‘Late financial bloomers’ set to change face of retirement
Research from Canada Life today reveals a growing wave of ‘Late Financial Bloomers’ is changing the face of retirement. This group secure their financial stability later in life and currently make up just 6 per cent of the retirement market but is expected to grow significantly over the next 15 years.
Socioeconomic factors, such as later access to home ownership and more time spent renting, as well as getting married and having children later in life are the main drivers behind this shift, triggering a major change in how these consumers plan for and live through retirement.
The research, carried out in conjunction with Trajectory, a strategic trends forecasting agency, found that the cumulative impact of reaching these life milestones later is what characterises this group and impacts on their retirement savings:
First marriages are now taking place four years later than 20 years ago (the average age is now 34 among men and 32 among women)
Divorce rates peak 20 years later in life, compared to 20 years ago, with a notable uptick occurring at over 60 years old
More women over 40 are giving birth each year than those under 20 - meaning that there will be a growing number of Late Financial Bloomers supporting their children through education much later in life, reducing their focus on retirement planning and saving.
Paul Flatters, Co-founder and CEO, Trajectory, says: “The rise of individualism and decreasing relevance of the social norms are driving the growth of these new groups of retirees. As the timing of home buying, marriage, divorce and having children becomes increasingly flexible for most people, its impact on the journey towards retirement and the finances needed for retirement is being felt too.”
Andrew Tully, Technical Director at Canada Life, says: “The retirement market will be disrupted by the growth of Late Financial Bloomers; a group which only makes up a fraction of the current market but will account for a much larger proportion by 2035. These retirees are more likely to have less wealth when they reach the ‘typical’ retirement age and, as a result, may have to work later in life and think differently about their assets and financial planning. The adviser community needs to plan ahead to respond to these changing needs, considering more complex retirement journeys and adapting existing models and services in order to support this growing group.”