$1.7 million needed to retire!!!!!

[badbrass]

Like I say! It BS!

[HVA7mm]

Originally Posted by huntinstuff

Lol

1.7 million at 65 means a 67% chance someone will inherit 1.3 million when you die

I hear that bs daily...."oh when i tun 65 im gonna retire and travel and climb mountains and windsurf .....bull****.....

You likely will have heart meds, be unfit for travel insurance and be less interested in bikinis and more interested in a nap.......

Do things throughout life. Betting on retirement fun at 65 is a pipe dream for most

Stop buying crap you dont need with money you dont have.

This is absolutely true, the bucket list things that people want to do after they retire at 65 isn't likely to happen. There are already things that I thought that I wanted to buy and wanted to do in my 40's that I couldn't care less about now. My wife and I have always struck a pretty good balance between doing what we want while still being pretty fiscally responsible, and I don't really see a need for that to change anytime soon.

I'm nearing 53 and was planning to start pulling my company pension in 4-6 years, but I'm at the point now that if I get offered a bag of Doritos to exit the company earlier, you'll just see my tire smoke wafting out of the parking lot. I work with a handful of guys that could have pulled their full db pension at 55, (10-12 years ago, plus they turned down a couple of early retirement packages) and are still there. They have no idea how much money they've left on the table. Corporations love people like that, as statistically they won't likely be cutting them very many pension cheques.

The way I see it, if I was going to be rich, it would have happened long ago. I'd much rather exit the workforce earlier in life while still "healthy", than to stick it out for another decade or so thinking that I'm going to be "wealthy". Life's short folks.

[Cageyc]

I don’t have 1.7 and am retired. I’m speculating but I think that this info came from investment firms that want to throw a scare into you to give them more of your hard earned $$$$$$

[no-regard]

Interesting observations here, I appreciate the differing views.

I've been giving this topic a little more thought than usual the past few days as I am trying to decide if I should buyback 2.5 years of missed pension, at a cost of $50K. Much to my surprise my financial advisor is suggesting I buy the pension, even though it will mean him not getting that money to invest. He says it is a no brainer.

Any thoughts about this?

[coolpete1]

im gonna sell my house and land , pack up and move somewhere cheap and warm , eventually dying on a bench with ice cream and tequila spilt all over me.

[pikeman06]

Exactly, better go where your dollar has some stroke. Guys get all defensive and ignorant when any of us talk about pulling out of alberta or Canada....trust me I put in my time sacrificed 35 years of my life and built a good nest egg. Go ahead and retire where they take half your paycheck then it costs 200 bux to fill up your truck to drive the kids to hockey then pay 80 bux for a bag of groceries then go open your power bill and tell me how your retirement is panning out. Pride is one thing, common sense and self preservation is a completely different thing. To each and their own. As the young uns say you be you ill be me.

[Camdec]

Desired retirement is all relative to one’s standard of living. Many retire and live happily on incomes much lower than others desire. Some can’t make ends meet on incomes others can’t fathom. Inflation is a big factor. It won’t stay at 6-7% forever, but does need to be considered. $1.7M is a grey area number to start with, not knowing if we are talking registered or non-registered money.

Did you know that there are some fee hungry, rip off, con artist, financial planners that may actually help you make sense of the options? Do your research, but if you’d rather go it alone all the power to you.

[calgarychef]

Originally Posted by Grizzly Adams1

What's a comfortable retirement ? If you plan on continuing to live what some of us would consider an extravagant life style, your income will have to match that, but most seniors tend to reduce their expectations and expenditures as they age and physical limitations come into play.
These numbers usually come from investment bankers who have a stake in encouraging you to place as much of your hard earned dollars in their care. In the final analysis and it happens more often than we care to think, there is no guarantee that after working 40 to 50 years that there will be a nice nest egg waiting for you.

Better enjoy life as you live it, not spend it trying to achieve a certain bank balance, granted we now live longer, but the "golden Years" are a myth.

Grizz

Agree. Live and enjoy while you can.

[fishnguy]

Median (after-tax) income of Canadian households was 73,000 in 2020 (source). So that would take about 25 years to save $1.7M, depositing the entire income to the savings account. So… dream on?

[HyperMOA]

Originally Posted by fishnguy

Median (after-tax) income of Canadian households was 73,000 in 2020 (source). So that would take about 25 years to save $1.7M, depositing the entire income to the savings account. So… dream on?

In 25 years that investment should double from growth over 3 times.

[fishnguy]

^ Sure, but the entire income would have to be invested, every cent of it, for 25 years.

The trend I see lately (past few years) is that there are more and more seniors working low paying jobs, such as cleaning floors in Costco, organizing shelves in Walmart, Fast Food, etc.

[HyperMOA]

Originally Posted by fishnguy

^ Sure, but the entire income would have to be invested, every cent of it, for 25 years.

The trend I see lately (past few years) is that there are more and more seniors working low paying jobs, such as cleaning floors in Costco, organizing shelves in Walmart, Fast Food, etc.

No. That’s incorrect. Let’s say a couple graduate university and enter the work force at 22. In 27 years if they have saved $425,000, without saving another penny, they should see it grow to 1.7 million by the age of 65. Of course that’s not a guarantee, or really wise retirement planning. Just as rules of thumb go it is realistic.

So now between the age of 22 to 49 they need to save $425,000. So each individual would need to save about $655 per month. This isn’t taking into account the growth of this money either over the 27 years of deposits. Likely it’s closer to $350 per person per month to reach these goals.

[NCC]

Originally Posted by HyperMOA

In a decade the gas bill may be $1000 a month through the winter.

My gas bill for January was $1000 (2 houses, 2 shops).

I’d be surprised if 10% of Canadians retired with $1 000 000 in savings, not including their primary residence.

I also agree to do things while you can. Travelling when you have to pee every ten minutes doesn’t look like fun.

[fishnguy]

Originally Posted by HyperMOA

No. That’s incorrect. Let’s say a couple graduate university and enter the work force at 22. In 27 years if they have saved $425,000, without saving another penny, they should see it grow to 1.7 million by the age of 65. Of course that’s not a guarantee, or really wise retirement planning. Just as rules of thumb go it is realistic.

So now between the age of 22 to 49 they need to save $425,000. So each individual would need to save about $655 per month. This isn’t taking into account the growth of this money either over the 27 years of deposits. Likely it’s closer to $350 per person per month to reach these goals.

It is correct, but just one perspective. Yours is another that is also correct (though I did not do the math on that account).

My point is that if you check the balances of savings and investment accounts of an average pre-retirement age Canadian, the story would write itself. So, unless you own a house that has greatly appreciated in value over the years, having $1.7M saved up for the retirement is a pipe dream for absolute majority of Canadians. To further expand, an average Canadian will probably make about (or less than) $2.5M in total, pre-tax, in their lifetime, working full-time for 45-50 years. In other words, with $1.7M banked, people are expecting to be living better (and probably significantly so) once retired than they did while working, which isn't going to happen for absolute majority of individuals and households in Canada. Note, that I am not talking about how and how much anyone should spend or save, I am talking about the reality as reflected by the bank accounts (which I have seen plenty of) and the general way people live prior and after retirement, if that makes sense.

[HyperMOA]

Originally Posted by fishnguy

It is correct, but just one perspective. Yours is another that is also correct (though I did not do the math on that account).

My point is that if you check the balances of savings and investment accounts of an average pre-retirement age Canadian, the story would write itself. So, unless you own a house that has greatly appreciated in value over the years, having $1.7M saved up for the retirement is a pipe dream for absolute majority of Canadians. To further expand, an average Canadian will probably make about (or less than) $2.5M in total, pre-tax, in their lifetime, working full-time for 45-50 years. In other words, with $1.7M banked, people are expecting to be living better (and probably significantly so) once retired than they did while working, which isn't going to happen for absolute majority of individuals and households in Canada. Note, that I am not talking about how and how much anyone should spend or save, I am talking about the reality as reflected by the bank accounts (which I have seen plenty of) and the general way people live prior and after retirement, if that makes sense.

I’m not disagreeing with what you say here, what I was saying is incorrect was that you say a couple would have to save every dollar of after tax money for 25 years to save 1.7 million. That’s not true. If a couple saved every dollar for 25 years it would likely be in the 4.5-5 million dollar range.

I’m not saying every Canadian can do this either. I’m not saying it’s normal. I’m also not saying somebody that is 63 right now should be at this level. But if you turned 18 today, saving $300-400 a month shouldn’t be all that hard. If you did that, you’d hit that 1.7 million mark fairly easily.

[fishnguy]

^ If you save $1,000 a month with an annual rate of return of 5%, you will come up with $1.5M after 40 years, unless my cold is messing with my head, lol.

My point is that the survey suggests that this and that, but the expectations seem to be extremely high. There was no way I could save $300-400 a month when I was 18 (and much further down the line).

[dgl1948]

I am going on to 20 years in retirement I think that number is close. You do not need that number in the bank on the day you retire but to live a reasonable retirement you will be close to those numbers when things are said and done. Take that number divided the number of years you are probably going to live. You will be surprised. There is a reason they call it the golden years.

[MountainTi]

Originally Posted by fishnguy

Median (after-tax) income of Canadian households was 73,000 in 2020 (source). So that would take about 25 years to save $1.7M, depositing the entire income to the savings account. So… dream on?

The people that need $1.7 million to retire today joined the workforce in the early to mid 70's. Median income was less than $10000. Tough go to bank $1.7 million in 47 years starting out with those wages

[Mavrick]

I never believed in giving my money to some neck tie to make his 1.7 million retirement.

I spent my money on a good bit of land, good equipment that could keep me farming a little till the day I grab my chest and die, because I couldn’t imagine not working. But I’m living my best retirement life and working at my own pace.

My wife and I want for nothing, but we are not jet setting people that need big money neither. We live a simple life, spend a ton of time with our children and grandchildren, horses trips to the mountains, fish, hunt, and many hours around a fire.

Each their own but we consider ourselves retired, and I certainly don’t have 1.7 million in the bank.

[sns2]

Originally Posted by huntinstuff

Lol

1.7 million at 65 means a 67% chance someone will inherit 1.3 million when you die

I hear that bs daily...."oh when i tun 65 im gonna retire and travel and climb mountains and windsurf .....bull****.....

You likely will have heart meds, be unfit for travel insurance and be less interested in bikinis and more interested in a nap.......

Do things throughout life. Betting on retirement fun at 65 is a pipe dream for most

Stop buying crap you dont need with money you dont have.

Randy, AO should pay you to be a “common sense” columnist. You are bang on!

PS: Still got your accubonds. They ain’t going anywhere.

[58thecat]

Originally Posted by badbrass

Like I say! It BS!

Yup, I ain’t no millionaire and am very comfortable retiring at 54 but I never kept up with the Jones, paid my biggest depts off as fast as possible, made sound investments ....all while raising a family and enjoying life.

Sounds all awesome but we too had our fair share up ups and downs like anyone else.

[58thecat]

Originally Posted by schreyer

I’ve been putting away since I was in my early twenties. I still have about another 25 years of work to go before I retire. I max out what my company contributes to RRSPS’s.

I don’t plan on winning the lotto, nor do I expect to get paid if a family member passes.

I’ve read the book called The Wealthy Barber. It would be a smart move in schools to have that book being mandatory to pass.

That sounds similar to what I started too, age 20 started investing, age 25 bought my first fixer upper house and went from there, small baby steps with a lot of away from work sweat equity to sweeten the pot.

[Talking moose]

I put all my money into partying until I was 35.
Now I put in 18 bucks for every hour worked into rrsps.
All you skool kids and youngsters reading this I advise you go this route.
Tons of regrets but tons of fun as well.

(Don’t do this)

[I’d rather be outdoors]

Originally Posted by fishnguy

Median (after-tax) income of Canadian households was 73,000 in 2020 (source). So that would take about 25 years to save $1.7M, depositing the entire income to the savings account. So… dream on?

Bingo. Cost of living is through the roof. Reality starting to set in for some that retirement (like home ownership), is just a dream because of reckless lieberal spending on non-bread & butter issues. This serves as a gateway to accepting the “you’ll own nothing and be happy” philosophy. The core of the problem is spending.

[HyperMOA]

Originally Posted by fishnguy

^ If you save $1,000 a month with an annual rate of return of 5%, you will come up with $1.5M after 40 years, unless my cold is messing with my head, lol.

My point is that the survey suggests that this and that, but the expectations seem to be extremely high. There was no way I could save $300-400 a month when I was 18 (and much further down the line).

Was minimum wage $15 when you were 18? If you are closer to retirement than 18 like I said this may not apply to you. If you are entering the workforce today it is likely doable. Working at a gas station on minimum wage nowadays is $32,000 a year. When I was 18, working at the same gas station paid under $10,000 a year. If a kid can’t put away $300 they are choosing not to. Don’t worry, I wish I had half the money I invested in the bar scene when I was in my 20s. If I did, I likely could cut 5-10 years off my retirement plan.

[Reeves1]

I was born with nothing.....and I still have most of it

(Plus 3 Pintos ! )

[bigbuck]

Originally Posted by Sundancefisher

Funny. We read that book also when we moved out. It’s been useful. It’s strategy is flexible as you age and income changes.

Too many kids these day are on the “need the newest and latest” bandwagon. The 2023 version of keeping up with the Jones’.

A iPhone 12 isn’t good enough. Need the 14. Ski jacket isn’t trendy enough. Eating out all the time. I see a lot of kids today needing to work till their 80.

It is a great book. I read it at 28 years old, wish I got my hands on it 10 years earlier.

[IL Bar]

I used to rent a house to a retired couple. They really opened my eyes. They had next to nothing and had raised a few kids. They’d been living off the government tit for years. He smoked and they never had to work and were always gone having coffee with someone or golfing or camping. The government built some new subsidized condos in the city and somehow these two got one and moved in there. Why work? The government will look after you if you don’t have money. That’s where your tax money goes supporting people like them.

One spring I was seeding the land they were renting the house on. I’d put in a 20 hour shift the day before as rain was coming and would finish spring seeding with one more day. As I was getting machine fueled ready to start the day he came out to visit me. He proceeded to tell me how young guys like me sure didn’t work as hard he did back when he grew up farming. I looked at him smiling and asked whose house he was living in? He shut up and left.

[elkhunter11]

Originally Posted by IL Bar

I used to rent a house to a retired couple. They really opened my eyes. They had next to nothing and had raised a few kids. They’d been living off the government tit for years. He smoked and they never had to work and were always gone having coffee with someone or golfing or camping. The government built some new subsidized condos in the city and somehow these two got one and moved in there. Why work? The government will look after you if you don’t have money. That’s where your tax money goes supporting people like them.

One spring I was seeding the land they were renting the house on. I’d put in a 20 hour shift the day before as rain was coming and would finish spring seeding with one more day. As I was getting machine fueled ready to start the day he came out to visit me. He proceeded to tell me how young guys like me sure didn’t work as hard he did back when he grew up farming. I looked at him smiling and asked whose house he was living in? He shut up and left.

The problem is ,that in today's society, people like you are becoming less common, and people like him, are becoming more common. The result is fewer people working to support more freeloaders, and anyone with common sense can see that will result in everyone's standard of living falling. Eventually, there won't be enough people working, to support the freeloaders, so the entire system will collapse, and money will probably be useless, with everyone trying to grab what they can to survive. At that point, it won't matter how much you saved for retirement. The question is how long it will take to get to that point.

[Dean2]

For all of you guys poopooing the article, I have a little challenge for you. Sit down and make an ACCURATE budget of your current monthly living costs. Record what you actually spend on all items, including property taxes, utilities, food, insurance, entertainment, car and house payments etc. If you pay any of these yearly, break them down into monthly for this exercise. Do not be tempted to leave out discretionary purchase, the annual trip to wherever and all the things we tend to miss when laying out a budget.
Now, let us assume that by the time you retire your house will be paid off and you will have no car payments anymore, so let’s deduct those two from the total.

Now, what is your monthly spend. My bet is you are spending at least $4,000 a month. Many of you will be spending quite a lot more than that. If you think you are going to spend less when you are retired, you are wrong. You will spend more because you have more free time to fill and because inflation at even 3% a year will add 50% to that spend in 12 years, $6,000 a month and double that spend in 24 years to $8,000. If you retire at 55 your monthly living costs are going to double by the time you hit 80, which is not an unreasonable life expectancy these days.

Current CPP and OAS, assuming you are 65, will barely cover half of your $4,000 spend (Max CPP at 65 is $1,307, max OAS $687) and OAS doesn’t kick in till you are 65. You could choose to collect CPP at age 60, but the amount would be reduced by 7.2% for every year prior to 65, so 36% less at 60, for $837/m.) The other $2,000 a month has to come from somewhere. If had your money in GICs for the last 15 years, you would need 1,400,000 to generate that income, without touching the principal. Even if you could earn dividend income of 5% you need $500,000, now and $1,000,000 by the time you hit 66, and $1,500,000 by 80. It is true that as you get older you can safely augment the income by taking money from the base principal, but you have to do that judiciously, in case you actually live to be a 100, by which time your monthly living costs could easily have grown to $16,000. Current cost for a placement in an assisted living home, with no government subsidy is $9,000 a month.

Depending on how Spartan a life style you want to live in retirement, you may be able to get away with less income, but inflation affects all of us. Property taxes, fuel, food, user fees will not stop going up. I know old folks in St Albert who had to sell the homes they bought in the 50s and 60s, because they could no longer afford the property taxes that had gone up to $450 a month, on the current market value of their homes. Take a look at folks you know that retired 10 or 15 years ago. How many of them are now struggling. You are far better off retiring with more than you need than less, and the easiest way to have that happen is to start at 20 or 25. Way harder to do starting at 45. Given there are very few defined benefit pensions anymore, do you kids a big favour and get them started saving at least $400 a month starting at 18. Once the habit is formed it will be there for life.

Money doesn’t buy happiness, but neither does poverty.