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Top 10 Myths Surrounding Aging Baby Boomers & What Boomers Need From Employers. Descending the Corporate Ladder. The State of the Aging Baby Boomer Market – Canada – 2006 Sam Cukierman Managing Partner Strategic Guidance Consulting Inc. Research Sponsors: DeGroote School of Business

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slide2

The State of the Aging Baby Boomer

Market – Canada – 2006

Sam Cukierman

Managing Partner

Strategic Guidance Consulting Inc.

Research Sponsors:

DeGroote School of Business

Verity International Limited

research for building loyalty to capture this market segment
Research for building loyalty to capture this market segment
  • Survey sample:
    • 1,000 Canadians aged 47 – 64,
    • Working full-time, (company or self-employed)
    • Weighted by age, gender, and marital status (to reflect Canadian demographics consistent with 2004 Statistics Canada data).
  • Survey was conducted in November 2005.
    • Sample accurately reflects the views of the target group, within 3.1 percentage points 19 times out of 20.
research for building loyalty to capture this market segment4

Age and Marital Status

Age Distribution

Marital Status

12%

9%

26%

Married

47-49

23%

Widowed, Divorced, Separated

50-54

25%

55-59

Single

60-64

68%

37%

Income / Net Worth

Household Income

Net Worth

9%

23%

27%

32%

15%

<$100,000

<$50,000

$100K - $249K

$50K - $74K

$250K - $499K

$75K - $99K

>$500,000

13%

>$100,000

No Response

18%

No Response

21%

16%

26%

Research for building loyalty to capture this market segment
slide5

Myth #1

Boomers will retire, find their place in the sun, and live happily ever after

boomers will retire find their place in the sun and live happily ever after

Myth #1

Boomers will retire, find their place in the sun, and live happily ever after

Facts:

  • The word retirement is a misnomer – it is not a point in time – it’s a lifestyle
  • The lifestyle will engage boomers in work
  • More than half of Aging Baby Boomers plan to continue working on a part-time basis after they “retire”
boomers will retire find their place in the sun and live happily ever after7

At Desired Retirement Age I Will ...

… Continue Working On Part-Time Basis.

By Age

8%

22%

50%

60-64

52%

55-59

50-54

52%

47-49

55%

18%

By Net Worth

52%

59%

>$500,000

$250K - $499K

50%

Continue working on a full- time basis

50%

$100K - $249K

Continue working on a part- time basis

53%

<$100,000

No longer work

Not sure / don't know

Myth #1

Boomers will retire, find their place in the sun, and live happily ever after
boomers will retire find their place in the sun and live happily ever after8

Myth #1

Boomers will retire, find their place in the sun, and live happily ever after
  • … and their needs for monthly income will be about the same as they spend today
  • … to spend money on themselves as a reward for a lifetime of hard work, on travel, on hobbies, on helping their children

At retirement I expect to need ...

7%

7%

Less monthly income than today

About same monthly income as today

49%

More monthly income than today

37%

Don't Know

boomers will retire find their place in the sun and live happily ever after9

Myth #1

Boomers will retire, find their place in the sun, and live happily ever after
  • How many years of retirement income do you think you will require after retirement?

This has implications for the social fabric of our society – with great influx of boomers wishing to work, where are the jobs? How will employers respond to meet boomer expectations (realistic or unrealistic)?

slide10

Myth #2

Aging baby boomers are financially prepared for retirement today

aging baby boomers are financially prepared for retirement today

Myth #2

Aging baby boomers are financially prepared for retirement today

Facts:

  • They are not financially prepared
  • 85% of aging baby boomers feel only somewhat prepared, not at all prepared, or simply do not know
aging baby boomers are financially prepared for retirement today12

Financial Preparation For Retirement

All Those

Continuing To Work

Self-Employed Continuing To Work

Don't know

Very prepared

3%

15%

28%

32%

21%

39%

Not at all prepared

60%

12%

Somewhat prepared

29%

61%

With your current company

With a different company

Don't know

Myth #2

Aging baby boomers are financially prepared for retirement today
slide13

Myth #3

Baby boomers access advice and information and place their trust in one advisor

baby boomers access advice and information and place their trust in one advisor

Myth #3

Baby boomers access advice and information and place their trust in one advisor

Facts:

  • 76% of baby boomers have started to “plan” for retirement
  • They begin with self-help modes of advice – websites, books, friends and family – and find the degree of helpfulness lacking
  • They progress to more credible professional sources of advice for planning; progression is slow and there is considerable room for growth
baby boomers access advice and information and place their trust in one advisor15

Financial planner with financial institution

34%

Family member / friend / colleague

31%

31%

Books, articles, newspapers

Independent financial planner

27%

Life insurance agent

18%

Financial institution manager / acct. manager

18%

Human resource person at place of employment

15%

14%

Accountant

7%

Broker

7%

Someone in government

6%

Lawyer

Real estate agent

5%

2%

Career counseling firm

Myth #3

Baby boomers access advice and information and place their trust in one advisor
  • Financial planners are the predominant source of advice – financial planners in banks, trusts, and credit unions get highest usage scores

Which of the following people / resources have you talked to or consulted with regarding your retirement planning? – note HR resource ranks 7th

baby boomers access advice and information and place their trust in one advisor16

Myth #3

Baby boomers access advice and information and place their trust in one advisor
  • The degree of helpfulness varies among advice providers - among those who have sought professional advice, independent financial planners rank highest in degree of helpfulness
  • Those who use accountants (only 14%) rank them as high as financial planners for helpfulness
baby boomers access advice and information and place their trust in one advisor17

33%

Independent Financial Planner

81%

21%

Financial Planner with F.I.

76%

22%

Accountant

76%

25%

HR & Workplace

71%

19%

F.I. / Account Manager

70%

14%

Someone in Government

67%

15%

Broker

67%

27%

Lawyer

64%

18%

Books / articles / magazines

61%

19%

Web sites

59%

16%

Family / friend / colleague

59%

16%

Real Estate Agent

Extremely Helpful

57%

25%

Extremely + Very Helpful

Career Counselling Firm

56%

19%

Life Insurance Agent

52%

Myth #3

Baby boomers access advice and information and place their trust in one advisor

Degree of Helpfulness

slide18

Myth #4

The 4 traditional cornerstones for retirement - savings, health, life insurance, and investment plans - are well-covered

slide19

Myth #4

The 4 traditional cornerstones for retirement - savings, health, life insurance,and investment plans - are well-covered

Facts:

  • Life insurance and RRSPs dominate financial holdings
  • Significant opportunities for growth exist in health, disability and critical care insurance and estate planning
slide20

Assets Currently Held by Aging Baby Boomers

Life insurance

77%*

Registered Retirement Savings Plan (RRSP)

68%

Health insurance

64%*

Disability insurance

59%*

Will

57%

Company pension plan

48%

Through Work Only

40%*

Long term care insurance

Acquired Personally

Insurance Coverage *

Critical care insurance

39%*

Both

39%

Stocks / bonds outside of RRSP

27%

6%

15%

18%

Critical care

40%

Mutual funds outside of RRSP

24%

5%

17%

18%

Long term care

59%

Power of attorney

21%

42%

10%

7%

Disability

64%

GIC outside of RRSP

16%

47%

13%

4%

Health

77%

Estate plan

10%

23%

24%

30%

Life

Registered Retirement Income Fund (RRIF)

7%

Myth #4

The 4 traditional cornerstones for retirement -savings, health, life insurance,and investment plans - are well-covered
slide21

Myth #5

Enormous generational wealth transfer through inheritances are occurring or will occur

enormous generational wealth transfer through inheritances are occurring or will occur

Myth #5

Enormous generational wealth transfer through inheritances are occurring or will occur

Facts:

  • Only 11% of aging baby boomers have inherited any kind of assets in the past 5 years
  • 55% of aging baby boomers do not anticipate inheriting any assets in the next 10 years – this holds true even for those aged 60-64
  • 26% do anticipate inheriting some wealth bequeathed by an estate, but this will not occur until their very late sixties / early seventies

Facts:

enormous generational wealth transfer through inheritances are occurring or will occur23

Yes

11%

Yes

19%

Don’t Know

By Net Worth

26%

35%

32%

No

29%

19%

89%

No

<$100,000

$100K - $249K

$250K - $499K

>$500,000

55%

Myth #5

Enormous generational wealth transfer through inheritances are occurring or will occur

Have you inherited assets from an estate that was bequeathed to you in the past five years?

In the next ten years or so, do you anticipate inheriting assets from an estate?

enormous generational wealth transfer through inheritances are occurring or will occur24

Myth #5

Enormous generational wealth transfer through inheritances are occurring or will occur

Does this make sense? Yes because…

  • They are spending money to help their children financially and will do so for the next 10 years
    • Only after age 64 do the number of children that are financially independent exceed the number of children receiving financial help
  • They expect to live well into their eighties, remain mentally and physically active, and be vigorous consumers, believing the monthly income requirements will be at least the same as what they spend today
enormous generational wealth transfer through inheritances are occurring or will occur25

Respondents with children

By Age Group

ALL

47-49

50-54

55-59

60-64

79%

Provide financial help to children

89%

76%

77%

47%

21%

Children financially independent

11%

24%

23%

53%

Myth #5

Enormous generational wealth transfer through inheritances are occurring or will occur
slide26

Myth #6

Company human resources functions are doing a good job helping future outgoing boomers when they leave their full time jobs

slide27

Myth #6

Company human resources functions are doing a good job helping future outgoing boomers when they leave their full time jobs

Facts:

  • Human resource management for career planning and advice is weak – research anecdotes from personal one-on-one interviews backed by quantifiable results
  • Career management consulting firms can fill the gap if company HR function is unable to fulfill boomer needs
slide28

When you retire, will you be entitled to receive any continued benefits from your existing employer?

What benefits will you be entitled to receive?

Don’t Know

16%

Yes

Health care benefits

77%

31%

Dental benefits

60%

Insurance

58%

Other

7%

Don't know

1%

No

53%

Myth #6

Company human resources functions are doing a good job helping future outgoing boomers when they leave their full time jobs
slide29

Importance of Topic in Retirement Planning

- Very Important / Somewhat Important Rating-

92%

Benefits you will be entitled to

81%

Legal matters (wills, power of attorney)

Financial counseling

74%

Understanding what to expect in retirement

72%

Prepare you in event of early retirement

64%

Suggestions for new activities to be involved in

60%

Advice on adjusting to retirement

59%

Evaluating personal strengths for new career choices

49%

Seeking new career choices after retirement

47%

Offering outside consulting / counseling

43%

Myth #6

Company human resources functions are doing a good job helping future outgoing boomers when they leave their full time jobs
slide30

Myth #7

After retirement, baby boomers will move, downsize their homes, and live out-of-country

after retirement baby boomers will move downsize their homes and live out of country

Myth #7

After retirement, baby boomers will move, downsize their homes, and live out-of-country

Facts:

  • Two thirds of aging baby boomers will stay in their current residence
  • Only 20% of aging baby boomers will live any part of their retirement outside of Canada
after retirement baby boomers will move downsize their homes and live out of country32

Which of the following best describes where your main residence will be when you retire?

Plan on Living Any Part of Retirement Outside Canada

Yes

20%

City / town / area

73%

where currently reside

Different city / town

13%

/area in same province

No

Don't know

80%

9%

Different province in Canada

4%

Somewhere other than

1%

- Where ?-

Canada or U.S.

United States

<1%

United States

52%

Caribbean

21%

Asia, Australia,Other

18%

Europe

14%

South America

7%

Myth #7

After retirement, baby boomers will move, downsize their homes, and live out-of-country
slide33

Myth #8

When the boomer works less they will do less

when the boomer works less they will do less

Myth #8

When the boomer works less they will do less

Facts:

  • Aside from part-time work, caring for physical appearance, exercise, travel, cooking, home renovations, gardening, charity and volunteer work will dominate retirement time
  • Standard of living, CPP availability, medical and dental affordability are key issues
when the boomer works less they will do less35

Currently

Plan To

%

Current Activities - Do / Plan To Do When Retire

Do

Do *

Change

86%

Walking

75%

11%

68%

Travelling

43%

25%

68%

Cooking

57%

11%

62%

Volunteering

30%

32%

61%

Gardening

50%

11%

49%

Home renovation / repairs

46%

3%

38%

Charity work

17%

21%

34%

Home decoration / décor

6%

28%

34%

Photography / art

25%

9%

33%

Exercise classes

19%

14%

Golf

21%

11%

32%

Wine tasting

15%

7%

22%

Knitting / sewing

18%

3%

21%

Sitting on board of directors (paid or unpaid)

13%

7%

20%

Weight training

15%

4%

19%

Social club member

10%

8%

18%

Religious classes / committees /services

12%

16%

4%

Social work

6%

12%

6%

Running

8%

1%

9%

Sailing

3%

6%

3%

5%

Tennis

4%

1%

* includes those who currently do and those who plan to do after they retire.

Myth #8

When the boomer works less they will do less
slide36

Myth #9

Boomers are not web savvy – their thirst for information will dry up

boomers are not web savvy their thirst for information will dry up

Myth #9

Boomers are not web savvy – their thirst for information will dry up

Facts:

  • Boomers want a website dedicated to their needs
  • Three out of every four (74%) aging baby boomers indicated they would definitely / probably be interested in accessing a website specifically geared to serve their needs. This is consistent across all age, income and net worth groupings

(Note: This survey was conducted on line. Results of data presented in this section may contain some bias given the respondent’s predisposition to a comfort level with the web).

boomers are not web savvy their thirst for information will dry up38

Entertainment discounts

88%

Medical services

85%

84%

General newsletter

82%

Food products

82%

Food preparation / recipe information

Hobbies

81%

Books

81%

Travel specials

78%

Computer products / services

75%

Health and fitness products / services

74%

Dining recommendations

74%

Financial services

70%

68%

Consumer electronics

66%

Volunteer opportunities

65%

Home renovation / repair services

63%

Hardware products

63%

Employment opportunities

61%

Automobile service

Clothing for sale

61%

50%

Municipal or other political issues

47%

Automobile sales

Recreation products

46%

42%

Art and collectibles

Myth #9

Boomers are not web savvy - their thirst for information will dry up

Respondents interested in accessing website (definitely / probably) for ...

“Top Ten”

slide39

Myth #10

THE BIGGEST MYTH OF ALL – we’ve identified this group; we’ve got our strategic plans lined up; we’re meeting the aging baby boomers’ needs today

slide40

Myth #10

We’ve identified this group; we’ve got our strategic plans lined up; we’re meeting the aging baby boomers’ needs today

Facts:

  • Everyone wants the business of this “brick-rich / cash rich” group
  • Few are meeting their expectations today
  • Opportunity abounds
slide41

Ranked in order of “above average” in meeting the needs of aging baby boomers, the following “top 12” businesses, services or professions are shown:

Above

Below

Don't

Average

ALL RESPONDENTS

Average

Average

Know

31%

Pharmacies

57%

8%

4%

27%

Vacation destinations

54%

9%

10%

25%

Seniors clubs / associations

48%

7%

20%

20%

Book stores /sellers

64%

7%

9%

20%

Specialty magazines / books

60%

8%

12%

19%

Specialty food stores

58%

10%

13%

19%

Restaurants

67%

9%

4%

19%

Doctors

58%

20%

4%

18%

Health / fitness clubs / gyms

53%

16%

14%

18%

Pharmaceutical companies

56%

19%

7%

18%

Travel agents

58%

10%

14%

17%

Hotels

65%

9%

9%

Myth #10

We’ve identified this group; we’ve got our strategic plans lined up; we’re meeting the aging baby boomers’ needs today
slide42

FINANCIAL SERVICES - ALL

Above

Below

Don't

Average

RESPONDENTS

Average

Average

Know

Financial planners associated with

16%

specific financial institution

57%

12%

15%

14%

Independent financial planning

60%

11%

15%

14%

Banks

59%

22%

5%

13%

Credit unions

53%

12%

22%

12%

Mutual fund companies

57%

14%

17%

11%

Life insurance companies

61%

18%

10%

Myth #10

We’ve identified this group; we’ve got our strategic plans lined up; we’re meeting the aging baby boomers’ needs today

Financial services industry falls into a middle category among the forty businesses, services, and professions surveyed :

slide43

The businesses ranked most negatively – the percentage aging baby boomers who believe their needs are met on a “below average” basis :

Above

Below

Don't

Average

ALL RESPONDENTS

Average

Average

Know

56%

Gasoline companies

3%

33%

8%

50%

Provincial government

4%

40%

7%

49%

Federal government

3%

41%

6%

43%

Municipal government

4%

47%

7%

25%

Retirement homes

15%

44%

17%

24%

Automobile dealers

7%

58%

11%

23%

Automobile manufacturers

8%

59%

10%

23%

Airlines

8%

57%

12%

23%

Home builders

7%

57%

14%

22%

Banks

14%

59%

5%

Myth #10

We’ve identified this group; we’ve got our strategic plans lined up; we’re meeting the aging baby boomers’ needs today
key implications
Key Implications
  • Life expectancy and expectancy for what life offers are high – catch the wave
  • Health conscious and confident – focus on wellness
  • Spenders – careful, and demanding a value proposition that makes sense
  • Branding is key – talk to them in their language – keep it simple - deliver messages from respected sources through an attention span that filters what they see, find credible and believable
  • Ethics will grow in importance
key implications46
Key Implications
  • Be innovative – create a value proposition on your own, or seek strategic alliances that twin those who are serving boomers well with those who need to break through and profit from this market segment
  • Case histories: AMEX / insurance; the GAP / Forth and Towne; Vespa / homebuilders; Shoppers Home Health / TEMPUR; Kellogg / Smart Start pedometer; Dove / Mirrors; Proctor and Gamble / make-up selling “hope”; Honda, Lexus, Chrysler
  • BIG GROWTH: estate planning; health insurance; cooking, specialty foods; wellness; account management cross- sell ratios