As Quebec residents race toward retirement, study reveals a financial trend toward de-consumption among the boomer generation
MONTREAL, May 12, 2014 /CNW Telbec/ - The financial priorities for Quebec's baby boomers are changing and it is influencing their consumption habits, according to the first white paper – Baby Boomers and Money - conducted by Capital One Canada, in collaboration with CROP, tax expert Luc Godbout, and political scientist Jean-Herman Guay. The study revealed this unique population is now torn between the materialism they used to embrace and a newer commitment to consume less. These results are magnified in Quebec, which will soon become one of the oldest societies in the developed world due to the size of its baby boomer population.
Torn between materialism and de-consumption
Quebec's baby boomers are struggling between a motivation to maintain their longtime spending habits and a dwindling desire to make purchases purely for pleasure. Among the cohort surveyed, more than half (54%) of baby boomers say that consumption remains an important symbol that gives meaning to their life, however 71% declare today that they feel less like buying than before. Ten years ago, the proportion of this cohort that made such a claim was 53%, which shows a trend towards de-consumption.
Among the baby boomers who participated in the study, 41% are retired while 51% remain active in the workforce. In the case of the latter, 59% estimate they will need an additional income during their retirement with non-retired baby boomers expecting to work part-time at a rate 50% higher than baby boomers who have already retired.
Baby boomers are concerned about their financial situation
As they reach an important turning point in their life, having already retired or on the cusp of doing so, 56% of Quebec baby boomers are worried they won't have enough money in the future. The white paper has revealed several differences in the financial situations between retired and non-retired baby boomers. While half of retired Quebec baby boomers are concerned about their financial future, this proportion jumps to 64% for non-retired boomers. This concern for the future appears to be fuelled by managing personal finances on a daily basis, as 47% of non-retired baby boomers say they have difficulty making ends meet compared to 19% of those who are retired.
Use of credit cards
Interesting data reveals that double the number of Quebec baby boomers hold credit cards at a lower interest rate than baby boomers in the rest of Canada (74% vs 30%). Yet, while they've secured cards with better rates, for many, managing their credit appears to be more challenging. Data from Capital One shows that a lower percentage of baby boomers who are still active in the workforce say they pay the full balance on their credit card every month (57% versus 78%).
"Our study reveals that many baby boomers struggle to make ends meet and have a difficult time controlling their personal finances. This is all the more common for baby boomers who are still in the workforce," said Pascal Bricault, Director at Capital One Canada. "For this group in particular, they should develop a sensible plan that leverages the right financial tools. And they shouldn't be afraid to seek expert advice when they need it."
In light of the data gathered in this white paper, it seems imperative to us that baby boomers who are still in the workforce need to invest the time and effort to take control of their personal finances. The first step towards achieving this is to begin paying closer attention to developing a sound financial plan. We therefore recommend four initiatives:
- Develop a financial plan and create a budget you can stick to
- Commit to paying the full balance on their credit card each month
- Set goals and reward yourself when you meet them to help stay on track
- Get help from a financial or credit expert
The option of remaining in the workforce for a longer period should be considered when planning for the future. There are a number of factors that can impact an individual's retirement income, which can become confusing at times. Rather than navigate these waters alone, baby boomers who are not knowledgeable about money matters should seek help from a specialist.
For access to the full white paper – Baby Boomers and Money – please visit www.capitalone.ca.
The data featured in this document comes from a survey of personal finance issues conducted with Quebecers aged 50 to 67 years old and undertaken specifically for this white paper, data obtained from CROP's own PANORAMA social survey, as well as relevant insights from Capital One Canada.
About Capital One
With offices in Toronto and Montreal, Capital One has offered Canadian consumers a range of competitive MasterCard credit cards since 1996, and now includes the Aspire suite of rewards cards, which are regularly cited by leading rewards experts for the great value they offer consumers. Capital One Canada is a division of Capital One Bank, a subsidiary of Capital One Financial Corporation of McLean, Virginia (NYSE: COF). Capital One believes in empowering Canadians to take control of their finances through programs and resources like Understanding-Credit.ca, Credit Education Week Canada and the Capital One Financial Education Challenge.
About Luc Godbout
Luc Godbout is the Director of Fiscal Studies at the University of Sherbrooke and a fellow on the Tax and Public Finance Research Chair. He has been acclaimed for Le Québec économique annual series, his novel Le Québec, un paradis des familles, and many conferences dealing with fiscal and economic policy.
About Jean-Herman Guay
Jean-Herman Guay is Professor of Applied Politics at the University of Sherbrooke. He specializes in public opinion, particularly, the behaviour of different age cohorts in Quebec. In 1997, he published a book on the matter titled Avant, pendant et après le Boom.
SOURCE: Capital One
For further information: Guillaume Bérubé, 514-282-4719