Many Canadians in their 30s, 40s not saving enough for retirement

[Ozy_Flame]

While my parents paid for my undergraduate education (sans books and supplies), I also worked 25-40 hours per week knowing that in order to set myself up for financial success right after university, I could not have a lick of debt and I needed a nest egg before going out into the real world. This worked out marvelously, and I can't help but recommend the same path for other undergraduates. Most undergrad programs do not require you to be knee-deep in textbooks 24/7, so working is plausible.

Even during my Masters program right now, I am working full time. It's tough, but it's not impossible. If you're single, have no family and can manage your time well (plus have a little bit of determination), one can find that mass amounts of student debt are not necessary.

[mykalberta]

I guess my company isnt as cheap as I thought, they match up to 7% of salary for RRSP.

[mykalberta]

Oh its been 7%. I am just surprised its lower at other places.

We cant even move to a Class A Highrise and they fight tooth and nail to stay out of Class B.

[simmer2]

Originally Posted by WilsonFourTwo

You know, Moneysense Magazine (which I recommend to EVERYONE) talked about the financial-decades in an article about a year ago. Basically, the advice was to chill out and stop stressing so much.....you're probably on the right track without even knowing it. Generally speaking, your life will be:

Your 20's: Acquiring an education, likely some acquire some debt. The goal should be to get an education with the least amount of debt possible.

Your 30's: Start a family, buy a house, acquire debt. The goal here is to keep your head above water.....nothing more.

Your 40's: Parental expenses start to ease, earnings still strong. The goal here is to chip away at debt wherever/whenever your can.

Your 50's: Kids are gone, mortgage gets paid off, still earning decent money. The goal is to be debt free, and save what you can.

Your 60's: Retirement beyotches! Woot!

I understand where you are going with this but at the same time you make it sound as if everyone should be okay with retiring in their 60's. Society expects us to follow this traditional path of retirement and there are so many more options out there which would reduce the age of retirement significantly. A person could retire when you are in your 40's, not your 60's; the problem is it's not taught in our school system.

Our education system is fundamentally flawed when we aren't taught simple things like what an RRSP is, how to balance a cheque book, the impact of compound interest on things like credit cards, etc. It's amazing how many people still carry a fair bit of credit card debt out there. Paying off that debt would be like earning 50% Rate of Return (pre-tax).

Obviously each person's investment strategies are linked to their inherent risk tolerances but still...many people are investing in what they feel is the right method, when in actuality it's not helping their situation at all.

[simmer2]

Originally Posted by fotze

You just found that out? I hope you have been putting 7%.

I have always believed that any employee that does not take full advantage of the company matching should be fired/not hired.

Dude comes in for his first day and signs the HR stuff, the company matches 10% and buddy says "ya, I'm only going to put 5%". HR should say "oh, you have failed our first test, this shows that you are irresponsible with your own finances so we cannot trust you to be responsible with company finances, so beat it foo" .

I see where you're going with this but I think this statement is a little bold...RRSP investments are not necessarily the best method of investing. What if they took that money and invested it elsewhere? I understand the problem that those people aren't necessarily going to invest and may instead spend the money rather than save it....but to say employees are automatically irresponsible because they don't enroll in the RRSP plans at a company is over the top IMO.

[Ironhorse]

Originally Posted by mykalberta

Oh its been 7%. I am just surprised its non-existant at other places.

Fixed.

[Regorium]

Originally Posted by Ozy_Flame

Even during my Masters program right now, I am working full time. It's tough, but it's not impossible. If you're single, have no family and can manage your time well (plus have a little bit of determination), one can find that mass amounts of student debt are not necessary.

The biggest problem right now is just finding a full time job. I'm sure many people would want to work full time + do their masters at the same time.

Right now there's a LOT of competition for the very few entry level jobs into professional industries (Several postings I've applied to for TERRIBLE location/terrible pay jobs have had ~500 applicants per position). I put the blame on older people that didn't save enough and refuse to retire.

[Sylvanfan]

Originally Posted by simmer2

Our education system is fundamentally flawed when we aren't taught simple things like what an RRSP is, how to balance a cheque book, the impact of compound interest on things like credit cards, etc. It's amazing how many people still carry a fair bit of credit card debt out there. Paying off that debt would be like earning 50% Rate of Return (pre-tax).

If I had a dollar for everytime someone have told me, "I bought $1500 worth of RRSP's this year". When I ask them, what did you buy, stocks, bonds, mutual funds, keep it in cash...they have no idea what I'm talking about.

Than again it does seem that a lot of people are more concerned with how much the payment on something is, rather than how much money the item is actually costing them.

[Bring_Back_Shantz]

Originally Posted by simmer2

I see where you're going with this but I think this statement is a little bold...RRSP investments are not necessarily the best method of investing. What if they took that money and invested it elsewhere? I understand the problem that those people aren't necessarily going to invest and may instead spend the money rather than save it....but to say employees are automatically irresponsible because they don't enroll in the RRSP plans at a company is over the top IMO.

Well if they can find somwhere that has a 100% ROR on the first day, then they probably wouldn't be working for very long.

[1stLand]

Originally Posted by Regorium

The biggest problem right now is just finding a full time job. I'm sure many people would want to work full time + do their masters at the same time.

Right now there's a LOT of competition for the very few entry level jobs into professional industries (Several postings I've applied to for TERRIBLE location/terrible pay jobs have had ~500 applicants per position). I put the blame on older people that didn't save enough and refuse to retire.

I have the same problem. I have 2 degrees (BComm. Marketing and BA Political Science) I am 25 and I have 2 full years of work experience after university. I am struggling to find an entry level job. I have my Real Estate license and would prefer to do that full time, but I am not at the point where I have enough business to do so.

I went into a placement agency yesterday and they basically ripped my resume apart.

I am considering doing an MBA, but believe that to be a useless grad degree and not worth the money, as most firms prefer a CA or CMA over an MBA nowadays.

Alot of lofty expectations going into university in terms of what would be waiting for me when I graduated.

I suppose I sound like i am entitled to a living because I graduated from University, but with all the money spent on an education nowadays, that IS the expecation or else what is the point?

[Pastiche]

Not to be snide but marketing and polisci are basically two of the least employable degrees.

You need to do a Master's if you want to be a professional nowadays.

edit: and yeah MBAs are useless pieces of crap, that's my bias though

[Knut]

Originally Posted by Temporary_User

I'll be graduating soon. I'm 25 and will have 50k is student loan debt.
I'm not horrible with money, but I'm not exactly good with it either. I worked for a couple years before getting back in school so I amassed a bit of furniture, nice car etc. That's all good.
My problem is that when I work during the summers I essentially spend what I make. I buy clothes and take one end of summer trip to Mexico or somewhere. I take out whatever student loans they are willing to give me (usually 10-13k). So I've essentially been living off ~25k for the last few years. When I do graduate and start working again I figure my standard of living will go up a little just because I will have constant income, but if I can learn to limit my spending to ~30-35k a year, whatever else can go to my loans. Hopefully I make more than that.

I exited school with about 80,000 in student loan debt... The worst thing i did was just pay into it my Minimum + whatever was left over at the end of the month.... It was going to take 12 yrs to pay off at that rate.

About 1.5 years ago I set it up to be a Consolidated term loan (through a bank, not a consolidation company). I Basically added up all my student loans and got a term loan at Prime +0.5 . This has allowed me to have an obtainable goal of having this paid off within 3 years. It automatically comes off my pay every 2 weeks and I do not even think about it.

Do this right away and you will know exactly what sort of disposable income you have.

[WilsonFourTwo]

Originally Posted by Sylvanfan

If I had a dollar for everytime someone have told me, "I bought $1500 worth of RRSP's this year". When I ask them, what did you buy, stocks, bonds, mutual funds, keep it in cash...they have no idea what I'm talking about.

Than again it does seem that a lot of people are more concerned with how much the payment on something is, rather than how much money the item is actually costing them.

Quoted for Wisdom.

If someone said "I just bought a car" and couldn't even tell me what make/model, my head would probably explode.

That said, I'd rather have someone say "I bought $1500 worth of RRSP's this year" than "I just bought my fourth $1500 TV this year".

While I'd rather see people with enough financial literacy to intelligently manage a self-directed RRSP, I won't really begrudge them for simply dumping money into a de facto savings account. As long as the salesman, er, financial advisor adequately matches timeline and risk for the person, it's better than not saving at all.

In my experience, getting people to save is typically the biggest challenge. They tend to start learning (MERs, smart diversification, real planning) on their own.....or with just a little bit of encouragement. My best friend is an extreme (but valid) example. Started working with him and his wife about 10 years ago...they were both financial idiots (massive debt, always missing bill payments, always broke). Now they have amassed a gorgeous portfolio that quite frankly, I envy. Back to the earlier point.....the hardest part was convincing them to save *something*. After about 6 months, they began to see the power of savings and interest, and the rest kinda wrote itself.

[Salt Water Cowboy #10]

ok heres part of the reason:

My dad moves to Calgary in 1973. he starts working in construction, does well and gets paid well. He made something like $18 to $24 per hour. He built a house in Okotoks for $73,000(2200 sq ft on huge lot). I think that included the lot, but not sure. Now I could go out and get the same construction job and probably be paid about the same. Maybe a bit more over time. But to build a home, ya right. I couldn't afford the payments if the bank would lend me the $$$ to do it. So how does someone making $50,000 a year afford a mortgage of $1500 a month and bills on top, and save for the future?? Having a home is saving for the future i suppose...

[Red_Baron]

Originally Posted by Table 5

FYI, this thread is totally killing my recent pangs of wasting some money on a Z3 M Coupe. I guess I'll have to just read a book or stare at a wall for fun.

Ha! What's the point of having the money for that car when you retire?-if you're too decrepid to work, you will be too decrepid to control it anyways.

My first boss told me that when he finished his degree in the late 60's he got married and bought a house worth 3x his starting salary. When I graduated, there was nothing but the most meager of trailers available for 3x my starting salary, and to find that trailer I would have had to move at least 300km away from where I was living. I spent most of my time away working so I didn't get around to buying a house until I was 30.

Right now, the main component to my retirement plan is to coach my wife about unnecessary spending-it's a difficult task but will pay dividends if successful.

[Kybosh]

Originally Posted by Ozy_Flame

Even during my Masters program right now, I am working full time. It's tough, but it's not impossible. If you're single, have no family and can manage your time well (plus have a little bit of determination), one can find that mass amounts of student debt are not necessary.

During my PhD I was contractually obligated to spend no more than 10 hours per week outside of my normal grad school duties. It all depends on your faculty though.

[1stLand]

Originally Posted by Pastiche

Not to be snide but marketing and polisci are basically two of the least employable degrees.

You need to do a Master's if you want to be a professional nowadays.

edit: and yeah MBAs are useless pieces of crap, that's my bias though

no sh*t

[bomber317]

Quote:
Originally Posted by mykalberta
Oh its been 7%. I am just surprised its non-existant at other places.

Originally Posted by Ironhorse

Fixed.

Our company stopped matching a year ago (it was 5%). I've now put money into my TFSA until the matching comes back.

I wish I could do both but it's one or the other right now.

The benefit of the TFSA is I can take it out for an emergency without getting taxed on it which can also be a detriment since I can take it out before I retire. It also lets me have a self directed account without those silly fees if it was in my RSP account.

Need a min 25k in an RSP account to have your fees waived for a self directed account. (I have more, but split up over 3 different registered accounts)

[simmer2]

Originally Posted by Red_Baron

Ha! What's the point of having the money for that car when you retire?-if you're too decrepid to work, you will be too decrepid to control it anyways.

My first boss told me that when he finished his degree in the late 60's he got married and bought a house worth 3x his starting salary. When I graduated, there was nothing but the most meager of trailers available for 3x my starting salary, and to find that trailer I would have had to move at least 300km away from where I was living. I spent most of my time away working so I didn't get around to buying a house until I was 30.

Right now, the main component to my retirement plan is to coach my wife about unnecessary spending-it's a difficult task but will pay dividends if successful.

When you figure out the key to this one, let me know. I think most guys would be interested in the answer.

[simmer2]

Originally Posted by Pastiche

Not to be snide but marketing and polisci are basically two of the least employable degrees.

You need to do a Master's if you want to be a professional nowadays.

edit: and yeah MBAs are useless pieces of crap, that's my bias though

On your first comment, you don't need a Masters to be a professional nowadays. In fact, I'd argue the opposite that unless your job is highly technical or something along the lines of a Doctor/Dentist, a Masters degree is largely unnecessary for a profession.

As for MBA's being useless, it depends on the context. If people are taking an MBA purely because they think it will get them ahead and that's it, then yes it's useless. You shouldn't be allowed to take an MBA unless you have work experience otherwise it is completely pointless.

To say that it's useless to everyone though is definitely a stretch. My business partner is currently taking his MBA and the tools he is getting out of the classes he is taking are invaluable to us.

Quote:
Originally Posted by Bring_Back_Shantz
Well if they can find somwhere that has a 100% ROR on the first day, then they probably wouldn't be working for very long.

And there's 100% ROR out there...again though this stuff just isn't taught in the education system, that's the fundamental flaw. I blame it on the Rich not wanting anybody else to know their secrets!! Damn you Thompson family, damn you.