Comments on: Retirement Rant

By: KG

KG — Tue, 03 Nov 2009 00:06:00 +0000

I have a great fear of becoming the crazy cat women who is eating poor kitty’s food or being a Wal-mart greeter till I am 90 just to make ends meet. I am 44 yrs old and have 3 failed marriages behind me. Each husband took what little I might have had and left me deeper in debt. A new relationship with a great guy who feels the same as me on money matters now ) My significant other & I were forced to claim bankrupcy in 2006 when he lost his job and there was no work around. He moved out west afterwards and I followed the next year. Hindsight is a wonderful thing because had we known his earning potential out here, we could have avoided the bankrupcy. But no crystal ball to tell us that..fast forward to 2009 and we are debt free, own a small home with a small mortgage and credit cards that we use only to reestablish credit and pay off each pay cheque. My concern is that I have very little retirement money. I have 18K in a LIRA which couldn’t be touched in the bankrupcy and started a personal plan last winter. I put 8% of my net in bi-weekly, I also got a new job where my employer matches up to 5% (gross) for RRSP and a share program for non-reg funds. I am taking advantage of that, but still fear I am not doing enough. I am a cash only girl, and watch every penny I spend. So my question is, should I feel ok with 15% I put into RRSP’s every pay and another 10% into a non-reg fund? There is only so much to go around but because of poor life decisions and just plain bad luck (and lots of stupidity) I am so far behind where I should be. Will I ever be able to retire? Not looking for a fancy retirement, just the basics with a few extras here and there. There are still too many sleepless nights worrying about what lies ahead and once bankrupt, you get very possessive of your money and hate to spend it, just in case something might go wrong yet again!

By: christine tripp

christine tripp — Wed, 28 Oct 2009 00:31:49 +0000

Every year my husband would take out a $5000 loan from our bank in Feb and add to our RRSP, and every year, when we got our tax rebate, he would pay the loan off. This was the only way we could do it, with a family of 6 and an income (in the 70’s and 80’s) of roughly $40,000
At the time I hated it, I would complain because all I could see is our needs, our wants. 4 children, all growing, clothing, food, can’t we have ONE vacation?????
We never did have a trip anywhere (other then we once took them on a road trip to TO, the zoo there and stayed in a cheap motel for 2 days) with the children but, now, all grown and with families of their own, they don’t seem any worse for wear:)
My husband (and don’t tell him I said this) was right. Both self employed and with no other pension or benifits, at least, because of him, we will not be trying to live on CPP and old age in the not too distant years to come.
It hurt at the time, but now I can’t even remember what I wanted to spend that tax rebate on. A trip to Disney Land? A new living room set??
It doesn’t matter now and it shouldn’t of mattered then.
A family vacation in their past would never make up for having to take their parents in and support them, right?:)

By: Tara

Tara — Mon, 26 Oct 2009 21:29:59 +0000

The recommendations are all over the map, so I’m just saving as much as I possibly can as quickly as I can, since I don’t know what the future will bring. At 43, I’m currently saving 30% of my gross income and my mortgage is paid off. Will it ever be enough? Who knows, but I know I’ve done my best, that’s all I can do.

By: Sandy

Sandy — Mon, 26 Oct 2009 04:53:16 +0000

Lol at the ostrich very funny Big Cajun Man

Yes the retirement questions
How much?
How Long?
What do I need?
What have I got?
What can I sell?
What am I still going to be paying for?
These are the questions we all need to ask ourselves when we are thinking about retirement.

By: Big Cajun Man

Big Cajun Man — Fri, 23 Oct 2009 14:21:52 +0000

Will I retire? I have no idea, I could be like my father and have a stroke 2 years after he retired, but luckily he had a good pension (at least for a while, until his former Employer started declaring bankruptcy) and some health benefits, but he also SAVED a lot of money.

I want the choice to retire if I want to, and work part time if I want to, that is my goal for my “Golden Years”, be able to choose, and the only way that happens is with RRSP savings, Pension benefits and hopefully some other savings (like a TFSA).

Remember, if you are like an Ostrich with your head in the sand you are leaving your “arse” up to be KICKED!

C8j

By: Joan

Joan — Fri, 23 Oct 2009 11:36:32 +0000

Risa – thanks for the info you provided in your first paragraph!!

By: MP

MP — Fri, 23 Oct 2009 11:28:39 +0000

frugalistas.blogspot.com complains that contributions to company pension plans reduces the amount you can put into RRSPs, reducing your tax advantage. Frugalistas forgets that any contribution you make into your company pension plan reduces your taxable income – remember that line on your tax return you enter to put in the amount of your pension plan contribution.

Also Leslie P is quite correct. If you have a defined benefit plan at work plus your CPP, you are more likely to have less tax benefit from RRSPs when you retire – an RRSP makes sense if you don’t have a company pension plan, because you will be in a much lower tax bracket than those with defined benefit plans.

I’m putting my max into a TFSA for me, and one for my spouse – they will be a much better vehicle for retirement for me because I will have enough income from CPP and two pensions (my first place of work 15 years, and my second place of work if I stay, another 15 years) to replace 40% of my pre-retirement net income.

By: Canadian Personal Finance Blog » Blog Archive » Random Bond and TFSA Thoughts

Fri, 23 Oct 2009 10:09:27 +0000

[...] Vaz-Oxlade did a Retirement Rant that is both entertaining and informative. I dare you to tell her why you aren’t saving, I [...]

By: Stephanie H.

Stephanie H. — Fri, 23 Oct 2009 05:23:08 +0000

I want to enjoy retirement so I view every penny in my 401k as investment in my quality of life. I put away 12%, my employer matches 4% and once a year they add profit sharing at around 5%. Many planners suggest the cost of living won’t actually go down as much as most people believe. Your home will still have maintenance, taxes and insurance and at the same time health care costs increase. Also one thing to consider is if you don’t work you will have more time in your day to keep busy. Depending on your hobbies it could very expensive.

By: Susan

Susan — Fri, 23 Oct 2009 03:53:24 +0000

I was speaking with a friend of mine the other day. This gentleman and his wife are in the mid-fifties, left Newfoundland and started a new life in another province. While they never made huge money (they each make $12-15/hour now) they have always saved a little bit from each paycheque. He said that if you never start saving, you never will. As you see your savings account grow over time you will want to find ways to add a little more each payday to your savings account.

Another thing he has said over our discussions; stay out of malls/Walmart, etc. Sure, buy yourself something new once in a while when it is on sale but only buy what you need. Groceries may need to be bought weekly but you don’t need to buy new clothes each month!

For every new ‘thing’ that is brought into the house, it needs to be washed, cared for, dusted, maintained, etc. I am getting tired of all the upkeep of our family belongings that I am committed to getting rid of a lot of it and am even more committed to not bringing more home. Everything that you own, owns you!

By: Rita

Rita — Fri, 23 Oct 2009 02:22:09 +0000

I knew a couple in their early 80’s, who lived on a total income of about $23,000 per year ($11,500 each). I did their tax returns for them. They owned their own small house and had zero debt, grew their own vegetables, shopped smart and at that point in their lives were done with any major traveling. Oh, and they still managed to put some money into savings for unexpected emergencies.

That was about 10 years ago so I don’t know what inflation would put those numbers at now. But maybe the fact that they lived through the Great Depression meant that they knew the difference between needs and wants better than we do.

By: moneymagnet

moneymagnet — Thu, 22 Oct 2009 23:54:31 +0000

@ Risa
@ Leslie P

While not a financial advisor either, I would tend to agree w/ Risa’s assessment that because you have a pension and also make pension-adjusted RRSP contributions, you definitely are going to get ‘clawed back’. As well, since you mention that your ‘retirement’ income will essentially be the same as pre-retirement, you are going to be taxed large because, in theory, RRSP investments are supposed to be used when you know your income will be reduced (usually in retirement when most individuals have no other source of income). So, it might be better for you (since you will have pension income for retirement) to max out your TFSA and then, if you want the added comfort and have the extra funds, contribute to your RRSP, as Risa has suggested.

By: Risa

Risa — Thu, 22 Oct 2009 21:33:16 +0000

Leslie P.

I’d recommend going online to the Service Canada website, getting a personal access code (which they send you via snail mail), as you will then be able to see what your CPP contributions and expected income from CPP will be, and have updated OAS and other numbers. Googling “Service Canada” or “Service Canada Account” should get you to the right place.

Once you have real numbers in hand (how much CPP, OAS) and how much from your job pension, you should be able to calculate your expected income in retirement, and what that means for taxes and OAS clawbacks. (You know you must start withdrawing from your RRSP by a set amount each year after age 69/71 (they’ve changed the rules; can’t recall which on it is now), right?–you should be able to look those percentages up.) All income–RSP, job pension, any other investment income or odd jobs–counts against the OAS, whereas TFSA withdrawals do not. So if you’re going to end up with generous incomes such that pretty much all the OAS is clawed back, my read is (I am NOT a financial advisor; I’m a stay-at-home Mom with a love of math), you’d be better off using TFSAs. So I’d suggest maxing TFSAs, making sure you have no debt at retirement (not even a mortgage), having some fun in the present (cuz ya just never know!), and if there is anything left over, RSPs. Others have thoughts on this?

By: cassie

cassie — Thu, 22 Oct 2009 20:12:29 +0000

It’s amazing to me, the amount of people who are not saving. $5, $10, $20 a week is good. $50, $100, $200? Even better. But start SOMEWHERE.

My father is 50 years old and has zero savings. He’s currently living paycheck to paycheck and it scares me, because what happens to him 15-20 years from now when he’s too old to continue to work at his job? Will he have to come live with me or my other siblings? I don’t know. I’ve tried to get him to save. Tried to show him how. Nothing works and it makes me really angry and saddens me as well. Some people really just do not get it.

By: Jenn

Jenn — Thu, 22 Oct 2009 19:49:37 +0000

I too have run our numbers through various retirement calculators and then roll my eyes at the results. I agree they all seem to assume we’ll need something around 70%, but for me that seems completely unecessary – we’re living on less than that now. At the moment were saving/investing nearly 50% of our net so that we’ll have the option to retire in 9 years at ages 55/58. We’ll likely work 1-2 years longer and instead of saving we’ll spend virtually everything on one last round of the big ticket purchases before we retire (new roof, windows, furnace, major appliances, vehicle, etc) so we begin our retirement with no big looming expenses for many years if ever. We won’t be continuing to save and invest during retirement so right off the bat I know we can live on 50% of our old income, and that 50% currently includes mortgage, 2 vehicles, commuting costs, kid related expenses, and feeding a teenaged boy… If I take out all of the stuff which will be gone after retirement we’re likely down to 30%. I think those calculators are informative in showing you the long term impact of increasing or decreasing your contributions, but for showing you what you actually need? I think you need to take them with a huge grain of salt. As we all know from Gail, separating need from want is the key to most things.

I read something a few days ago that really made me stop and think. (I hope I’ve got the numbers right here). For every $1000/yr of after tax income you need in retirement you need about $40k saved (at 3%). Rather than thinking we all need to save massive amounts of money, perhaps we should all be thinking about cutting our expenses a little. Maybe the $100/mth satelite bill. Is that really worth saving up an extra $40k? Or a coffee each per day ($1.50×2x365=$1095)…. Just something to think about. I know it’s got me reevaluating the logic of staying in our “forever house” with the high property taxes and utilities. Paying off the mortgage is great but this place will always have major support costs and maintenance. On top of selling and getting access to the equity, we’d need waaaaaay less saved by renting or buying something tiny with lower utility,tax and maintenance bills. Maybe by rethinking our “needs” in retirement we can live on far less that we thought and can retire sooner.