What is middle class in Calgary?

[Hot_Flatus]

Originally Posted by Sliver

What are the Coles Notes on this? I've only read how people under save for retirement.

Essentially his conclusion was that the standard investment co rhetoric of "save 70% of your pre-retirement income or you're screwed" is in most cases not necessary and more in the neighborhood of 50% for most people. He admitted that most people simply end up never using all of this money they set aside. Many people will have a few sizable purchases when at or nearing retirement: potentially a new car, vacation home or other splurge items. After that period, your expenses are typically quite lower than you'd expect. You also are no longer saving for retirement, which in itself is a massive expense that is often overlooked in calculating your pre-retirement expenses.

With CPP, OAS and calculated RRSP/TFSA savings he seemed to contend that most people need not stress about some grandoise number being preached as a target for everyone and their dog. There were many easy to read examples laid out where an average middle class couple only put away 40-45%% of their pre-retirement income and had a very comfortable retirement from 60 on and included things like travel, recreation etc.

One of the big points he hit on that I never thought of either was that your retirement needs dwindle massively once you enter your 70's and activity levels drop. Budgeting for a reduction in activity and expense which will undoubtedly come at that time also needs to be taken into account i.e. your first ten years of retirement will look vastly different that the next ten years.

You may not agree with it, but this is very refreshing as a read based on something from the other perspective for once.

[Slava]

Originally Posted by Hot_Flatus

Essentially his conclusion was that the standard investment co rhetoric of "save 70% of your pre-retirement income or you're screwed" is in most cases not necessary and more in the neighborhood of 50% for most people. He admitted that most people simply end up never using all of this money they set aside. Many people will have a few sizable purchases when at or nearing retirement: potentially a new car, vacation home or other splurge items. After that period, your expenses are typically quite lower than you'd expect. You also are no longer saving for retirement, which in itself is a massive expense that is often overlooked in calculating your pre-retirement expenses.

With CPP, OAS and calculated RRSP/TFSA savings he seemed to contend that most people need not stress about some grandoise number being preached as a target for everyone and their dog. There were many easy to read examples laid out where an average middle class couple only put away 40-45%% of their pre-retirement income and had a very comfortable retirement from 60 on and included things like travel, recreation etc.

One of the big points he hit on that I never thought of either was that your retirement needs dwindle massively once you enter your 70's and activity levels drop. Budgeting for a reduction in activity and expense which will undoubtedly come at that time also needs to be taken into account i.e. your first ten years of retirement will look vastly different that the next ten years.

You may not agree with it, but this is very refreshing as a read based on something from the other perspective for once.

I think that there is a huge gulf in retirement savings though. There are people who plan and get advice on how to structure things and as a result might end up "over-saving" (although I don't think that is the correct term). Then there is an entire other segment where they save nearly nothing, and essentially feel like they're doomed so they won't seek advice. Getting advice and help with this has an enormous impact on peoples outcomes though; we see study after study show that people who get advice have far better outcomes than people who don't.

The reason I don't think it's over-saving though is that we don't know when we'll die. So if I save piles of money and die at say 70, you could look with the benefit of hindsight and say "gee, Slava could've spent more and didn't need to save as much money". Sure...if I know today that I am going to die on my 70th birthday, I would plan accordingly! But statistically there are pretty good odds that I or my wife will be alive at 95. Planning for years less than that is not something that I would entertain.

I've worked with a lot of people on their retirements, and come to think of it, I haven't heard anyone of them lament saving too much money. I've heard people feel that they should have started sooner, and should have saved more of course, but none in the opposite camp.

[nik-]

at what age are they saying this and at what balance is their retirement fund when they're saying it?

[Locke]

Originally Posted by Slava

I think that there is a huge gulf in retirement savings though. There are people who plan and get advice on how to structure things and as a result might end up "over-saving" (although I don't think that is the correct term). Then there is an entire other segment where they save nearly nothing, and essentially feel like they're doomed so they won't seek advice. Getting advice and help with this has an enormous impact on peoples outcomes though; we see study after study show that people who get advice have far better outcomes than people who don't.

The reason I don't think it's over-saving though is that we don't know when we'll die. So if I save piles of money and die at say 70, you could look with the benefit of hindsight and say "gee, Slava could've spent more and didn't need to save as much money". Sure...if I know today that I am going to die on my 70th birthday, I would plan accordingly! But statistically there are pretty good odds that I or my wife will be alive at 95. Planning for years less than that is not something that I would entertain.

I've worked with a lot of people on their retirements, and come to think of it, I haven't heard anyone of them lament saving too much money. I've heard people feel that they should have started sooner, and should have saved more of course, but none in the opposite camp.

Hey! Thats not what you told me! You said that my plan of becoming a semi-insane burden on the State was foolproof!

I believe your exact words were: 'ingenious.'

[Slava]

Originally Posted by Locke

Hey! Thats not what you told me! You said that my plan of becoming a semi-insane burden on the State was foolproof!

I believe your exact words were: 'ingenious.'

Shhh....it only works if some people do it!

[Locke]

Originally Posted by Slava

Shhh....it only works if some people do it!

I feel I'm being sold a bill of goods here...

[NuclearFart]

Originally Posted by blankall

Maybe not quite that low, but below $150 for sure. There are public stats on what they bill. However if you're an entry level go, you typically work for someone else's clinic and a significant portion of your billings will go to the clinic.

It can certainly be that low for take home income, depending on hours worked, specialty, scope of practice, academic obligations, etc. The reported billings are only what the government is paying out, most doctors have overhead costs that run 30-60% of their billings.

[Locke]

Originally Posted by NuclearFart

It can certainly be that low for take home income, depending on hours worked, specialty, scope of practice, academic obligations, etc. The reported billings are only what the government is paying out, most doctors have overhead costs that run 30-60% of their billings.

Especially in private practice where they have their own premises, getting their facilities up to code and even just their insurance costs are incredibly expensive.

[Sliver]

Originally Posted by NuclearFart

It can certainly be that low for take home income, depending on hours worked, specialty, scope of practice, academic obligations, etc. The reported billings are only what the government is paying out, most doctors have overhead costs that run 30-60% of their billings.

I don't doubt it, but we're talking gross income for every other occupation in this discussion, so talking about take home for one vocation is disingenuous in context of the thread.

[blankall]

Originally Posted by Sliver

I don't doubt it, but we're talking gross income for every other occupation in this discussion, so talking about take home for one vocation is disingenuous in context of the thread.

We're talking pre and post tax income for the other professions, which is different than revenue. Revenue is meaningless when comparing incomes.

My main point was that all doctors do not live an upper class lifestyle.

[NuclearFart]

Originally Posted by Sliver

I don't doubt it, but we're talking gross income for every other occupation in this discussion, so talking about take home for one vocation is disingenuous in context of the thread.

My bad, I actually was talking about gross income. Not after tax income as take home would imply.

[Sliver]

Originally Posted by blankall

We're talking pre and post tax income for the other professions, which is different than revenue. Revenue is meaningless when comparing incomes.

My main point was that all doctors do not live an upper class lifestyle.

Take home is after tax. Gross is pre-tax. I'm not talking about the revenue of the practice.

[Sliver]

Originally Posted by NuclearFart

My bad, I actually was talking about gross income. Not after tax income as take home would imply.

Okay, gotcha. All good.

[CliffFletcher]

Originally Posted by Hot_Flatus

One of the big points he hit on that I never thought of either was that your retirement needs dwindle massively once you enter your 70's and activity levels drop. Budgeting for a reduction in activity and expense which will undoubtedly come at that time also needs to be taken into account i.e. your first ten years of retirement will look vastly different that the next ten years.

Yes, I recently heard that as well. The financial planning industry sells a retirement lifestyle of golfing every day, international travel, dinners out, and basically doing all the wonderful (and costly) thing you wanted to do while you were working.

But that's not the reality for most people. Sure, you're probably gonna have a couple nice vacations and maybe play a lot of golf when you're 63-72. But after that, most seniors gear down to really cheap lifestyles. They don't need to replace a car that sits in the garage most of the time. They're not going to Cancun or Spain every winter, they're doing sudukos, babysitting grandkids, and watching curling.

[Slava]

Originally Posted by CliffFletcher

Yes, I recently heard that as well. The financial planning industry sells a retirement lifestyle of golfing every day, international travel, dinners out, and basically doing all the wonderful (and costly) thing you wanted to do while you were working.

But that's not the reality for most people. Sure, you're probably gonna have a couple nice vacations and maybe play a lot of golf when you're 63-72. But after that, most seniors gear down to really cheap lifestyles. They don't need to replace a car that sits in the garage most of the time. They're not going to Cancun or Spain every winter, they're doing sudukos, babysitting grandkids, and watching curling.

Well that could be the sales pitch at some places, and it's the romanticized version. But I think that the industry actually talks about three stages of retirement: active, semi-active and passive. Any good advisor goes through that with their clients as retirement approaches and explains the three stages, what they can expect in terms of income and how that becomes relevant for their finances.

And yeah, you're quite right that costs like travel and cars decrease through the years. Other costs add up though and take up some of that cost, if not all. And in all honesty, a lot of people spend more in that first decade or 15 years annually than they did while they were working because they want to "front-load" their retirement. Travel and do things actively while they can, because as they approach that semi-active phase the trans-Atlantic flights and desire to do those things decreases quite substantially for a few reasons. Many people can no longer get insurance for travel, and of course some people can't travel medically. Still others have no desire to make that 7-9 hour flight in their 70's.

[Peanut]

Originally Posted by nik-

at what age are they saying this and at what balance is their retirement fund when they're saying it?

Exactly. The people who “oversaved” are the people who worked longer than they needed to. Maybe they don’t lament it out loud but time is a valuable currency. Some would argue the most valuable currency. I definitely don’t want to work any longer than required.

[Locke]

Originally Posted by Peanut

Exactly. The people who “oversaved” are the people who worked longer than they needed to. Maybe they don’t lament it out loud but time is a valuable currency. Some would argue the most valuable currency. I definitely don’t want to work any longer than required.

At the same time though there are people who would have no idea what to do with themselves when they're retired. They want to work as long as possible.

It gives them a reason to get up in the morning, something to do. Its their routine.

To each their own.

[Wormius]

Is "oversaving" synonymous with working past retirement?



I think we probably save more than we have to, but our lifestyle is pretty lean for the most part so we just have more left over to save. I don't intend to work until standard retirement age.



Is it possible to break down what the expected finances are required from age 60-70, 70-80, 80-90, 90+? I can see medical expenses / insurance going up.

[GranteedEV]

Originally Posted by Locke

At the same time though there are people who would have no idea what to do with themselves when they're retired. They want to work as long as possible.

My dad retired early this year and he's at a loss for things to do. I've never seen someone so committed to tracking down slighlty cracked door jambs and chipped fence paint to fix. Personally, I could probably work away at random backlogs for a decade of retirement before I ran out of things to do, but in my dad's case I almost get the sense he misses working.

[Slava]

Originally Posted by Locke

At the same time though there are people who would have no idea what to do with themselves when they're retired. They want to work as long as possible.

It gives them a reason to get up in the morning, something to do. Its their routine.

To each their own.

It's more and more common (at least anecdotally) that people work longer, and the shift is that they're working because they want to, not that they need to. Filling 40 hours a week with things to do consistently is not as easy as people expect. I find that clients work in all kinds of jobs after they retire, or volunteer or do something to get them out of the house, socializing with people and keeping busy.

Retirement is increasingly about financial independence, particularly for professionals and white collar workers. Obviously if you're in the trades and your work is physically demanding it can be about resting your body. I have had clients in those areas work reduced hours and maybe just help younger employees out though because they enjoy working and it keeps them more active.