Are you saving enough for retirement?

[bizaro86]

Originally Posted by V

My grandfather had nothing but OAS and CPP in his retirement. A single parent trying to raise 6 kids on a painter's salary wasn't going to allow him to do any better. He lived a happy retired life until he died at 82.

I'm not sure you need to hoard your money to retire happy. I think happiness is a lot cheaper if you know how to find it.

I agree with the above, money definitely doesn't buy happiness.

Happiness = reality - expectations

I do think it makes sense to plan for approximately level standard of living, so you don't have a big drop in retirement. For some people OAS/GIS/CPP will be enough, especially of you end up with a paid off house.

For others, significant assets will be required to keep consumption level.

I dont think spending money on stuff makes you happy, but I bet for many people not being able to afford things they used to have would make them unhappy.

[Johnny199r]

People have different retirement goals or expectations.

If someone wants to just stay home, volunteer, spend time with family, and eat very cheaply, then sure, retirement wont cost very much. That's great, if that is what they want.

However, many people have dreams of travel when they retire. Additionally, some people in high stress occupations, or physically demanding occupations, may feel like they can't continue to work until a certain age, and so they aim to retire early.

Another big factor affecting retirement is people carrying debt into retirement. A retirement may be pretty challenging if an individual is still carrying a substantial mortgage into their retirement timeline.

Everybody is different.

Do you want money to help support your kids? Are you going to try to save enough money in case you have to go into a nursing home? Are you just counting on your kids to pay for that, if it happens? Will you have money for medications?

My goal is to retire in my 50's and live at least half the year outside of Canada and travel my face off.

My wife and I are each professionals. We live in an apartment, drive a used honda civic we payed cash for, have no desire to have children and plan for the day we can leave our high stress jobs behind.

Someone with kids/grandkids might have a completely different retirement plan. That's great. There's no right answer.

Ive seen older relatives living in poverty in retirement. It's not for me. Ive seen my mom nearly have a breakdown because she needed help paying for her parents nursing home bills. Things don't magically workout without planning and foresight. I'm willing to sacrifice now for later.

[prarieboy]

Originally Posted by Johnny199r

People have different retirement goals or expectations.

I'm willing to sacrifice now for later.

Make sure you don't go to far in that direction. My father died at 58 and my mother at 66.

My accountant told me "Keep doing what you're doing and spend the rest"

[Weitz]

Originally Posted by prarieboy

Make sure you don't go to far in that direction. My father died at 58 and my mother at 66.

My accountant told me "Keep doing what you're doing and spend the rest"

Not only that, but in 10, 20, or 30 years the world could be vastly different. Travel could be really expensive or not possible. You could get sick or die like you said. To sacrifice now in hopes later will be better can be a risky game.

Thats not to say dont save anything for retirement though.

[Johnny199r]

Originally Posted by prarieboy

Make sure you don't go to far in that direction. My father died at 58 and my mother at 66.

My accountant told me "Keep doing what you're doing and spend the rest"

Obviously there is a middle ground. It's important not to go too far extreme in one direction.

Eating cans of soup for every meal, in order to dream of a baller retirement is crazy.

Likewise, saving $0 for retirement, because "YOLO" probably is not a good idea either.

[Scroopy Noopers]

Originally Posted by Johnny199r

Obviously there is a middle ground. It's important not to go too far extreme in one direction.

Eating cans of soup for every meal, in order to dream of a baller retirement is crazy.

Likewise, saving $0 for retirement, because "YOLO" probably is not a good idea either.

Yeah if you think it’s hard for the young to pay rent/mortgage in this day and age, you should see what 80 year olds pay for retirement communities.

[CroFlames]

Originally Posted by Johnny199r

People have different retirement goals or expectations.

If someone wants to just stay home, volunteer, spend time with family, and eat very cheaply, then sure, retirement wont cost very much. That's great, if that is what they want.

However, many people have dreams of travel when they retire. Additionally, some people in high stress occupations, or physically demanding occupations, may feel like they can't continue to work until a certain age, and so they aim to retire early.

Another big factor affecting retirement is people carrying debt into retirement. A retirement may be pretty challenging if an individual is still carrying a substantial mortgage into their retirement timeline.

Everybody is different.

Do you want money to help support your kids? Are you going to try to save enough money in case you have to go into a nursing home? Are you just counting on your kids to pay for that, if it happens? Will you have money for medications?

My goal is to retire in my 50's and live at least half the year outside of Canada and travel my face off.

My wife and I are each professionals. We live in an apartment, drive a used honda civic we payed cash for, have no desire to have children and plan for the day we can leave our high stress jobs behind.

Someone with kids/grandkids might have a completely different retirement plan. That's great. There's no right answer.

Ive seen older relatives living in poverty in retirement. It's not for me. Ive seen my mom nearly have a breakdown because she needed help paying for her parents nursing home bills. Things don't magically workout without planning and foresight. I'm willing to sacrifice now for later.

Far be it from me to tell someone how to live their life...

But please get a cool car. Two professionals with no kids, and no plans to have kids, splurge on a baller car. Get a beast Shelby Cobra or Aston Martin or something flashy.

[prarieboy]

Originally Posted by Johnny199r

Obviously there is a middle ground. It's important not to go too far extreme in one direction.

Eating cans of soup for every meal, in order to dream of a baller retirement is crazy.

Likewise, saving $0 for retirement, because "YOLO" probably is not a good idea either.

Absolutley. I should have clarified a little better. He told us to keep doing what we are doing in terms of saving for Retirement and don't worry about spending anything that's left over.
We like to stay at nice hotels and eat at good restaurants when we travel so that's what we do. We could save some money on travel and maybe we could retire earlier but there's no guaranteed future.

[RichieRich]

I'm always amazed when I encounter friends, colleagues, or family friends who upon realizing they're 50'ish surprisingly remark... " well geez I guess I better start thinking about retirement and maybe saving a few bucks". The majority of these folks are double income, have likely earned near $100k/year for a quite a while... and often have 2 cars, a nice house that's had a few reno's, often take holidays, pricey hobbies.

[PaperBagger'14]

Originally Posted by RichieRich

I'm always amazed when I encounter friends, colleagues, or family friends who upon realizing they're 50'ish surprisingly remark... " well geez I guess I better start thinking about retirement and maybe saving a few bucks". The majority of these folks are double income, have likely earned near $100k/hr for a quite a while... and often have 2 cars, a nice house that's had a few reno's, often take holidays, pricey hobbies.

If I was making 100k/hr I probably wouldn't save much until about 1 week before retirement!

[RichieRich]

Originally Posted by PaperBagger'14

If I was making 100k/hr I probably wouldn't save much until about 1 week before retirement!

oops. no doubt. That would make em either NBA, NFL some other athlete, or a world elite controlling the billions toiling away mining rare earth metals for EV's in cesspools of alkaline waters.

[Izzle]

Retirement is another 25 years away for me. However, it's good to think about it.

Regarding that, has anyone looked into Vanguard's VRIF ETF? Looks like they target a 4% yield at a somewhat reasonable 0.30% mer. I think that would be something I'd stick into a RRIF and have a hassle free experience.

The downside is that the 4% return might be a return on capital in some cases. Also they have a 50/50 split between equity and fixed income so that might be too aggressive for someone in retirement.

Thoughts?

Sent from my Nexus 6P using Tapatalk

[Slava]

Originally Posted by edslunch

For the financial planners among us, what are your typical assumptions about investment rate of return and inflation for a thirty year retirement? I don’t need the certainty of an annuity, just a lower risk mix of securities. I’m not looking for financial advice, just curious what people’s assumptions are at the high-level planning stage.

I just wanted to come back to this on the return rate assumptions (I agree with Enoch that a 2-3% inflation rate is probably adequate). This is a pet peeve of mine with planners in general, so apologies in advance.

The thing is it's pretty amateur for a planner to say something like "well the market gets you about 10% a year on average, so let's be conservative and call it 7%. Then after you retire you will want to dial back the risk, so let's say that you get 5% a year after that." To me, this is fraught with a lot of risks and issues. In all honesty, it's great because the numbers look pretty solid in most cases. This is partly due to the retirement funding looking solid at 5% with a minimum RRIF/registered withdrawal at 71 that is 5.28%. If you take that minimum and the projection says that you'll earn close to the same, you're in pretty good shape.

Problem is, the real world doesn't work on averages. So while it's great to say you'll compound at 7% and just take medium risk, what are you actually compounding at? How does that look over the coming decade with bond yields that are likely far lower than what we've seen for the preceding 30-40 years? Those balanced funds that are medium risk and keep you all sorted aren't going to earn you 9-9.5% before fees to net you that 7% if the bond sleeve is getting you 1-2% a year. Unless you're of the mindset that your medium risk equities are going to get you an average return of 9% per year. If you read some of the predictions (they have their own problems, to be fair), you'll see a range of predictions that are at 5-6% and below for the coming years. So, the risk is pretty obvious. You plan for that 7%, thinking its a nice, conservative number and instead end up with something closer to 4-5% after it's all said and done. Then you dial back the risk on retirement and instead of that 5% that kept everything looking good, you end up with something closer to 3%.

[Slava]

Originally Posted by Johnny199r

People have different retirement goals or expectations.

If someone wants to just stay home, volunteer, spend time with family, and eat very cheaply, then sure, retirement wont cost very much. That's great, if that is what they want.

However, many people have dreams of travel when they retire. Additionally, some people in high stress occupations, or physically demanding occupations, may feel like they can't continue to work until a certain age, and so they aim to retire early.

Another big factor affecting retirement is people carrying debt into retirement. A retirement may be pretty challenging if an individual is still carrying a substantial mortgage into their retirement timeline.

Everybody is different.

Do you want money to help support your kids? Are you going to try to save enough money in case you have to go into a nursing home? Are you just counting on your kids to pay for that, if it happens? Will you have money for medications?

My goal is to retire in my 50's and live at least half the year outside of Canada and travel my face off.

My wife and I are each professionals. We live in an apartment, drive a used honda civic we payed cash for, have no desire to have children and plan for the day we can leave our high stress jobs behind.

Someone with kids/grandkids might have a completely different retirement plan. That's great. There's no right answer.

Ive seen older relatives living in poverty in retirement. It's not for me. Ive seen my mom nearly have a breakdown because she needed help paying for her parents nursing home bills. Things don't magically workout without planning and foresight. I'm willing to sacrifice now for later.

It's entirely this. You can't just save blindly and hope it works, or not save and assume that living on CPP/OAS is going to be enough. It obviously comes down to lifestyle and what you want retirement to look like, and that can also change drastically through the years. But you really need to have a plan, regardless and work toward whatever that desired outcome is.

[MarchHare]

Originally Posted by CroFlames

Far be it from me to tell someone how to live their life...

But please get a cool car. Two professionals with no kids, and no plans to have kids, splurge on a baller car. Get a beast Shelby Cobra or Aston Martin or something flashy.

I'm not the person you're responding to, but I'm in a very similar position (married professional, two incomes well above the Alberta median, no kids). We don't even own a car and have no desire to. I'd much, much, much rather spend that money on life experiences (specifically travel) instead. Also, we paid off our mortgage in full before we turned 40 specifically because we saved so much money from not having to worry about car payments, gas, insurance, parking, repairs, routine vehicle maintenance, etc., etc., etc. Owning a car is expensive and really not worth it if you live in a walkable community where it's convenient to commute via foot, bike, or public transit.

[The Yen Man]

Originally Posted by MarchHare

I'm not the person you're responding to, but I'm in a very similar position (married professional, two incomes well above the Alberta median, no kids). We don't even own a car and have no desire to. I'd much, much, much rather spend that money on life experiences (specifically travel) instead. Also, we paid off our mortgage in full before we turned 40 specifically because we saved so much money from not having to worry about car payments, gas, insurance, parking, repairs, routine vehicle maintenance, etc., etc., etc. Owning a car is expensive and really not worth it if you live in a walkable community where it's convenient to commute via foot, bike, or public transit.

I'd argue for some, driving is part of a life experience. I certainly like to drive on a summer evening. I also love to drive when it rains. Sometimes I just go cruising at night for half an hour while listening to music just because I like to drive.

[Sliver]

Originally Posted by CroFlames

Far be it from me to tell someone how to live their life...

But please get a cool car. Two professionals with no kids, and no plans to have kids, splurge on a baller car. Get a beast Shelby Cobra or Aston Martin or something flashy.

I love having cool cars, but I see the appeal of just having one mediocre car. Sounds like Johnny gets more out of the peace of mind that comes with building up some solid savings than he'd get out of owning a nice car, though.

Sometimes people save a lot not because they are Scrooge or want to die with four million dollars in the bank, but they just enjoy the security of having that money more than the enjoyment they'd get out of spending it.

The one thing I wish you could buy is time off during your working years. My preference would be to work 75% of my current hours and make 25% less. There just doesn't seem to be a good way to do that in most jobs. The only real work around is to try to save more and retire 25% earlier, which isn't the worst.

[MarchHare]

Originally Posted by The Yen Man

I'd argue for some, driving is part of a life experience. I certainly like to drive on a summer evening. I also love to drive when it rains. Sometimes I just go cruising at night for half an hour while listening to music just because I like to drive.

Sure. If you consider driving to be a fun hobby or a lifestyle choice you find enjoyable, you do you. For my wife and I, though, the opportunities afforded to us by not owning a car are far more valuable than any pleasure we'd derive from driving.

[undercoverbrother]

Originally Posted by Sliver

I love having cool cars, but I see the appeal of just having one mediocre car. Sounds like Johnny gets more out of the peace of mind that comes with building up some solid savings than he'd get out of owning a nice car, though.

Sometimes people save a lot not because they are Scrooge or want to die with four million dollars in the bank, but they just enjoy the security of having that money more than the enjoyment they'd get out of spending it.

The one thing I wish you could buy is time off during your working years. My preference would be to work 75% of my current hours and make 25% less. There just doesn't seem to be a good way to do that in most jobs. The only real work around is to try to save more and retire 25% earlier, which isn't the worst.

I wish we 'retired" until we were 30, then at 30 you go to work and work at your job until you fall over dead.

You could draw a retirement "loan" that you had to pay back during your working years.

[Sliver]

Originally Posted by undercoverbrother

I wish we 'retired" until we were 30, then at 30 you go to work and work at your job until you fall over dead.

You could draw a retirement "loan" that you had to pay back during your working years.

OMG fata that. The only thing that keeps me going is knowing one day I can just start my permanent vacation. If there was no light at the end of the tunnel I'd just jump off a bridge now.