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The kids are alright – ‘lost’ generation no more

Gen X getting a good grip on planning, Investors Group research finds

WinnipegMB – January 4, 2011 – Sometimes referred to as the ‘lost’ generation, Generation X - the segment of the Canadian population between the ages of 30 and 44 - may be finding its financial way according to new research by Investors Group.

Results of a new poll probing the Gen X retirement mindset revealed a majority (58 per cent) have a clear vision for their retirement life and what they will be doing with their time.  This compares favourably with the findings of an earlier retirement survey by Investors Group which found that two-thirds of their Boomer aged parents (66 per cent) say they have a clear retirement vision.  Echoing the sentiment of their elders, 60 per cent of Gen Xers think that retirement will be an exciting stage of their lives.

The two generations also display similar approaches to saving and investing for retirement. Sixty-one per cent of Gen Xers have RRSPs and of those, 85 per cent plan to contribute the same or more in the upcoming tax year. This compares to 62 per cent of Boomers who have RRSPs, 79 per cent of whom who will be contributing the same or more to their RRSPs. TFSAs are equally popular for both generations as well. Four out of ten (39 per cent) Gen Xers have opened TFSAs, almost the same as 43 per cent of Boomers who have.

“Gen X and Boomers may have some differences, but it appears the apple doesn’t fall far from the tree in financial planning,” says Debbie Ammeter, Vice President, Advanced Financial Planning of Investors Group. “Gen Xers share remarkably similar dreams and hopes especially when it comes to their vision of retirement and how they are going to get there.” 

Cruising together?

According to the research, Gen Xers plan to spend much of their retirement years enjoying the same activities as their parents.  Like Boomers, travel scores highest on the list of retirement pleasures for Gen X (68 per cent) along with no work pressures (58 per cent). Boomers rank travel and no work pressures at 61 per cent and 58 per cent respectively.

Taking extended life expectancies into consideration, Gen X may be able to enjoy some retirement time together with their Boomer parents—if Mom and Dad agree. Surprisingly, spending time with family (57 per cent) rates higher as a retirement pastime for Gen Xers than it does for Boomers (46 per cent).

The concept of ‘working retirement’, pioneered by Boomers, also appears to be taking hold in the next generation. Four-out-of-ten Gen Xers as well as Boomers expect to gradually retire by working fewer hours from their current employer.

“It may be that Boomers have fundamentally changed the way retirement is viewed and the kids are following in their footsteps,” says Ammeter of Investors Group. “But it is also possible that the Gen X retirement lifestyle vision could change as this demographic cohort continues to age.”

Practical realities

According to Investors Group’s research, a majority (62 per cent) of Gen Xers believe they will have to fund their own retirement.  Half (51 per cent) expect to fund their own medical and personal care. Boomers have very similar views with 60 per cent saying they will have to fund their retirement and 56 per cent expecting to pay for their own care.

When compared to Boomers, Gen Xers recognize that government pensions might not play as large a role in their retirement income (25 per cent and 20 per cent respectively) and see RRSPs as a more important income source (21 per cent versus 16 per cent). Only 3 per cent expect inheritance to be a primary source of retirement income.

Fifty-four per cent of Gen Xers follow a spending budget while four of ten (39 percent)  work with a financial advisor to help them make investing and saving decisions.

“Given the financial challenges confronting them, including uncertain economic times, it’s notable that many are not putting financial planning on the back burner,” said Ammeter. “But there’s certainly room for improvement.”

Among Gen X RRSP contributors, 43 per cent plan to invest in the stock market via mutual funds while 28 per cent say they plan to put it in GICS, governments or money market investments. Twenty per cent are not sure where they plan to invest their money.

It depends on perspective

One area of apparent disagreement between Gen X members and Boomers is the impact on society that Boomers have had. Perhaps not surprisingly, Boomers appear to be more impressed while Gen Xers are less moved.

One-in-four (27 percent) Gen Xers think that Boomers had an exceptional or positive impact on society, politics and the economy and the majority give them mixed marks—64 per cent say their influence was both positive and negative.

Boomers, on the other hand, beg to differ. Forty-five per cent believe their generation had an exceptional or positive impact on society.

“Like so many other things in life, your viewpoint depends at least partially on your perspective,” said Ammeter.

About the Survey Methodology

This Harris/Decima Poll was conducted online within Canada between October 28 and November 9, 2010 among 2,031 adults (aged 18 and over).   Respondents for this survey were selected from among those who have agreed to participate in Harris/Decima surveys. The data have been weighted to reflect the composition of the adult population. Because the sample is based on those who agreed to participate in the Harris/Decima panel, no estimates of theoretical sampling error can be calculated.

About Investors Group

Investors Group, founded in 1926, is a national leader in delivering personalized financial solutions to Canadians through a network of over 4,600 Consultants located throughout Canada. In addition to an exclusive family of mutual funds and other investment vehicles, Investors Group offers a wide range of insurance, securities, mortgage and other financial services. Investors Group is a member of the IGM Financial Inc. (TSX: IGM) group of companies.IGM Financial is one of Canada’s premier financial services companies with over $125 billion in total assets under management.

For more information contact:

Ron Arnst
Media Relations
(204) 956-3364
ron.arnst@investorsgroup.com

Teresa Pagnutti or Lisa Mills
Environics Communications
416-969-2721/ 416-969-2831
tpagnutti@environicspr.com/lmills@environicspr.com