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

[Regorium]

Originally Posted by fotze

Did you do internship? Or have summer jobs somewhere in the patch?

Unfortunately, no. I kind of figured that'd be my biggest mistake.

I did my bachelor's at the best university in Canada (U of T), and after waffling about whether to stay in Toronto or come back to Calgary (which is home), I came back to avoid Leaf fans So yeah, I have experience, but in a non-related industry. Ditto with my summers, did them all out in TO without thinking about O&G. Come back to Calgary, and of course, everything is related to energy so been doing my masters at UofC to pick up some of that knowledge. Still very tough without experience.

Ehhh, it's a tougher road, but was just illustrating that saving money is tough when your income line = $0, even if your willingness to save/work is high. At the same time, many people like myself are settling for jobs that pay half of what they should be, which leads to less money being available to save.

And Baby Boomers seriously had it easy. As was shown, the pay vs. standard of living, especially in Alberta was ridiculous 20 years ago. Now, you need a good job to even have a chance.

[Shazam]

Originally Posted by pylon

I couldn't disagree more. Baby boomers are for the better part very fiscally responsible. I look at my folks, who have a million plus home paid for, well into the 7 figures for retirement savings, and will never ever have to rely on the government for a dime.

What? Most people, let alone boomers, don't have a million dollars in savings.

Kiddies, look at the median income of the average Canadian. Then figure out how much they need to save to reach a million in savings. Yeah...

[WilsonFourTwo]

Originally Posted by Oil Stain

Or they find that the pay is just too lucrative to give up. Typically the last years of employment are your most highly paid in that field, and you have more vacation so why not hang on a for a few more years?

Umm, I don't think that's it. Typically, the last years of employment are modest in terms of income. Peak earning years are generally accepted as 35-50. I think that if someone is staying longer than they "Have to", it's usually because the "Need to".

[1stLand]

This has been very interesting discussion, hearing different people's perspectives, especially those in their twenties and relating how well off their parents generation is.

I agree they had it easier back then in terms of the jobs available and the cost of living.

I think alot of them end up working more instead of opting to retire because of their kids situation. Boomers are famous for supplementing their kids lack of employment opportunities and lack of savings by offering to pay their downpayment on their first home, letting them live in their house longer than usual, buying them vehicles, paying for their vacation etc etc.

That is even trickling down to their grandkids now that there are many 20-something adults that lack responsibility and have two or three kids in tow and never had to means to start a family to begin with.

In many cases (sad as it sounds) baby boomers children are going to be counting on their inheritance when their parents bite the dust to finally be able to own a home that is paid off and have extra money for toys (vacation home, quads, boats).

[WilsonFourTwo]

Originally Posted by Shazam

What? Most people, let alone boomers, don't have a million dollars in savings.

Kiddies, look at the median income of the average Canadian. Then figure out how much they need to save to reach a million in savings. Yeah...

Yup. IIRC, the typical retiring couple has under $250,000 in assets (excluding the home). I tried to dig up the Moneysense Magazine article, but couldn't find the source online.

I can tell you one thing for certain.....you'd be crazy, misinformed or a rare blend of both to think that the typical couple retires with anywhere near a million in total assets. The good news is, you'd also have to be crazy, misinformed or a rare blend of both to think that you need a million in total assets to retire comfortably!

[Phaneuf3]

Originally Posted by Shazam

What? Most people, let alone boomers, don't have a million dollars in savings.

Kiddies, look at the median income of the average Canadian. Then figure out how much they need to save to reach a million in savings. Yeah...

Well according to ING Direct's savings calculator, if you start with $0 and put away $400 a month for 40 years, you'll have just a little over a million (1,056,xxx.xx) if you got a 7% interest rate.

Obviously it depends on your situation but $400 isn't breaking the bank for a lot of people and it doesn't account for any employer matching you may have going on. Maybe $300 is only coming out of your paycheck (before tax) and $100 is from your employer to make up that $400.

That's a whole pile of assumptions built on other assumptions but I don't think the figures look too unrealistic. If you entered the workforce at 18 and did that, by the time you're 58 you have over a million dollar retirement fund ready to go.

[ma-skis.com]

Originally Posted by pylon

I couldn't disagree more. Baby boomers are for the better part very fiscally responsible.

The example of your parents, although admirable, doesn't stand up for the entire generation.

In general, I think it's widely viewed and understood that Boomers have been less concerned about saving and the future than they have about what they do in the moment.

Although when someone places blame on the boomers for not screwing up their industry or being the reason why they can't get a job or save enough money, it tells me they should have chosen a better career path or reevaluate the things they need verses the things they want.

This is the situation you are in, make your choices accordingly. and be prepared for your consequences.

[WilsonFourTwo]

Originally Posted by 1stLand

In many cases (sad as it sounds) baby boomers children are going to be counting on their inheritance when their parents bite the dust to finally be able to own a home that is paid off and have extra money for toys (vacation home, quads, boats).

I snipped most of your post, but Gratz, reasonably well put.

That said, the one thing I feel compelled to point out though.....your theory is off by one generation.....the Boomers benefited from inheritance much more than their children will. The generation born between the World Wars were the ones who worked hard (really hard!), bought everything cash, and hoarded their dollars.

When they died off, the Boomers starting spending that inheritance. The people in their 80's and 90's right now.....those are the ones who actually made the money. Those in there 50's and 60's right now are the ones who spent the family money, then spent their credit, and are now preparing to spend OUR money and OUR credit so that they can retire.

[WilsonFourTwo]

Originally Posted by Phaneuf3

Well according to ING Direct's savings calculator, if you start with $0 and put away $400 a month for 40 years, you'll have just a little over a million (1,056,xxx.xx) if you got a 7% interest rate.

Obviously it depends on your situation but $400 isn't breaking the bank for a lot of people and it doesn't account for any employer matching you may have going on. Maybe $300 is only coming out of your paycheck (before tax) and $100 is from your employer to make up that $400.

That's a whole pile of assumptions built on other assumptions but I don't think the figures look too unrealistic. If you entered the workforce at 18 and did that, by the time you're 58 you have over a million dollar retirement fund ready to go.

Although your point is well taken (seriously, good post)....change it to 5% and see what the total is. MERs sure do cost a lot when you add up the decades.

[blankall]

Originally Posted by 1stLand

I think alot of them end up working more instead of opting to retire because of their kids situation. Boomers are famous for supplementing their kids lack of employment opportunities and lack of savings by offering to pay their downpayment on their first home, letting them live in their house longer than usual, buying them vehicles, paying for their vacation etc etc.

That is even trickling down to their grandkids now that there are many 20-something adults that lack responsibility and have two or three kids in tow and never had to means to start a family to begin with.

In many cases (sad as it sounds) baby boomers children are going to be counting on their inheritance when their parents bite the dust to finally be able to own a home that is paid off and have extra money for toys (vacation home, quads, boats).

I think this is exactly the issue.

It's this weird cycle of no jobs being available since the baby boomers have them, and the boomers being unable to quit their jobs because they have to support the children who can't get the jobs.

Meanwhile you see the disparity between entry level and upper level jobs growing as baby boomers need more and more money to support their retirement and children. Meanwhle the children are willing to accept lower payign jobs because they have to in order to gain the experience.

The people who really get screwed in all of this are young people going on their own without the support of mom/dad.

A forced solution is coming that will bring this cycle to an end in the near future. As boomers transition into their 70s they will be forced to retire. Their minds and hearts (litterally. They are going to have heart attacks) will start to go.

A former employer of mine in his 70s was going senile. Meanwhile he was supporting his children, now in their 30s and heading into their 40s... They were now having grandchildren that he was indirectly supporting as well. The whole thing really is crazy.

[Cowboy89]

Originally Posted by WilsonFourTwo

Although your point is well taken (seriously, good post)....change it to 5% and see what the total is. MERs sure do cost a lot when you add up the decades.

Which is why passively invested ETFs that have fees at or below 0.50% are available too. Over decades there is little empirical proof that active management increases a fund's return. Therefore building portfolios from index tracking ETFs that pay low fees are a nice option.

[WilsonFourTwo]

Originally Posted by blankall

A forced solution is coming that will bring this cycle to an end in the near future. As boomers transition into their 70s they will be forced to retire. Their minds and hearts (litterally. They are going to have heart attacks) will start to go.

A former employer of mine in his 70s was going senile. Meanwhile he was supporting his children, now in their 30s and heading into their 40s... They were now having grandchildren that he was indirectly supporting as well. The whole thing really is crazy.

Just some food for thought here for you all......when 1/5th of the population (specifically the age group who owns the most property) dies off, what do you think will happen to the value of real estate? Market Glut.....

While I don't think buying a home is ever a bad idea, I would suggest to you youngsters out there that using it as a piggy-bank (the way Boomers did/do) is going to be a sure fire path to ruin. Perhaps cash is King will become the new (old) motto?

[1stLand]

Originally Posted by blankall

I think this is exactly the issue.

It's this weird cycle of no jobs being available since the baby boomers have them, and the boomers being unable to quit their jobs because they have to support the children who can't get the jobs.

Meanwhile you see the disparity between entry level and upper level jobs growing as baby boomers need more and more money to support their retirement and children. Meanwhle the children are willing to accept lower payign jobs because they have to in order to gain the experience.

The people who really get screwed in all of this are young people going on their own without the support of mom/dad.

A forced solution is coming that will bring this cycle to an end in the near future. As boomers transition into their 70s they will be forced to retire. Their minds and hearts (litterally. They are going to have heart attacks) will start to go.

A former employer of mine in his 70s was going senile. Meanwhile he was supporting his children, now in their 30s and heading into their 40s... They were now having grandchildren that he was indirectly supporting as well. The whole thing really is crazy.

The Senior VP of the real estate development company i worked for after university was 60 and was supposed to retire at the time. You could tell in meetings his mind was going and really didnt have a good grasp of the marketplace or have his finger on the pulse of the industry anymore. 3 Years later and he is still occupying that VP role even though he spends half the year in Phoenix. Heck if I was him i would stay put too. He probably clears $200,000 a year after taxes.
He started off as a draftsman and moved here from saskatchewan.
Still can't understand email

[WilsonFourTwo]

Originally Posted by Cowboy89

Which is why passively invested ETFs that have fees at or below 0.50% are available too. Over decades there is little empirical proof that active management increases a fund's return. Therefore building portfolios from index tracking ETFs that pay low fees are a nice option.

^^^^^

Pay attention folks. He speaks the truth.

Ya Cowboy, this is a big part of my couch potato strategy. Low cost, low stress, low effort.....quality returns!

[1stLand]

Originally Posted by WilsonFourTwo

Just some food for thought here for you all......when 1/5th of the population (specifically the age group who owns the most property) dies off, what do you think will happen to the value of real estate? Market Glut.....

While I don't think buying a home is ever a bad idea, I would suggest to you youngsters out there that using it as a piggy-bank (the way Boomers did/do) is going to be a sure fire path to ruin. Perhaps cash is King will become the new (old) motto?

Yes and no.

Moving forward, Yes Cash will be king.

However not sold on the fact real estate will be flooded with a glut of inventory as boomers begin to pass away or move into nursing homes........ that 1/5 of the population is continually being replenished due in part to immigration.

[V]

Originally Posted by WilsonFourTwo

The good news is, you'd also have to be crazy, misinformed or a rare blend of both to think that you need a million in total assets to retire comfortably!

What do you figure you need? Let's say a guy like me at 30 years old is 25 years from retirement. At 2.9% inflation, 1,000,000 in 2035 is worth $490,000 present dollars. Could you retire right now with $500k in total assets, including your house. Would you be able to count on 5% interest on whatever little you have in your investment account (let's say 200k because you have a 300k house paid off) to sustain you for the next 30 years?

I don't know, I think you're going to need more than $1,000,000 in 2035 to retire comfortably, but maybe an actual economist can convince me otherwise.

[Traditional_Ale]

Originally Posted by 1stLand

However not sold on the fact real estate will be flooded with a glut of inventory as boomers begin to pass away or move into nursing homes........ that 1/5 of the population is continually being replenished due in part to immigration.

At least they might be able to afford a home when they get here!

[Shazam]

Originally Posted by V

What do you figure you need? Let's say a guy like me at 30 years old is 25 years from retirement. At 2.9% inflation, 1,000,000 in 2035 is worth $490,000 present dollars. Could you retire right now with $500k in total assets, including your house. Would you be able to count on 5% interest on whatever little you have in your investment account (let's say 200k because you have a 300k house paid off) to sustain you for the next 30 years?

I don't know, I think you're going to need more than $1,000,000 in 2035 to retire comfortably, but maybe an actual economist can convince me otherwise.

Remember, you will get CPP and OAS.

[Sylvanfan]

Originally Posted by Shazam

Remember, you will get CPP and OAS.

Only if those damn boomers don't exhaust that resource before those in the trailing demographic get there.

[pylon]

Originally Posted by ma-skis.com

The example of your parents, although admirable, doesn't stand up for the entire generation.
In general, I think it's widely viewed and understood that Boomers have been less concerned about saving and the future than they have about what they do in the moment.

Although when someone places blame on the boomers for not screwing up their industry or being the reason why they can't get a job or save enough money, it tells me they should have chosen a better career path or reevaluate the things they need verses the things they want.

This is the situation you are in, make your choices accordingly. and be prepared for your consequences.

It is not like my parents were super wealthy. My dad was / is an oilpatch guy that was likely making around 100 k/yr through the 80's and 90's and my mother supplimented the family income with a part time job as a realtor. My understanding was that every dime my mother made, went towards low risk, long term RRSP's, and real-estate investments, and 10% of my dads take home went as well, leaving the rest to pay for everything else. We could have lived super large I suppose looking at the numbers, but their # 1 goal was assuring they would never have to rely on anyone to take care of them one day, and they had long term security. It was just smart money management... my mother is Jewish, so I guess it came natural.

A lot of my parents friends, and some of our relatives had way more income, but are in way worse situations because annual 2 week trips to Hawaii, designer fashions, and showing off The BMW to the neighbour were far more important to them than their long term security. And its silly, because now, they are looking for bargain vacations, and cheapo cars because they squandered their income on frivoulous stuff. And can no longer support it being retirees.

I just wish I could convince my folks to live it up, because I do not want to become rich because my folks pass on one day. In a perfect world I want 1 cent left in their bank account the day they finally go, they earned it, and they should blow every last penny.