A millennial’s fear: His parents are not financially ready for retirement

A 30-something reader recently asked for ideas on how to find a financial planner. Not for him – he and his spouse are solid, money-wise. His parents are a different story.

The parents are close to retirement age, but their son is worried about their financial situation. “I feel they lack the financial knowledge to make a solid plan, and the financial adviser at the bank doesn’t have their best interest in mind,” this reader said in his e-mail to me. “I asked my dad if he had a TFSA, and he didn’t seem to know what that is.”

The son wants to find a planner to advise his parents. To help him in his search, I sent this directory of fee-for-service planners who work for an hourly or flat rate and aren’t compensated through the sale of investments or providing investment advice.

Story continues below advertisement

I expect to hear more stories like this one in the years ahead – financially smart children of baby boomers taking a look at their parents’ finances and thinking, hmm. I encourage this curiosity.

One thing I’ve learned about families is that kids often have no idea of how financially secure their parents are. So start a family discussion. Adult kids may find their parents have this retirement thing nailed. If not, an early intervention could help the parents change their approach so they retire with more financial security.

When in doubt about your parents and their preparations for retirement, ask. You do not want to find out your parents are financially short for retirement after they retire.

Subscribe to Carrick on Money

Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.

Rob’s personal finance reading list

Electric cars save you money, and not just on gas

Insurance costs for electric vehicles can be modestly lower than their gas-powered counterparts, and the maintenance costs are significantly cheaper.

She negotiated her rent down by $300 per month

I’m adding this Money Diaries entry from Refinery29 – titled A week in Toronto on a $60,000 salary – because the author did something smart. She took advantage of the weak downtown rental market in Toronto to negotiate a nice cut in her monthly rent.

These are the jobs that will be in demand in 2021

The job market has weakened as a result of the latest round of economic lockdowns, but it’s expected to rebound as the pandemic recedes. Here are the jobs that will be in demand.

Story continues below advertisement

What happens to your TFSA when you die?

A blogger offers a thorough rundown on what happens to the money in your tax-free savings accounts after death, including the ins and outs of naming a beneficiary versus a success holder.

Ask Rob

Q: With some defined-benefit pension plans, there is an option to contribute additional amounts than the minimum percentage required. Fifteen per cent of my salary goes towards my DB pension. I’m 29, have no debt and no other retirement savings. I’d like to start saving more but am not sure if I should increase contributions to my pension or look at other options.

A: I going to throw out an idea – create a medium-term investment fund for financial goals between now and retirement. For this, you would invest outside your pension plan. You might end up using this money for retirement, but it would primarily be used for goals 10 to 20 years down the road. Maybe upgrading your education or taking a sabbatical period and travelling. Just a thought.

Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.

Today’s financial tool

A real life mortgage-rate comparison – rates are broken out for mortgages of various types, including those with and without mortgage-default insurance (required when you buy a home with a down payment of less than 20 per cent).

The money-free zone

Every now and then, I like to put on my headphones and listen to something nice and loud (I live in a condo). I queued up Creedence Clearwater Revival’s Live at Woodstock album this past weekend, including a blazing 11-minute version of Suzie Q that I happen to love. Next, some CCR studio greatness that you may not have heard – Ramble Tamble.

Story continues below advertisement

ICYMI

What I’ve been writing about

Making more than $100,000 and still in financial trouble? It’s happening in the COVID-19 pandemic (for Globe Unlimited subscribers)
GICs versus annuities – Which held up better as interest rates plunged? (for Globe Unlimited subscribers)
‘The pandemic showed us how boring retirement can be’ (for Globe Unlimited subscribers)

More Rob Carrick and money coverage

Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.