Money Talk | Let’s discuss Retirement Again

I’m afraid for the future.

Not like I was afraid in 2008. The American economy is recovering and Europe will stabilize. Financial institutions will not make the same mistakes again. We won’t let them.

What I’m afraid of are expectations for the future. The sense of entitlement that I see. The idea that there are short cuts to success.

The formula is hard work and sacrifice. Always. No exception. Not hard work and debt. Never debt and nice stuff. A generation of easy credit and increasing house prices here in Canada has spoiled us. But things have changed. It’s not different here in Canada. We just haven’t had our turn yet.

Baby boomers will weep and wail about shrinking pensions and extra years at their cubicles. But they’ll be okay. They’ll sell their properties for less than they’d hoped and cut back on their retirement expectations. But they’ll be fine.

Us 40-year-olds will look back at these times and think they are the good old days. We’ll remember when we first realized that property values could go down also, when jobs began to pay less and when we were afraid of liquid financial assets (stocks, mutual funds and bonds).

Unlike others, I’m not afraid of inflation and financial loss. My wife and I have spent a long time going over our budget and planning for our future. This involved a lot of tough choices and sacrifices. We’ll be fine because we’ve talked this through.

What I’m afraid of is deflation and time. House prices are going down, interest rates will rise, and jobs will pay less. For those of us in our 40’s who haven’t taken the time to plan for the future, I’m not afraid that we will lose our money. I’m afraid that we’ll outlive the money that they have. That scares me. This is why I’m reposting some retirement savings tips that I wrote last December, with the hopes that it will start the retirement savings conversation in the homes of my fellow 40-year-olds.

Start now

If you are 35 with zero saved right now and you want to save a million dollars by age 65, you need to save $671 per month. If you have saved $50,000, then that monthly payment is $304 per month.

Now, if you are 45 with zero saved and you want to reach a million by age 65, you’ll need to put away $1,698 per month. If you’ve saved $100,000 already your monthly payment is $861.

See what a difference starting now makes.

No, really don’t wait. Start right now!

Delays are costly. Consider this, a 40-year-old begins contributing $3,000 per year into a retirement savings plan and continues to do so until retirement at 65. Assuming 9% annual growth (seems like wishful thinking but lets assume). At 65 he will have $254,102 saved. Now let’s say that instead of making that first investment at 40 he spends some time doing research, talking to friends, talking to professionals and basically hemming and hawing. He then ends up not making that first investment until a year later. Well by age 65 he’ll have just $230,369. A $23,733 penalty for his late start.

Hit the max and hit up free money

Some employers match your retirement contributions up to a certain limit. To add $1,000 a month to your account, you may have to contribute only $500 to $700 depending on your company’s matching formula. You should aim to hit the maximum and collect all that fee money.

Take a long look at your expenses

Its time to make some tough decisions on expenses. Now that you have a little more income you’ll want to treat yourself again and return to how life was. To meet your goals you’ll have to make some sacrifices.  It may be time to get rid of those “beyond-your-means” expenses, like the third car, premium cable package or your [gulp] seasons tickets. Cutting down the extra expenses will create room to put away cash into a retirement fund.

Have a plan (that starts right now)

I’m not a financial planner. For a specific financial plan that suits you please consult a professional.

With that being said, starting with zero in savings you can put away $1 million in 20 years with this simple savings strategy that you can implement right now. You can adjust the numbers up or down to meet you savings goals.

Begin by saving $500 per month this year, starting January 2013. The following year and every year after that increase the monthly savings by $100. So in 2014 you are saving $600 per month, 2015 you are saving $700 per month and so on.  In twenty years you’ll have $1 million.


  1. Very important topic. I don’t buy into the argument that Canada is different. Every other country has had a housing market crash why can’t it happen here? It can and it will. Thanks for sharing your thoughts.

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