TORONTO, April 17, 2012 /PRNewswire/ - Retiring Boomer business owners do a better job of financial planning and are far more active in preparing for retirement compared to the average Canadian, according to the 22nd Annual RBC RRSP Poll.
Fifty-four per cent of retiring Boomer business owners regularly review, update and keep their financial plan in mind when they are about to make key financial decisions, compared to 38 per cent of Canadians in general. Consequently, almost two-thirds (65 per cent) of retiring Boomer business owners are confident their savings are where they should be, compared to 51 per cent of the rest of Canadians who think they are at or ahead of their retirement savings goal.
"Due to their entrepreneurial mindset and the fact that they must take care of themselves financially in the future, retiring Boomer business owners see financial planning as a priority," said Michael Feaver, senior manager, Strategic Initiatives, RBC. "Overall, they do a better job of retirement planning and start investing at an earlier age, which gives them greater flexibility and control during their retirement years. Your business requires a strong grasp and long-term view of its finances; your personal finances should be no different."
The survey found retiring Boomer business owners are approaching retirement with a different financial priority in mind compared to the average Canadian; their focus is on saving for their retirement versus making payments to reduce debt which is the main priority of the average Canadian.
However, retiring Boomer business owners and the rest of Canadians have one thing in common: both groups have increased the estimated amount of money they believe they will need to retire and live a comfortable lifestyle. Retiring Boomers who own a business have increased their estimate of what is needed to retire by 16 per cent to $1.1 million from $968,000 in 2010; the estimate for Canadians in general has jumped by 19 per cent to $778,000 since 2010.
"Retiring Boomer business owners are more self-reliant and have invested their time as well as their money in preparing for retirement," said Jason Round, head, Financial Planning Support, RBC Financial Planning. "With Canadians now spending an average of 15 to 20 years in retirement, it's important to take the time to understand what it will take to live comfortably and enjoy the lifestyle you want. A financial planner can help get you on the right track and address the challenges of retirement planning, whether you own a business or not."
Round noted that business owners face additional related complexities, such as deciding whether to incorporate or operate as a sole proprietorship and, consequently, how best to draw money from the business; determining whether options such as holding companies, individual pension plans and trust options would be appropriate for their business and personal needs; and developing a succession plan to ensure they have an effective exit strategy for personal, family and business purposes.
- More than half (56 per cent) of retiring Boomer business owners say that working part-time during retirement would be appealing to ensure they don't outlive their savings; only 43 per cent of Canadians in general feel this way.
- Canadians who own a business believe they have a better chance of choosing when to retire (74 per cent), compared to 50 per cent of Canadians in general who believe it will be their choice.
- Only 50 per cent of all Canadians have a financial plan. Of those with a plan, 47 per cent have it written on paper, 27 per cent are keeping track of it in their head and 21 per cent are using a spreadsheet or electronic database.
- Less than half of all Canadians (45 per cent) turn to a financial advisor for help with their investment decisions.
About the 22nd Annual RBC RRSP Poll
This survey was conducted by Ipsos Reid between October 24 and November 15, 2011 via interviews of 4,135 Canadian adults, including a random sample of 1,224 adults in the general population (aged 18 and over) and 2,911 Boomers aged 50 to 69 with household financial assets of $100,000 or more. The results are based on samples where quota sampling and weighting are employed to balance demographics and ensure that the sample's composition reflects that of the actual population according to Census data. Quota samples with weighting from the Ipsos online panel provide results that are intended to approximate a probability sample. A weighted probability sample of 1,224 Canadian respondents, with 100 per cent response rate, would have an estimated margin of error of ±3 per cent, 19 times out of 20. Data for Boomers are unweighted with a margin of error of ±2 per percentage points, 19 times out of 20.
Image with caption: "22nd Annual RBC RRSP Poll: Comparisons (CNW Group/RBC)". Image available at: http://photos.newswire.ca/images/download/20120417_C6124_PHOTO_EN_12358.jpg