Based on my non-existent retirement savings I’m poised to live zero years as a capital-R Retiree, Rob Csernyik writes.Getty Images/iStockphoto
Rob Csernyik is a freelance journalist.
The first time I remember seriously pondering my future retirement was in university. A fellow student said she wanted to retire early to Hawaii and it caught me off-guard. Her career hadn’t yet started, but she was already imagining how it would finish.
This prompted some daydreaming and a determination that I was unlikely to fully retire. I couldn’t see myself enjoying the long stretches of idleness; I’ve always enjoyed having work to do. My retirement decision wouldn’t be made of necessity, I figured, but based on how much I enjoyed working. This seems quaint now.
Recently a feature in this newspaper projected how many years men can expect to live in retirement – about 90 per cent of the 1,000-man sample will live a decade past the age of 65, just over half the sample until 89. My immediate thought was that, despite these odds (and some encouraging lifespans in my family tree), based on my non-existent retirement savings I’m poised to live zero years as a capital-R Retiree.
Though it feels sometimes like I’m alone, having too little retirement savings or none is common. An Edward Jones Canada survey found about 70 per cent of my fellow millennials don’t save enough for retirement. It also notes that 27 per cent of us (myself included) can’t afford to do so. Is it any wonder?
Rising costs of living deny the luxury of squirrelling funds away to serve a far-off future. I’ve felt that older generations take this “spend today, worry later” attitude as blithe ignorance. Instead, it’s a necessity to survive. As grocery bills increase, hunger pangs speak louder than the little voice echoing in our heads about the life-changing magic of compound interest.
Yet still, one of the most uncomfortable realizations of my mid-30s has been that I may have missed the boat on certain types of wealth-building. For instance, when I struck out and opened a retail store a decade ago, I was comfortable making financial sacrifices such as putting off short-term notions of home ownership or saving for retirement. I figured one day, in more financially comfortable times, I could still catch up.
Though my business is long gone, I’ve been able to advance financially in my career. But housing prices and the retirement number – the dollar figure that lets one comfortably leave the work force – have far outpaced my earnings growth, putting me no further ahead toward either. Workers in my generation have to look forward to self-funding any level of real comfort in our retirements, as the golden ticket days of pensions have waned and old-age benefits only go so far.
I grew up hearing that $1-million was enough to retire on, a figure two-thirds of recent IG Wealth Management survey respondents still believe. Meanwhile, a Bank of Montreal survey suggests Canadians will need $1.7-million to retire, an estimate 20 per cent higher than in 2020. (Though critics note these big numbers can sometimes cause needless worry as everyone’s retirement number is different, as a single person with moths in his retirement savings jar, I look at these increases seriously.)
Generational wealth transfers may aid some members of my generation in securing retirement, but there hasn’t been and won’t be one significant enough in my family to change my financial future. And though coming years may hold surprises that allow me to save for the future, relying on that is like pegging life plans on a lottery win – a fool’s errand.
Instead, to avoid a future of bleak austerity – the sort I’ve experienced previously when working for low wages – I’ll need to plan to work as long as I’m able to ensure some degree of comfort as I age. Given that governments around the world (like France) and close to home (like Quebec) have either increased retirement ages or are exploring the idea, I’m likely to be in good company working into my older years.
The type of retirement my parents grew up imagining – even some of my peers viewed as possible – is morphing into a new beast, taken older, if at all, and supplemented by side hustles, if not formal jobs. We need to accept this and plan accordingly, instead of shaming people for struggling to prepare.
In May I’ll turn 37, the year that another Edward Jones Canada survey notes is an average age Canadians begin saving for retirement. I don’t see myself having the capacity to do so at least until I’m 40. According to one retirement calculator, if I want to capital-R Retire I need to save about $1,700 monthly from now until I’m 65. But when it factors in additional retirement income like part-time work, I’m on much stronger footing – as long as I don’t expect a condo in Waikiki.