$1.7 million needed to retire!!!!!

[bigbuck]

I think retirement is doable for everyone. Biggest thing is to start as early as you can. There is no reason not to get 7-9% return through your 20s,30s, and 40s. As you get closer to your retirement and shift your investments 5% is probably more realistic.

$300 put away per month from 20 to 60 years old with an average of 8% return will put you over a million. I understand their is inflation but it's just an example, that's even 5 years earlier than the magic age of 65. If you can't average $300/month for those 40 years, its time to look in the mirror. Doesn't matter what income level you are at.

As most financial experts say "the first 100k invested is a pain in the ***** to accomplish, but once you achieve this you can really start to see the power of compound interest"

[Grizzly Adams1]

Originally Posted by 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 $$$$$$

You got er, once you don't have a mortgage, realize you can get by with one vehicle and health insurance won't cover you for travel, your income requirements decline dramatically. It's guys like Madoff that promote this crap.

"We had 32 million with Bernie, our life savings, now we can't pay the bills".

Grizz

[jstubbs]

I’m a young guy, mid 20s. Know a lot of older family and friends who are pretty successful small business owners. Almost every single one tells me if they were in my shoes, they’d go work for the RCMP or some sort of gov’t org where they put in their 25-30 years and retire with a big fat defined benefit pension before they’re even mid 50s.

Some days I really think that’s the way to do it. However, I previously worked for the Alberta Government, and I think grinding out 25 years there (or any gov’t office) might kill me faster than anything. And a guy certainly isn’t going to get rich working there either.

And realistically, what will retirement look like in 40 years? Will the retirement age be 75? Will OAS and CPP even exist, or be anywhere sufficient? Will the world be in shambles from a major world war? Will AI and robots be doing everything for us regardless like in WallE?

Originally Posted by HyperMOA

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.

Yes, but those entering the workforce today will be told in 20 years when they’re finally starting to consider retirement, that they need $3m to retire comfortably. Just like how 20 years before this article, they were saying you need $1m to retire comfortably.

[bigbuck]

Originally Posted by jstubbs

I’m a young guy, mid 20s. Know a lot of older family and friends who are pretty successful small business owners. Almost every single one tells me if they were in my shoes, they’d go work for the RCMP or some sort of gov’t org where they put in their 25-30 years and retire with a big fat defined benefit pension before they’re even mid 50s.

Some days I really think that’s the way to do it. However, I previously worked for the Alberta Government, and I think grinding out 25 years there (or any gov’t office) might kill me faster than anything. And a guy certainly isn’t going to get rich working there either.

And realistically, what will retirement look like in 40 years? Will the retirement age be 75? Will OAS and CPP even exist, or be anywhere sufficient? Will the world be in shambles from a major world war? Will AI and robots be doing everything for us regardless like in WallE?



Yes, but those entering the workforce today will be told in 20 years when they’re finally starting to consider retirement, that they need $3m to retire comfortably. Just like how 20 years before this article, they were saying you need $1m to retire comfortably.

Yes, for sure. But income should also increase. My Example was only $300/M. increase that to $500 which is still very attainable in my opinion and you have 2.6 or so million.

[HyperMOA]

Originally Posted by jstubbs

Yes, but those entering the workforce today will be told in 20 years when they’re finally starting to consider retirement, that they need $3m to retire comfortably. Just like how 20 years before this article, they were saying you need $1m to retire comfortably.

You are likely correct. 23 years ago I was talking coworker and we were talking about winning a million dollar lottery. He said anyone could retire winning that sum. I told him no. I said an older guy like himself could comfortably retire as his house was basically paid for. His kids grown and moving out and such. Me in my early 20s couldn’t retire with a million dollar lottery win. I’d be set for life but couldn’t retire. Once he saw the expenses I’d have to pay to purchase a house, raise kids, buy vehicles for 60 years not 20, he saw what I was saying. That didn’t even take inflation into account.

So I’m pretty sure you are right, in 20ish years it likely will be 3 million. So maybe bump up that minimum contribution now. AND START NOW!!! Wish I was smarter when I was your age. Even $100 a month would’ve helped. Time is on your side at this stage. Later in life, when you can, increase it more and more and more. The first million is the hardest. The second million will be easy comparatively. The third million will be gravy.

[I’d rather be outdoors]

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.

^This. Your future (and your children’s, grandchildren’s) futures have been mortgaged to pay for this type of reckless spending by the lieberals. Even if you’re able to squeeze out a retirement, are your offspring going to be able to own a house/retire in areas we live today? Voting matters folks, unless you subscribe to the “own nothing and will be happy” philosophy.

[Chowdowncowtown]

I think most people just don't have a good concept of how retirement finances work. This headline is based on what people are guessing they need to retire - how many respondents do you think have actually sat down and done the math?

[walker1]

Originally Posted by Big Sky

To quote the great philosopher, Cheryl Crow "It's not having what you want, it's wanting what you got."

" If it makes you happy, it can't be that bad..." another from Crow!!!!

No health means no happy IMO.
The 1.7 mil does not seat everyone for the reasons listed here. So many people live outside their means and the banks love seeing people line up to borrow/rent more money!
One vital key is paying off debt as fast as you can . I recall going for a loan when I first moved here as I had an old z-24 with 300k on it ( poor mans Z28!!!)
Denied . Would not loan me $ without any investments and me with 30 grand in student loans at the time as I went out of country ( USA)for my second degree with the dollar at .68.
Times were tough.
I recall stating in my head that it was hard to invest for the future when I was in so much debt in the present!!!
I did take the advice and afforded 50 bucks a month into an RRSP and was able to secure a small loan a year later.
I thought writing a book being a recent University grad with all the debt and had the name picked out....... Trying Times!!!!

[big zeke]

A few key points to keep in mind:

-Start early. If you start retirement saving too late, there is no way you can save enough to build a significant nest egg. Compounding will have a much bigger impact than most people think.
-Know your expenses. Many savers have little clue where their income goes or where they can cut back if needed. We've been tracking spend monthly for years and know quite precisely what our spend is and what our savings are
-Reduce investment risk as you age. As your nest egg grows you will want to be more defensive, losing 20% of your nest egg at 25 will be much easier to recover than the same % loss at 55
-You probably want to plan to retire early. Employability drops significantly as you age...try applying for a new job at 55 or 60, it's a longshot. Your health might limit your working life as well.
-Do some simple modelling. It's called a sinking fund calculation and it will give you a sense of retirement plans and nest egg size. You'll want to run a few cases varying retirement duration, inflation and retirement spend.
-Take a critical look at debt and debt cost. Pay off high interest debt promptly. Being debt free allows more flexibility unless you have a guaranteed high return investment...these are hard to find.

The certainty of a DB pension may seem attractive but any equity disappears when you die...a nest egg won't do that and some generational wealth can be passed on. Keep in mind if your DB benefits can't cover your costs there is little you can do to fix it.

[jungleboy]

Originally Posted by jstubbs

I’m a young guy, mid 20s. Know a lot of older family and friends who are pretty successful small business owners. Almost every single one tells me if they were in my shoes, they’d go work for the RCMP or some sort of gov’t org where they put in their 25-30 years and retire with a big fat defined benefit pension before they’re even mid 50s.

Some days I really think that’s the way to do it. However, I previously worked for the Alberta Government, and I think grinding out 25 years there (or any gov’t office) might kill me faster than anything. And a guy certainly isn’t going to get rich working there either.

And realistically, what will retirement look like in 40 years? Will the retirement age be 75? Will OAS and CPP even exist, or be anywhere sufficient? Will the world be in shambles from a major world war? Will AI and robots be doing everything for us regardless like in WallE?



Yes, but those entering the workforce today will be told in 20 years when they’re finally starting to consider retirement, that they need $3m to retire comfortably. Just like how 20 years before this article, they were saying you need $1m to retire comfortably.

I’m 60 and I recall in my twenties the standard threat hanging over everyone’s head was “ will there even be a Canada pension when we turn 65”. It still exists. Is it sufficient? No but it is a start point and you should expect to supplement it with your own savings/ investments.
1.7 mil is un realistic for the vast majority . Yes if you are a double income with no kids and very vigilant about socking away money ,then sure.

The majority however have 2 or three kids they have two incomes but most of one of them is paying for childcare , they live paycheque to paycheque because mortgages or rent, groceries,vehicles, daycare, education cost, university debt, utilities ,carbon taxes, taxes taxes and some more taxes on top of the taxes

I would venture a guess that most investment gurus that push this Idea really need you to invest with them as much as possible . Not so much your retirement security but for their own personal portfolio

[nelsonob1]

Just about everyone I know who retires, including the guys who manage it in their late fifties, either dies, turns stupid or hates it.

I am not going to retire - slow down for sure - maybe eventually just a couple of jobs a month (I'm a commercial appraiser) and redirect my energies into my hobbies but screw retirement until i need a diaper or no longer understand basic math.

Just the thought of having the entire hunting season off, and only working a day or two a week sounds like heaven.

[I’d rather be outdoors]

Originally Posted by nelsonob1

Just about everyone I know who retires, including the guys who manage it in their late fifties, either dies, turns stupid or hates it.

I am not going to retire - slow down for sure - maybe eventually just a couple of jobs a month (I'm a commercial appraiser) and redirect my energies into my hobbies but screw retirement until i need a diaper or no longer understand basic math.

Just the thought of having the entire hunting season off, and only working a day or two a week sounds like heaven.

Personal choice, and sounds like you’ve found something you really enjoy doing. There are others who don’t and want out of the rat race in a reasonable time and current political winds aren’t helping to achieve that goal and becoming less achievable every day for future generations.

[Grizzly Adams1]

Originally Posted by nelsonob1

Just about everyone I know who retires, including the guys who manage it in their late fifties, either dies, turns stupid or hates it.

I am not going to retire - slow down for sure - maybe eventually just a couple of jobs a month (I'm a commercial appraiser) and redirect my energies into my hobbies but screw retirement until i need a diaper or no longer understand basic math.

Just the thought of having the entire hunting season off, and only working a day or two a week sounds like heaven.

They meet at the local A&W every morning for coffee and to discuss their aches , pains, and gossip. The place is packed, Not me.

Grizz

[crazyperch]

I might be wrong, but the $1.7 would be your net worth. so if you are including your home that should be paid off by the time one retires, the $1.7 isn't far off.
still a little high i think, but not by much.

[EZM]

I think there are some great points here ..... one thing I think of as I approach retirement in the next 10 years is how I want to live my life after ....

....and if you have a simple life, don't have expensive hobbies and don't travel too much to fancy places, and a home paid for and some investment that return a dividend large enough to live on .... then maybe $1.7 is enough.

If you want to travel, and have expensive hobbies, like to live high on the hog, maybe that number is much larger.

It really just depends on how much money you need/want to be able to spend per year after you retire. From there the math should be easy to back into to determine what the $ number is that you need to start with.

[-JR-]

Yup..... Sounds about right if you live in Vancouver !

[Map Maker]

The reporter who did this report threw in the word “ 1.7m of savings”.
It’s not savings and it is net worth of 1.7m.
House, pension and everything else.

[pikergolf]

Originally Posted by jstubbs

I’m a young guy, mid 20s. Know a lot of older family and friends who are pretty successful small business owners. Almost every single one tells me if they were in my shoes, they’d go work for the RCMP or some sort of gov’t org where they put in their 25-30 years and retire with a big fat defined benefit pension before they’re even mid 50s.

Some days I really think that’s the way to do it. However, I previously worked for the Alberta Government, and I think grinding out 25 years there (or any gov’t office) might kill me faster than anything. And a guy certainly isn’t going to get rich working there either.

And realistically, what will retirement look like in 40 years? Will the retirement age be 75? Will OAS and CPP even exist, or be anywhere sufficient? Will the world be in shambles from a major world war? Will AI and robots be doing everything for us regardless like in WallE?



Yes, but those entering the workforce today will be told in 20 years when they’re finally starting to consider retirement, that they need $3m to retire comfortably. Just like how 20 years before this article, they were saying you need $1m to retire comfortably.

That is just some terrible information, not even close for the federal public service. The retirement age for them without penalty is 60, 2% of wages for every year worked up to a maximum of 70%. You get penalized for every year you are short of 60. Still a very sweet deal but nothing like your friends are telling you.

[waldedw]

So many variables in that assessment of 1.7M to retire, are you travelers and spend $30K a year on vacations, are you retiring in a huge city like Vancouver or Toronto when the cost of living is much higher, how is your health, are you still carrying debt, mortgage, do you have a 2nd winter home in Arizona or a cabin at the lake to maintain, or both, do you have a defined pension plan, etc. etc. everyone is different but I guess when you make general statements they have to be taken for just that.

[CanuckShooter]

Originally Posted by pikergolf

That is just some terrible information, not even close for the federal public service. The retirement age for them without penalty is 60, 2% of wages for every year worked up to a maximum of 70%. You get penalized for every year you are short of 60. Still a very sweet deal but nothing like your friends are telling you.

I worked 40+ years of shift work in the pulp/paper industry, my brother put in 22 years in federal service 9-5 office work. Our gross pensions are almost identical. So I'd say he did pretty good in comparison. I messed up and should have put my 44 years into federal service.

What nobody has mentioned Tax Free Savings Accounts, those are the game changer. No income tax on earnings, no tax on withdrawals. Drawing from that savings account won't have your Old Age Security clawed back, also won't put your income into a level where you lose a lot of tax credits. HST rebates, age credits for example. Socking it away in RRSPs will have tax consequences and people don't talk about that.

[Phil McCracken]

Originally Posted by pikergolf

That is just some terrible information, not even close for the federal public service. The retirement age for them without penalty is 60, 2% of wages for every year worked up to a maximum of 70%. You get penalized for every year you are short of 60. Still a very sweet deal but nothing like your friends are telling you.

RCMP is different that the Public Service...

[Big Sky]

Originally Posted by CanuckShooter

What nobody has mentioned Tax Free Savings Accounts, those are the game changer. No income tax on earnings, no tax on withdrawals. Drawing from that savings account won't have your Old Age Security clawed back, also won't put your income into a level where you lose a lot of tax credits. HST rebates, age credits for example. Socking it away in RRSPs will have tax consequences and people don't talk about that.

They both have their place and people should be making use of each of them.

Agree with the above. The tax consequences of a single person or widow(er) dying with a large amount of money in an RRSP/RIF can be considerable.

[eyeflyer]

1.7 million is a ridiculous amount. If you have no mortgage or vehicle payment and collect a pension, OAS and CPP you can live easily on 100K a year or even less.

[Dean2]

Originally Posted by eyeflyer

1.7 million is a ridiculous amount. If you have no mortgage or vehicle payment and collect a pension, OAS and CPP you can live easily on 100K a year or even less.

If you make 100,000 a year, a big chunk of your OAS gets clawed back. CPP amounts to $15,600 a year. Even with a good DB pension, pulling $85,000 a year means you made more than 125,000 a year. About the only DB pensions left are civil service, virtually no private companies offer them any more. Civil servants are necessary, but it is private business and individual taxpayers that gets to pay for all of that.

[Dean2]

There is on this thread, as there is so often on social media, some good points and some decent advice, but also some stuff that is really incomplete and lots of other stuff that is just dead wrong.

The lifetime TFSA contribution limit for someone who is now 65 is 91,000 dollars. It is a good savings vehicle going forward, tax effective and very well suited to anyone earning less than $60,000 a year. Even if you earn over 60,000, you should make your full annual contribution, however, over $60,000, your marginal tax rate makes RRSPs more tax effective, especially as your income goes up. RRSPs were first introduced in 1957 and since 1991 the max contribution limit has been 18% of income to a max of $11,500 in 1991. The max has increased every year and now stands at $31,560 (so you need an income of 175,000 to hit max).

Thus, the lifetime contribution limit for that same person in RRSPs, assuming no company funded pension, is well over 600,000 if he started working at 18. If he qualified for the maximum RRSP contribution limit, he got almost half the money he contributed back in tax refunds, which is enough to max out your TFSA limit every year and have more than half left over. If he put the full max in every year, yes he is going to have a pot load of money in RRSPs at age 65. Yes, there are tax implications to that, including OAS claw back, subsidies you don’t get, rebates that aren’t yours, no subsidy for extended care homes etc. What you don’t worry about when you have 3 million in RRSPs are all of those tax implications. You don’t need OAS, you don’t need heat and family subsidies, you can afford to pay the full price of a private room in a concierge service level extended care facility. You also have enough money to do pretty much whatever you want till you have to move into the home. If you croak early with 3 million in your RRSP and no spouse, oh well, your kids only get the net of tax amount, still a pretty good bequest, and your TFSA balance will likely take care of at least part of the tax bill, with the rest coming out of RRSP funds.

Don’t feel sorry for the people with too much money in RRSPs. There is NO downside to having more money in retirement than you need, and if you were making enough money to afford the max contribution limits, you still had more than enough income to live REALLY well on the way to retirement. The folks that have the far more difficult balancing act are those that are nowhere near making the money to do max RRSP contributions. Those are the folks that need quality financial advice (also the ones least likely to get it) and need to really study how they can maximize their savings while also living well during their working and child rearing years. If you have a kid that is 16 and earning income, give him a copy of the wealthy Barber and get them started on a savings program.

[DirtShooter]

Got nearly a half mil in my pension with 25+ years to go before retirement, guess I'll keep racking up the hours with that.... Nice thing is not 1 dime has been put in by me. 100% has been employer contributed and the fund managers doing their thing.

[jstubbs]

Originally Posted by DirtShooter

Got nearly a half mil in my pension with 25+ years to go before retirement, guess I'll keep racking up the hours with that.... Nice thing is not 1 dime has been put in by me. 100% has been employer contributed and the fund managers doing their thing.

You guys hiring? Lol

[Hooter]

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.

I’m with you! My wife and I try to balance saving for retirement and still enjoying the money we have with our kids while they still want to be with us.

I’ve seen too many people say “when I retire I’m going to <insert whatever you like>” and they never end up making it to retirement.

I think you need to plan for retirement, but not devote your life to saving for it.

[Dean2]

Originally Posted by Hooter

I’m with you! My wife and I try to balance saving for retirement and still enjoying the money we have with our kids while they still want to be with us.

I’ve seen too many people say “when I retire I’m going to <insert whatever you like>” and they never end up making it to retirement.

I think you need to plan for retirement, but not devote your life to saving for it.

I see these kinds of comments a lot. There is a BIG difference between not being able to climb a mountain in your retirement and not being able to pay for heat and food.

Only 37% of Canadian men have a company pension. Of that 37%, fully 3/4s are government workers. Only 40 % of all Canadians have an RRSP and only 10% of those that have an rrsp max out their contribution room.

If you retire on CPP, OAS and have the Income supplement, it will be a truly miserable retirement.

I am not saying do nothing fun all your life to save for retirement, balance is good. However like the ant and the grasshopper, about 70% of Canadians are WAY under saving for retirement. That is not a surprise when surveys conclude that 80% of Canadians have not retirement plan in place.

You guys do whatever you want, but this constant nonsense of I will just live within my means when I retire is not going to work out well.

[The Cook]

Originally Posted by Grizzly Adams1

You got er, once you don't have a mortgage, realize you can get by with one vehicle and health insurance won't cover you for travel, your income requirements decline dramatically. It's guys like Madoff that promote this crap.

"We had 32 million with Bernie, our life savings, now we can't pay the bills".

Grizz

Paid off the mortgage & line of credit the year before I retired (6.5 years ago). Without having to pay $2500 a month to the bank That money is mine and living in the most expensive town in Alberta every penny counts. We have more than enough to live (70k combined income) a normal life. Being debt free is a must for retiring happily ever after.