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October 11, 2021

Why it's so difficult to save for retirement these days

After years of living high, many boomers are approaching their retirement years with little or no savings. Despitye this, many have a laissez-faire attitude when it comes to managing their money, critics are quick to point out.

But, while certainly guilty of excess, baby boomers aren't as profligate as many think, argues advisor Adrian Larson.

They're just a bit too generous, he suggests, citing a recent report from the National Center for Policy Analysis which analyzed how spending habits have changed over the decades by comparing how middle-aged workers spend today to their counterparts 20 years ago.

The report identified the top three areas in which boomers are spending more than the prior generations aged 45 to 54 and 55 to 64.

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* Spending on education (for their kids, not themselves) has increased by 80 per cent for 45-to-54-year-olds and by 22 per cent for 55-to-64-year-olds.

* Spending on adult children has jumped sharply as well, with 59 per cent of parents providing financial support to adult children who are no longer in school.

* Spending on housing has increased by 25 per cent for both age groups, largely due to house size and rising expenses. The median house increased in size from 2,080 square feet in 1990 to 2,392 square feet in 2010.

The solution? "Choosing a college for your children that won’t break the bank, and also kicking your adult children off the payroll," Larson says.

Do these numbers reflect your experience? Are your spending habits putting your retirement in jeopardy?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...