Retirement Is Dead
macleans.ca
macleans.ca
* https://globalnews.ca/news/11705204/canadian-couples-retirem...
This survey is released by a bank that makes money from AUM fees for things like mutual funds. It is in their interest to think you need more, but most folks do not need as much as they believe. The study tends to be released during "RRSP season", which is close to the last time Canadians are able to put in money into their retirement saving account (RRSP ~ 401(k)) for the current tax year (and get a taxable income reduction).
This (flat) fee-only advisor goes over some of the preconceptions that have:
* https://www.youtube.com/watch?v=5LmiW4FgAL8
He's put out videos about what you can expect if you have 'only' CA$ 250k saved:
* https://www.youtube.com/watch?v=QLQk6X3NCPs (single)
* https://www.youtube.com/watch?v=_9-8CIvphfI (couple)
* https://www.youtube.com/watch?v=EkyvLe66G94 (couple)
Or even a single at 65 with $125k:
Depending on the commitments you had during your working life, you may need as little as 40% of your working income in retirement to have the same lifestyle (as opposed to the 70% number that is bandied about so much).
USA-specific: At ~$38K/year (including SS) you probably need to own a home without substantial deferred maintenance to make it work. So you can retire on $250K but only if you're over 62 and only if you have substantial wealth outside of those liquid assets (so probably a net worth at least 2x your liquid). If you have a spouse also on SS it much easier.
Forty per cent of us in this age range have less than $5,000 in savings.
That's Canadians, aged 55-64. I expect younger generations will be no different. It's an awful lot of people, given the age demographic in the country.
And while this is a Maclean's article, so it is understandably focused on Canada, pretty much everything covered in the article is also relevant to Americans with similar numbers... but with the added shitshow that prior to age 65 you will have severe health insurance concerns if you are underemployed.
If we're just looking at how to improve the individual: The issue is lack of self discipline. as he said, it's just too easy to spend. The solution: more social security, in effect a forced retirement plan. Instead of 7.5%, make it 10% or even 15%, 20%, whatever it takes. that takes self discipline out of the equation and fixes the imbalance between spending and saving.
If we're looking at society, then there's a lot of ways to bring the cost of living down. the cost structure of an individuals spending is mostly on housing. Unfortunately, right now your only choices in the developed world are: an extremely fancy luxurious living arrangement (most condos, apartments, houses, etc) far beyond your means or an illegal tent under the highway. But, looka tthe hazda tribes: they show you don't need millions of dollars for shelter. they don't even have modern tools. they build their own shelter by hand every night with a few hours of work, with NO money or retirement savings whatsoever - what can we learn from this? sure we may not build the exact same structure but there's a lot to learn from this conceptually. There's a world of innovation waiting to happen between those luxury condos and a handwoven 3 hours makeshift tent - unfortunately right now, it's all very much Illegal.
In the city where the author is based, there's plenty of derision of "luxury" places, but it's just Nimby code for "don't build anything, I want to keep renting my basement at $2k/m". Actual luxury places are the ones they live in, paid for presumably by borrowing against their land value.
Even at $1.4m, new builds have a veneer of what amounts to AirBnBification, as far as I've seen from the few I've actually visited. They're expensive and poor quality with relatively little space, fake wood finishes, vinyl flooring like anything else, and a standard package of appliances
The way I've been framing this is that it costs basically $2m CAD in this city to paint your house, if you wanted to be able to. You can buy something below that, but you don't have the same amount of agency over it that you would with a detached house.
Point is though that I find it's rare for any rented place or condo to be fancy by any stretch, it's all pretty ordinary stuff you'd expect but dressed up like it's expensive. The kitchen is still in the living room and has 4 sq ft of space to move around in, the cupboards are usually still particleboard, where there might have been a closet 20 yrs ago there's now machinery or venting, and the doorknobs are crunchy.
No thanks, I’d rather it be half what it is now in the US with the other half be investable by myself. Just putting that into an index fund would have resulted in significantly better returns.
Even if it were practical though, how would you deal with those left destitute because of poor timing (retiring just after a market crash) or who just made poor investment decisions?
This author owns there own home and even if they have an infinite length mortgage they are likely to end up with new principal to do a reverse mortgage on and similar investment return to someone buying on margin with no interest. It's basically just moving the elitist pension system from the job to the housing.
The author ending up at an inheritance of no value is not all that different than someone leaving only the house if houses weren't an investment and they had a pension to death. The house acted as a vehicle to give them all the investment structure they lacked. The problem with this situation is the people who are excluded from home ownership and paying rents.
Used to be in a union (in a sector I don't work in anymore) that bumped that up to 18%.
7.5% is woefully little.
That seems comparatively grand compared to what humanity has set subsequent generations up for.
Don’t think it’s a coincidence that people are depressed, doom scrolling, taking long bets on prediction markets and approaching life with a general sense of financial nihilism. May as well get that avocado toast if house prices are perpetually out of reach
Not judging anyone. Circumstances are different for each and every person, and financial literacy isn't universal. But I am genuinely curious as to how such a large number of people that have/had careers that paid ok end up paycheck to paycheck when retirement comes around.
Most want the instant lottery win when you tell them they have to save and live within their means over time, eyes just glaze over and it doesn’t happen.
I also have given up trying to advise people to do differently in my life. They won’t learn/listen until they get to 50-55 before they start to realize that time has run out.
Unless you were born with a silver spoon, the treadmill starts when you turn 18. when you are young compounding interest/stock splits/dividends/blue chip stocks/401k/unions are your friend.
I was never in a Union, but in my profession, the pipe fitters who worked in the field at my company were, and their healthcare and their pensions, and their savings at the end of life were very very good.
It’s too bad. A large part of the country are anti-Union in fact, many people in the union were very conservative and didn’t quite realize how lucky they were to be in a Union.
When the CPP was being reformed in the 1990s:
* https://en.wikipedia.org/wiki/Canada_Pension_Plan#1998_refor...
There was a lot of debate about whether it should still be government run, or left to individuals, and it is exactly this situation that many folks said that there needs to be some component of retirement that should not be able to be touched by individuals.
You're supposed to start saving during the most financially constrained portion of your life, and those are the dollars that have the most impact on your nest egg. Imagine someone starts investing $100/mo at 20 for 3% annually. Their friend who starts saving the same amount at 30 will have 30% more money, despite putting in almost as much.
A person whose parents gave them $10k for retirement at 20 and only starts investing at 30 will have as much as the person who invested religiously from 20, while a person who managed both will have double.
While somewhat avoidable in retrospect, I don't believe my story is uncommon.
America, and now much of the Western world, runs on debt and taking on debt is being instilled from the early years, so no wonder why people can't save when their income is spent on interest payments.
We know empirically that lower wealth inequality works because in the past periods with lower wealth inequality societies lived more secure lives financially, so wealth redistribution is the answer.
And the point is to save and live within your means you can’t sit around and worry about what if the right thing to do is to save and live within your means you don’t sit around and worry about if everybody’s rich then no one‘s rich that sounds like an excuse not to do anything.
Many people who I worked with always had an excuse there’s no point saving or living within your means because inflation is gonna kill you or you’re going to be taxed.
There is whole LARP scene of FIRE and influential bloggers from that scene are the only ones that are making money.
Nest egg I do believe had merit back when there actually were "high yield savings accounts" available. I basically see who is LARPing money management when I see they post about FIRE or HYSA, well "money market accounts" seem better and kind of like of HYSA, but the hell those are not really that easily available.
Government bonds are also rather interesting for keeping as "nest egg", corporate bonds are useless.
Article author seems to be from quite well off family lamenting he just didn't understood any of financial stuff and world moved on while he ate away whatever he had. Sad part is it can happen to any of us even if we are financially literate because market can be bad far longer than we can afford or like retirement, jobs all of this can shift while we are left with much less for day to day. Part that I don't understand is that, we should expect that outcome rather than be surprised by it. We should be surprised when all went well and there was no recession, layoffs during our lives.
> ... BS like "high yield savings account" there is no such thing as long as I am alive ...
HYSA are in 2026 readily available.
> ... well "money market accounts" seem better and kind of like of HYSA, but the hell those are not really that easily available.
Likewise readily available: open a free brokerage (or "cash management") account at Fidelity.com online (it is easy and acts similar to a bank account: your paycheck can be direct deposited there, it offers a billpay service, you can use it for electronic transfers, and outgoing wire transfers are free; no minimum balance and no monthly fees), cash by default goes into their SPAXX money market account (its 0.42% ER (Expense Ratio) is higher than some, but its 3.33% yield beats most savings/credit union savings rates; EX: Ally bank is yielding 3.00% these days). If you want more of the yield to go into your pocket you can buy (with no transaction fee) a ETF like Vanguard's VBIL which invests only in short duration US Treasury bills (now yielding 3.63% w/ER 0.06%). And if you're up for slightly higher effort, you can buy T-Bills directly at Fidelity with auto reinvestment, at no extra cost.
The preceding (including HYSA) are all near-zero risk, and as a consequence, do NOT pay truly "high" yields (which I think was your real point), they just pay yields that are at the upper end of 'near-zero risk'. These are NOT where you invest for long-term gain/appreciation. For the latter, conventional wisdom says: invest in the stock market, where the risk is much higher, but the historical long-term return is too. ETF's make this easy and efficient. One candidate for "fire and forget": VTI, Vanguard's Total [US] Stock Market Index ETF (as before, with an easy to open account at Fidelity, you can trade these for almost no cost; Fidelity has many competitors, I am merely a happy customer of theirs).
The designation of "HYSA" is itself kind of a semantic shrinkflationesque slight of hand.
"HYSA"s in 2026 have similar and often worse rates than a standard savings account back in, say, most of the 1990s.
But, sure, compared to the average modern standard savings account (with rates of effectively nothing and well below inflation) it is higher yield than that.
between 2.5% and 4% that's normal savings account rate and high yield is BS.
Isn't the reserve chute the Old Age Security pension along with the Guaranteed Income Supplement?
Assuming a single person with no other income, they would add $11,378 to the maximum CPP payout of $18,092 for a total of $29,470 or $14,918 to the average CPP payout of $11,000 for at total of $25,918. (Unlike the CPP, OAS is clawed back if you have other income over a certain amount.)
Retiring at 70 would raise the maximum CPP to $25,690 and OAS to $12,272 for a total of $37,962.
https://www.canada.ca/en/services/benefits/publicpensions/ol...
Not a huge amount but substantially more. Renters also seem eligible for other help at these income levels which might amount to $5,000 per year in BC.
https://ageplacehub.ca/blog/affordable-senior-housing-canada...
(I am not Canadian but did try and look into pensions when I thought about moving there.)
CPP benefits are proportional to how much you pay in over your life. OAS is proportional to how long you've lived in Canada and thus 'contributed to society at large'; once your income is CAD >95k/indiviudal OAS starts getting clawed back (IMHO it should be clawed back much sooner).
On top of CPP and OAS it is your responsibility to have personal savings: RRSP/pension, TFSA, etc.
GIS is the 'poverty prevention' program, for people making less than 20-30k:
* https://www.canada.ca/en/services/benefits/publicpensions/ol...
The downside of means testing pension payments is that it acts as a disincentive to discretionary pension saving.
The previous UK system (pre-2009) was an extreme example of this where those without additional pension savings got topped up with pension credit (GIS equivalent) that was clawed back at 100%. They ended up raising the state pension (OAS equivalent) to that level so those with a full contribution history are no longer eligible for pension credit (12,548 GBP = 23,416 CAD).
The OAS clawback rate is only 15% which seems more like a tax on pensioners - reasonable given they no longer make social security contributions though maybe the 50% GIS clawback would disincentivise workplace tax-deferred pension saving for those affected.
Why does a couple with $180k HHI need to get anything?
Presumably the optimal strategy if you have retirement income within the range where you face a 15% clawback might be to withdraw extra income one year so that you can avoid the clawback the following year, since the higher marginal tax rate would be less than the clawback saved.
> Just tax those with high incomes to get it back.
This appears to not raise as much money as many people think. Interesting conversation with UK tax lawyer Dan Neidle on the topic:
* https://www.youtube.com/watch?v=hgQONOM15HI
* https://en.wikipedia.org/wiki/Dan_Neidle
(Of course there could be reasons besides strictly revenue to do it, but folks should be realistic about the pros and cons.)
Dan has actually criticised a similar situation in the UK where child benefit is clawed back from higher earners.
> If I was a Tory Chancellor, I wouldn’t abolish inheritance tax. I’d fix the ridiculous marginal rates that mean there are hundreds of thousands of 30-somethings paying more than 70% tax on every additional £ they earn.
https://taxpolicy.org.uk/2023/09/24/70percent/
It’s reasonable to question the balance between how much taxation should be born by higher income pensioners (who likely own their home outright) vs working age people at the same level of income (who additionally pay social security tax). Maybe it would make more sense to roll social security into the tax system and raise pension payments so lower income pensioners don’t lose out.
It is the same with social security in the USA.
The higher earners are already heavily subsidizing the lower. Take away their returns and they will vote to dismantle the whole thing.
My parents define their retirement as cruises, traveling, etc. My mother has 3 closets full of clothes, the latest iPhone and iPad to check Facebook…
Both generations worked very hard, and I don’t want to criticize them. I keep telling my father and mother that they should burn and enjoy all their money while they can.
My point is not to criticize a generation, but to try to contextualize that a comfortable wealthy retirement is relatively new in our social concept, and so far it seems more as a one-off trick that only baby boomers pulled after the huge economic growth post 70s, than a sustainable economic pattern.
One thing young people in the west (most of the world stays home until they are married) can do is stay home pay your parents some rent save the balance that you would be paying. If you were living away from home don’t leave until you get married but during that time you have to save of course this assumes that you have good parents and a good home life, when you have youth on your side, and you have a good job, the possibilities of are endless when you are young if you have the discipline to save and invest.