How much do you put into RRSP's?

[yads]

Increasing contributions by 10% per year? Sorry Slava, how is this at all realistic?

[bomber317]

Originally Posted by yads

Increasing contributions by 10% per year? Sorry Slava, how is this at all realistic?

starting at $5k in your high earning potential years.

$500 increase in your first year, and $550 the next and so forth.

Doesn't seem too crazy to me.

[GP_Matt]

Originally Posted by yads

Increasing contributions by 10% per year? Sorry Slava, how is this at all realistic?

If you make $80000 a year and get a 3% raise that is a $2400 raise for the second year when your $5000 contribution only needs to go up by $500.

Plus, I keep telling myself that by 35 I will own most of the things that I want to own so my expenses should start to go down every year after that as I merely have to replace things and not acquire more stuff. That's how it works right? Life starts getting cheaper at 35.

[The Yen Man]

Originally Posted by bomber317

starting at $5k in your high earning potential years.

$500 increase in your first year, and $550 the next and so forth.

Doesn't seem too crazy to me.

Maybe not for the first 10 years, but that compounds pretty quickly. By year 20, you're contributing about $30K for the year. In year 30, you are contributing almost $80K for that one year.

[Sylvanfan]

High earning years? Those aren't happening. I get paid less today than I did 7 years ago at a similar job. Plus needing 30 years from my age puts me as working till I'm almost 70. So retire at 67 check...lower projected standard of living, check. Statistically I fit the profile of a Canadian not saving enough to retire. I mean my situation should be survivable, but expecting 30 more years old good health is no given certainty.

[MoneyGuy]

Don't worry about the CPP. It's actuarily sound for decades.

[GP_Matt]

Originally Posted by Sylvanfan

High earning years? Those aren't happening. I get paid less today than I did 7 years ago at a similar job. Plus needing 30 years from my age puts me as working till I'm almost 70. So retire at 67 check...lower projected standard of living, check. Statistically I fit the profile of a Canadian not saving enough to retire. I mean my situation should be survivable, but expecting 30 more years old good health is no given certainty.

You are a drafter for an Engineering company right?

Some of the clients that you draft for often hire their own in house drafters and often pay significantly more money. Atco hires drafters and I think they start them at a high rate with a lot of upside potential and a pension plan. (I hate Atco, but they do pay well)

Anyway, if you are looking to move up and make more money it is worth keeping your eye out for some of the bigger corporations to see if they are hiring. You will have to sell them your soul but the office might have a daily fruit basket.

[Slava]

Originally Posted by The Yen Man

Maybe not for the first 10 years, but that compounds pretty quickly. By year 20, you're contributing about $30K for the year. In year 30, you are contributing almost $80K for that one year.

Ya, it certainly climbs pretty high, but we're also starting off with a relatively small amount here. It's also factoring in inflation at 3%, which means that the $80k years are more like $40k....which is a lot to sock away in your 30's for people but closer to possible when the mortgage and kids are gone.

The other factor here is that some people are going to come to a crushing realization at some point: they didn't save enough, early enough. There are only a few ways to rectify that. Save more money, work longer, get a better return, or retire on less money.

I've taken the "get a better return" out here. I based this on the historical performance of the market since 1900 and used the median value. So its pretty clear...either sock away some extra cash now, retire later or retire on less.

[Sylvanfan]

Originally Posted by Slava

The other factor here is that some people are going to come to a crushing realization at some point: they didn't save enough, early enough. There are only a few ways to rectify that. Save more money, work longer, get a better return, or retire on less money.

That there is where I'm at. But honestly you need to do all of the things you list or you'll be fata'd down the road. Even if you miss out on one, that's going to have a major impact. So I would urge others, not to get to my situation, which I would think is above average compared to other Canadians, or at least the statisticians would have us believe that.

[EverfresH15]

I am currently putting away 8% and the company matches that so 16%. I am very happy about that but all the talk on here makes me want to start putting away a bit more.

[darklord700]

Originally Posted by Slava

The other factor here is that some people are going to come to a crushing realization at some point: they didn't save enough, early enough.

I know a few seniors that didn't save enough by traditional sense. Yet, they didn't suffer in their golden years. They couldn't afford the luxuries like cruises or trips when they retire. But they were not homeless nor did they starve.

I think this whole retirement thing was blown way out of proportion, it's not as grim as most people painted it to be. Assuming you have no CPP at all, you have at least OAS and GIS that will give you more than a $1K per person. With CPP and some pension income, most people could retire without lowering their standard of living too much.

[bizaro86]

Originally Posted by darklord700

I know a few seniors that didn't save enough by traditional sense. Yet, they didn't suffer in their golden years. They couldn't afford the luxuries like cruises or trips when they retire. But they were not homeless nor did they starve.

I think this whole retirement thing was blown way out of proportion, it's not as grim as most people painted it to be. Assuming you have no CPP at all, you have at least OAS and GIS that will give you more than a $1K per person. With CPP and some pension income, most people could retire without lowering their standard of living too much.

Which is why people always emphasize home ownership. If you had to pay rent out of that money, you'd be in trouble.

[Mr.Coffee]

I was previously saving lots but I was also accumulating lots of debt.

I've now switched my mentality and am using some of the savings to pay off existing debts. I figure that if you own a home by the time your 40, you should have a good 20 years or so after to accumulate large savings sans mortgage.

I often question myself whether I'm doing the right or wrong thing, but as a young person it's tough to get going without accumulating a bunch of debts. I have a lot of debt, but it was used to upgrade the house which in theory is I guess equity.

At the end of the day, a decent standard of living in Calgary / Canada is expensive, but it's also a great life.

[V]

Originally Posted by GP_Matt

You are a drafter for an Engineering company right?

Some of the clients that you draft for often hire their own in house drafters and often pay significantly more money. Atco hires drafters and I think they start them at a high rate with a lot of upside potential and a pension plan. (I hate Atco, but they do pay well)

Anyway, if you are looking to move up and make more money it is worth keeping your eye out for some of the bigger corporations to see if they are hiring. You will have to sell them your soul but the office might have a daily fruit basket.

My drafters start out straight out of school at about 30 bucks an hour. The good ones that have experience are making in the range of 45 bucks an hour with a pretty sweet pension, and nice time off. Any overtime is double time. It's pretty tough to beat.

[flamesfever]

Just forget all the toys, the 3 year cell phone / internet contracts, the eating out often, the gambling, the new cars, smoking, etc. etc. etc...and start getting the bank to deduct a portion of your paycheque each month and put it in an RRSP or TSFA.

[Sylvanfan]

Originally Posted by V

My drafters start out straight out of school at about 30 bucks an hour. The good ones that have experience are making in the range of 45 bucks an hour with a pretty sweet pension, and nice time off. Any overtime is double time. It's pretty tough to beat.

What are they doing? I'm a steel guy, and have 17 years experience. Supposedly good at it, at least thats all I've ever been told. I make about what your beginners make. I've been looking for a new job, but I'm so specialized in one trade that it seems to be a detriment.

Let me know when you're hiring again.

[Cowperson]

Originally Posted by flamesfever

Just forget all the toys, the 3 year cell phone / internet contracts, the eating out often, the gambling, the new cars, smoking, etc. etc. etc...and start getting the bank to deduct a portion of your paycheque each month and put it in an RRSP or TSFA.

In your 20's and 30's, that's about the gist of it.

Most likely you'll have the last laugh though.

Cowperson

[V]

Originally Posted by Sylvanfan

What are they doing? I'm a steel guy, and have 17 years experience. Supposedly good at it, at least thats all I've ever been told. I make about what your beginners make. I've been looking for a new job, but I'm so specialized in one trade that it seems to be a detriment.

Let me know when you're hiring again.

Microstation drafting for a utility. It's a pretty easy gig. And it's crazy how much they make compared to non-union private drafters. Based on what I've seen, go to any utility and with a lot of experience you're probably looking at a 40% raise plus more time off, plus a pension, plus a small (2k-ish) bonus at the end of the year.

You're in the Okanagan, aren't you? I wouldn't be surprised if your skill set would be considered transferrable to someone like Terasin or BC Hydro.

[Devils'Advocate]

Okay, so I was talking to a financial guy yesterday about my situation.

I'm going to do some rounding here to make the calculations easier. Let's say I make $100,000 per year. If I work to 60, when I retire my pension will pay me $70,000 per year. So the financial guy asked me how much I WANTED to make each year. My response was that I would preferably like to be making the same - $100,000. He said, well, no, most people need much less when they retire. My thought was, uh, WHY? Wouldn't you want MORE in retirement? What if I plan on travelling the world? I most certainly don't plan on sitting at home watching TV 16 hours a day.

I was told that to make $100,000 in my retirement, I'll have to start putting $3,000/month into a 3% return RRSP. Which obviously means I'd have to live like a hermit between now and retirement.

So I guess my question is - why do people have their expenses go DOWN after retirement? Like I said, I would think people would be going on MORE vacations; MORE entertainment outings; etc.

[DownhillGoat]

Originally Posted by Devils'Advocate

So I guess my question is - why do people have their expenses go DOWN after retirement? Like I said, I would think people would be going on MORE vacations; MORE entertainment outings; etc.

No mortgage, for starters.