Retirement a distant dream for many Canadians

[Bill Bumface]

People in a debate over who the bigger slackers are between 8am and 5pm on a Tuesday?

[Dentoman]

Originally Posted by bizaro86

Money is not the number one priority for Gen Y, which is what other generations don't understand/get upset about.

If you're advertising a job that pays $17 per hour, has a title of labourer, and doesn't have good time off, you're doing it exactly wrong if you're looking for Gen Y help.

You'd be better off giving 4 weeks paid vacation and calling them construction technicians (construction labourer) or logistics assistants (warehouse labourer) with a base salary of $13 per hour.

That makes it a career with lifestyle flexibility instead of a job.

Money isn't number one because they are still living at home ... get their butts out in the real world and they will realize that time off don't pay the bills.

"Career with lifestyle flexibility" .... that's a good one

[Dentoman]

Originally Posted by hulkrogan

People in a debate over who the bigger slackers are between 8am and 5pm on a Tuesday?

That would be a good point .... except I'm the boss.

[Dion]

Originally Posted by Dentoman

That would be a good point .... except I'm the boss.

.....and a bad role model for your employees

[IliketoPuck]

Originally Posted by hulkrogan

People in a debate over who the bigger slackers are between 8am and 5pm on a Tuesday?

There has to be some perk to being a consultant. It might not be job security or benefits.

[Dentoman]

Originally Posted by Dion

.....and a bad role model for your employees

Hey ... their paycheques don't bounce. I tell them this is my decompression time.

[Dentoman]

Originally Posted by Slava

You're right, you don't NEED 135% but there is a disconnect that I probably didn't explain well enough. When people look towards retirement they think that 70% of their wage will be enough. That makes sense until they suddenly have an extra 8 hours a day to fill....for a lot of people that time is filled with spending money one way or another.

I do agree that some people can make due on $25k per year, but these are not people who saved their whole lives. These are people who relied on the forced savings of CPP, etc. and for one reason or another didn't or weren't able to save more.

I agree with this. People generally have big plans for their retirement. I don't think the requirements will always be 100% of pre-retirement income, but I think there will be periods of time that it will.

[yads]

Originally Posted by Slava

You're right, you don't NEED 135% but there is a disconnect that I probably didn't explain well enough. When people look towards retirement they think that 70% of their wage will be enough. That makes sense until they suddenly have an extra 8 hours a day to fill....for a lot of people that time is filled with spending money one way or another.

I do agree that some people can make due on $25k per year, but these are not people who saved their whole lives. These are people who relied on the forced savings of CPP, etc. and for one reason or another didn't or weren't able to save more.

Again, Slava, the reality is that even the top third of retired people do not spend as much money as you're making it seem:

http://www.theglobeandmail.com/globe...rticle1726568/

In the Russell study, the top third of households aged 65 to 74 had average expenses of about $54,000. Of this they spent about $38,000 on essentials and approximately $16,000 on lifestyle expenditures.

And that's early in retirement for most people.

People are quick to jump on Relator 1 when he makes ridiculous assertions about mortgages or the housing market, but no one seems to question when financial planners tell us we need more than our current income in order to retire and live well. And I know you're not doing it maliciously, but there is an inherent conflict of interest as a financial planner to tell people they need a certain amount to retire comfortably. Since your compensation is typically tied to how big your book is. (If you're a fee only financial planner I apologize in advance).

[The Yen Man]

Originally Posted by Tron_fdc

So what's everyone's idea of enough savings? I wonder if we should do a poll?

$250 000.00
$500 000.00
$750 000.00
$1 000 000.00

I would think that $500k savings and owning your own home would be enough. At 10% return you should be able to live on $50k a year.

That 10% is totally bunk though unless you go high risk. Put it this way. If it was relatively safe, you'd mortgage the crap out of your house (at 3% interest) and use it to generate a yearly 7% return.

[jtfrogger]

Originally Posted by tripin_billie

I think another thing that is really working against Gen Y is the licensing/ degreeing of skills. I have a Gen X brother that did not need an IT degree to get into his first IT job, just had to show he had the skills. In the early 90s, being able to write some basic html was enough to convince people you were a web developer. Now, even with coding skills, multiple languages known, etc. if you don't have the specific degree, no employer is going to look at you seriously. The age of being able to pick up tech skills and then use them to get jobs is gone.

Everything now has a degree or certificate, so Gen Y has to spend a lot of money to prove they can do what Gen X could simply demonstrate they could do.

This is an over-generalization. There will always be employers in both buckets. Also, as an aside, I personally never considered anyone with HTML skills a developer. Creating HTML web pages is not development, in my opinion.

When I was looking for a job in the mid-nineties, some employers put a LOT of value on the degree. Especially given that I had little related work experience. That isn't so far removed from the early 90s, but the degree would have prevented other guys that were more capable than me from getting some of the job offers I got.

Earlier this year, one of my responsibilities for a contract that I had was developer recruitment. Over a period of about three months, I hired about ten developers that were for a mix of employee and contract positions. One of the developers I hired did not have a degree nor diploma. He also only had very limited work experience. He was able to prove his worth and he was hired on as an employee. This was a unique situation, but it happened.

I don't think things have changed as much as you think in this area. There will always be people that will succeed without degrees and people that struggle without it. A degree opens more doors, and it always has.

Originally Posted by yads

People are quick to jump on Relator 1 when he makes ridiculous assertions about mortgages or the housing market, but no one seems to question when financial planners tell us we need more than our current income in order to retire and live well. And I know you're not doing it maliciously, but there is an inherent conflict of interest as a financial planner to tell people they need a certain amount to retire comfortably. Since your compensation is typically tied to how big your book is. (If you're a fee only financial planner I apologize in advance).

I think this is very much the case with a lot of things about the financial planning industry. (And this is not meant as a slight to Slava. He appears to be generally knowledgeable and reasonable.) A lot of sales is based on fear. It is hard to sell retirement savings if you are telling people that the saving are to fund luxuries in retirement. The other area that boggles my mind is education savings for children. I've read stories about how you have to plan to save hundreds of thousands of dollars in order for your child to get ahead in life. In reality, most Canadians have great opportunities for tens of thousands of dollars in their own backyard. Here in Calgary, UofC, SAIT & Mount Royal are all great choices. For people that must go away for school, there is nothing wrong with getting student loans and/or having to work summer jobs to pay for school. I think Canada can do better, but our education system is very good for a reasonable price.

[GP_Matt]

Originally Posted by blankall

I live in Vancouver. I suppose things are different here.

I think a major disadvantage with labour jobs is that they truly are futureless right now. $17.00/hr, which works out ot about $35,000.00. Really isn't that much money these days.

In GP a $17 per hour job means an average of 60 hours of week with full benefits. That is pushing your starting income to $60000.

[Cowboy89]

I think the big thing the Baby Boomers have to realize is that today 60s marks don't get you into a University that costs a couple of hundred dollars, to later graduate and get employed in a rapidly expanding North American economy that boasted many jobs created by their own demographic bulge. Also back then you didn't need to go to technical college to do a lot of more manual work. Gen Y had/has more competition and higher costs just to get off the ground and into a career than the Baby Boomers had. That has to be acknowleged.

As for Gen Y, they were raised by a generation that had unbelievable upward mobility, and grew up in an era of the largest continuous economic boom in history. Gen Y came into the workworce with a unjustified swagger and I like to think in many ways expected great things for themselves in terms of job opportunities, work life balance, leisure time, and self fulfilment from their job. Turns out the most recent financial crisis highlighted that the wonderful world they grew up in was actually funded by boomer credit and that maybe insted of doing what you love everyday, just merely carving out a decent middle class existance is a more appropriate life goal. In my observation as a Gen Yer, I think a lot of us simply don't understand that the rugs been pulled out from under us and it's really time to dig deep and forget about running a sucessful (Insert random hobby or leisure pursuit as a 'job' idea) company.

[chemgear]

Updated household debt numbers out today. Like real estates prices only going up, up, up!

(Cue the "it's okay, it's not really debt" joke )

http://business.financialpost.com/20...h-record-debt/

Canadians still don’t seem to be getting the message about carrying excessive household debt. On Tuesday, Statistics Canada reported the ratio of household credit-market debt to personal disposable income inched up from 147% in the first quarter to 149% in the second.

[Slava]

Originally Posted by yads

Again, Slava, the reality is that even the top third of retired people do not spend as much money as you're making it seem:

http://www.theglobeandmail.com/globe...rticle1726568/



And that's early in retirement for most people.

People are quick to jump on Relator 1 when he makes ridiculous assertions about mortgages or the housing market, but no one seems to question when financial planners tell us we need more than our current income in order to retire and live well. And I know you're not doing it maliciously, but there is an inherent conflict of interest as a financial planner to tell people they need a certain amount to retire comfortably. Since your compensation is typically tied to how big your book is. (If you're a fee only financial planner I apologize in advance).

See thats the problem with the financial services industry though. People want to hear how much it will take for them to retire, but when they don't like the answer they say its a sales pitch. When you actually work through the figures in an honest fashion though the reality is that people are not saving enough money; that has little to do with personal bias. People underestimate the amount they'll need for retirement whether they invest with me or put the money in a coffee can in their freezer.

[bizaro86]

Originally Posted by Dentoman

Money isn't number one because they are still living at home ... get their butts out in the real world and they will realize that time off don't pay the bills.

"Career with lifestyle flexibility" .... that's a good one

I live at home. The home I own. I'm solidly in Gen Y, and have turned down job offers that came with more money/better stock options because where I'm at now has the best vacation/time off policy. That policy is providing my employer with a discount on my employment services.

If recruiting/keeping Gen Y employees is an important part of your business, I'd challenge you to consider whether your attitude toward work may be different than your employees, and whether you could make changes to that attitude that would 1) save you money and 2) improve your employee retention.

I obviously don't have a stake in this, but trying to understand where your employees are coming from in terms of different generational values might benefit your business.

[bizaro86]

Originally Posted by yads

Again, Slava, the reality is that even the top third of retired people do not spend as much money as you're making it seem:

http://www.theglobeandmail.com/globe...rticle1726568/


And that's early in retirement for most people.

People are quick to jump on Relator 1 when he makes ridiculous assertions about mortgages or the housing market, but no one seems to question when financial planners tell us we need more than our current income in order to retire and live well. And I know you're not doing it maliciously, but there is an inherent conflict of interest as a financial planner to tell people they need a certain amount to retire comfortably. Since your compensation is typically tied to how big your book is. (If you're a fee only financial planner I apologize in advance).

Most people don't spend as much in retirement as when they're working because they don't have as much money. If people had an annuity that paid out 130% of their working income, it would get spent on lifestyle upgrades. Ultimately, it's a decision based on how much consumption you want to do when your working and how much consumption you want to do when you're retired.

[J pold]

Originally Posted by Cowboy89

Turns out the most recent financial crisis highlighted that the wonderful world they grew up in was actually funded by boomer credit and that maybe insted of doing what you love everyday, just merely carving out a decent middle class existance is a more appropriate life goal. In my observation as a Gen Yer, I think a lot of us simply don't understand that the rugs been pulled out from under us and it's really time to dig deep and forget about running a sucessful (Insert random hobby or leisure pursuit as a 'job' idea) company.

This. I am fortune in that I was interested in, and have studied finance and economics, so I have a fairly good understanding of just how bleak an economic reality we will live in for the next decade - possibly more. As a result I have done everything I can (Degree, CFA, internships, co-ops) in order to secure a good job in the future. At my current internship I am working 75-80 hours per week, granted that is the nature of the business, and nearly all my friend’s think that I am insane. They preach to me about how I will burnout and can’t have any ‘fun’ or I am ‘missing out on life’ working this much. That work should be about ‘doing what you love’ and shouldn’t be hard or require much sacrifice. Meanwhile most of them work middle management retail jobs, with no degree or further credentials. They all have new houses, cars, and gadgets all of which were bought on credit, and think that one day they will magically walk into a job that pays them 150K+ a year, as if they grew on the proverbial tree, so they’ll be able to afford the life they have already leveraged themselves into.

I should add that I don’t think there is anything wrong with middle management retail jobs – or any job for that matter. What I do think is wrong is living beyond your means; mortgaging your future by accumulating debt and assuming that things will be good in the future. At the end of the day a large number of gen Yer’s are going to be in for a rude awaking.

[Sylvanfan]

Originally Posted by GP_Matt

In GP a $17 per hour job means an average of 60 hours of week with full benefits. That is pushing your starting income to $60000.

The problem there is laboring for 60 hours a week. I work at a computer, but with a young kid and wife who works, I can maybe work 5 to 6 hours a week over my regular 40. I desperately need the money, but the time is an issue.

[J pold]

The harm today’s youth unemployment is doing will be felt for decades, both by those affected and by society at large

Before the financial crisis Spanish unemployment, a perennial problem, was pushed down by credit-fuelled growth and a prolonged construction boom: in 2007 it was just 8%. Today it is 21.2%, and among the young a staggering 46.2%. “I trained for a world that doesn’t exist,” says Ms Ulldemolins.

[V]

Hey, what kind of inflation percentage should you be using to project your present value of savings. For example, if I retire in 25 years from now, and I assume 3% inflation between now and then, my $1,000,000 is only going to be worth $477,000.

I did a quick google search, but I haven't seen what the experts would say is a reasonable assumption for inflation.