Retirement a distant dream for many Canadians

[Slava]

Originally Posted by 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.

I think the true historical average is 4.1%....3% is better than nothing though! A lot of people just forget about this entirely....

[JohnnyB]

I'm all for saving for retirement, but honestly a massive problem in these projections for me is that I expect to see a very dramatic increase in life expectancy by the time I'm at what is even now considered to be an age for retirement. I think the option for extended life (and healthy positive extended life, not just the lying in bed with tubes in your body kind) is going to become a viable option for a lot of people in my lifetime.

[JohnnyB]

Originally Posted by Cowperson

The average person has three careers I believe, although that may be changing as well.

Coincidentally, in the New York Times today, a look at the way young people view morality and its stunning differences with prior generations. As an example, the author is disturbed that the majority of young people in the survey have no moral issue with today's rampant consumerism - but then again, neither do I so I'm no sure why that would hook him.

Anyway, a look at the way young people view morality these days and their day-to-day decision-making which goes to your point and probably serves some purpose in this discussion about retirement planning. The culture of "me" and "now."

http://www.nytimes.com/2011/09/13/op...t.html?_r=1&hp

Cowperson

This in itself is worthy of a pretty interesting discussion. Living in China, particularly Shanghai, it is phenomenal to see the generational difference between those currently in their teens and twenties with their parents, and the nature of the difference is very similar to what's discussed in that article though I imagine it is much more pronounced here that in North America.

[bizaro86]

Originally Posted by 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.

3% is probably reasonable. I use 3.5% modelling, but you don't know what it'll be until you get there, when it's too late to change anything.

Run it with a few different numbers (ie 1%-6%) and see if that would change the decisions you're making now.

[Tinordi]

Thought this was mildly relevant.

[rubecube]

Originally Posted by J pold

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.

/J pold12

[rubecube]

Actually, I really liked J pold's first post about the entitled baby-boomers.

[Kybosh]

When you take a senior economics course does the textbook come with a crystal ball?

[IliketoPuck]

No crystal ball, you have to pay extra for that while living at home.

[Tinordi]

Big problems highlighted in this very interesting article.

http://www.businessinsider.com/every...for-one-2011-9

One age demographic is getting richer while all others are getting poorer. Guess which one? Yes, those over 65.

Democracy's new battle lines being drawn as this demographic is swelling in population, votes more, and demands more government services per capita.

[flamesrule_kipper34]

Isn't J Pold a CFA?

[McG]

i wanted to thank everyone for this thread; some super discussion and great articles to round out perspectives.

i am a fan of david chilton's first book and i will read his second...as soon as my wife finishes it.

one thing that i have noticed that has changed is the amount of nickle and diming that can happen during a regular day. coffees, parking, lunch, cell phones, utilities, cable tv/satellite, internet...just things like these that seem to erode disposable income and have somehow moved from luxury items to requirements in life. i have to hold my hand up on this as well because the internet and cable tv provide things that i really enjoy myself, and i am certainly just an average man in an average life and spend money too. it just seems to me that there are expenses out there that previous generations didn't have, and yet the average late teenager/early 20's has an iphone/android plan that is $50 to $75 per month, and thinks the world ends when it breaks or they lose it. i know how they feel; not a criticism at all but just observing that this is an extra expense that didn't exist before.

i actually found the article on morals from the new york times to be a bit concerning to be honest...and the money sense article to be a relief!

again, thanks to all for such an interesting thread.

[IliketoPuck]

Originally Posted by flamesrule_kipper34

Isn't J Pold a CFA?

I for one welcome our new CFA overlord.

[DownhillGoat]

Originally Posted by McG

i am a fan of david chilton's first book and i will read his second...as soon as my wife finishes it.

Really good book. I'm about halfway through it now.

[Dion]

Generation X similar to boomers in retirement ideas: survey

"Gen X and boomers may have some differences, but it appears the apple doesn't fall far from the tree in financial planning," said Debbie Ammeter, vice-president for advanced financial planning of Investors Group. "Gen Xers share remarkably similar dreams and hopes especially when it comes to their vision of retirement and how they are going to get there."

Similar to boomers, about four in 10 Gen Xers said they would maintain some kind of reduced work schedule in retirement.

A separate survey from Scotiabank, also released Tuesday, showed most Canadians plan on working in retirement. Most cited to need to stay mentally or socially active as the reasons, but almost 40 per cent cited financial necessity.

http://www.canada.com/life/Generatio...483/story.html

[Champion]

One of my favourite shows is Till Debt Do us Part. I used to be pretty bad with my money. No care. Max out the CC to $15000. Max out Credit Line. Then when I got married I changed. Spreadsheet everything I spend. It gave me a big "WTF moment". I was paying over $500 in interest per month on credit cards.

I have a business now and my wife is a teacher so my income is higher than I ever thought I could make, but I still track everything. It makes you feel good knowing where every penny is going and budgeting.

[Rathji]

Originally Posted by Champion

One of my favourite shows is Till Debt Do us Part. I used to be pretty bad with my money. No care. Max out the CC to $15000. Max out Credit Line. Then when I got married I changed. Spreadsheet everything I spend. It gave me a big "WTF moment". I was paying over $500 in interest per month on credit cards.

I have a business now and my wife is a teacher so my income is higher than I ever thought I could make, but I still track everything. It makes you feel good knowing where every penny is going and budgeting.

I was the same way for a long time and that show was a pretty big influence in me turning it around. Once I realized how much money was being pissed away every month by us not really focusing on it, it became fairly easy to right the ship.

[Champion]

Originally Posted by Cowperson

Maybe he knows he's going to be on the receiving end of the greatest inter-generational wealth transfer in history OR he's planning to downsize at some point (and hopes there's a younger version of himself ready to buy when the time is right).

I know one guy in his 40's who hasn't saved a dime in his life but openly declares his retirement will be funded by "The Bank Of Mom." His widowed mother is a very sharp millionairess and he's an only child.

Sometimes I wonder if this is all overblown but, as someone with no inheritance in sight and only myself to provide self-funded retirement, I'm amply motivated to believe it.

The circumstances for everyone will be different but many of these studies fail to account for anticipated wealth transfer between generations or the fact this gentleman in Chestemere, as one example, IS actually saving . . . . . provided he can sell that house for a pretty penny in the future.

Cowperson

Some people are like that. I have a lot of friends who make upwards of 130K per month take home and they never waste their money. When it comes to partying, vacationing, having dinner parties at their house, they go all out. Otherwise, they still coupon clip, save money, etc.

It's very shocking how some people go beyond their means.

[Champion]

Originally Posted by Rathji

I was the same way for a long time and that show was a pretty big influence in me turning it around. Once I realized how much money was being pissed away every month by us not really focusing on it, it became fairly easy to right the ship.

Yeah. It doesn't have to be that show, but I always tell people to watch it. People just need to sit down, take a hard look at what they make and what they spend, create a plan for any debt, and a lot of stress can be gone. That show was what actually helped me.

[Super Nintendo Chalmers]

Worst case I personally know is a woman in her forties making $80K a year, single, no kids, lives with her parents and doesn't pay rent or for food. She has $60K in credit card debt. I just shake my head.