“Dollars And Sense”: How Demographics Can Work For You
By: David Christianson, CFP, R.F.P., TEP
You undoubtedly saw all of the recent coverage on a blockbuster announcement from Statistics Canada.
In case you missed it, the results of their year of research and deep analysis into the 2006 Census determined that - wait for it - we are getting older.
Well, I guess that turns all of our assumptions upside down, doesn't it?
Actually, the finding was that Canadian society is getting older, not you and me. That's a relief.
The actual fact is that 13.7% of Canadians are now over age 65. This will increase significantly in the next decade, since another 16.9% of the population is currently between 55 and 65 and the older folks aren't dying the way they were supposed to. There has been a 22% increase in the number of people age 90 and older, to 4,500, and there is now an amazing one million people age 80 and beyond, a 21% increase over 2001.
As the baby boom bulge starts to hit 65 in about 2011, we can expect all of these older age sectors to become a more significant part of society, as one in three Canadians is a baby boomer.
In your personal financial planning, you should plan for a longer life expectancy than you might have previously assumed. Make sure your planner has worked this into your plan, to ensure you never run out of money.
What are some of the other implications? Well, a number of them we have seen already, such as the soaring prices for cottages and other leisure properties.
Pioneering demographers like David Foot (Boom, Bust & Echo) and David Cork & Susan Lightstone (The Pig and the Python) predicted ten years ago everything this census has now confirmed. We knew then that the demand for recreational property, travel services, pharmaceuticals, eyeglasses, Viagra, laser and cosmetic surgery and a host of other products and services for the middle-aged would grow.
Those predictions were one of the factors that drove up the stock prices of many of these companies to unrealistic levels in the late 1990s. Smart speculators bought cottages and condos expecting them to soar in price, but it didn't happen for another five years.
How do you benefit from these trends? As an investor it is difficult, because the general market has already factored these beliefs into current stock prices.
However, as an individual, look for a few things, at a minimum. Expect continued demand for condominiums, personal care home spaces, timeshares and cabins, but don't count on unloading your executive-sized house at a high price 10 years from now. In theory, everyone else will be doing the same thing at the same time.
If you own a professional practice or small business and plan to sell it in the future to retire, expect a lot of competition and not a lot of buyers.
As a business owner, don't count on a lot of new eager workers in the future. There will be fewer of them, they will be more demanding and have a new set of rules with which we are unfamiliar. Many older workers will stick around, but will value their leisure time much more than your money.
If you are in that situation, be on the lookout for an upcoming book called The Leisure Economy: How a Shift Away from the Work World Will Reshape Our Lives and Industries by economist Linda Nazareth. This will be published by John Wiley & Sons Canada, Ltd.
As always, we recommend you go into the future as prepared as possible. This weekend, make sure you have some shade handy. We predict some serious heat.
David Christianson is a fee-only financial planner and investment counsel with Wellington West Total Wealth Management Inc. His column appears Fridays in the Winnipeg Free Press. You can e-mail him at dchristianson@wellwest.ca