A Fifth Of Canada's Working Baby Boomers Have Nothing Saved For Retirement

[waterloodude]

I could see a few things at play here:
- baby boom generation has seen the death of company pensions and lifetime employment, so they never thought about needing to jump between multiple companies during their career or saving for retirement (yeah, piss poor excuse but a lot of people can't seem to adapt to change)
- have bought into the idea of home ownership as an investment/retirement vehicle after becoming gun shy over the various market cycles (tech boom bust, banking boom bust), also explains still having a mortgage as they keep upgrading their home as an investment strategy
- thinking home ownership is the safest investment, they're financing the home purchases of their children by selling off their retirement investments or taking out mortgages on their fully owned home, perhaps thinking they'll be paid back/taken care of in the future while I suspect most of the kids just think this is an advance on their inheritance

 

[Smallcock]

I am the exact opposite of you.

I don't want to be the richest man in the cemetery. That makes no sense to me whatsoever.

The problem is that nobody knows when they're going to die, so the best way to prepare for retirement is to have enough assets that generate a fat perpetual income stream. If not, one might find themselves without any money when they need it most in their old age. For this reason, I'll inevitably die "rich" and all the better for my beneficiaries whomever they may be. In the interim, I enjoy life but spend wisely.

 

[The "Bone" Ranger]

You can buy an annuity from a life insurance company with a lump sum.

The problem is that nobody knows when they're going to die, so the best way to prepare for retirement is to have enough assets that generate a fat perpetual income stream. If not, one might find themselves without any money when they need it most in their old age. For this reason, I'll inevitably die "rich" and all the better for my beneficiaries whomever they may be. In the interim, I enjoy life but spend wisely.

 

[Keanu]

Some people are naturals at managing their money while others spend for today and never worry about tomorrow. It is the way we are wired. For me, spending the money and watching it all disappear has always created anxiety. When I finished school and started working, almost 80 percent of the money I earned was invested. There were no fancy cars that would depreciate, or high living. I stayed at home with my parents for 7 years until I got married. In that time about 300K of fresh investments were made in the US stock markets. After marriage I started spending and haven't stopped. About 15 years have passed and that 300K has grown to slightly under 1.4 million. In 5-7 years it should be around 3 million at which point I'll retire. I spend most of my money these days, and live well. The key was to sacrifice early, and give the money time. Sad they don't have many courses to teach people about life in school and save them so much stress.

 

[bigshot]

The key was to sacrifice early, and give the money time. Sad they don't have many courses to teach people about life in school and save them so much stress.

I always tell my kids that the best investment decision is to start early. If you spend and run up debt early on, you'll never get ahead of the curve...

 

[Occasionally]

I spend most of my money these days, and live well. The key was to sacrifice early, and give the money time. Sad they don't have many courses to teach people about life in school and save them so much stress.

Yup. High living like BMWs and new iPhones every year are expenses that drain your money. For someone who is established, no problem. For someone who can barely keep afloat and can't even buy their first home, big problem. Investments and real estate "should" go up in value. Of course, there's no guarantee. Like everyone, I've had my share of clunker stock picks that went in the toilet, but also my share of good gains and the best gains of all real estate. Never had one primary or investment property lose money. Even with all the fees and taxes you pay, they're still all winners.

People who spend like crazy miss out on appreciating value assets because they don't know any better, are spenders, or are impatient (which correlates to spending). To make good money, you got to save and bankroll funds and turn that money into more money.

The government tries to babysit everyone by taking money away and giving it back as pensions and such. The purpose is to protect people who blow their money (and also to give money to people who had bad jobs or stayed at home as a parent). Most people work and make decent money, yet the feds treat everyone with the same stroke like we're all idiots who can't budget.

Never the less, some people are still in the hole big time, and never caught onto appreciating assets. Missed out big time. Oh well, you can't babysit every crybaby who is broke.

 

[nottyboi]

This is what happens when you tax the middle class too high. They can't save enough for retirement.

some people just cannot save....

 

[Big Rig]

Some people are naturals at managing their money while others spend for today and never worry about tomorrow. It is the way we are wired. For me, spending the money and watching it all disappear has always created anxiety. When I finished school and started working, almost 80 percent of the money I earned was invested. There were no fancy cars that would depreciate, or high living. I stayed at home with my parents for 7 years until I got married. In that time about 300K of fresh investments were made in the US stock markets. After marriage I started spending and haven't stopped. About 15 years have passed and that 300K has grown to slightly under 1.4 million. In 5-7 years it should be around 3 million at which point I'll retire. I spend most of my money these days, and live well. The key was to sacrifice early, and give the money time. Sad they don't have many courses to teach people about life in school and save them so much stress.

And you invest in mutual funds to double your $ every 5-7 years?

 

[Occasionally]

The key was to sacrifice early, and give the money time. Sad they don't have many courses to teach people about life in school and save them so much stress.

To add more,

We never had courses on budgeting or life skills. The closest thing we had was keyboarding class in high school, and in junior high Family Studies class where kids are young and we're goofing around cooking an omelette which tasted like ass.

However, I remember someone saying they do teach this in high schools now. If that's true, then good on schools. About time. If they are going to teach kids about non-essential material like cumulus clouds and what is the derivative in a calculus question, then surely they can teach essential topics like family life, budgeting, and career paths.

I'm hoping schools do teach this now.

It will help high school kids get on the right foot regarding picking what career to go into, not going broke, and how to live on your own. All essential topics a student graduating high school soon should know about.

Someone will say...... that's not teachers responsibilities. That's up to the kids and their parents.

I disagree. Some kids need to be taught it as they won't do it themselves, their parents might be bad at it so they will not be a good source of learning, and if schools can spend hours teaching you how to play volleyball and calculate what the odds are pulling an ace from a deck given 5 cards (finite math), they can surely find time to teach fundamental skills a 16 year old will need very soon when they graduate.

It's such a "fits like a glove" moment, you'd think schools would be doing this for 100 years.....

Teach kids career path stuff
- This gives students an idea what sectors do, what kind of jobs available, pay, education needed
- This should help prevent kids saying "I have no idea what I want to do so I took art classes in university"

Teach kids budgeting
- No brainer. Helps kids save money for everyday living
- Also, can blend this into what kinds of assets you need to get approved for mortgages, getting accepted by landlords for rentals, car loan tips etc....
- Heck...... spoonfeed kids..... if you cut down your cable bill $20, that's $240/yr, $7.2k over 30 years, and compounded for opportunity costs (assuming someone banks it), is probably $30k over a lifetime (I made up the $30k part but you get the idea)

Teach kids job hunting skills
- This is a tougher one since anyone going to college/university won't need hardcore job hunting info for years, but they will probably need part time jobs
- So help them craft resumes, role play interviews, language to use and not use and such
- This can also lead to post-secondary requirements since some may require this. For me, all I did was submit my grades to 3 schools and I picked one. But sometimes schools are more demanding and you hear about kids needing to meet university reps in order to be considered. This kind of teaching can help too

 

[Jasmine Raine]

My dad would fall into this category. He is 2 years away from "retirement" with no savings, living paycheck to paycheck, relying on over draft every month and paying the minimum on his LOC.

I have taken over his finances. With my plan, he will be debt free in 2 years but I won't be able to get him a "savings" for his retirement. He has worked his whole life and will get CPP and OAS but that is all. I have to be prepared to take care him. Thankfully I have saved, have no debt and therefore I can manage it.

He will probably work until he is 70. If he can do that, then he may just have a chance at a good enough retirement. I just learned of this a couple of months ago. Wish I had known a few years so I could help do more with more time.

I can see how this could happen to so many others. Sad and scary at the same time. Add some other issues, medical, mental and you can see how seniors end up homeless on the street.

I am personally, the complete opposite to him. I consider my monthly savings like any other monthly bill that comes in. I stress like mad every month about my bills. It is an anxiety issue I have. It doesn't matter how much is the bank, how easily I can pay that extra high CC bill at Xmas during the month the money is due, doesn't matter if I save a grand a month, every month - I worry about money for the future. Like badly and all the time.

Then again I was a homeless teen at one point ( mom and dad where split, Dad and I didn't reconnect until later in life). That is where my anxiety stems from. I never want to be homeless or hungry again. It has been my driving force since 17. I am the type who could have millions in the bank and I would still feel itnisnnot enough money.

I can't wrap my head around people like my dad. Don't get me wrong, I love my poppi to pieces, but to not pay a single bill and fee "meh, I will get it next month" - nope. I would be climbing the walls, biting my nails, going completely mad. Weird how people's brains are all wired so differently.

I do agree that schools need to focus more on life skills and less on stupid shit. Learning to plan, save and budget with money is one skill every one needs to learn.

 

[Occasionally]

My dad would fall into this category. He is 2 years away from "retirement" with no savings, living paycheck to paycheck, relying on over draft every month and paying the minimum on his LOC.

I have taken over his finances. With my plan, he will be debt free in 2 years but I won't be able to get him a "savings" for his retirement. He has worked his whole life and will get CPP and OAS but that is all. I have to be prepared to take care him. Thankfully I have saved, have no debt and therefore I can manage it.

He will probably work until he is 70. If he can do that, then he may just have a chance at a good enough retirement. I just learned of this a couple of months ago. Wish I had known a few years so I could help do more with more time.

I can see how this could happen to so many others. Sad and scary at the same time. Add some other issues, medical, mental and you can see how seniors end up homeless on the street.

I am personally, the complete opposite to him. I consider my monthly savings like any other monthly bill that comes in. I stress like mad every month about my bills. It is an anxiety issue I have. It doesn't matter how much is the bank, how easily I can pay that extra high CC bill at Xmas during the month the money is due, doesn't matter if I save a grand a month, every month - I worry about money for the future. Like badly and all the time.

Then again I was a homeless teen at one point ( mom and dad where split, Dad and I didn't reconnect until later in life). That is where my anxiety stems from. I never want to be homeless or hungry again. It has been my driving force since 17. I am the type who could have millions in the bank and I would still feel itnisnnot enough money.

I can't wrap my head around people like my dad. Don't get me wrong, I love my poppi to pieces, but to not pay a single bill and fee "meh, I will get it next month" - nope. I would be climbing the walls, biting my nails, going completely mad. Weird how people's brains are all wired so differently.

I do agree that schools need to focus more on life skills and less on stupid shit. Learning to plan, save and budget with money is one skill every one needs to learn.

Good to see you have solid financial management. Among the most important life skills IMO. Some people will claim that old saying.... "money doesn't buy happiness". Bullshit. Name one dead broke guy who is happy as a clam, yet can't support his family and has debt which will never get paid off. Hard to find.

That's when you run into shitty family life, kids who feel like shit, it affects your work life, and the extreme end.... suicide.

I'd bet every dollar I have that the average person who has some dough and lives a comfortable life with money and job is happier than the above.

As for your mention about stress, maybe take a longer view of it to soothe your feelings. Break out Microsoft Excel and spend an hour putting together a budget, assets and road map where you think (and hope) you will be when you are 60.

Make some fancy formulas that calculate estimated savings per month compounded at a reasonable interest. Then do some estimates like what you think your home (if you own) is worth by then. Do whatever + and - revenue and costs and see what that magic $$$ net worth number is at 60.

If it's nice and high, I'm sure it'll make you feel better.

For me, I structured this. It's never an exact science, but as long as you can ballpark some numbers, that's good enough. I update it periodically:

Starting assets
Cash
Non-registered stock accounts personal
RRSP personal
TFSA personal
RRSP company
RPP company
DPSP company
Home equity (estimate)
Real estate investment equity (estimate)
= Current net worth. I actually treat all my possessions and car conservatively at $0. I don't have lingering credit card bills and such, so I don't bother adding a debt line

PLUS

Future paycheque income
Monthly paycheques
+ net annual bonus/mth (annual bonus / 12)
- monthly costs (necessities and typical discretionary)
- property tax prorated by month (annual /12)
= Monthly net savings on average.... it will go and down pending spending habits, property tax payments and people who get annual bonuses are usually lump sums, so this is a monthly average

PLUS

Estimated increases to personal RRSP (already factored out of net pay cheques) by myself into my RRSP (5%) every year
Estimated increases to retirement accounts by my company every year (RRSP matching and other account bonuses) every year

The above stuff are compounded at an annual interest rate of 3%

PLUS

Estimated lump sum real estate net gains from sale of properties every 5 years
Estimated increase to home equity worth vs. current equity... what I think this property will worth down the line. Mortgage will be done by then

Roll it all up and hopefully anyone doing a similar tracker gets a nice number by the time they are 60. And if it's nice, retire. Live off your $$$ and as a bonus, the government will send you money down the line!

An important thing is liquidity. You can have lots of assets, but if most of it is home equity, that doesn't help your cash flow unless you sell and downgrade, or get small mortgages or loans so you get cash. IMO best is to always have a balance of cash, stocks and home equity. So if you get fired and don't find a job for 6 months, you can still live comfortably and not worrying about paying for every day expenses. But not too much cash..... put it in a high interest 2% savings account or investments and hope they go up. Too much piles of cash sitting there at 0.5% interest does nothing. If that's the case, might as well pay down some of the mortgage.

 

[Jasmine Raine]

I wish a spread sheet would help. I am the type who could literally have millions in the bank and I would still fret every month. It is an anxiety that I have. Apparently as a result of PTSD from being a homeless teen.

It worked to make me a smarter person with savings and such but just sucks that every month will always feel like it is not enough.

I am better with it. Now it is only once a month when bills are due, where before it was all the time. Like daily. Checking accounts, counting cash, double and tripple checking billing dates, up late making calculations all the time. Horrible when I had loan debt which is why I can't carry debt at all. No loans, cars are paid cash, no CC debt past the 21/30 days grace period. I never do payment plans or those deals of " don't pay until May 2020". Everything is paid outright all the time. I only use my CCs for the points and cash back.

Money is a weird thing for me. Way back in the day when I was just starting out business wise, I would be horrible at invoicing. I felt like I was asking for money. Which I was but it is money I earned. However for the longest time it was painful and I would not invoice for months at a time. Again, all related to my teens years.

Probably why I have a hard time with being handed cash from clients. I prefer they put it in a dish by the table so I don't have to see it.

And holy shit - you should see me at Xmas. Every year my card gets flagged for suspicious use and I don't find out until it is declined at the machine. Let me tell you how my heart literally drops to the floor. Every time. And I know it is probably nothing, but man I am on that phone while driving to the bank, all while breathing a bag, having a panic attack. LOL. I know. I am nuts.

 

[renuck]

This thread has been some good reading! I'm picky about spending money (I'm a numbers person) and I used to run the finances but it was constant fights and stress with the S.O.. The last few years I've thrown in the towel and said fine you do it. We make decent money I think and we don't have as much disposable income as I think we should, nor are we saving what I think we should. We are saving some but it always feels like we are living paycheque to paycheque. I keep trying to get rid of services to save money - nobody watches cable TV in our house but last I looked our Rogers bill is nearly $700/mo. !!!! I want to limit or throttle data that our daughter uses, she just keeps adding more data as we go over. Her spending issues aren't the only reason (but a significant one) of why I'm considering a divorce.

Well I say considering, but I think I've already checked out and being the calculating type I'm trying to time it with our mortgage maturing next year so we don't get stuck with any unnecessary fees. I've already been looking into real estate - as in what I'm going to move into. And I've been getting plans together to invest, either in business or real estate. If/when I make it out of this I'll definitely be behind compared to most here but I'm looking forward to actually moving more into the black than red.

 

[kkelso]

This thread has been some good reading! I'm picky about spending money (I'm a numbers person) and I used to run the finances but it was constant fights and stress with the S.O.. The last few years I've thrown in the towel and said fine you do it. We make decent money I think and we don't have as much disposable income as I think we should, nor are we saving what I think we should. We are saving some but it always feels like we are living paycheque to paycheque. I keep trying to get rid of services to save money - nobody watches cable TV in our house but last I looked our Rogers bill is nearly $700/mo. !!!! I want to limit or throttle data that our daughter uses, she just keeps adding more data as we go over. Her spending issues aren't the only reason (but a significant one) of why I'm considering a divorce.

Well I say considering, but I think I've already checked out and being the calculating type I'm trying to time it with our mortgage maturing next year so we don't get stuck with any unnecessary fees. I've already been looking into real estate - as in what I'm going to move into. And I've been getting plans together to invest, either in business or real estate. If/when I make it out of this I'll definitely be behind compared to most here but I'm looking forward to actually moving more into the black than red.

Glad to hear you are making objective assessments leading up to a divorce.

How the HELL is your Rogers bill $700?

KK

 

[renuck]

I exaggerated a bit, I think it's about $630... and I have no idea why it's that high. We have some VIP channel package, did I mention no one watches TV in our house? I think there are 2 or 3 boxes kicking around here - only one is hooked up AFAIK. We have ~20GB data plan and we travel a bit so the S.O. will use the roam like home at $5-$10/day and also the daughter instead of waiting to use wifi. +++

 

[Butler1000]

I exaggerated a bit, I think it's about $630... and I have no idea why it's that high. We have some VIP channel package, did I mention no one watches TV in our house? I think there are 2 or 3 boxes kicking around here - only one is hooked up AFAIK. We have ~20GB data plan and we travel a bit so the S.O. will use the roam like home at $5-$10/day and also the daughter instead of waiting to use wifi. +++

Dude. Time to lay the hammer down. Kill the cable. Take it to basic. Don't ask. Tell.

As for phones. Tell them that's it. No roaming on vacation. Or pay for it out of their own pocket.

Do not let them whine this out. Don't get emotional about it. Just do it. And when they cry just say sorry but we just can't afford it. Calmly.

And just say that continuously. Don't get into minutia arguments. Just put your foot down.

 

[Butler1000]

Also I would suggest a safety deposit box at a credit union. And start quietly putting money in there.

Then start having a discussion with your SO about priorities and retirement. A serious one. And one with your daughter about finance. And the cut off point for her bills.

 

[Occasionally]

What most people need is phone, tv, internet:

Phone
- Don't know. I've had a company phone for almost 15 years that's all paid for... not really as it's a taxable benefit, which at the end of the day is about $30/mth out of pocket when it's income tax time. The last time I browsed cell phone plans for personal use was when Telus was around and I bought my first cell phone at Future Shop around 1999!
- Savings. Get rid of home landline, for cell phone find programs that have unlimited basic functions, when traveling, do those $5 or $10 all day Rogers/Bell deals so you don't get huge roaming charges, or just cut off data when traveling unless you really need it, activate Wi-Fi and hope there is good Wi-Fi hotspots at the hotel, resort or wherever you are traveling too

TV
- Cheapest way is to do those IPTV boxes, or find some good streaming sites and do that through your TV. Quality can be hit and miss because it's internet feeds, but the selection will be humongous
- For me, I do basic cable, where I bought out the Rogers cable box on a rent to own plan over 36 months at $8/mth 5 years ago. They had these promos at the Rogers store back in 2012 I think. So I bought it for about $300. It isn't a fancy PVR or have any fancy functions. It just does cable tv which is good enough for me. I have no idea if Rogers still has these kinds of promos. But perhaps not even worth it anyway since a lot of people seem to have bundle deals where they include the rental units for free anyway

Internet
- Assuming someone needs a decent amount of data, 150 gb or unlimited plans can be had for about $50 at independent places. You'll have to buy out a modem for about $100 though, but you have no monthly fees going forward

My set up
- Cell phone = from work. So I got lucky here
- No land line

TV/Internet bundle
- Rogers $100 = Unlimited internet + basic cable + free modem + no monthly modem fee. Fees increased to $110 lately, but I complained and got $10/mth off for 6 months.... will complain more later when it's due to go back to $110

 

[Occasionally]

I wish a spread sheet would help. I am the type who could literally have millions in the bank and I would still fret every month. It is an anxiety that I have. Apparently as a result of PTSD from being a homeless teen.

It worked to make me a smarter person with savings and such but just sucks that every month will always feel like it is not enough.

I am better with it. Now it is only once a month when bills are due, where before it was all the time. Like daily. Checking accounts, counting cash, double and tripple checking billing dates, up late making calculations all the time. Horrible when I had loan debt which is why I can't carry debt at all. No loans, cars are paid cash, no CC debt past the 21/30 days grace period. I never do payment plans or those deals of " don't pay until May 2020". Everything is paid outright all the time. I only use my CCs for the points and cash back.

Money is a weird thing for me. Way back in the day when I was just starting out business wise, I would be horrible at invoicing. I felt like I was asking for money. Which I was but it is money I earned. However for the longest time it was painful and I would not invoice for months at a time. Again, all related to my teens years.

Probably why I have a hard time with being handed cash from clients. I prefer they put it in a dish by the table so I don't have to see it.

And holy shit - you should see me at Xmas. Every year my card gets flagged for suspicious use and I don't find out until it is declined at the machine. Let me tell you how my heart literally drops to the floor. Every time. And I know it is probably nothing, but man I am on that phone while driving to the bank, all while breathing a bag, having a panic attack. LOL. I know. I am nuts.

That sucks. I can't help you with any PTSD stuff.

However, the government doles out around $1,000/mth to everyone in their senior years. Who knows how far $1,000+ /mth will get you down the line. I believe it's taxable, so your net amount will be less. But assuming someone's home is paid off, the net amount should be able to cover let's say monthly property tax (when split across 12 months), utilities, and probably car insurance. It won't cover everything, but probably half of an old person's monthly expenses should be covered with government issued funds. The key kicker is if someone is still paying $1,000/mth towards a mortgage. That can be a make or breaker.

 

[SupahotGavin]

I personally hate stats where we get "the average."

As I believe I'm below average when it comes to building a retirement nest egg. The reality is I have always invested in mutual funds and stocks, topped up my RRSP and earned a solid income. However, I have spent the last 20 years living carefree. I've traveled to over 60 countries and made some bad investments. I only have about $650k saved and I'm not sure even if I focus on the next 10 years to keep saving it will be be enough to stop working. I don't really consider my home an investment. Its worth $1M but so what I need a place to sleep after all. The cost of living in Toronto is too high. I will probably need to find a new city to live in during my golden years if I want my money to last.

But I dont regret a damn thing.

"I spent a lot of money on booze, birds, and fast cars. The rest I just squandered."