Financial security evolves through different life stages, each presenting unique challenges and opportunities. This blog explores financial security across various age groups, using data to highlight key trends and considerations.
1. Early Adulthood (Under 30)
Key Financial Activities:
- Home Ownership: Young adults are 98% more likely not to own a home and 37% less likely to own one with a mortgage.
- Credit Management: They are 108% more likely to miss or delay mortgage payments and 74% more likely to delay non-mortgage payments.
- Debt: This group is 173% more likely to carry student loan debt. They are also 60% more likely to only make minimum payments on credit cards and 90% more likely to miss a credit card payment due to financial difficulty.
- Investments: Investment levels are low across all asset types, with individuals in this stage being twice as likely to not have an RRSP.
Early adulthood often comes with financial uncertainty. Many are managing the burden of student debt while facing high living costs and limited income growth. Credit struggles and low investment participation suggest a focus on short-term survival over long-term financial planning. Supporting this group with accessible financial education and tools can help lay the groundwork for greater stability and security in the years ahead.
2. Establishing Career and Family (30-39)
Key Financial Activities:
- Home Ownership and Refinancing: Individuals in this group are 58% more likely to refinance their mortgage for home renovations. They are also 40% more likely to own a home with a mortgage and 33% more likely to have skipped or delayed a mortgage payment.
- Debt Management: They are 22% more likely to carry significant credit card and installment debt.
- Savings and Investments: This group is 20% more likely to have RRSPs and to have never made a withdrawal.
- Housing Type: More likely to live in apartments, townhouses, or semi-detached homes.
As individuals in their 30s work to establish their careers and build families, they tend to take on larger financial commitments, particularly in homeownership and debt. The higher likelihood of refinancing for renovations reflects a desire to invest in their living space, while greater participation in RRSPs suggests growing attention to long-term financial planning. Still, the increased incidence of missed mortgage payments indicates ongoing financial pressure, underlining the importance of effective budgeting and proactive debt management during this life stage.
3. Peak Earning Years (40-54)
Key Financial Activities:
- Home Ownership: Individuals in this group are 50% more likely to own a home with a mortgage and to negotiate their mortgage payment terms. They are also 48% more likely to make additional mortgage payments.
- Credit Usage: They are 25% more likely to use five or more credit cards, 21% more likely to have a higher credit card limit, and 40% more likely to carry both credit card and installment debt, on top of car loans, lines of credit, mortgages, and other financial obligations.
- Wealth Accumulation: This group is actively building wealth, with significant investments in RRSPs and other financial assets.
During their peak earning years, individuals in this life stage are focused on growing their wealth while juggling a wide range of financial responsibilities. The combination of high credit utilization and growing investments points to the need for strategic financial planning to ensure long-term stability. Financial institutions can support this group with advanced investment options and tailored debt management tools that help optimize both short-term flexibility and long-term financial health.
4. Pre-Retirement (55-64)
Key Financial Activities:
- Home Ownership: Individuals in this group are 40% more likely to own their home outright, without mortgage debt.
- Retirement Savings: They are 104% more likely to hold higher RRSP investments and 30% more likely to have never made withdrawals.
- Debt Reduction: This group is actively paying down debt, with a significant decline in mortgage debt balances and other liabilities.
As retirement nears, individuals in this stage are increasingly focused on financial security. Many are prioritizing debt elimination and building retirement savings, especially through RRSPs. The trend toward mortgage-free homeownership reflects a broader shift toward financial stability. Financial institutions can support this group by offering solutions geared toward retirement income planning, tax efficiency, and strategies for preserving wealth during the transition to retirement.
5. Retirement (65+)
Key Financial Activities:
- Home Ownership: Retirees are twice as likely to own their homes outright, with no remaining mortgage debt. Many purchased their homes in the 1990s, contributing to substantial equity growth.
- Income Management: This group manages income from multiple retirement sources and is 23% more likely to have a higher net worth.
- Debt Management: Debt levels are significantly lower across all categories.
In retirement, financial security is shaped by how effectively income is managed and debt is minimized. The data indicates that retirees typically enjoy higher net worth and low levels of debt, reflecting decades of disciplined financial habits. Financial advisors can support this group by offering guidance on managing retirement income, planning for estate distribution, and achieving late-life goals such as charitable giving or supporting family members.
Conclusion
Financial security is a lifelong journey that requires ongoing planning, informed decision-making, and the ability to adapt to changing circumstances. By understanding the unique financial needs, challenges and opportunities at each life stage, individuals can take proactive steps to improve their financial well-being and build a more secure future. Whether you are just starting out or enjoying retirement, proactive financial planning is key to achieving financial security.
Discover how financial security evolves through each life stage with our in-depth data insights. Whether you’re advising clients or planning your financial future, our comprehensive analysis provides valuable guidance tailored to each life stage. Contact Manifold today to access data-driven solutions that enhance financial planning and security across all ages.