Tag Archives: TD

Déjà-Boom: boomerang kids collide with retirement goals of boomer parents

By Sheryl Smolkin

Do you remember the American romantic comedy film Failure to Launch? The film focuses on a 35-year-old man who lives in his parents’ home and shows no interest in leaving the comfortable life Mom and Dad have made for him there.

Well, kids staying at home longer is no longer just an urban myth. The boomerang effect is in full swing as many millennials continue to lean on the boomer generation for financial support, according to a recent TD survey. At a time when the older generation should be preparing for retirement, many instead are experiencing a “déjà-boom” effect, as children or grandchildren return to the family home or need financial assistance.

“As a parent or grandparent it’s natural to want to help our kids and grandkids who may be facing financial challenges such as finding full-time employment or paying their day-to-day expenses,” says Rowena Chan, Senior Vice President, TD Wealth Financial Planning. “It’s important that this desire to help is balanced with your own goals for retirement.”

Overall, 62% of the boomer generation feels the “déjà -boom” effect is preventing them from saving enough for retirement. The survey also revealed that the trade-off between providing financial support and saving for retirement is placing boomers under a considerable amount of financial stress. It’s not surprising that more than half (58%) of boomers report feeling financially stressed and say their retirement savings are being impacted by their extended financial support of boomerang kids, as one in four Canadian boomers admit to supporting their adult children or grandchildren.

“While the déjà-boom effect may be an unexpected event in retirement planning, it is important for pre-retirees to remember that it’s not too late to plan for the future and achieve their goals. A lot can be accomplished in the 10 to 15 years before retirement and planning ahead is a key step in making the journey as smooth as possible,” Chan continues.

The added financial stress brought on by this arrangement isn’t unnoticed by millennial offspring. In fact, almost half of millennials (44%) who depend on their boomer parents or grandparents for support are aware that their financial situation will mean fewer retirement savings, while 43% of millennials admit they are willing to cut costs when facing economic difficulty before asking for financial help.

“Both generations recognize this isn’t an ideal situation, which means important conversations need to take place so everyone is on the same financial page,” says Chan. “Sitting down with someone who understands different family dynamics is a great first step to set defined goals and establish a financial action plan to best serve both generations.”

TD offers the following advice for boomer parents who are working towards retirement and boomerang kids who want to be independent:

Be Ready for Whatever Life Throws Your Way
Despite this new reality, it is important to understand that your retirement goals are still within reach. Meeting with a financial planner and doing a goals-based assessment is key to determining what your options might be for supporting your kids while keeping your plans for retirement on track.

Negotiate the Return
Discuss how everyone can contribute to the household budget and operations. For example, you may be able to cover the basics like room and board, but other living expenses like cell phone bills, car payments, or financial support for recreational activities are additional costs that your offspring could  cover independently. Also, consider having everyone pitch in on the costs of running the day-to-day operations and dividing the household chores. 

Prepare to “Relaunch”
Whether it’s your newly-married daughter, her spouse and child, or your son who recently graduated and has moved back home, there are plenty of opportunities to educate all family members on the importance of being fiscally responsible and working toward financial independence. Invite them to join in your financial conversations to discuss how to navigate their current circumstances and establish good financial habits.

Decide When to Release
As you and your offspring are mapping out financial action plans, identify a date when you will no longer be financially committed to each other. As you approach this date, set up a series of mini-goals that will allow you to free up funds to divert toward your retirement savings while ensuring that your kids are meeting the savings targets they set in their own financial plan.

Work with your planner to ensure these goals are S.M.A.R.T.: Specific, Measureable, Agreed upon, Realistic and Time-based. S.M.A.R.T. goal-setting provides the preparation, focus and motivation needed to achieve your objectives.

And watch or re-watch the movie “Failure To Launch” if you can with your boomerang kids. There is nothing like a good laugh to defuse any tension that may be associated with kids moving back home!

Big Cajun Man shares RDSP, RESP expertise

By Sheryl Smolkin

Alan Whitton and his son Rhys
Alan Whitton and his son Rhys

 

podcast picture
Click here to listen

Hi,

As part of the savewithspp.com continuing series of podcast interviews with personal finance bloggers, today I’m talking to the “Big Cajun Man,” author of the Canadian Personal Finance Blog.

In real life, he is actually, Alan Whitton, a mild-mannered government civil servant and father of four, living in Ottawa. Alan has been blogging about finance and consumerism for about ten years, focusing on real life experiences.

As a result, he has written extensively about Registered Disability Savings Plans and parenting a disabled child.

Welcome, Alan.

My pleasure Sheryl.

Q: First of all Alan, tell our listeners where your alter ego name, “Big Cajun Man,” came from.
A:  Well, I was playing golf with friends and was wearing a straw hat and someone yelled at me, “What do you think you are, some kind of big stinking Cajun man?” and the guys I was playing with have called me that ever since.

Q: Why did you start blogging?
A: Well, I started initially just on BlogSpot as sort of an open letter to my mother because at the time, my wife was pregnant with our fourth child, who was a bit of a surprise. Then I realized I could write about other things and I was always interested in money so I figured I’d just start blogging about it.

Q: How frequently do you post?
A: I try to write four or five posts in a week. The Friday post is usually a ‘best of’ what I’ve seen during the week.

Q: How long are the blogs and how complex are they? Do they vary?
A: Oh, it’s usually somewhere between four and eight paragraphs. What shows up, or what I read about or something that happens in my life is usually the catalyst for the more interesting ones.

Q: Tell me about some of the topics you write about.
A: Well, family and money and how families work with money, a little bit on investing, a lot more on disability and how families can deal financially with kids with disabilities or loved ones with disabilities. And that really, again, arose because when Rhys was diagnosed on the autism spectrum, I had to learn about all this so I figured I’d write about it too.

Q: And, how old is Rhys now?
A: He is 9. I have three beautiful daughters who are 24, 22 and 20, and my son who has just turned 9. It’s a multi-generational family. That’s why I end up writing about things like university costs and parenting a 9-year old.

Q: There are probably over a dozen personal finance bloggers in Canada. What’s different about your blog. Why do you think it’s a must read?
A: I don’t know. I mean, my point of view as a father of a multi-generational family is interesting. I always have had a different perspective on things. I leave a lot of the specific investing ideas to some of the more qualified chaps like Michael James and Rob Carrick. I mostly just talk about John Public’s point of view of things.

Q: How many hits do you typically get for your blogs?
A: Between 8,000 and 12,000 a month. It started off very slowly and I think with the backlog of over 2,500 posts there’s a lot of people who just search and end up finding me accidentally.

Q: What are some of the more popular blogs you’ve posted?
A: Well, anything under my RDSP and RESP menus are popular, like how to apply for your child’s disability tax benefits. And on the RDSP side of things all the fights I’ve had with TD about putting money in and taking money out. Also, surprisingly, I wrote one simple blog that just said “I am a civil servant,” and let me tell you, that one caused no end of excitement.

Q: What is the essence of that particular blog?
A: I was trying to blow up some of the very negative views people have about civil servants. I mean, I worked in the private sector for over 20 years. I‘ve been a civil servant for 4 years.

Q. Tell me some of the key features of Registered Disability Savings Plans and what parents of disabled children need to know about them.
A: Well, just that right now they’re sort of the poor stepson at most financial institutions. I mean they’re not very flexible. Typically, at worst, they’re really just savings accounts. You can buy GICs or the bank’s mutual funds, which usually have very high management fees.

From what I can tell so far, TD Waterhouse is the only trading partner or trading house that has an RDSP where you can actually buy whatever you want like ETFs. But even the TD plan is not very well set up. It’s pretty cumbersome to put money into.

Q: What’s cumbersome about it?
A: Well, I can’t set up a weekly automatic withdrawal. I have to put money aside into another TD trading account. Then I have to phone up every once in awhile and transfer the money from the trading account into the RDSP. And then I have to call back after the money’s cleared to say, “And now I want to buy these ETF’s or index funds.”

Q: Why is that?
A: I don’t know. I’ve asked TD that a whole bunch of times. It’s just the way the system works. I’ve poked at them as best I can. I’ve asked a few other people to poke at them, but I haven’t really received a satisfactory answer.

Q: Are there legislative rules about how you can invest RDSPs?
A: Not, necessarily. It’s just the banks are putting that kind of limit on things because it’s not a big money maker for them. They’re not going to make a fortune on amounts people deposit into RDSPs.  Whereas with RESPs, there are more people with kids going to university.

Q: What are the contribution limits on RDSPs?
A: The overall lifetime limit for a particular beneficiary is $200,000. Contributions are permitted until the end of the year in which the beneficiary turns 59. Up to a certain amount every year, depending on how much money you make, will be matched by the government.

Based on parental income, an RDSP can get a maximum of $3,500 in matching grants in one year, and up to $70,000 over the beneficiary’s lifetime. A grant can be paid into an RDSP on contributions made to the beneficiary’s RDSP until December 31 of the year the beneficiary turns 49.

Q: Do you have a favorite personal finance blogger that you read religiously?
A: I’ve got a couple. I like reading Michael James “On Money”, but he’s a friend of mine. I really like the Canadian Capitalist, but he’s sort of taken a hiatus. “Boomer & Echo” and the “Canadian Couch Potato” are quite good and so is “My Own Advisor.” I’ve met most of these guys at various conferences. I also read Squawkfox and have had extensive correspondence with her on Twitter.

Q: What, if any, money making opportunities or spin-offs have there been as a result of your blogging career?
A: Well, I don’t do this for the money which is obvious given how little I make at it. This is more of a cathartic thing for me.

Q: If you had only one piece of advice to readers or listeners about getting their finances in order, what would it be?
A: Get out of debt. Debt is a bad thing. There’s no such thing as good debt. It’s all bad. Don’t fool yourself into thinking there’s livable debt like a mortgage or maybe paying for your university. Somehow carrying debt has been normalized in the last 30 years or so but it’s still really not ok.

Thank you very much, Alan. It was a pleasure to talk to you.

Thanks for the opportunity Sheryl.

This is an edited transcript you can listen to by clicking on the link above. You can find the Canadian Personal Finance Blog here.

Apr 21: Best from the blogosphere

By Sheryl Smolkin

185936832 blog

If there are snow flurries as forecasted for this week, it’s probably all my fault because I took our winter coats to the dry cleaners this past weekend. But when the temperature goes up, the temptation to put away boots and down jackets for another year is irresistible.

Sometimes your financial accounts also need a spring cleaning. In Spring Financial Cleaning Big Cajun Man recounts how he cleaned up his Quicken data files removing redundant accounts so they give him a more realistic financial picture.

Jim Yih reminds us that investing and taxes go hand in hand, particularly outside of your RRSP. That’s because different forms of investment income can provide significant tax benefits.

In spite of the plethora of personal financial blogs and other sources of financial advice available to Canadians, Brighter Life editor Brenda Spierling reports on Brighter Life that Women lag behind in financial planning. Does this sound familiar? She suggests that you create a financial plan and open an automatic savings plan or payroll deduction plan as soon as possible.

This week Robb Engen on Brighter Life writes tongue-in-cheek about Bank Slogans And Taglines, Translated. For example, he says TD’s “Open earlier, open later. Even Sunday” really means, “We don’t care that most of you want to bank online. We’re going to make you come in and speak to an advisor so we can sell you more products  any time, day or night.”

Finally, after a foot injury in January, on Give me back my five bucks, Krystal Yee reports that she laced on her running shoes for the first time 75 days later and that she is determiend to run and blog her way back to top physical condition.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere. Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.