Are you saving enough for retirement?

[Dan02]

Originally Posted by Handsome B. Wonderful

I was financially ready when I was 35...

...to finally start saving for retirement.

Sweet 3 more years to waste.

[The Yen Man]

Originally Posted by nik-

This thread is just a setup for a humblebrag

Pretty much this. This topic crops up again and again in new (but feels really recycled) threads, and it's mostly a bunch of people humblebragging about how they're doing it right, and all the people around them are doing it wrong. Society is going to the crapper, but they're smarter than everyone else.

[blankall]

My main plan is to have passive income via rental property. Hoping to have three by the time I retire.

Currently have one that is about 1/3 paid off and in my early to mid 30s. By the time I'm too old to maintain these properties, I'll sell them. I figure it'll take me 20 years total to pay off the first property, 10 for the second, and 7 for the third.

[Phanuthier]

Originally Posted by blankall

My main plan is to have passive income via rental property. Hoping to have three by the time I retire.

Currently have one that is about 1/3 paid off and in my early to mid 30s. By the time I'm too old to maintain these properties, I'll sell them. I figure it'll take me 20 years total to pay off the first property, 10 for the second, and 7 for the third.

Curious, what are your thoughts about rentals vs a REIT? Obviously you aren't paying an upper management, and you are better leveraged off a mortgage, but its less dirty work and better diversified.

I've been wanting to do the calculation myself to see the advantages vs disadvantages... curious about thoughts of those that may have don't.

[rubecube]

Originally Posted by The Yen Man

Pretty much this. This topic crops up again and again in new (but feels really recycled) threads, and it's mostly a bunch of people humblebragging about how they're doing it right, and all the people around them are doing it wrong. Society is going to the crapper, but they're smarter than everyone else.

I don't think that's the case. Different people have different priorities. I'm not saying anyone else's is objectively better or worse than mine. Your perspective is and should be different depending on what situation you find yourself in (kids, married, single, etc.).

[OMG!WTF!]

Originally Posted by Phanuthier

Curious, what are your thoughts about rentals vs a REIT? Obviously you aren't paying an upper management, and you are better leveraged off a mortgage, but its less dirty work and better diversified.

I've been wanting to do the calculation myself to see the advantages vs disadvantages... curious about thoughts of those that may have don't.

I think the leverage is the biggest thing. Obviously you can mortgage more than you can margin. That's good and bad. But on the other hand, you don't have to maintain your REIT. People vastly under estimate the cost of owning a house for 25 years. eg: I'll sell before I have to replace anything.

It all depends on capital appreciation; if you think your property value will appreciate significantly then you should own a house. Always trade the hot market. If not, maybe you need more dividend income.

There are also more write off's with owning property...that's not really a good thing but some people like it. That can increase your ROI if you do it right. I think selling either a REIT or a rental property would trigger capital gains so that's probably a wash.

If you can't seem to save any money, then owning a rental property might be a good thing. The forced mortgage pay down is always a nice surprise at the end of the year. That's retirement money if all goes well.

The other thing people tend to under estimate is the misery of dealing with tenants. If you really want to golf in Phoenix all winter you'll have to hire a management company or you'll go nuts. Just buy a REIT.

And, it really depends on what you assume interest rates will be over the life time of your investment. A person who is planning on owning houses for the next 25 years might have something to think about in the next ten years with rates.

I did ok with real estate but only because the market went up a lot and I happened to be in the right place at the right time. Looking back on the places I've owned and sold, I had a lot of close calls...houses on the river in Bowness, on the slippery slope in Wildwood, in leaky condo buildings, maniac tenants, fires, locusts. There's so much uncalculated risk. It's a young man's game and I'm 41.

For me, real estate is still interesting and I'm involved as a lender. I hate risk and only do deals that make sense to me, very good loan to value, good properties, good borrowers and a good Lawyer. I prefer relying on owners to pay me rather than tenants. Sucks for taxes though. No expenses to write off. And normally no capital gains. So I'm just kind of experimenting at this point. My state of mind is much better so far. We'll see about the bottom line this tax season. I'm wondering if it should be a business or personal nxt year. I suspect business.

I think that it's something I could do for income when I'm older and not go totally crazy. You could also buy stock in a mortgage investment corp instead of a REIT if this is the kind of thing you like. They usually pay about an 8% dividend. I suspect they're more stable, or at least as stable as a REIT. Again, it depends if you expect capital appreciation or not. That really is the key to what you should own.

[Slava]

Originally Posted by The Yen Man

Pretty much this. This topic crops up again and again in new (but feels really recycled) threads, and it's mostly a bunch of people humblebragging about how they're doing it right, and all the people around them are doing it wrong. Society is going to the crapper, but they're smarter than everyone else.

I haven't seen anyone suggest that anyone is doing anything wrong here so far?

[SeeGeeWhy]

Originally Posted by rubecube

"Sure you may have done a trip to Europe in your late 20s, but that extra $10k I put away has allowed me to golf every weekend in my 50s and work on my hobby car." YAWN

Sure Gramps, but the herpes I contracted on yacht week are forever!

[vtec260]

Originally Posted by Ozy_Flame

Really? You don't even have a personal spending account? She better be a full fledged accountant, otherwise your man card has been taken away.

A man is not defined by monetary wealth, but by woman who stands by him.

Giving up financial control wasn't easy as I made more income than her, but at the end, her meticulous accounting (no, she's not an accountant) helped to retrain my impulsive nature of buying what I want, rather than what we needed. At the end, it's what works in our family and keeps everyone happy.

[Ozy_Flame]

Originally Posted by vtec260

A man is not defined by monetary wealth, but by woman who stands by him.

Giving up financial control wasn't easy as I made more income than her, but at the end, her meticulous accounting (no, she's not an accountant) helped to retrain my impulsive nature of buying what I want, rather than what we needed. At the end, it's what works in our family and keeps everyone happy.

Hey whatever works for you man. Looks like you have what you need, money management-wise.

Although I disagree with a man being defined by a woman who stands by him. A significant other is part of that character, but a man is defined by what he does and can carve out his own reputation and fate.

[CroFlames]

I don't think anyone can tell you what is "enough" for retirement, or how to get there. Even a lot of financial advisers. They often give you the textbook answer.

My advice to anyone who is considering saving for retirement (which obviously you should be) is to educate yourself on your options available to you, and evaluate your retirement goal to reflect that. Talk with people who understand money & markets, and don't be afraid to ask questions. Everyone has questions. Stock markets work for some, rental properties for others. There is more than one way to skin a cat.

I will say that if you company offers a retirement contribution matching plan, you may as well contribute. Reduces your taxes up front, and you basically get free money from your employer.

[SeeGeeWhy]

Originally Posted by Johnny199r

These days, people are living longer, university tuition and houses cost more than ever and pensions are being eliminated from many work places. There's a great deal of personal responsibility needed for people to plan accordingly for their retirement.

Are you putting enough money away for retirement? Do you have a realistic estimate of your yearly living expenses in retirement? Or are you, like some, planning on never retiring?

It's strongly advised that you start putting money away as early as you can, in order to take advantage of compound interest:http://www.moneychimp.com/calculator...calculator.htm

I've always been a saver and am constantly planning for retirement. I've whipped my woman into shape after years and years of her being in debt (she'll have all of her debt paid off this summer at age 36, after spending all of her money on "good times" in previous years).

It seems most of the co-workers I know (I'm a government lawyer) don't really set much savings aside (nice cars, big houses, going out for lunch most days, while some are still paying off student loans)

I get a DB pension with the government, but I save like it's not going to be there, or if it is, it will be in a severely reduced form from today's current state. I hope to be able to have a good retirement at 55 or 60. I don't want end up like some of the 65+ year old guys in my office working (I have to make sure not to get divorced like they did, fingers crossed).

Other than the humblebrag point already made earlier in the thread, the bold line from the OP is the thing that stood out to me.

When has it ever been anyone other than your own responsibility to take care of your own retirement?

The rare golden handcuffs like DB pensions seem really rare to find, they seem insane for any rational business to offer their employees. The OP is wise to live as if it won't be there when he's retired... even a government might not be able to fulfill the obligation.

OP is right about compound interest, but most people are lousy at allocating their savings in assets that actually earn compounded interest. A HUGE part of this is putting their nest eggs with "advisors" that take huge fees to manage the money... straight into funds that have huge fees for the same damn reason. It's quite the racket.

Here are a few other things that I've grown to consider with respect to retirement planning and personal financial management.

- No one in this thread discussed how much they invest in their health. How often are you exercising, measuring and managing stress levels, monitoring blood test scores that are relevant to you, had your genome mapped, eating food that is right for your body, monitoring how you are responding to your environment? What's the point of saving for some point in the future if you're not being a good custodian of your health and ensuring longevity with a good quality of life?

- "Saving" is equal parts - earning more, spending less, retaining a portion in properly allocated asset classes for your risk and stage in life. Too many people are focused too much on one of the three.

- Mentioned several times in this thread - enjoy the ride up, too. Put a portion of your earnings towards satisfaction in the now. Rewarding yourself for meeting goals, and giving.

- Manage your affairs and relationships well... Be on the right side of social contracts. Be an asset owner instead of just an employee, don't get married to the wrong person, don't go into business with the wrong person, don't go to prison, don't over obligate yourself in debt agreements, own assets where you can respond to inflation/deflation, be insured properly, have a current will... probably more here but I've never really thought to write these out before.

- Mortgages are a huge liability. Pay the next payment's principal every payment you make and you'll save thousands of dollars in after tax interest over the span of your mortgage.

- Look at your finances like a business. If you don't know how to read and prepare a basic financial statement, learn how as soon as possible.

- Time is the one asset we cannot acquire more of. Be good with your use of time.

My personal plan is one thing and I question it all the time. I'm constantly sending PMs to Slava spitballing random ideas and questioning what my assumptions and plans are. What I've come to find is that it is difficult to stick to a path when your emotions on a day to day basis can change your perception of risk.

[Sliver]

Originally Posted by nik-

This thread is just a setup for a humblebrag

Basically, any time you buy anything like a car or a vacation or fancy house, you are displaying to your peers what you like to do with your money/access to debt. I'll compliment you on your house, your car and listen to you talk about your vacation(s). For some reason, though, it is socially unacceptable to talk about savings, aversion to debt, frugality or the accumulation of wealth. I find it really odd.

People who travel and vacation a lot always ask what my vacation plans are for the year. My answer is always the same - probably go to BC for a week, a few weekenders in Banff/Lake Louise, drive down to Whitefish for a few days and maybe visit family in Saskatchewan for a bit. They look at me with sad eyes and say "that's cool; should be fun" but really they think it's pitiful.

I would love to ask those people how much they're packing away for retirement, if they've contributed the minimum to their kids' RESPs to achieve the maximum government contribution, if they're paying down their debts or accumulating more, etc. But obviously I can't, because that would be rude.

I think it's absolutely nuts to not lay a strong financial foundation (to the best of your ability given your unique circumstances) during your earning years. It's only sensible that that takes priority over flitting around the globe to show off for Facebook. Now that's bragging. Planning for your future is something to be proud of. Risking your future financial stability for a vacation isn't.

Anyway, we all leverage ourselves and spend our money based on our priorities. Next time somebody makes a thread looking for tips on travelling to here, there or anywhere, I'm going to chime in like a lot of the clowns in this thread to ask them if they're saving enough for retirement and paying down their debts. Isn't this thread supposed to be about retirement savings? If so, why are half the posts about people bragging about their lack of financial foresight?

[Doodlebug]

I thought this speaker who was on BNN a couple of weeks ago had a very interesting take on retirement. Anyways some points to think about.

http://www.bnn.ca/News/2015/3/3/Pens...ion-bucks.aspx

[automaton 3]

Having been on both sides of the fence - saving for retirement when you have dual incomes and no kids is very easy. Saving on one income and with kids becomes much more difficult.

From friends that are divorced with kids - saving for retirement becomes almost impossible unless you are one of the lucky few with a db pension.

[kevman]

This thread reminds me of something on CBC radio yesterday that was pretty much a call in show for old folks saying how they lived within their means and are now reaping the rewards. It's funny because nobody every admits to "keeping up with the Jones" but yet someone out there is doing it.

I'm somewhere in the middle of the live within your means group and the life's too short group. Sometimes I think about how I could save a bunch more cash and retire earlier but other times I think I should just quit my job and take a few years off while the living is good. Ultimately either extreme seems rather out there so I remain at the status quo...

[I_H8_Crawford]

Originally Posted by Doodlebug

I thought this speaker who was on BNN a couple of weeks ago had a very interesting take on retirement. Anyways some points to think about.

http://www.bnn.ca/News/2015/3/3/Pens...ion-bucks.aspx

the only caution I would add to that is we have NO IDEA what CPP & OAS will look like in 20-30 years when some of us plan to retire... hell there could be a chance that OAS no longer exists - the boomers are going to suck up a TON of money off of that in the coming decade here.

My wife and I agreed our number is $2 Million - when we hit $2 mil in liquid assets we are done with work.

[V]

Originally Posted by SeeGeeWhy

The rare golden handcuffs like DB pensions seem really rare to find, they seem insane for any rational business to offer their employees. The OP is wise to live as if it won't be there when he's retired... even a government might not be able to fulfill the obligation.

I really don't understand how it's even possible to plan as if I don't have the DB pension. It takes 13% of my income every single cheque. It's not like I've got any kind of disposable income after that's gone.

So either the pension is there when I retire, or I'm totally sunk, I guess.

[V]

Originally Posted by Doodlebug

I thought this speaker who was on BNN a couple of weeks ago had a very interesting take on retirement. Anyways some points to think about.

http://www.bnn.ca/News/2015/3/3/Pens...ion-bucks.aspx

Haha, as a family with four kids and a mortgage that's bigger than I like, I think it's pretty funny to ask the question, what do my wife and I spend on just us, not the kids, not the mortgage, just us. I think we might be able to get by with about $5k per year to maintain that.

[Phanuthier]

Originally Posted by OMG!WTF!

I did ok with real estate but only because the market went up a lot and I happened to be in the right place at the right time. Looking back on the places I've owned and sold, I had a lot of close calls...houses on the river in Bowness, on the slippery slope in Wildwood, in leaky condo buildings, maniac tenants, fires, locusts. There's so much uncalculated risk. It's a young man's game and I'm 41.

Great post, thanks.... this line stuck out to me, is it really a "young mans game" ? I never thought about it that way, but now that I think about it, it is true.

I've been thinking of ways to mitigate the risk I take from bad tenants, et al... I guess this only really applies to where I live, but I was seeking out this option of perhaps being a landlord to section 8 housing (government sponsored housing) as I was told some 2nd hand knowledge.