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

[Kybosh]

Originally Posted by Bring_Back_Shantz

I think you're exactly the kind of person username was talking about.
You only make $1500/month, you have a mortgage, and you can't find $150/month to put away as savings?

Traditional wisdom is that you shouldn't spend more than 1/3 of your income on housing, so assuming that $1500 is after tax, and assuming your mortgage (never mind property taxes, etc) is more than $500/month, then yeah, traditional thought on the matter seems to indicate you're exactly in the category of people who are living beyond their means.

Yes there are a lot of things that go into how much you can save, but there's a reason the term "house poor" exists.
If you're in a position where you're unable to save for the future (no just paying for a house isn't saving for the future) then you've got a few options:
1) try to find a job that pays better (probalby the hardest)
2) cut down on discretionary spending
3) reduce living costs (may be rent vs mortgage)
4) be prepared to work forever

A few things:

1) I make more than $1500/month now and that was just an example. A lot of people don't realize how little research scientists make in academia, at least initially.
2) The mortgage/insurance/taxes etc. I pay are much cheaper than if I were to rent because I bought before the market boomed. As an aside, I'm actually paying for both my mortgage and rent right now because I'm doing contract work in Edmonton. The rent I'm paying is much more than the upkeep costs of my house in Calgary. Also, my house in Calgary isn't exactly the Taj Mahal. It's simple small starter home in a modest neighbourhood.
3) I do find it insulting that I'm grouped in with the people username was talking about because I do the things I do out of necessity not because I want to. It's not like I'm not investing. I'm simply doing the best I can under the circumstances I'm in right now.
4) I will be seeking employment elsewhere after my contract finishes up. Sue me if I took a pay cut to try to do some good for cancer research.
5) Discretionary spending. . . haha. I have none. My fun time money essentially buys groceries and my climbing gym membership.

I'm not going to explain myself anymore but, suffice to say, I'm quite different from the people discussed in the initial article.

[MoneyGuy]

Originally Posted by hulkrogan

I'm curious how much you made at the time you got your $65,000 mortgage. Did it seem big at the time?

I know talking to many people in their 50's and 60's that they had a mortgage at one time that they pooped their pants signing the papers and looking back it was something we laugh at now, like $80,000 or $100,000.

I think you old guys need to figure out your $60-$80K mortgage is our $300-$400K mortgage.

I think some older people in this thread are a little delusional about the state of their finances in their 20s.

Funny, because I was thinking about this very thing yesterday. I took that $65K mortgage 27 years ago. I was 29 years old and it was my second house (and we still live there, but have been mortgage free for 16 years now). We signed the papers just before I got on a plane for Toronto on business. The worry that occupied my thoughts much of that flight was, "Holy crap, have we done the right thing? That's a lot of money and that's a pretty big mortgage payment. I hope we can afford this."

I knew that it might be tight for a couple of years but would get easier as our incomes grew and the mortgage payments were an increasingly smaller percentage.

So, you are correct. It is all relative.

[username]

Originally Posted by blankall

Your making the assumption that everyone has regular and consistent work available to them.

Going back to the subject of trades, all of my friends who went into the trades three years ago because of all the opportunities are now living off EI, savigns, parents etc..

Actually I'm not. If I'm a trades person and I know the cyclical nature of the business then I personally would probably put away 40 - 50% of my income when the times are good so that it evens out when the times are tough.

It's all discipline which why we have the problem we have.

[username]

Originally Posted by Kybosh

Good advice, I wish I had been better at budgeting and put away 10% of my $1500/month. Come on, it isn't simple as that and depends on a lot of other factors.

It's funny though, the bank classifies me in one of the highest earning potential brackets (which is why I was able to get my mortgage) but I struggle to make ends meet even with my frugal lifestyle. Stupid academic research.

It is that simple my friend. If you put way 10% of that take home, you're right you may have had to wait to buy a home/condo. Rent for a few years until your income catches up with being able to afford a place to buy.

I'd also like to mention that most people forget - owning property isn't a right, it's a privilage. Most people feel entitled to ownership these days when there's absolutely nothing wrong with renting.

[Traditional_Ale]

Originally Posted by Kybosh

A few things:

1) I make more than $1500/month now and that was just an example. A lot of people don't realize how little research scientists make in academia, at least initially.
2) The mortgage/insurance/taxes etc. I pay are much cheaper than if I were to rent because I bought before the market boomed. As an aside, I'm actually paying for both my mortgage and rent right now because I'm doing contract work in Edmonton. The rent I'm paying is much more than the upkeep costs of my house in Calgary. Also, my house in Calgary isn't exactly the Taj Mahal. It's simple small starter home in a modest neighbourhood.
3) I do find it insulting that I'm grouped in with the people username was talking about because I do the things I do out of necessity not because I want to. It's not like I'm not investing. I'm simply doing the best I can under the circumstances I'm in right now.
4) I will be seeking employment elsewhere after my contract finishes up. Sue me if I took a pay cut to try to do some good for cancer research.
5) Discretionary spending. . . haha. I have none. My fun time money essentially buys groceries and my climbing gym membership.

I'm not going to explain myself anymore but, suffice to say, I'm quite different from the people discussed in the initial article.

*mod edit, image removed language*

[Bring_Back_Shantz]

Originally Posted by Kybosh

A few things:

1) I make more than $1500/month now and that was just an example. A lot of people don't realize how little research scientists make in academia, at least initially.
2) The mortgage/insurance/taxes etc. I pay are much cheaper than if I were to rent because I bought before the market boomed. As an aside, I'm actually paying for both my mortgage and rent right now because I'm doing contract work in Edmonton. The rent I'm paying is much more than the upkeep costs of my house in Calgary. Also, my house in Calgary isn't exactly the Taj Mahal. It's simple small starter home in a modest neighbourhood.
3) I do find it insulting that I'm grouped in with the people username was talking about because I do the things I do out of necessity not because I want to. It's not like I'm not investing. I'm simply doing the best I can under the circumstances I'm in right now.
4) I will be seeking employment elsewhere after my contract finishes up. Sue me if I took a pay cut to try to do some good for cancer research.
5) Discretionary spending. . . haha. I have none. My fun time money essentially buys groceries and my climbing gym membership.

I'm not going to explain myself anymore but, suffice to say, I'm quite different from the people discussed in the initial article.

I realize you're situation is temporary, and not optimal, but in just about any other circumstance, don't you think paying a mortgage, and having 0 discretionary income, are pretty good indicators of someone who is spending way too much on housing costs?

Also, I may be wrong, but your comment about being classified as a high potential earner, and that's why you qualified for your mortgage seems a little odd.
Seems to me when I applied, I was approved based on how much I was actually making, not what I might make.

[Kybosh]

Originally Posted by Bring_Back_Shantz

I realize you're situation is temporary, and not optimal, but in just about any other circumstance, don't you think paying a mortgage, and having 0 discretionary income, are pretty good indicators of someone who is spending way too much on housing costs?

Now that I'm reading my post again I just realized that I was taking out my frustrations on you. Sorry for that. I'm in a more or less fine situation financially.

It is a kick in the balls that I'm paying for rent in addition to my mortgage, but as you said, that's temporary and is necessary for this position. I will be moving back to Calgary after this work is finished, which is why I'm keeping the house. If I weren't paying for both mortgage and rent right now, I would have more than enough to make regular RRSP contributions and have discretionary income. It is a financial sacrifice to allow myself to do some research that could potentially do some good for people.

Edit: The mortgage situation. I thought I put it in before but I looked back and I missed it. I'm a co-owner of the house 50/50. (Not with my parents as I know that will be the next question). I'm a long standing customer with the bank, good relationship, good credit rating, high earning bracket potential, steady income, RRSP and investment accounts. . .so they saw no reason to turn my self or my mortgage partner down.

[blankall]

Originally Posted by hulkrogan

I think some older people in this thread are a little delusional about the state of their finances in their 20s.

I think there are also many delusional about how hard they worked or how hard it was to get the jobs they had. Never in history have peopel needed more experience/qualifications to get a job. People also work harder for less buying power than they did a generation ago.

The stories my older co-workers tell me about the parties that were thrown in the 70s and 80s are out of control. Since then we've had cut backs and the PC movement to deal with that.

[Sliver]

Originally Posted by fotze

OK enough beating around the bush, lets do what shazam suggested and slap them on the counter, moneyguy you go first, whats your net worth?

[username]

Originally Posted by Kybosh

3) I do find it insulting that I'm grouped in with the people username was talking about because I do the things I do out of necessity not because I want to. It's not like I'm not investing. I'm simply doing the best I can under the circumstances I'm in right now.

Sorry - this wasn't meant as an insult.

[MoneyGuy]

Originally Posted by fotze

OK enough beating around the bush, lets do what shazam suggested and slap them on the counter, moneyguy you go first, whats your net worth?

I'll just say it's somewhere between a million and enough to buy the Calgary Flames.

As for this debate on ETFs being a better choice than funds or stocks, I know someone will say I have a vested interest, but I think you guys are looking at this the wrong way. It's not whether I can save 50 basis points, but what will make me better off.

I don't have the time for a full reply right now, but first off you can't buy the performance of the index anyway. If 20% of actively managed funds under perform the index and it costs 50 bps to buy the index, that 20% then likely becomes something like 35%. Take out the dogs from the fund universe and look just at the really good managers and it's way different. I'd argue that if you choose from the elite managers that you'll out perform the index minus the cost of buying the index. I know it, but some people use a very one-sided case for index investing.

Then, if you buy the ETFs without advice, are you going to do the right things when you own the ETFs? Most people screw up and let emotions rule their decisions, harming themselves. I can't tell you the number of times I've persuaded someone to stay the course near a market bottom, when they wanted to sell everything and head for the hills. Market's down 30% and your heart wants to sell, but a year later you held on and are up 20%. How much is that worth?

What is the tax and estate planning we do worth? What about everything else that we do to keep folks on track?

Sorry, but if you want to cut your fees by 50 bps, go ahead. Will you be better off than by dealing with a client-centred advisor like Slava? I highly doubt it.

[Phanuthier]

Originally Posted by MoneyGuy

I'll just say it's somewhere between a million and enough to buy the Calgary Flames.

As for this debate on ETFs being a better choice than funds or stocks, I know someone will say I have a vested interest, but I think you guys are looking at this the wrong way. It's not whether I can save 50 basis points, but what will make me better off.

I don't have the time for a full reply right now, but first off you can't buy the performance of the index anyway. If 20% of actively managed funds under perform the index and it costs 50 bps to buy the index, that 20% then likely becomes something like 35%. Take out the dogs from the fund universe and look just at the really good managers and it's way different. I'd argue that if you choose from the elite managers that you'll out perform the index minus the cost of buying the index. I know it, but some people use a very one-sided case for index investing.

Then, if you buy the ETFs without advice, are you going to do the right things when you own the ETFs? Most people screw up and let emotions rule their decisions, harming themselves. I can't tell you the number of times I've persuaded someone to stay the course near a market bottom, when they wanted to sell everything and head for the hills. Market's down 30% and your heart wants to sell, but a year later you held on and are up 20%. How much is that worth?

What is the tax and estate planning we do worth? What about everything else that we do to keep folks on track?

Sorry, but if you want to cut your fees by 50 bps, go ahead. Will you be better off than by dealing with a client-centred advisor like Slava? I highly doubt it.

Sort of indirect to your post, but I just wanted to follow through that an underlying theme in this thread is the emotion of money. Emotional that they feel sorry for themselves, emotional that they feel attached to spending money to "keep up to society" or emotional trying to one-up each other. Who cares? I mean... be smart about it and be pro-active about your money moves, but don't be so emotional about it. Either the have's (aka. the Donald Trump guy) or don't (aka. why or why did i do a communications degree). I hope this doesn't come across as pretentious, but I think goals and plans you set in life should be real and not just about $$ figures, then choose the best path that works for you.

[Sliver]

Originally Posted by Phanuthier

Sort of indirect to your post, but I just wanted to follow through that an underlying theme in this thread is the emotion of money. Emotional that they feel sorry for themselves, emotional that they feel attached to spending money to "keep up to society" or emotional trying to one-up each other. Who cares? I mean... be smart about it and be pro-active about your money moves, but don't be so emotional about it. Either the have's (aka. the Donald Trump guy) or don't (aka. why or why did i do a communications degree). I hope this doesn't come across as pretentious, but I think goals and plans you set in life should be real and not just about $$ figures, then choose the best path that works for you.

I don't think anybody would disagree with you, but this thread is about finance so that's what we are discussing. It probably would be good timing to start a life plan thread that draws in other important parts of preparing for your future if you were so inclined.

[macker]

Sorry, but if you want to cut your fees by 50 bps, go ahead. Will you be better off than by dealing with a client-centred advisor like Slava? I highly doubt it.[/QUOTE]



So if you had a client that came to you and wanted to buy an ETF would you/could you sell it to them? Far too many advisors today promote just funds even if a client may want and be better served with an ETF. Remember it is what is best for the client not the advisor. You say 50 basis points difference in MER's between the two but we both know that you are about 2% off on that estimate. A client centered advisor will give you acces to both ETF's and funds and won't just promote one company such as many of the captive agents out there today. The industry is litered with conflicts of interest and the best advisors today are fee based and full service offering clients the best of both worlds which is in many cases ETF's, Funds, and individual securities etc. Who cares if advisors don't make as much money off of ETF's....they still shouldn't ignore them....Everything in its right place.

[Slava]

^this thread is like crack to me. I know that I shouldn't even click but I do and can't help but reply when I do!

Anyway, I can do ETFs and basically anything security-wise (as long as it's approved). I still hold to the fact that 50 basis points isn't that far off once you factor in the costs of aquiring the ETFs. In fact some of the ETF MERs are actually starting creep up (depending on the type of underlying security and whether or not it's actively managed). Pretty hard to say with certainty that you are saving a full 2% on that basis. There are also lower cost mutual funds depending on the load and amount invested.

[KTown]

Originally Posted by Sliver

There is no way you are disclosing everything here...if your story is true and you haven't left out some material information then I'm pretty sure you live in the land of make believe.

Its funny how someone could assume and judge someone like you, because I worked extremly hard to get to where I am today without financial support from anyone. Sounds like a little jealousy, it takes hard work it took many 60 hour work weeks. It took going to work overseas for months at a time for startup and commisioning away from all the good stuff, going to places you don't want to go too.

Apparently society nowadays doesn't believe in hard work and being smart with your money. If someone is successful it must have been given to him.

Either your jealous or just a bitter person.

[Phanuthier]

Originally Posted by KTown

Its funny how someone could assume and judge someone like you, because I worked extremly hard to get to where I am today without financial support from anyone. Sounds like a little jealousy, it takes hard work it took many 60 hour work weeks. It took going to work overseas for months at a time for startup and commisioning away from all the good stuff, going to places you don't want to go too.

Apparently society nowadays doesn't believe in hard work and being smart with your money. If someone is successful it must have been given to him.

Either your jealous or just a bitter person.

I don't know you personally, but if you indeed did this with no help AND you overleveraged like crazy (not surprising since you seem to see Donald Trump as somewhat of an idol)... you should at least recognize that you were very, very lucky to have a lot of things go your way. No offense, but from reading your posts (and knowing a bit about investing and business)... you do not strike me as overly intelligent when it comes to money (not stupid, but not exactly a world class entrepreneur)... more like, the Donald Trump style worked for you.

[IliketoPuck]

Slava I have to say, everytime I see one of your posts, it is full of financial knowledge. But I just stare at that avatar of yours with the creepy smile and it kind of makes me look over my shoulder.

[Slava]

Originally Posted by IliketoPuck

Slava I have to say, everytime I see one of your posts, it is full of financial knowledge. But I just stare at that avatar of yours with the creepy smile and it kind of makes me look over my shoulder.

Thanks for the compliment, and what else can I say...."it ain't easy bein white!"

[blankall]

Originally Posted by Phanuthier

I don't know you personally, but if you indeed did this with no help AND you overleveraged like crazy (not surprising since you seem to see Donald Trump as somewhat of an idol)... you should at least recognize that you were very, very lucky to have a lot of things go your way. No offense, but from reading your posts (and knowing a bit about investing and business)... you do not strike me as overly intelligent when it comes to money (not stupid, but not exactly a world class entrepreneur)... more like, the Donald Trump style worked for you.

It's also possible that he did some time on the rigs or up North... may that was what was implied by "work overseas for months at a time for startup and commisioning away from all the good stuff, going to places you don't want to go too".

If spent a year or two up north in the oilfields at the right time and then invested in the housing market (and pulled out at the right time), you could easily make a lot of money quickly. I wouldn't call it luck, but more good timing.

I know a few other people who have managed to do the same thing in sales. The rest all used family connections though (Which I think is a much much bigger edge than having someone support you through college).