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Baby Boomers: 3 Ways You Are Sabotaging Your Retirement

Christopher Liew, CFA
Economic Turbulence

The greatest misery for a baby boomer is an inadequate amount of retirement funds built through the years. This problem is self-inflicted. Usually, the baby boomers themselves sabotage their retirements.

There are three ways you can tell if a baby boomer is wrecking their financial future. Unless you come to terms with reality, you’ll be facing a retirement crisis.

They did not think about retirement income

Many Canadians who were born between 1946 and 1964 are approaching retirement. Planning is an essential element of retiring. There are lifestyle adjustments and the need to downsize, including relocating to an affordable dwelling. Unfortunately, statistics are showing that 71% of Canadians don’t know how much they need for retirement.

Unused saving vehicles

The Canadian government encourages its citizens to save and prepare for retirement. Investment vehicles like the TFSA and RRSP are available to make saving easy. Relying on your pension alone won’t save you from future financial dislocation.

Baby boomers who would invest in Chemtrade (TSX:CHE.UN) and TransAlta Renewables (TSX:RNW) could be rid of the worries of accumulating funds for the sunset years. The two stocks are among the highest-paying dividend stocks.

Chemtrade is a $1 billion company providing industrial chemicals and services in the U.S., South America, and Canada. The company is also unique. The nature of the business has the perfect structure to counter the fluctuating costs and selling prices of the chemicals and services.

Since Chemtrade is the largest producer of most of the niche specialty chemicals, the company continues to enjoy significant market share. With 18 years of delivering a double-digit dividend, Chemtrade is a rare find.

Another gem of a stock for baby boomers is TransAlta Renewables. This $34.45 billion independent power producer pays a higher-than-market dividend of 7%. If the company can sustain the yield in the years ahead, you could double your money in 10.24 years.

TransAlta is one of the few utility stocks that can create a stable cash flow for many years to come. Demand for renewable energy sources like gas, hydro, and wind will further increase, as the countries of world goes for green energy.

More compelling is that TransAlta’s assets are fully contracted and long term. If the company has recurring revenue, baby boomers will receive high, consistent returns.

Improbable targets

There is no magic number as to the actual amount baby boomers in Canada would need to live a comfortable retirement lifestyle. The circumstances and the variables vary for each retiree.

Planning for retirement is no joke, so you need to set realistic targets. You don’t commit reasonable a percentage of your income for saving or investment only to fail. Assess what you can contribute to your investment vehicles.

You’re leaving no stone unturned when you have Chemtrade and TransAlta as the anchors of your retirement portfolio.

More reading

Fool contributor Christopher Liew has no position in any of the stocks mentioned. Chemtrade is a recommendation of Dividend Investor Canada.

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