I don't own any real estate and have no plans or desire to. I take the opposite view that you do.
My wife and I are professionals (40ish) we move every couple of years to a new town/city and always rent. I dont want anything to do with realtor fees, closing costs, property maintenance and repairs, home insurance, property taxes etc etc.
If I'm renting a house or apartment (we've done both) I like to hand my rent over at the end of each month and call the landlord if there are any problems (the basement in our current house had a minor flood twice last year, glad I didnt have to pay that bill for that repair!) The next place we are moving to next month (new city) is a 3 bedroom apartment with the nicest gym I've ever seen, surrounded by restaurants and shops.
Owning property for many people is a positive thing because a mortgage is a forced savings problem. It removes any temptation to spend that $1500 or $2500 each month on other things. Hopefully that asset appreciates over time, and the owner reaps the benefits.
My wife and I have the discipline to put lots of money into low cost ETFs through Questrade every month, so renting works for us. The additional benefit is we arent tied down, and are always flexible to go wherever we want next. Renting can be dangerous for those that dont have the discipline to invest their extra income after rent, but its not a problem for us. I'm willing to bet the stock market will be still be stable in my old age and that currencies will not erode as you believe.
It's like people who want to be landlords. God bless them, I could never put up with all of that work and potential headache of difficult tenants. I'd rather just invest in a REIT from my computer - aka property management companies that do all the work, get a nice return and never have to worry about a tenant who is always late with rent, trashes the house/apartment or spend my evenings doing repair jobs.
I find it fascinating the different paths people can take to end up at their ultimate retirement goal. I dont think their is one correct choice. Its just important to make a plan early on, and stick with it.
I am beginning to warm up to this philosophy. It seems there is a compelling argument to suggest the markets are more profitable than home ownership
My hesitation regards terrible landlords, renovictions, constant rent increases, etc. It may be ego, or just a traditional way of thinking that I can't get past, but I don't like the idea of being in my 60s without the security of my own home and living under an other's rules. Plus, the idea of having no mortgage/rent payment in retirement is nice.
I will be selling my house soon and renting short-term. I'll ponder my path during that time.
I am beginning to warm up to this philosophy. It seems there is a compelling argument to suggest the markets are more profitable than home ownership
My hesitation regards terrible landlords, renovictions, constant rent increases, etc. It may be ego, or just a traditional way of thinking that I can't get past, but I don't like the idea of being in my 60s without the security of my own home and living under an other's rules. Plus, the idea of having no mortgage/rent payment in retirement is nice.
I will be selling my house soon and renting short-term. I'll ponder my path during that time.
A lot depends on what you rent. If you rent a condo, then I'd say there is a good chance the owner will sell at some point and you'll have to find a new place (this has happened to me).
That risk also exists with a house.
I like renting in "nice, newer" apartment buildings that are professionally managed. You don't have to worry about landlords, renovations, and if the rent is high enough, generally no riff raff.
Increases in rent may always be a possibility, but that is no different than your property taxes. At least there is no danger of having to shell out $5,000 for a new roof, or furnace. I like the peace of mind of not being responsible for anything.
My ex and I used to discuss money (or lack of) more often than I would’ve liked. A few years of living in my own, and I can attest she was indeed right. I am ####ing terrible with money, and while I can support my own habits I am currently not supporting my own retirement.
Thanks for bringing this topic back up, a nice reminder I need to pull my head out of my ass.
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No, no…I’m not sloppy, or lazy. This is a sign of the boredom.
My ex and I used to discuss money (or lack of) more often than I would’ve liked. A few years of living in my own, and I can attest she was indeed right. I am ####ing terrible with money, and while I can support my own habits I am currently not supporting my own retirement.
Thanks for bringing this topic back up, a nice reminder I need to pull my head out of my ass.
This is far from unusual. Most people are dire financial straights, in my opinion.
I can't believe its been four years since this thread. That went fast. I inherited two bottles of Scope mouth wash since then. I will at least have fresh breath as I enjoy my retirement cat food.
I still think people don't understand risk or manage it well. But I'm paranoid af.
I try not to get too bogged down by some of the smaller details that people are debating in this thread. I keep it fairly simple and just save as much as I can while paying my bills and having some fun from time to time.
I contribute a several hundred to my TFSA every month. My employer has a fairly robust rsp matching program so I put in 18% of my income (mine and theirs combined) plus some lump sums if i get a bonus or when I get my tax refund.
I’m early 30s so it is tough to do long term projections but based on some of my current numbers, I do feel quite comfortable about retiring.
All my investments are etf’s or mutual funds. Nothing too aggressive but I’ve got a long time horizon so they tend to be more growth oriented.
I also own home but I see that as more of a fallback.
I have a fairly strict monthly budget but don’t feel like I’m missing out on life because I’m somewhat frugal. I don’t travel enough but it’s more than none and I’m pleased with my current balance between saving and spending.
I have no spouse or children so my situation obviously wouldn’t apply to most people on here.
Currently 35. I put away 14% of my income into an RRSP, where my company matches 4%. I have no idea if I'm saving enough for retirement, but after 8 years of slowly increasing my contributions, it seems to be a decent start. The projections (which are based on interest rates way higher than I think I'll get) seem to indicate I'm ahead of schedule. I don't believe it though.
My wife and I are DINKs, so our focus since buying a home 4 years ago is to try and pay off the mortgage as fast as possible. I was laid off 6 days after I bought my first condo at age 25, so for me, until that mortgage is gone I will not feel like I have financial freedom. I have always hated renting ever since my first landlord tried to pass off a collapsing ceiling as paint chipping.
We have taken a few big trips since getting married, as we know it will be tougher when we do end up having kids. I think it is important to enjoy life while your young, assuming you are smart enough to not sacrifice the future. I do think there are too many people who are enjoying life now while also sacrificing the future though.
What would people consider a realistic monthly average as "quite comfortable" in retirement?
Is 5k total per month for a husband and wife with vehicles and primary residence fully paid off and roughly $1,000 in fixed costs such as utilities, property taxes, etc, considered very comfortable?
As I get older, retirement feels like the 30's version of one of those topics such as taxes that people in their 20's talk about as never having learned in the education system.
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Travis Munroe | Century 21 Elevate | 403.971.4300
There are some pretty good and very basic Financial planning apps out there.
Consider how much you want/need when you retire. Add in CPP and OAS. That is a good base. Work backwards to monthly savings to reach that goal. See how drastically yearly ROI on your investments can affect your retirement number.
Also factor inflation.
My big struggle is between aggressively paying down our mortgage and knowing that even modest index investing can beat current mortgage rates over the long term.
Rates will go up. But they would need to more than double to make paying down the mortgage priority#1.
I really enjoy these discussions. Knowing how much money you have, how much you need to save to keep up with goals and how that affects guilt free spending is an ever fluctuating adventure.
What would people consider a realistic monthly average as "quite comfortable" in retirement?
Is 5k total per month for a husband and wife with vehicles and primary residence fully paid off and roughly $1,000 in fixed costs such as utilities, property taxes, etc, considered very comfortable?
As I get older, retirement feels like the 30's version of one of those topics such as taxes that people in their 20's talk about as never having learned in the education system.
There is no one size fits all answer.
Many advisors recommend budgeting so that you withdraw 4% of your capital per year of retirement. However, there are a million variables.
What do you want to do in retirement? Travel? A little or a lot? Budget or expensive travel? Any other hobbies? Expensive or cheap ones?
Are you going to put away money to cover prescriptions if you get sick and have no prescription plan from work in retirement. Save for a nursing home? (They are expensive as hell) you want new vehicles in retirement? Help the kids or grandkids with university? Like to eat out a lot at nice restuarants or just cook at home?
Are you going to continue to invest when in retirement? Bonds or equities? Extremely low risk or moderate risk?
Last edited by Johnny199r; 05-20-2019 at 08:04 PM.
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For me and my spouse that looks like contributing to our company rrsp plan.... about 12% of our combined income total.
We own a house that we are aiming to have paid down by 50... we bought an older duplex in decent enough shape, but on a good piece of inner city land, so in my mind this is a sound investment (rather than having bought a nicer house on a half lot or a new duplex). If I had to downsize to a condo later in life then this would presumably free up a pile of money later on.
We have a child now which doesn’t leave a ton of room for further savings at the moment, but typically we max out one of our tfsa and sometimes both.
We do prioritize having one big trip per year, a decent year round lifestyle, including a few weekend trips where we are cost sensitive. We could save plenty more if we needed to, but if I’m planning to work into my 60’s I feel like I have enough savings vehicles already, and honestly I assume my cost requirements will be smaller in the future. Can always just move to Mexico if not, lol.
Anyways, I won’t sacrifice having a desirable lifestyle today to save incremental dollars. Want to make memories, not get too money anxious, and enjoy my youth (31 right now).
While we save for our retirement I have a hard time really slashing my current lifestyle for a future in which you have no idea how things are going to be. The world is going to be a very different place in 30 years. Goal is to be $5000 a month in retirement.
How did people do with their investments when they had to put their child in daycare for the first time? Did you guys pause investing (outside of your pension), reduce it or continue on without interruption?
I hate to tell you this but the costs of after school care are almost as high as daycare (YMMV). Kindergarten is about $1,300 for the year and grade school is about half that (remember, they get every 2nd Friday off now)
God knows the budget's tight, but it's still a good habit to stick with if you can to put x% of your salary away for savings. Even if it's a big drop from what you used to do. "Temporary" has a way of sticking around a lot longer than you think...
Last edited by I-Hate-Hulse; 05-20-2019 at 09:54 PM.
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Prior to the Boomer generation, most people just worked until they could no longer do it ... and usually passed away shortly thereafter. Like others have said, choose a line of 'work' that doesn't seem like a burden to you and chances are you will never even want to retire. Enjoy life today, because nobody knows what tomorrow will bring. Don't make the mistake of assuming all that money you squirrel away today will be as valuable to you 30 years from now as it would be now.
I know far too many folks who have found that the retirement gig is not what it is sold to be. Turns out we need to 'work' at something in order to stay happy and healthy.
Retirement saving may be prudent, but it is also a huge business. Be skeptical.
As my wife and I are approached last 1/3 of working years, we look at our pension and mutual fund reports more frequently. I did most of my savings and investing before marriage and two kids as I knew not much money would left over until they grew up. Also, wife went back to university in her late 30's for a second degree and I was only bread winner for 5 years. Spent little and took a trip only every other year during that time. When she finished school, finances became much better as house income doubled.
Got lucky enough to get on Apple stocks along with other tech/financial stocks 20 years ago and they are doing well, although I haven't put any money into them for awhile or to any RRSP or TFSA. Reading "The Wealthy Barber" at age 22 when I finished university and started working was the best financial book I read at the time. Note: this mutual fund money won't be sole source of retirement fund to depend on as our two work DB pensions will generate $10-13K per month at 65 years old. Our house should be paid off by then so we'll have extra back up fund.
Now that both kids are in university (we are funding their education for 4 years max each and don't believe in going into debt that young of age), we have more financial breathing room and are able to take splurge a bit here and there for trips and spending, knowing that we'll be okay at 65. Still practising common sense, though. No new cars (current ones are 10 and 7 years old), spend on what we need vs. want, enjoy life a bit, and stay healthy to enjoy the golden years.
What would people consider a realistic monthly average as "quite comfortable" in retirement?
Is 5k total per month for a husband and wife with vehicles and primary residence fully paid off and roughly $1,000 in fixed costs such as utilities, property taxes, etc, considered very comfortable?
As I get older, retirement feels like the 30's version of one of those topics such as taxes that people in their 20's talk about as never having learned in the education system.
It basically depends on what you want to do in retirement, when you retire, and how that lifestyle compares to where you are now. I have some clients who spend frugally (because they’re worried about running out of money, not because they can’t afford more) and I have others who are not frugal. Some people want to maintain their current standard of living through retirement and some plan to decrease theirs.
But as far as the “no one told me!” kind of arguments, it’s kind of ridiculous. There are dozens of options for people to get advice these days. I opened a new credit card through a new bank and they wanted to run me through a retirement discussion to get my online banking setup. Literally any bank will have this conversation with you. There are advisors all over (such as myself) who will gladly sit down with people. I think it’s more a case of people avoiding the topic than it is of having nowhere to get educated. The other factor is there is a lot of people who just think it’s all going to work out somehow without planning how. It might, but to me that’s too large of a risk and I just couldn’t take that approach.
I opened a new credit card through a new bank and they wanted to run me through a retirement discussion to get my online banking setup. Literally any bank will have this conversation with you.
Every time I go to my bank (usually only if I need a draft or to modify a mortgage) they try to sell me one of two things:
A personal unsecured loan at a rate approximately double the rate they can see I have on my unused HELOC
A mutual fund that will structurally underperform due to institutional imperatives in management and high fees.
I think both would be equally hazardous to my financial health.
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