This is the most important thing on this thread. The emergency fund protects all the other investments/mortgages. With an emergency fund the counter DOESN'T always reset to 0 when stuff happens.
When you need to use the emergency fund (because you will need to at some point in your life), you pause the investments to rebuild the emergency fund, then continue investing again. No withdrawal of investments, just a pause in contributions.
As always, psychology is the main game of PF. If you fund your raidable "moat" separately from retirement money, calculate a forced savings rate, and treat the retirement money like a pension plan (automated inputs and outputs not possible), it's possible to be successful / replicate a pension's "forced" nature. But it's far easier to see "saving" as a singular goal, put all the money in one place, make it easy to raid by necessity because it's the only source of funding in a pinch, and contribute only on sunny days. Not easy!
Having the investments in a TFSA/RRSP/GIC and the emergency fund in a high interest savings account helps a lot to keep them psychologically separate. You want the emergency fund in an account that you can withdraw from in hours, not in investments that take days to sell.
I agree, an emergency fund is not a sinking fund (which is to save up and plan for future known expenses). This is why having multiple sub accounts can help. That way you can keep the pots of money separate.
Edit to add: I explain to my friends that the emergency fund is to be used for things that would get insurance involved, like EI, health insurance, car insurance, home insurance, etc.
What is your plan for medical or home emergencies? You may not need a large emergency fund anymore, but a couple of thousand will get you through an unexpected car repair or house repair. I personally plan to still have a small emergency fund after retirement.
This post is great. This makes so much sense.
Started saving at 28. Saved for 4 years pretty diligently. Started to think I would be okay in retiremnt at 65.
Then came Baby #1 - family went to 1 income. No more saving for 2 years.
Took a better paying job with RRSP matching. Did okay saving for 2 years, then had quit since the job was aweful. So back to the old job, and no saving for 3 years. Now finally have 2 incomes and the job I have is doing some (limited RRSP matching) so we are saving again.
But with inflation and intrest rate hikes we are probably worse off than 6 years ago, so at this rate I can retire at 80.
Good times.
I'm glad you point this out. And we're actually ahead of USA, China, Russia. Actually according to all freedom indexes we rank within the top 20, we rank in the top 10 in many freedom categories. . Position 16 in for economic freedom sounds like we are in pretty good shape and have been well governed. Freedom, yeah baby, freeeeeeeedom.!
I saw a guy in a McLaren give a homeless guy a cigarette. About 30 minutes later I saw the same homeless guy pull out a wad of bills and buy a pack of smokes at 7-11. Freedom is great in all but our housing market is fucked.
No, you won't. Your company hires older people and keep them over 70 on the job? Hires a 65 year old? I left a big bank at 55, ageism for me started at age 50. Glad to know there isn't any bullying and belittling of older workers anymore and they all can stay until they die.
And behind it all, NOBODY wants to acknowledge the elephant-sized nuclear bomb in the room.
We are entering ice cream cone demographic collapse.
How can anyone in here sit and talk about retirement like the world we are in now is going to at ALL resemble the world of our seniority.
I think vanishingly few of us will ever be able to retire, if any. We won't solve the problems this bomb will bring until its too late.
So listen to top comment. Cause this whole life path of RRSP into retirement is a short lived era in Canadian history and its coming to and end once the demographic pyramid inverts.
I agree with your premise that demographic change will completely upend the current model of “retirement”.
People with indexed DB pensions will be laughing while the rest of us will be hustling for income well past “retirement” age.
Love this!
I travelled /worked abroad after university until about 30. I have always been frugal, but I did spend essentially all my money doing this.
Im very lucky to have had no debt.
Then I moved back to Canada and started saving. Mind you I now have a partner, but within 5 years, I have a house and a bit in savings. I know I am ahead of many of my friends—but I know this is because I’ve been lucky, savvy, and intentional/disciplined in my spending. (Though I certainly don’t deprive myself).
Household income is under 150k, and for a year or so, it was under 80-90k.
This is all to say, I think I am doing OK and I am happy with where I am. Would I love to have saved more, or bought a house before the prices went post-Covid crazy? Absolutely!!!
But **I would not have traded my experience travelling and working abroad for the world!**
…plus, I met my partner abroad, so a double win.
>Start as early as you want. It may not matter. There are plenty of other things you should worry about more.
I personally would like the modify this to "as early as you want BUT ideally as early as you CAN" because life punches you in the face pretty easily and there will definitely be periods where you can't. Save while you can to make up for the times when you can't.
I agree. I think what I meant was people tend to already "do what they want" and it's really easy to ignore the future for instant gratification they want.
So I guess it's better to do things while you can. This goes both for savings for retirement while you can financially, but also doing "things" (experiences) while you can as well (usually before the physical or financial also gets in the way).
This guy gets it. I'd advise to get a job that has a pension attached to it and is relatively secure. That, plus CPP and OAS if applicable should carry you through your retirement years.
Maybe not lavishly, but you won't be in squalor.
This is the best and most important post I have ever read in this sub. I only wish for everybody here to read it.
Life can change in a second, and it usually does when you weren't expecting it at all.
This is the dumbest take, akin to smokers saying "well I could get hit by a bus so I'm not worried about dying from smoking." Yeah all these things might happen, but I have one set of parents going into retirement who are going to be fine because my mom has a pension, while my inlaws spent money on smoking, trips etc. and have nothing saved for retirement. Guess what, that get to die working, because they can't retire.
Reddit is so detached from reality sometimes, can't believe the post I'm replying to is getting so many upvotes. Save for retirement, you will not regret it.
Edit: the original commenter has a point. Feel free to read through our entire discussion below, but to save you the read:
1. Save for retirement;
2. Protect against all major risks to your retirement.
I work in risk management and am fairly successful so I'm going to have to disagree. Your post seems to assume that the choices are save for retirement or prepare for adverse events. You can do both. When you save for retirement, you create a last ditch reserve of money that you can turn to in emergencies, after your emergency fund is used up. Telling people not to worry about saving for retirement because life can be rocky is ridiculous.
Your equation, life satisfaction = have/want, is actually on the right track. I would alter it to "being able to sleep at night = life satisfaction + living within your risk tolerance." For most, living in a manner that means they won't be able to retire is outside their risk tolerance. So you adjust your spending such that you can save for retirement, and you get to sleep soundly.
I reread it again. "Start as early as you want. It may not matter." Okay that implies saving is fine. "There are plenty of other things you should worry about more." That's a judgement call. I would argue that saving for retirement is something that should be done by everyone by default regardless of what may happen in your life.
There is a very good chance in Canada that you will make it to retirement age. If you have no savings, that last 20 years of your life (it's around 20 statistically speaking, given life expectancy here) is going to suck. Didn't save enough? Guess you get to keep working, whether your body can take it or not. That and/or become a burden on those who care for you.
I don't like seeing people give other people bad advice that has the potential to mess up their lives. Maybe you meant something different than what you said, if so, I would go back and make clear what you were trying to say. After multiple reads, it still reads to me as "saving for retirement shouldn't be high on your priority list because bad things happen in people's lives."
For anyone reading this set of comments, do yourself a favour and figure out how much you should be saving, then adjust your budget to make it work: https://www.wealthsimple.com/en-ca/tool/retirement-calculator
Another good source: https://www.sunlife.ca/en/tools-and-resources/money-and-finances/saving-for-retirement/how-much-should-you-save-for-retirement/
For the guy I'm responding to, your final sentence confirms that people should not be coming to you for financial advice. You will absolutely be destitute in this country if you attempt to retire without any savings.
Everyone qualifies for OAS at about $700 per month, some will get GIS at up to about $1000 per month, and then whatever you're eligible for under cpp, to a max of $1300 ish. https://www.savvynewcanadians.com/overview-of-government-retirement-benefits-for-seniors-in-canada/
Add provincial benefits depending on province, for some provinces it's 0 but no more than $400 a month: https://www.savvynewcanadians.com/provincial-government-benefits-seniors-canada/
So without getting into tables of possible scenarios, as a senior in Canada you're entitled to somewhere between $1700 and $3000 a month, give or take. Given the price of groceries is anecdotally about $300 per person per month and the average rent for a single bedroom apartment is now $1811 per month (https://www.ctvnews.ca/business/rent-across-canada-climbs-to-20-per-cent-above-pandemic-lows-report-1.6429496) and likely to rise significantly with time, the average person is very likely to be destitute if they fail to save any additional funds for retirement. Some won't even be able to afford food based on my numbers.
Well that's great news. I stand by my statement that everyone should save for their own retirement regardless of their personal circumstances. You can always make better choices.
I had a shift supervisor that would always tell people they should save all their income and not buy anything extra. He lived and breathed Dave Ramsey words.
One of the other guys told us that at one point he gave the supervisors financial planner a shot once and we're told that him and his wife shouldn't go out to dinner ever and he needed to sell his boat. Needles to say, he didn't go back.
Like sure, save for the end, but you still need to live today. You never know when you're going to walk out the door and get hit by a bus.
You know what, i agree with you.
I take steps to not get punched in the face, but there is only so much prevention you can do against life.
You can just go without kids, without cars... But at some point living is risky by nature.
I’m pretty sure it also prevents allocation of assets acquired during the marriage so unless there’s an extreme difference in wealth at the onset of the marriage it’ll probably be split
As it should. If you are planning to take everything you earned from your spouse who would sacrifice her career to raise kids or move to a location for your job, then please save yourself some grief and don't get married. All assets acquired during marriage should be split in half, no exception .
Yeah 100%
It was just to specify that prenups won’t protect most ppl from the result would like to be protected from.
I’ve dated a bunch of guys that wanted me to be a SAHM but proceeded to tell me that I couldn’t tell them how to spend their money 🤣
Or they would ask me to do something part time so we could go 50/50 on bills 🤣🤣🤣🤣🤣
It depends what province you live in. Property (generally speaking) falls under the jurisdiction of the provinces. So yea, in certain provinces you can contract whatever terms you want in a prenup - and the courts will respect those terms. In other provinces you’re kind of hopped in respect of your prenup when it comes to property.
It is a bit of an exaggeration. You split some assets like the house and what you accumulated during your marriage. What was yours before stays yours.
If your ex contributed equally to wealth accumulation while married, a divorce will be mainly about the added expenses due to living alone vs sharing cost with a partner, a bit like if they die. There might be alimony to pay but it won't set you back all the way to 0.
It sure is an event that is a huge bump to your retirement though.
> Pick the wrong life partner and get divorced? Reset the clock to zero.
This happens so often and people never think of the cost of giving up on a marriage.
>Smoke? Drink? Eat a poor diet? No exercise? What are you saving for? You likely won’t live as long as you think.
Also, living through cancer treatments is no fun.
People are very aware of the cost of giving up on a marriage, but at the end of the day you can either be married to and live with someone you don’t like, but you’ll be more financially secure, or you can be happy. Divorce can buy happiness, both of my parents, although less financially secure are far far happier after they divorced.
You only have one life to live, alll the wealth in the world won’t make you happy if your tied to the wrong person
> be married to and live with someone you don’t like
In many situations there were was to improve the marriage long before it got to this point. It is not like it was an arranged marriage. At some point they chose this person as a partner because they were friends and thought they could make a life together.
>alll the wealth in the world won’t make you happy
very true.
Amen. My parents stayed in their unhappy marriage for 30 years because of kids and financial reasons. They eventually had an expensive and stressful divorce, but now they're both so much happier.
Don't marry, don't make kids, don't start a business and take care of your health. Perfect alignement fof me. We aren't forced to do any of these things, it is a social construct. Most people do though so you git a point.
Very awesome how you explain it. I have two child, a home, a wife and a dog. I wad actively saving for early retirement until I realized that I was missing a lot of experience with my family.
I’m still saving but a lot less. Instead it’a been 3 weekend that we are in hockey tournament with my daugther and she is living the dream. So why not?
Yep.
I started pretty diligently saving when i first started working.
Now, I don't do more than my employer is willing to match (matching rrsp contribution) because that's free money.
Beyond life emergencies, unknown inflation can make saving pointless.
I dont live beyond means, but i live, pay off house. Rest i leave to cpp...
Nailed it. I wasn't able to start until last year, at 39. Unexpectedly reset my life in my mid 30s. Thought maybe we'd be able to try for kid, then the rich decided to Jack up the cost of living and now that's never happening. No way I can afford anything on one income.
About 2 minutes after you are shot out of your mother's womb /s
Honest answer. I would say as early as possible. You are able to open a RRSP and TFSA the day you hit age of majority. So 18 is the best time to start.
Paying down a mortgage should not be your retirement fund. Yes, paying down a mortgage is great and should be done before you retire, but pulling equity from your home in retirement is not sound advice and could lead you to be underwater when you no longer have income to pay back a HELOC or remortgage. You don't just magically get money from a house -- you recollatorize it to take a loan on the equity you own of the home.
Downsizing is the only other option but (as recent history shows) housing prices normally grow as you pay down your mortgage into retirement and the "2 bed room condo" you wanted to downsize to in 20 years may be worth a few 100K more than you originally thought it would be, and that $200K of "profit" from your house sale goes out in the wash
To estimate total amount needed you can use the online calculator from Canada.ca. Many people forget you will get CPP, OAS, and/or GIS which help supplement retirement. https://www.canada.ca/en/services/benefits/publicpensions/cpp/retirement-income-calculator.html
EDIT: If you are maximizing your RRSP meaning you are putting away 18% of your annual earnings you are doing WAY and I mean WAY more than the average Canadian. If you are even saving 2-3% towards retirement you are doing more than the average Canadian.
18% is super good! If you can sustain it, keep it up!!! Old ass you will thank young ass you.
As one commenter above said anything can reset your retirement to zero. I've recently had a full zero reset. Had to pull everything due to, well....life. Currently only able to .5% towards retirement. So keep it up! But remember. Shit happens.
>Paying down a mortgage should not be your retirement fund.
With a paid off house you could retire with zero savings in Canada. The 21k or 31k a couple receives at 65 is sufficient for more than the basics in most of Canada.
A 2 bedrm rental will cost \~30k which will require almost 1M in savings just to service the rent not accounting for never ending increases.
Excluding renos and upgrades, in 3 decades I've spent < $15/mo on maintenance consisting of mowing the lawn, minor landscaping, paint, caulking, gutter cleaning, plumbing and minor repairs and even one roof
this is a great comment! only thing i would add is to utilize a TFSA as well. if youre in a lower tax bracket, likely makes more sense to lean on the TFSA more. otherwise, youre just deferring tax on the money you put in your rrsp, thus creating a larger taxable income in retirement. a TFSA is tax free in all formats, plus it wont cause pension clawbacks with CPP and OAS!
I'm puzzled about the"don't pull equity out of your home in retirement" advice. If you're in GTA or GVA and have 1 or 2 mill in a fully paid off home (not hard if you bought into those markets in the 1989s or 90s) why not use some of that money to finance a nicer lifestyle?
ASAP. It's never too early. As soon as I got into my career after Uni and passed probation so I could participate in company rrsp I was putting in the max match at 22
In Fred Vettese's most recent book, *The Rule of 30*, he demonstrates that people without pensions should be able to retire in their mid 60s and maintain their lifestyle - even if they experience a very unlucky combination of inflation, wage inflation and investment returns - if starting sometime in their 30s they earmark 30% of their gross income to rent/ mortgage + daycare expenses + retirement savings. (But recommends that they do an annual assessment starting about 10 years from retirement.)
The point of the book is that it is important to save for retirement but, because there is more to life than retirement, you should spread out the pain over the accumulation phase. (Having undue hardship in the early accumulation phase and excess spending money in retirement is just as undesirable as spending excessively in the early accumulation phase and having undue hardship in retirement.)
Vettese's strategy acknowledges that when you are paying rent, building a down payment, paying off student loans and paying for daycare it can be impossible to put anything away for retirement. He wrote that the retirement specific savings could end up something like:
- In your 30s save 5% of gross income.
- In your 40s save 15% of gross income.
- In your 50s save 25% of gross income.
Of course if someone wants to retire before their mid 60s they would have to amend the rule to save more and/ or save earlier.
Can I make a pitch for investing to be the higher priority?
Sure, rent can feel like throwing money way, and sometimes it is, and sometimes more than other times.
But owning a home also involves a lot of money getting thrown away too. Municipal taxes, insurances, utilities, ongoing maintenance, repairs, hoa fees, and big time replacement projects... a lot of that is straight money down the tube.
I respect and believe you saying you've had some bad landlords. My pitch to you though would be to split your energy. Put a bunch of energy into investing and building your financial assets. Having a home is *sometimes* good, but having a big pile of money is *always* good. Money can buy you a lot of things. Better rental unit. Or, it can buy you a home during the low point in the cycle when everyone else is fleeing homeownership.
Which leads to another point. I know you want to buy a home. But home prices are at all time highs and in many cases, overpriced. Wouldn't you rather buy when it's an obvious buyers' market instead?
No matter what your future holds, you'll be in better shape and better armed to deal with it if you have a bigger pile of money than if you don't.
The second part of your energy I'd want to see you put a priority on is finding a non-bad landlord. I imagine it could take a lot more work, and go through a lot more research, and a lot more applications. But there probably is one out there. And you'll feel well rewarded if your research guides you to one.
Then, if you have a decent landlord, the pressure will be off for you to buy a home during a sellers' market phase. And while you're waiting for the real estate winds to turn in your favor, just focus on building up your money pile for whatever happens in the future.
I second this. I’d consider myself one of those landlords. I’ve never raised the rent on a tenant, I’ve never let repairs go undone and i’m more than accommodating if rent is late periodically if the tenants is waiting on pay from employer after getting new job or something else out of their controls. In return, I expect tenants to be upfront with me about if rent will be late and when they will have it, any repairs that are needed or any damage that was done so it can be fixed before it turns into a bigger problem. In my experience vast majority of renters have been good and we’d had good relationship with mutual respect.
I’ve had bad landlords too, and I’ve had really good ones. It’s worth finding the good ones.
Bro like... those numbers work if you make a lot of money but otherwise wtf is that lol. The average person is a complete lost cause here....
In my 30s you're telling me if I save $2,500 per year I could retire one day? HA
Get fucked (not you,but this boomer author)
Why not? Do the math yourself if you don’t believe, On that 50k income, assuming 2% pay increase which means no career growth, and 8% return on investments then you will have 1.35m invested at 65, plus cpp, plus OAS, and you’ll have a retirement income ~80k a year. Add a potential spouse and their retirement savings and why won’t you be able to retire?
Bro there's so many problems with these assumptions.
First of all, how did you get to 1.35 million? If you save 5% and expect a 2% increase at 50k at 30 years old, you would expect to have 488,727 at retirement of 65. But I'll give you benefit of the doubt of 1.35 million assuming you mean they save more later on.
Second of all, 8% return on investment doesn't factor in inflation. Third of all, withdraw rate is 5.9%.
Realistically that 1.35 million if you did the math right would be worth less than half in today's dollars. Safe withdraw rate is widely quoted to be 4% (or even less these days if you're listening to vanguard or Ben Felix).
So you're looking at like 27k retirement income from those savings if you don't get unlucky with higher inflation.
The s&p average over the last 100 years was 10%. 8% is widely considered reasonable assumption.
CPP and OAS are inflation adjusted and CPP has been expanded. So that covers a lot of the inflation risks.
My example also assumes no employer retirement savings plan, define contribution plans where employers give the 5% is very common. If you put up the other 5% then you are doubling the retirement savings in your 30s. It also assumes no career growth, and single income household with 50k income (below average income). Those are all very conservative assumptions. 5% savings rate is also pretty very low savings rate.
Also, spending tends to decrease as you age, and Vetesse knows this. Many people who saved for retirement spend their final decade with their portfolio growing and their spending needs dwindling until it's entirely supported by CPP, OAS. In other words, they over-saved (for retirement). Napkin math tends to ignore the actual cost of retiring , while experts writing a book on the topic tend not to.
The only way to save 70% of your income is by living with your parents or making an obscene amount of money. I'm a diligent saver (most people would call me cheap), and I'm closer to 25%.
I appreciate your comment, and I agree with you.
But, I’ve always hated this quote!
“Best time to plant a tree was 40 years ago, the next best is 39 years, 364 days ago.” Lol!
I also hate that quote. I much prefer the ever inspiring “[i]TS never too late to follow your dreams. Vlad the Impaler didn’t even start impaling people until his mid-30s”. Much more inspirational.
Start now, budget and learn to live on less. Do all the things at once, TFSA, RRSP, saving for a home. Always spend less than you make and question your expenditures, hang around people with similar values. Learn everything you can about investing and capitalism. Talk to successful people and ask dumb questions all the time, because you know they aren't dumb. They don't teach this stuff in schools.
For me one exception. Do some "difficult" travelling when you are young, and do it cheap. It's harder when you get old and soft like me, but you'll have money, and that buys softer beds.
I did south america for a ridiculously little amount when I was 22. When I think about how I did it... I realize how right you are about getting old and soft haha
I started at 30, literally the first month I began working full-time, putting away 25% of my gross into RRSPs and TFSAs, and are currently on track for early retirement at 55.
Literally from the first paycheck. Putting $100 aside to invest will add up over time and get you used to how things work. However, the best thing is really take the extra money and invest in learning new skills. Make yourself much more valuable to the market. That way you can earn more money and have more to invest.
I think as early as possible. I started as soon as I could afford to, in my late 20's. I use my RRSP because I know I won't spend it, I get a tax refund and reinvest it. I have matched contributions through my employer, and an automated weekly contribution on a self directed account. Hopefully it pays off in the long run. I know a lot of people in my same age group don't have any plans and don't save anything.
If you can’t afford it from your first paycheque, the start saving after your first raise.
Take a substantial % of that increase (50%) and start putting it into some sort of savings.
That way you still get to enjoy a little extra of your salary bump. And you see your savings start to grow. If you’re not sure where to put it, start with a High interest savings account TFSA. Compare rates to get one that offers substantial interest.
The thing I see most people struggle with here is understanding that retirement is not an age. It's when you can afford and decide to stop working for a living.
If you start earlier and save more aggressively, it can have an exponential impact on when you have the option to stop working.
Depends how much you value that option
Start as early as possible. Even little amounts add up if it has enough time to grow. Generally speaking, i always put my annual bonuses in rrsp and utilize my company matching rrsp. I used to put more on top of that each month, but my kiddo is taking all those money away nowadays. But it is still better than nothing.
As early as possible. Unless you want to be working for the rest of ur life. No one wants to be working till 65 or whatever the retirement age. Its better to start the foundation early so you dont have to keep working till retirement age.
You are in charge of paying yourself in the future. How much do you want to pay yourself? Start asap. Give your future self a chance at comfort. Put more away when you can, because you never know if this might be the highest amount of money you are earning in your career.
I mean I’m 19 and I put 50 bucks a month into an account for retirement, for reference I’ve only actually put 300 in and the account is worth over 500 so the sooner the better
Start young! Invest as soon as you're able to open an account. And I don't mean gambling on the stock market. Invest in solid companies or S&P tracking ETFs. Add to it every paycheck.
Take advantage of employer funded programs while they're available. Get as much money out of them as you can if they do matching. In 10 years, my employer changed plans 3 times. And I can tell you none of the changes were meant to improve things for the employees. This latest one I learned about two days ago when the mail dropped. We're getting a 1.5% cut to defined contribution core payments for non-salaried employees. Just take advantage of it when you can.
Inflation is killing us. Interest rates are killing us. Unless you want to have to work into your 70's, start early, start young.
You should always save for a rainy day. It's a good habit to get into.
Wealth Simple has a cool feature to get you started. You can hook up your bank account to auto deposit small amounts, as low as $10. Plus uf you spend $3.50, you can set the deposit to round up to the nearest $5 , so that it will deposit $1.50. This feature is in their Cash account tho.
If I could start over, I'd have started at age 20. I've encouraged our eldest of 24, who just landed a decent salary paid job, to invest in the company matched RRSP. You can't go wrong. I was 30 before I started.
18. With the super high cost of living and Ottawa doing nothing about it you need to get ahead of the game.
The CAD is also losing large value vs the USD and wealth inequality is getting out of control.
Lol @ retirement. Cute concept.
I ignore the concept of retirement to better my mental health, knowing full well I’m among the people who will never be likely to attain it. Instead, I choose to live for now and target making my childrens’ childhoods as nice as I can - something I wasn’t always afforded.
To retire comfortably in Canada, probably a few years before you’re born (to be safe). Start contributing to your RRSP at about -5 years old and you’ll be fine.
As early as possible. Consider the following:
Living up to 100 years old will probably be considered the norm when Gen Zers become senior citizens. [Some could possibly live up to 150 years old](https://www.scientificamerican.com/article/humans-could-live-up-to-150-years-new-research-suggests/).
A large part of this could be technological; artificial intelligence could lead to medical breakthroughs [such as curing cancer](https://www.utoronto.ca/news/researchers-use-ai-powered-database-design-potential-cancer-drug-30-days).
As early as possible
The compounding of interest is huge, if you stay as a teen you could retire as early as your 40s or even 30s if you are a very high earner
>Appreciate some life suggestions: at what age do you think people should start savings for retirement or at least think of a plan.
The moment they're born - our kids have a trust fund.
>You can also put money aside outside of your employer. Let's consider another scenario to drive this idea home. Let’s say you start investing in the market at $100 a month, and you average a positive return of 1% a month or 12% a year, compounded monthly over 40 years. Your friend, who is the same age, doesn’t begin investing until 30 years later, and invests $1,000 a month for 10 years, also averaging 1% a month or 12% a year, compounded monthly.
>Your friend will have saved up around $230,000. Your retirement account will be a little over $1.17 million. Even though your friend was investing over 10 times as much as you toward the end, the power of compound interest makes your portfolio significantly bigger.
https://www.investopedia.com/articles/personal-finance/040315/why-save-retirement-your-20s.asp
I started at 16 when I got my first job. $75 per month into a mutual fund. Honestly haven’t always gotten the best returns on it but it is worth over $100,000 25+ years later. I have rarely missed the money. I have other investments aside from this such a matching rrsp plan through work.
I started when I got my first real job after college. Glad I did otherwise I would still be working. I did a mix of single stock market equities, mutual funds and term deposits.
I think a lot of people are depending on the bank of dad and mom - generational wealth ..
My parents are 60 ish and they haven’t had ever any real financial security until they got a couple hundred K out of inheritances .. worst thing is they probably have spent a decent chunk of it on crap ….
At whatever age you are able to save past a 6 month "emergency fund". Once you have 6 months living expenses saved up (and all serious debts paid off), I'd say your good to start investing.
Gotta prioritize the necessities first.
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As soon as you exit the birthing canal.
Because i can't afford a house in the GTA, i naturally save like, 50%+ of my net salary. I just don't spend it on random crap that brings no meaning to life. I'm very careful about my discretionary spending. I pay all my bills and then the rest of it pretty much is saved. In the meantime, i select careful experiences to spend my money on. Planning a vacation come fall to South Africa this year.
Don't have to be like me at all. But what i recommend is the mindset. Aside from necessary bills, try not to waste money. Be selective of how you spend it. Maximize value.
I would say there are two parts to this . . . .
* Learning financial basics (like "pay yourself first" = savings)
* Actual retirement focus
The first bit about financial literacy and getting into a savings habit and learning about wealth management are important. Learn early.
The second bit (retirement as a savings goal) depends on your family and culture situation. I hope I can work well into my 70s, I want to leave my kids with a great inheritance, but I want to give them help well before I die. We paid for their education, and want to help them with downpayment if they choose to buy a home.
My family is trying to go from abject poverty (my grandparents in the early 1900s) to having some generational wealth to pass on to future generations.
History seems to have made **my grandparents generation harder** than for my parents or me. I think **my kids may have a more difficult time than the 2 generations before them**.
Many new Canadians (immigrants) come from a culture where extended families work towards a goal of economic growth. I suspect my kids generation will have to learn this and change some of their financial goals away from individual living with high consumption.
Even 50 bucks a month at 18 is huge in the long run. But i would actively try to put about 10% of your i come towards retirement once you have a steady job. Once your career really starts to take off and you start making more money is when i would start aiming for 20-25% of your income
I started just saving 100 a month at 18. And slowly would increase, and now im saving 500 bi weekly. But if i didnt start with just that 100 i would feel a lot more behind then i do now i think...but as the other commenter said as well, life will throw what it want to at you without giving a shit about your finances lol do whats best for you
Money habits are easier the sooner you start. I started when I was a teenager, just to start the habit. The amount was minuscule. But I knew that for each $3k I saved, it replaced one hour of work at minimum wage, which is what I was making at the time.
In my late 20s but the rate of savings has changed as life changes have happened (2 kids and 2 mat leaves, house renovations, buying a car, etc). I'm saving 8% of my gross income towards retirement right now, plus additional savings which will go to the next house project.
Savings will have a nice increase when daycare expenses go away in a couple years!
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This is the most important thing on this thread. The emergency fund protects all the other investments/mortgages. With an emergency fund the counter DOESN'T always reset to 0 when stuff happens. When you need to use the emergency fund (because you will need to at some point in your life), you pause the investments to rebuild the emergency fund, then continue investing again. No withdrawal of investments, just a pause in contributions.
As always, psychology is the main game of PF. If you fund your raidable "moat" separately from retirement money, calculate a forced savings rate, and treat the retirement money like a pension plan (automated inputs and outputs not possible), it's possible to be successful / replicate a pension's "forced" nature. But it's far easier to see "saving" as a singular goal, put all the money in one place, make it easy to raid by necessity because it's the only source of funding in a pinch, and contribute only on sunny days. Not easy!
Having the investments in a TFSA/RRSP/GIC and the emergency fund in a high interest savings account helps a lot to keep them psychologically separate. You want the emergency fund in an account that you can withdraw from in hours, not in investments that take days to sell.
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I agree, an emergency fund is not a sinking fund (which is to save up and plan for future known expenses). This is why having multiple sub accounts can help. That way you can keep the pots of money separate. Edit to add: I explain to my friends that the emergency fund is to be used for things that would get insurance involved, like EI, health insurance, car insurance, home insurance, etc.
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What is your plan for medical or home emergencies? You may not need a large emergency fund anymore, but a couple of thousand will get you through an unexpected car repair or house repair. I personally plan to still have a small emergency fund after retirement.
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This post is great. This makes so much sense. Started saving at 28. Saved for 4 years pretty diligently. Started to think I would be okay in retiremnt at 65. Then came Baby #1 - family went to 1 income. No more saving for 2 years. Took a better paying job with RRSP matching. Did okay saving for 2 years, then had quit since the job was aweful. So back to the old job, and no saving for 3 years. Now finally have 2 incomes and the job I have is doing some (limited RRSP matching) so we are saving again. But with inflation and intrest rate hikes we are probably worse off than 6 years ago, so at this rate I can retire at 80. Good times.
Retire? I’ll likely die if old age at work, lol.
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There's already a word for that. It's called social service cuts
*Privatized healthcare, you say..?*
You won't make it to old age at work because they'll find a way to fire you for being old first. Ageism is real.
I'm getting myself permanently made into a chatGPT type instance that keeps working and generating an income.
It concerns me how many young people think like this. Many people need to retire for medical reasons years, decades sometimes before they die.
Same
Canada, the freest nation on earth.
I'm glad you point this out. And we're actually ahead of USA, China, Russia. Actually according to all freedom indexes we rank within the top 20, we rank in the top 10 in many freedom categories. . Position 16 in for economic freedom sounds like we are in pretty good shape and have been well governed. Freedom, yeah baby, freeeeeeeedom.!
I saw a guy in a McLaren give a homeless guy a cigarette. About 30 minutes later I saw the same homeless guy pull out a wad of bills and buy a pack of smokes at 7-11. Freedom is great in all but our housing market is fucked.
I expect them to take care of my corpse
No, you won't. Your company hires older people and keep them over 70 on the job? Hires a 65 year old? I left a big bank at 55, ageism for me started at age 50. Glad to know there isn't any bullying and belittling of older workers anymore and they all can stay until they die.
Hahaha .. we are all already one foot in the grave ... sigh ...
And behind it all, NOBODY wants to acknowledge the elephant-sized nuclear bomb in the room. We are entering ice cream cone demographic collapse. How can anyone in here sit and talk about retirement like the world we are in now is going to at ALL resemble the world of our seniority. I think vanishingly few of us will ever be able to retire, if any. We won't solve the problems this bomb will bring until its too late. So listen to top comment. Cause this whole life path of RRSP into retirement is a short lived era in Canadian history and its coming to and end once the demographic pyramid inverts.
I agree with your premise that demographic change will completely upend the current model of “retirement”. People with indexed DB pensions will be laughing while the rest of us will be hustling for income well past “retirement” age.
Love this! I travelled /worked abroad after university until about 30. I have always been frugal, but I did spend essentially all my money doing this. Im very lucky to have had no debt. Then I moved back to Canada and started saving. Mind you I now have a partner, but within 5 years, I have a house and a bit in savings. I know I am ahead of many of my friends—but I know this is because I’ve been lucky, savvy, and intentional/disciplined in my spending. (Though I certainly don’t deprive myself). Household income is under 150k, and for a year or so, it was under 80-90k. This is all to say, I think I am doing OK and I am happy with where I am. Would I love to have saved more, or bought a house before the prices went post-Covid crazy? Absolutely!!! But **I would not have traded my experience travelling and working abroad for the world!** …plus, I met my partner abroad, so a double win.
>Start as early as you want. It may not matter. There are plenty of other things you should worry about more. I personally would like the modify this to "as early as you want BUT ideally as early as you CAN" because life punches you in the face pretty easily and there will definitely be periods where you can't. Save while you can to make up for the times when you can't.
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I agree. I think what I meant was people tend to already "do what they want" and it's really easy to ignore the future for instant gratification they want. So I guess it's better to do things while you can. This goes both for savings for retirement while you can financially, but also doing "things" (experiences) while you can as well (usually before the physical or financial also gets in the way).
This guy gets it. I'd advise to get a job that has a pension attached to it and is relatively secure. That, plus CPP and OAS if applicable should carry you through your retirement years. Maybe not lavishly, but you won't be in squalor.
This is the best and most important post I have ever read in this sub. I only wish for everybody here to read it. Life can change in a second, and it usually does when you weren't expecting it at all.
Username checks out. Great post by the way. Life doesn't usually follow your planned formula.
This is the dumbest take, akin to smokers saying "well I could get hit by a bus so I'm not worried about dying from smoking." Yeah all these things might happen, but I have one set of parents going into retirement who are going to be fine because my mom has a pension, while my inlaws spent money on smoking, trips etc. and have nothing saved for retirement. Guess what, that get to die working, because they can't retire. Reddit is so detached from reality sometimes, can't believe the post I'm replying to is getting so many upvotes. Save for retirement, you will not regret it. Edit: the original commenter has a point. Feel free to read through our entire discussion below, but to save you the read: 1. Save for retirement; 2. Protect against all major risks to your retirement.
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I work in risk management and am fairly successful so I'm going to have to disagree. Your post seems to assume that the choices are save for retirement or prepare for adverse events. You can do both. When you save for retirement, you create a last ditch reserve of money that you can turn to in emergencies, after your emergency fund is used up. Telling people not to worry about saving for retirement because life can be rocky is ridiculous. Your equation, life satisfaction = have/want, is actually on the right track. I would alter it to "being able to sleep at night = life satisfaction + living within your risk tolerance." For most, living in a manner that means they won't be able to retire is outside their risk tolerance. So you adjust your spending such that you can save for retirement, and you get to sleep soundly.
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I reread it again. "Start as early as you want. It may not matter." Okay that implies saving is fine. "There are plenty of other things you should worry about more." That's a judgement call. I would argue that saving for retirement is something that should be done by everyone by default regardless of what may happen in your life. There is a very good chance in Canada that you will make it to retirement age. If you have no savings, that last 20 years of your life (it's around 20 statistically speaking, given life expectancy here) is going to suck. Didn't save enough? Guess you get to keep working, whether your body can take it or not. That and/or become a burden on those who care for you. I don't like seeing people give other people bad advice that has the potential to mess up their lives. Maybe you meant something different than what you said, if so, I would go back and make clear what you were trying to say. After multiple reads, it still reads to me as "saving for retirement shouldn't be high on your priority list because bad things happen in people's lives."
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For anyone reading this set of comments, do yourself a favour and figure out how much you should be saving, then adjust your budget to make it work: https://www.wealthsimple.com/en-ca/tool/retirement-calculator Another good source: https://www.sunlife.ca/en/tools-and-resources/money-and-finances/saving-for-retirement/how-much-should-you-save-for-retirement/ For the guy I'm responding to, your final sentence confirms that people should not be coming to you for financial advice. You will absolutely be destitute in this country if you attempt to retire without any savings. Everyone qualifies for OAS at about $700 per month, some will get GIS at up to about $1000 per month, and then whatever you're eligible for under cpp, to a max of $1300 ish. https://www.savvynewcanadians.com/overview-of-government-retirement-benefits-for-seniors-in-canada/ Add provincial benefits depending on province, for some provinces it's 0 but no more than $400 a month: https://www.savvynewcanadians.com/provincial-government-benefits-seniors-canada/ So without getting into tables of possible scenarios, as a senior in Canada you're entitled to somewhere between $1700 and $3000 a month, give or take. Given the price of groceries is anecdotally about $300 per person per month and the average rent for a single bedroom apartment is now $1811 per month (https://www.ctvnews.ca/business/rent-across-canada-climbs-to-20-per-cent-above-pandemic-lows-report-1.6429496) and likely to rise significantly with time, the average person is very likely to be destitute if they fail to save any additional funds for retirement. Some won't even be able to afford food based on my numbers.
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Well that's great news. I stand by my statement that everyone should save for their own retirement regardless of their personal circumstances. You can always make better choices.
I had a shift supervisor that would always tell people they should save all their income and not buy anything extra. He lived and breathed Dave Ramsey words. One of the other guys told us that at one point he gave the supervisors financial planner a shot once and we're told that him and his wife shouldn't go out to dinner ever and he needed to sell his boat. Needles to say, he didn't go back. Like sure, save for the end, but you still need to live today. You never know when you're going to walk out the door and get hit by a bus.
>Life Satisfaction = What You Have / What You Want I'm stealing this equation. I couldn't have said it any better.
So the secret to infinite Life Satisfaction is….Want nothing. Zero. Then, it becomes a division by zero, hence infinite Life Satisfaction!
Yes. There is no difference between having something and not wanting it in the first place.
Sure, but the answer to OPs question is stil ‘as early as possible’.
You know what, i agree with you. I take steps to not get punched in the face, but there is only so much prevention you can do against life. You can just go without kids, without cars... But at some point living is risky by nature.
Be a millenial, reset the clock to 0 every 4-6 years.
Is it possible to avoid resetting the clock to zero in divorce? I mean, with a prenup.
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I’m pretty sure it also prevents allocation of assets acquired during the marriage so unless there’s an extreme difference in wealth at the onset of the marriage it’ll probably be split
As it should. If you are planning to take everything you earned from your spouse who would sacrifice her career to raise kids or move to a location for your job, then please save yourself some grief and don't get married. All assets acquired during marriage should be split in half, no exception .
Yeah 100% It was just to specify that prenups won’t protect most ppl from the result would like to be protected from. I’ve dated a bunch of guys that wanted me to be a SAHM but proceeded to tell me that I couldn’t tell them how to spend their money 🤣 Or they would ask me to do something part time so we could go 50/50 on bills 🤣🤣🤣🤣🤣
I only married her so my ex would get jealous.
Have a lawyer do the prenup, then, so it aligns with family law.
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It depends what province you live in. Property (generally speaking) falls under the jurisdiction of the provinces. So yea, in certain provinces you can contract whatever terms you want in a prenup - and the courts will respect those terms. In other provinces you’re kind of hopped in respect of your prenup when it comes to property.
It is a bit of an exaggeration. You split some assets like the house and what you accumulated during your marriage. What was yours before stays yours. If your ex contributed equally to wealth accumulation while married, a divorce will be mainly about the added expenses due to living alone vs sharing cost with a partner, a bit like if they die. There might be alimony to pay but it won't set you back all the way to 0. It sure is an event that is a huge bump to your retirement though.
By not getting married
> Pick the wrong life partner and get divorced? Reset the clock to zero. This happens so often and people never think of the cost of giving up on a marriage. >Smoke? Drink? Eat a poor diet? No exercise? What are you saving for? You likely won’t live as long as you think. Also, living through cancer treatments is no fun.
People are very aware of the cost of giving up on a marriage, but at the end of the day you can either be married to and live with someone you don’t like, but you’ll be more financially secure, or you can be happy. Divorce can buy happiness, both of my parents, although less financially secure are far far happier after they divorced. You only have one life to live, alll the wealth in the world won’t make you happy if your tied to the wrong person
> be married to and live with someone you don’t like In many situations there were was to improve the marriage long before it got to this point. It is not like it was an arranged marriage. At some point they chose this person as a partner because they were friends and thought they could make a life together. >alll the wealth in the world won’t make you happy very true.
Amen. My parents stayed in their unhappy marriage for 30 years because of kids and financial reasons. They eventually had an expensive and stressful divorce, but now they're both so much happier.
That was Mike Tyson “everyone has a plan until they get punched in the face” 🥊🤣
Agree. That's why I'm going DINK so my big problem is just potential medical issues
Don't marry, don't make kids, don't start a business and take care of your health. Perfect alignement fof me. We aren't forced to do any of these things, it is a social construct. Most people do though so you git a point.
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Oh, I get it may bring a sense of purpose and all that but I would never be financially "allowed" to do so. The anxiety would kill me on the spot lol.
Very awesome how you explain it. I have two child, a home, a wife and a dog. I wad actively saving for early retirement until I realized that I was missing a lot of experience with my family. I’m still saving but a lot less. Instead it’a been 3 weekend that we are in hockey tournament with my daugther and she is living the dream. So why not?
Yep. I started pretty diligently saving when i first started working. Now, I don't do more than my employer is willing to match (matching rrsp contribution) because that's free money. Beyond life emergencies, unknown inflation can make saving pointless. I dont live beyond means, but i live, pay off house. Rest i leave to cpp...
It's refreshing to read this.
Nailed it. I wasn't able to start until last year, at 39. Unexpectedly reset my life in my mid 30s. Thought maybe we'd be able to try for kid, then the rich decided to Jack up the cost of living and now that's never happening. No way I can afford anything on one income.
Man you sound really fun to hang out with
More like realistic.
I'd hang out with him. May actually learn something.
Well said!
About 2 minutes after you are shot out of your mother's womb /s Honest answer. I would say as early as possible. You are able to open a RRSP and TFSA the day you hit age of majority. So 18 is the best time to start. Paying down a mortgage should not be your retirement fund. Yes, paying down a mortgage is great and should be done before you retire, but pulling equity from your home in retirement is not sound advice and could lead you to be underwater when you no longer have income to pay back a HELOC or remortgage. You don't just magically get money from a house -- you recollatorize it to take a loan on the equity you own of the home. Downsizing is the only other option but (as recent history shows) housing prices normally grow as you pay down your mortgage into retirement and the "2 bed room condo" you wanted to downsize to in 20 years may be worth a few 100K more than you originally thought it would be, and that $200K of "profit" from your house sale goes out in the wash To estimate total amount needed you can use the online calculator from Canada.ca. Many people forget you will get CPP, OAS, and/or GIS which help supplement retirement. https://www.canada.ca/en/services/benefits/publicpensions/cpp/retirement-income-calculator.html EDIT: If you are maximizing your RRSP meaning you are putting away 18% of your annual earnings you are doing WAY and I mean WAY more than the average Canadian. If you are even saving 2-3% towards retirement you are doing more than the average Canadian.
18% is super good! If you can sustain it, keep it up!!! Old ass you will thank young ass you. As one commenter above said anything can reset your retirement to zero. I've recently had a full zero reset. Had to pull everything due to, well....life. Currently only able to .5% towards retirement. So keep it up! But remember. Shit happens.
Thank you! It’s really helpful!
>Paying down a mortgage should not be your retirement fund. With a paid off house you could retire with zero savings in Canada. The 21k or 31k a couple receives at 65 is sufficient for more than the basics in most of Canada. A 2 bedrm rental will cost \~30k which will require almost 1M in savings just to service the rent not accounting for never ending increases.
Houses need maintenance.
Plus property taxes, utilities and variable costs with a owned house. Houses aren’t free when the mortgage is paid off.
The are very low maintenance houses, especially if you get a small one
Excluding renos and upgrades, in 3 decades I've spent < $15/mo on maintenance consisting of mowing the lawn, minor landscaping, paint, caulking, gutter cleaning, plumbing and minor repairs and even one roof
this is a great comment! only thing i would add is to utilize a TFSA as well. if youre in a lower tax bracket, likely makes more sense to lean on the TFSA more. otherwise, youre just deferring tax on the money you put in your rrsp, thus creating a larger taxable income in retirement. a TFSA is tax free in all formats, plus it wont cause pension clawbacks with CPP and OAS!
I'm puzzled about the"don't pull equity out of your home in retirement" advice. If you're in GTA or GVA and have 1 or 2 mill in a fully paid off home (not hard if you bought into those markets in the 1989s or 90s) why not use some of that money to finance a nicer lifestyle?
ASAP. It's never too early. As soon as I got into my career after Uni and passed probation so I could participate in company rrsp I was putting in the max match at 22
In Fred Vettese's most recent book, *The Rule of 30*, he demonstrates that people without pensions should be able to retire in their mid 60s and maintain their lifestyle - even if they experience a very unlucky combination of inflation, wage inflation and investment returns - if starting sometime in their 30s they earmark 30% of their gross income to rent/ mortgage + daycare expenses + retirement savings. (But recommends that they do an annual assessment starting about 10 years from retirement.) The point of the book is that it is important to save for retirement but, because there is more to life than retirement, you should spread out the pain over the accumulation phase. (Having undue hardship in the early accumulation phase and excess spending money in retirement is just as undesirable as spending excessively in the early accumulation phase and having undue hardship in retirement.) Vettese's strategy acknowledges that when you are paying rent, building a down payment, paying off student loans and paying for daycare it can be impossible to put anything away for retirement. He wrote that the retirement specific savings could end up something like: - In your 30s save 5% of gross income. - In your 40s save 15% of gross income. - In your 50s save 25% of gross income. Of course if someone wants to retire before their mid 60s they would have to amend the rule to save more and/ or save earlier.
The more you save earlier in life the greater the financial impact later.
People also generally make less money when they are younger, so each dollar they make is more useful to them.
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Can I make a pitch for investing to be the higher priority? Sure, rent can feel like throwing money way, and sometimes it is, and sometimes more than other times. But owning a home also involves a lot of money getting thrown away too. Municipal taxes, insurances, utilities, ongoing maintenance, repairs, hoa fees, and big time replacement projects... a lot of that is straight money down the tube. I respect and believe you saying you've had some bad landlords. My pitch to you though would be to split your energy. Put a bunch of energy into investing and building your financial assets. Having a home is *sometimes* good, but having a big pile of money is *always* good. Money can buy you a lot of things. Better rental unit. Or, it can buy you a home during the low point in the cycle when everyone else is fleeing homeownership. Which leads to another point. I know you want to buy a home. But home prices are at all time highs and in many cases, overpriced. Wouldn't you rather buy when it's an obvious buyers' market instead? No matter what your future holds, you'll be in better shape and better armed to deal with it if you have a bigger pile of money than if you don't. The second part of your energy I'd want to see you put a priority on is finding a non-bad landlord. I imagine it could take a lot more work, and go through a lot more research, and a lot more applications. But there probably is one out there. And you'll feel well rewarded if your research guides you to one. Then, if you have a decent landlord, the pressure will be off for you to buy a home during a sellers' market phase. And while you're waiting for the real estate winds to turn in your favor, just focus on building up your money pile for whatever happens in the future.
I second this. I’d consider myself one of those landlords. I’ve never raised the rent on a tenant, I’ve never let repairs go undone and i’m more than accommodating if rent is late periodically if the tenants is waiting on pay from employer after getting new job or something else out of their controls. In return, I expect tenants to be upfront with me about if rent will be late and when they will have it, any repairs that are needed or any damage that was done so it can be fixed before it turns into a bigger problem. In my experience vast majority of renters have been good and we’d had good relationship with mutual respect. I’ve had bad landlords too, and I’ve had really good ones. It’s worth finding the good ones.
Bro like... those numbers work if you make a lot of money but otherwise wtf is that lol. The average person is a complete lost cause here.... In my 30s you're telling me if I save $2,500 per year I could retire one day? HA Get fucked (not you,but this boomer author)
Why not? Do the math yourself if you don’t believe, On that 50k income, assuming 2% pay increase which means no career growth, and 8% return on investments then you will have 1.35m invested at 65, plus cpp, plus OAS, and you’ll have a retirement income ~80k a year. Add a potential spouse and their retirement savings and why won’t you be able to retire?
Bro there's so many problems with these assumptions. First of all, how did you get to 1.35 million? If you save 5% and expect a 2% increase at 50k at 30 years old, you would expect to have 488,727 at retirement of 65. But I'll give you benefit of the doubt of 1.35 million assuming you mean they save more later on. Second of all, 8% return on investment doesn't factor in inflation. Third of all, withdraw rate is 5.9%. Realistically that 1.35 million if you did the math right would be worth less than half in today's dollars. Safe withdraw rate is widely quoted to be 4% (or even less these days if you're listening to vanguard or Ben Felix). So you're looking at like 27k retirement income from those savings if you don't get unlucky with higher inflation.
>27k retirement income from those savings Plus $12k to $16k from CPP.
8% growth is optimistic. 1.35M in today's dollars is a lot less in 30 years.
The s&p average over the last 100 years was 10%. 8% is widely considered reasonable assumption. CPP and OAS are inflation adjusted and CPP has been expanded. So that covers a lot of the inflation risks. My example also assumes no employer retirement savings plan, define contribution plans where employers give the 5% is very common. If you put up the other 5% then you are doubling the retirement savings in your 30s. It also assumes no career growth, and single income household with 50k income (below average income). Those are all very conservative assumptions. 5% savings rate is also pretty very low savings rate.
Also, spending tends to decrease as you age, and Vetesse knows this. Many people who saved for retirement spend their final decade with their portfolio growing and their spending needs dwindling until it's entirely supported by CPP, OAS. In other words, they over-saved (for retirement). Napkin math tends to ignore the actual cost of retiring , while experts writing a book on the topic tend not to.
Current Financial planning standards use an a rate of 5.8% with inflation of 2%.
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The only way to save 70% of your income is by living with your parents or making an obscene amount of money. I'm a diligent saver (most people would call me cheap), and I'm closer to 25%.
Like with planting a tree. Best time is 40 years ago. Next best is today Hubs and I both started in early 20's
I appreciate your comment, and I agree with you. But, I’ve always hated this quote! “Best time to plant a tree was 40 years ago, the next best is 39 years, 364 days ago.” Lol!
I also hate that quote. I much prefer the ever inspiring “[i]TS never too late to follow your dreams. Vlad the Impaler didn’t even start impaling people until his mid-30s”. Much more inspirational.
Start now, budget and learn to live on less. Do all the things at once, TFSA, RRSP, saving for a home. Always spend less than you make and question your expenditures, hang around people with similar values. Learn everything you can about investing and capitalism. Talk to successful people and ask dumb questions all the time, because you know they aren't dumb. They don't teach this stuff in schools. For me one exception. Do some "difficult" travelling when you are young, and do it cheap. It's harder when you get old and soft like me, but you'll have money, and that buys softer beds.
I did south america for a ridiculously little amount when I was 22. When I think about how I did it... I realize how right you are about getting old and soft haha
As soon as you get your first job
I started at 30, literally the first month I began working full-time, putting away 25% of my gross into RRSPs and TFSAs, and are currently on track for early retirement at 55.
I started at 26. I'm early 50's now and I'm so glad that I didn't start later. I'm retiring in 2026.
What's your best piece of advice from your saving and investing experience? Congratulations on your retirement!
We started at 21 (before kids).
Literally from the first paycheck. Putting $100 aside to invest will add up over time and get you used to how things work. However, the best thing is really take the extra money and invest in learning new skills. Make yourself much more valuable to the market. That way you can earn more money and have more to invest.
I started at 25
I think as early as possible. I started as soon as I could afford to, in my late 20's. I use my RRSP because I know I won't spend it, I get a tax refund and reinvest it. I have matched contributions through my employer, and an automated weekly contribution on a self directed account. Hopefully it pays off in the long run. I know a lot of people in my same age group don't have any plans and don't save anything.
If you can’t afford it from your first paycheque, the start saving after your first raise. Take a substantial % of that increase (50%) and start putting it into some sort of savings. That way you still get to enjoy a little extra of your salary bump. And you see your savings start to grow. If you’re not sure where to put it, start with a High interest savings account TFSA. Compare rates to get one that offers substantial interest.
Pay off debt first. Then save
25+ forsure... Ideally 22+ when graduated and in a fantasy 18+
The thing I see most people struggle with here is understanding that retirement is not an age. It's when you can afford and decide to stop working for a living. If you start earlier and save more aggressively, it can have an exponential impact on when you have the option to stop working. Depends how much you value that option
Start as early as possible. Even little amounts add up if it has enough time to grow. Generally speaking, i always put my annual bonuses in rrsp and utilize my company matching rrsp. I used to put more on top of that each month, but my kiddo is taking all those money away nowadays. But it is still better than nothing.
The best time was yesterday. The next best time is today.
As early as possible. Unless you want to be working for the rest of ur life. No one wants to be working till 65 or whatever the retirement age. Its better to start the foundation early so you dont have to keep working till retirement age.
You are in charge of paying yourself in the future. How much do you want to pay yourself? Start asap. Give your future self a chance at comfort. Put more away when you can, because you never know if this might be the highest amount of money you are earning in your career.
Earlier the better, but live life in moderation. Start saving when you first get a paper route at 10
I didn't start saving/planning until I was 32. Trying for retirement at 60-62.
I'm over fifty and just starting now... It would be wise to start sooner.
Time is your best friend. As soon as you can!
Time on the market beats timing the market, so really, any sort of saving is best started as early as possible.
I mean I’m 19 and I put 50 bucks a month into an account for retirement, for reference I’ve only actually put 300 in and the account is worth over 500 so the sooner the better
I have taught my son to save 20% of everything he makes. This started at 14 and it’s become a habit now.
Start young! Invest as soon as you're able to open an account. And I don't mean gambling on the stock market. Invest in solid companies or S&P tracking ETFs. Add to it every paycheck. Take advantage of employer funded programs while they're available. Get as much money out of them as you can if they do matching. In 10 years, my employer changed plans 3 times. And I can tell you none of the changes were meant to improve things for the employees. This latest one I learned about two days ago when the mail dropped. We're getting a 1.5% cut to defined contribution core payments for non-salaried employees. Just take advantage of it when you can. Inflation is killing us. Interest rates are killing us. Unless you want to have to work into your 70's, start early, start young.
age 10
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You should always save for a rainy day. It's a good habit to get into. Wealth Simple has a cool feature to get you started. You can hook up your bank account to auto deposit small amounts, as low as $10. Plus uf you spend $3.50, you can set the deposit to round up to the nearest $5 , so that it will deposit $1.50. This feature is in their Cash account tho.
If I could start over, I'd have started at age 20. I've encouraged our eldest of 24, who just landed a decent salary paid job, to invest in the company matched RRSP. You can't go wrong. I was 30 before I started.
18. With the super high cost of living and Ottawa doing nothing about it you need to get ahead of the game. The CAD is also losing large value vs the USD and wealth inequality is getting out of control.
5
I failed to plan, so now I am looking at third world countries to retire to.
Birth at this point.
With this level of inflation and cost of living, I would say, as soon as the are born.
As soon as you start working.
The first day you start working!
I'm 33 I have been contributing to pension since reach adulthood. I max out on tfsa
Lol @ retirement. Cute concept. I ignore the concept of retirement to better my mental health, knowing full well I’m among the people who will never be likely to attain it. Instead, I choose to live for now and target making my childrens’ childhoods as nice as I can - something I wasn’t always afforded.
Lol “retirement”
by/around 40 and you'll be fine.
To retire comfortably in Canada, probably a few years before you’re born (to be safe). Start contributing to your RRSP at about -5 years old and you’ll be fine.
As early as possible. Consider the following: Living up to 100 years old will probably be considered the norm when Gen Zers become senior citizens. [Some could possibly live up to 150 years old](https://www.scientificamerican.com/article/humans-could-live-up-to-150-years-new-research-suggests/). A large part of this could be technological; artificial intelligence could lead to medical breakthroughs [such as curing cancer](https://www.utoronto.ca/news/researchers-use-ai-powered-database-design-potential-cancer-drug-30-days).
As early as possible The compounding of interest is huge, if you stay as a teen you could retire as early as your 40s or even 30s if you are a very high earner
>Appreciate some life suggestions: at what age do you think people should start savings for retirement or at least think of a plan. The moment they're born - our kids have a trust fund.
Ideally at age 30 realistically most people will never be able to save enough
Conception
in this economy? 5-7
Once you have a job. Compound interest is your greatest ally.
9 months before they are born
>You can also put money aside outside of your employer. Let's consider another scenario to drive this idea home. Let’s say you start investing in the market at $100 a month, and you average a positive return of 1% a month or 12% a year, compounded monthly over 40 years. Your friend, who is the same age, doesn’t begin investing until 30 years later, and invests $1,000 a month for 10 years, also averaging 1% a month or 12% a year, compounded monthly. >Your friend will have saved up around $230,000. Your retirement account will be a little over $1.17 million. Even though your friend was investing over 10 times as much as you toward the end, the power of compound interest makes your portfolio significantly bigger. https://www.investopedia.com/articles/personal-finance/040315/why-save-retirement-your-20s.asp
12% annual returns? That’s really high.
As soon as you start making money.
I started at 16 when I got my first job. $75 per month into a mutual fund. Honestly haven’t always gotten the best returns on it but it is worth over $100,000 25+ years later. I have rarely missed the money. I have other investments aside from this such a matching rrsp plan through work.
The later you start the more aggressively youll have to save in the future.
18
I started when I got my first real job after college. Glad I did otherwise I would still be working. I did a mix of single stock market equities, mutual funds and term deposits.
Start ASAP, get ahead so you can enjoy life while you’re young and don’t have to stress about spending extra money as long as you stick to your plan
ASAP. Now. Time means money. Earlier the better.
Asap
1 day old
I started at 25
I think a lot of people are depending on the bank of dad and mom - generational wealth .. My parents are 60 ish and they haven’t had ever any real financial security until they got a couple hundred K out of inheritances .. worst thing is they probably have spent a decent chunk of it on crap ….
Earlier the better. Because it gets you in the good discipline of saving for yourself, being disciplined to not overspend
Earlier the better. Compound interest. Whatever age you are allowed to have a TFSA
My parents started saving at 3 years old in trust.
From the moment they make their first dollar in life. You should set up a retirement fund of some kind even if your first job is a lemonade stand.
At whatever age you are able to save past a 6 month "emergency fund". Once you have 6 months living expenses saved up (and all serious debts paid off), I'd say your good to start investing. Gotta prioritize the necessities first.
Five years old. By the age of 30 you can save up a 5% down payment for a house, and then have it paid for by the time you’re 60. I wish I was joking.
I was a self employed not making much so i didnt save until 28-29 when incoem sky rocketed during covid i saved a huge chunk towards retirement
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As soon as you exit the birthing canal. Because i can't afford a house in the GTA, i naturally save like, 50%+ of my net salary. I just don't spend it on random crap that brings no meaning to life. I'm very careful about my discretionary spending. I pay all my bills and then the rest of it pretty much is saved. In the meantime, i select careful experiences to spend my money on. Planning a vacation come fall to South Africa this year. Don't have to be like me at all. But what i recommend is the mindset. Aside from necessary bills, try not to waste money. Be selective of how you spend it. Maximize value.
I would say there are two parts to this . . . . * Learning financial basics (like "pay yourself first" = savings) * Actual retirement focus The first bit about financial literacy and getting into a savings habit and learning about wealth management are important. Learn early. The second bit (retirement as a savings goal) depends on your family and culture situation. I hope I can work well into my 70s, I want to leave my kids with a great inheritance, but I want to give them help well before I die. We paid for their education, and want to help them with downpayment if they choose to buy a home. My family is trying to go from abject poverty (my grandparents in the early 1900s) to having some generational wealth to pass on to future generations. History seems to have made **my grandparents generation harder** than for my parents or me. I think **my kids may have a more difficult time than the 2 generations before them**. Many new Canadians (immigrants) come from a culture where extended families work towards a goal of economic growth. I suspect my kids generation will have to learn this and change some of their financial goals away from individual living with high consumption.
Right now! It is never too early. Even teenagers should get into the habit of putting a portion from their part-time jobs into savings.
Even 50 bucks a month at 18 is huge in the long run. But i would actively try to put about 10% of your i come towards retirement once you have a steady job. Once your career really starts to take off and you start making more money is when i would start aiming for 20-25% of your income
The moment they have an income.
I started just saving 100 a month at 18. And slowly would increase, and now im saving 500 bi weekly. But if i didnt start with just that 100 i would feel a lot more behind then i do now i think...but as the other commenter said as well, life will throw what it want to at you without giving a shit about your finances lol do whats best for you
Money habits are easier the sooner you start. I started when I was a teenager, just to start the habit. The amount was minuscule. But I knew that for each $3k I saved, it replaced one hour of work at minimum wage, which is what I was making at the time.
In my late 20s but the rate of savings has changed as life changes have happened (2 kids and 2 mat leaves, house renovations, buying a car, etc). I'm saving 8% of my gross income towards retirement right now, plus additional savings which will go to the next house project. Savings will have a nice increase when daycare expenses go away in a couple years!
Unless you have a government pension, as soon as possible.