Gen X ain't got no time for retirement!

[originalhypa]

So, who here is thinking about retirement?

RRSPs: For gen-Xers and millennials, saving for retirement is a huge challenge

Living paycheque to paycheque, drowning in red ink, struggling to make ends meet: They’re all clichés that fit Stephanie Yan’s finances.

The 47-year-old health care worker had been battling debt even before she bought a condo in Surrey more than a decade ago. But carrying a mortgage — even one for $130,000, a paltry sum compared with today’s norm — almost proved too much.

“I decided I needed to move out of my mom and dad’s place and I didn’t want to rent, so I managed to save up enough and with a little help from my mom and dad, I had enough for a down payment for a home,” says Yan.

“At the time, I didn’t think about the debt load I was already carrying and got myself into trouble.”

She soon landed in debt counselling to tame a personal deficit that was putting on her a path to losing her condo.

Even today, after becoming a meticulous budgeter, she still battles the bills. With the RRSP deadline approaching, the marketing urging Canadians to make last minute contributions fails to resonate.

“To me, is it’s just another year without RRSPs because unfortunately I have no money to put into it,” she says. “There just isn’t the money there to save for anything.”

Yan is in good company in the Lower Mainland.

For many in Vancouver who are struggling to pay down debt, retirement seems more and more out reach.

And, in general, Canadians are increasingly indebted. Statistics Canada indicates that on average Canadians owe than $1.68 for every dollar they earn — the highest level since the agency began measuring the ratio in the early 1990s.

But the picture in Vancouver is bleaker. According 2014 data, Vancouverites owe more than $2 for every dollar earned.

Generation Xers like Yan — those in their late 30s to early 50s — often face the most difficulty, says Scott Hannah, CEO of the non-profit Credit Counselling Society.

“They are generally the most heavily indebted citizens,” he says, adding the average age of people seeking help from the Credit Counselling Society is 43.

It’s around this age that many individuals experience “the most expensive period of their lives,” Hannah says, adding they reach many milestones about a decade later than the baby boomers did.

“They’re just now settling into careers in a home with a big mortgage, lines of credit and raising families.”

This demographic was the first to experience economic troubles that have only deepened since turn of the century.

“They came of age when wages lost the most ground,” says Paul Kershaw, a professor at the School of Population and Public Health at UBC. At the same time, “housing prices really started to take off.”

Although the following generation, the millennials, face the same challenges — perhaps even more so on home ownership — people in their late 30 and early 40s are often more indebted. Because they had a larger window of opportunity to get into the housing market, they took on more debt than previous generations.

Moreover, they’ve often dipped into the growing equity in their homes to make up for lost wage growth.

Consider this point: even though people ages 35 to 44 have had their individual wealth grow go by about $180,000 since 1999, “they had to take on $135,000 in additional debt,” Kershaw says.

That means “for every dollar of wealth they’ve accumulated over the last couple of decades, they had to take on 75 cents worth of debt,” says the founder of Generation Squeeze, which advocates for Canadians under 50 in government policy decisions, which are often driven by the concerns of older people.

“Compare that to somebody who is like 55 to 64, or over 65.” Those older age groups gained even more wealth but at much less cost.

“For every dollar of more wealth they’ve accumulated, they have taken on nine cents or two cents (respectively) of debt,” he says.

For gen-Xers, the result has been they have less money for retirement, Kershaw says.

Moreover they’re just the vanguard of the problem. Millennials — ages 18 to 34—are even worse off, he adds. Their net wealth “has barely changed — up just $1,000 since 1999 while debt is up by $20,000.”

So for every additional dollar of wealth, they’ve taken on $20 worth of debt.

Although younger generations are profoundly challenged to save for retirement, Vancity wealth adviser Sophie Salcito says they should still try to stash away some money every month in the RRSP. Even $25 a month is a start.

“At least try rather than just be defeatist about it,” Salcito says.

Of course, finding extra cash can be difficult, and that’s where the lost art of budgeting can come in handy — something people who grew up in the Dirty 30s had to master by necessity.

These days budgeting “is a dirty word for a lot of people,” says the certified financial planner who frequently raises the issue with even her boomer clients.

“Their eyes glaze over, but these are basic principles you can’t get around; you need to know how much money is coming in and how much is going out.”

Without tracking expenses, most people struggle to cut costs and save, Salcito adds.

Even with a budget, saving remains a challenge for Yan. And that makes retirement feel like another cliché: a pipe dream.

“It does seem like that,” Yan says. “But at least my home should be paid off when I retire.”

In the meantime she is ever-mindful of money, worried about sinking deeper in debt.

And often she can’t help but think whether she made the right choice.

“It’s nice having a home, but at the same time is it really worth it?”

http://vancouversun.com/news/local-n...ime=1487701943

TL/DR: Those born from 1960-1976 were the last generation with a low asset to debt ratio. 1977-1990 is not quite as lucky. 1991-present is fucked.

[CivicBlues]

pssh, I doubt anyone on RS can relate.

We all make over 100k living in million dollar townhouses drivin' the latest luxury cars while munchin' on all day McDicks' breakfast.

Try Reddit.

[6o4__boi]

It's ok...WW3 will fix everything.

[unit]

just pop over to the RE thread, everyone owns a place in coal harbor

[Hondaracer]

How much does the first woman make in that she can't carry a 130k mortgage?

25 year amartization on 130k is like 1000 a month, you could probably even go lower than that if you wanted to.

Rent and build onto your savings and RRSP's. I think sooner than later a shift has to occur where the dream of owning a "home" is gone and renting is seen as a completely viable option for life.

The definition of home has changed over the last 10 years from a detached home in Vancouver to a condo in maple ridge. Live within your means and be smart with your money. Imo the first woman's surrey condo probably didn't appreciate at all and may even be worth less than when she bought it so a depreciating asset doesn't help

[320icar]

My work has an RSP for me, but realistically I have zero private retirement savings, and same goes for every single friend I know. If I want to live now, then I just won't later.

[GS8]

Population goes up
Jobs don't

Cost of living goes up
Wages don't

Invest in school
Can't find job

---

I found the only way to put money into savings / investments is to live cheap and be on a strict spending budget. Monitor your income and expenses. Don't buy unnecessary shit to get that 15sec high of showing people your new swag. Make sacrifices.

I find the job scene in Vancouver to be utter shit. 5 years experience to make $19 hour when the industry standard is at least $24? Yeah, fuck you.

BUT DAT SUNSET DOE

[Gh0st]

^ Honda Racer -- very true.

Looks like the only retirement plan she has now is selling the old Surrey condo.

I used to work in the healthcare industry for a government agency in a position of hiring. They are underpaid and overworked! Based on the financial information listed above, it's very unlikely she is a nurse. She is probably a Residential Care Worker or Community Support Worker. They make 17-18/ hour. Just a guess!

That comes out to give or take 35k gross a year. Approx 28k net.

1000 a month mortgage sounds about right lets do a quick sum of basic expenses - I will try to stay conservative where possible.

1000 monthly mortgage
125 property tax spread monthly
150 monthly strata
200 car insurance (business required in healthcare industry for RCW/CSW's)
200 gas
400 food
100 misc/going out
50 cellphone
50 internet/subscriptions
50 emergency

Total: 2325 monthly payments or 27,900 annually.

TL/DR - Renting and cutting out driving is perfectly normal. Opting to rent in an older one bedroom Vancouver apartment (850/month and taking transit can save you lots. My friend is renting around Fraser and 44th inner street) it beats paying strata and taxes on a run down depreciating Surrey Condo.

[syee]

She doesn't really seem too financially responsible. She was living at home and was already battling debt at that point even before getting her mortgage. I think it's time for her to move back home and get her finances in order first. Also, with housing prices and rental availability the way it is in Vancouver, it certainly seems more logical living at home while putting money aside for the future. (or in her case, paying off her debt)

Many employers do RRSP matching and if you're in this situation, it's well worth it to scrape together any money you might have and contribute to your RRSP so that you can get this extra bit of "free money".

[ZN6]

The 47-year-old health care worker had been battling debt even before she bought a condo in Surrey more than a decade ago. But carrying a mortgage — even one for $130,000, a paltry sum compared with today’s norm — almost proved too much.


That's her problem. Have debt issues? Ok! Let's lay on more debt.

[Hondaracer]

Originally Posted by GS8

Population goes up
Jobs don't

Cost of living goes up
Wages don't

Invest in school
Can't find job

---

I found the only way to put money into savings / investments is to live cheap and be on a strict spending budget. Monitor your income and expenses. Don't buy unnecessary shit to get that 15sec high of showing people your new swag. Make sacrifices.

I find the job scene in Vancouver to be utter shit. 5 years experience to make $19 hour when the industry standard is at least $24? Yeah, fuck you.

BUT DAT SUNSET DOE

Sounds like you're in a pretty terrible industry when crack head temp laboirers on construction sites with experience pushing a broom can make 18-20 almost anywhere.

[Rallydrv]

people gotta know that in another 20-30 years (maybe sooner), pension/cpp (gov't funded )and/or others will not exists anymore.

lol .i really like it when RRSP ads from bank take returns at >5%/ seriously?

[ZN6]

I went to work two jobs while in university to try and borrow as little as possible. Got good grades and in effect got some scholarships to help pay for school. I came out of school debt free WITH savings.

You want something, work for it. I don't think it's so much of a problem with the system, it's just that there are too many people expecting a handout.

How many university students do you know eek-in then take the most useless courses to fulfill the credit coming out expecting a 100K job?

I knew too many people who went into university asking "What's the easiest course to get my upper-div credits? Oh philosophy 300? okie dokie."

[originalhypa]

Originally Posted by CivicBlues

We all make over 100k living in million dollar townhouses drivin' the latest luxury cars while munchin' on all day McDicks' breakfast.

It's fitting that some guy posted today that it was a great day to drive around in his Maserati.

I have a haiku for this.....

No need to working
Great day to drive Italian car
Prince of Vancity

Originally Posted by unit

just pop over to the RE thread, everyone owns a place in coal harbor

Couple that with their 1995 Porsche worth $100k, and a Fendi man purse.

Originally Posted by syee

She doesn't really seem too financially responsible.

I think that is the point of the article. She isn't very good with her money, which is a big problem with my generation. I know many peers in their late 30's and early 40's who carry a ton of debt, and still do a $7k vacation to Disneyland every year. They just don't care.

Originally Posted by Hondaracer

Sounds like you're in a pretty terrible industry when crack head temp laboirers on construction sites with experience pushing a broom can make 18-20 almost anywhere.

agreed.
My buddy owns a company that makes displays for supermarkets. He had 5 welders, about a quarter of his crew call in sick yesterday. These guys are not educated, but they run a welding machine and make $24/hr.

If you show up sober, and you're not an utter idiot, it's fucking impossible to not make money in the trades these days. There is a shortage of people willing to work hard.

[ZN6]

Originally Posted by syee

She doesn't really seem too financially responsible. She was living at home and was already battling debt at that point even before getting her mortgage. I think it's time for her to move back home and get her finances in order first. Also, with housing prices and rental availability the way it is in Vancouver, it certainly seems more logical living at home while putting money aside for the future. (or in her case, paying off her debt)

Many employers do RRSP matching and if you're in this situation, it's well worth it to scrape together any money you might have and contribute to your RRSP so that you can get this extra bit of "free money".

If I were her and battling old debts, I'd definitely move home and rent out the damn surrey condo. Let someone else pay for your mortgage.

[Tapioca]

One of her downfalls during her peak earning years was not getting married or securing a long term relationship and acquiring or building assets through that.

Her ace in the hole is an inheritance from her parents.

[Hondaracer]

Originally Posted by originalhypa

agreed.
My buddy owns a company that makes displays for supermarkets. He had 5 welders, about a quarter of his crew call in sick yesterday. These guys are not educated, but they run a welding machine and make $24/hr.

If you show up sober, and you're not an utter idiot, it's fucking impossible to not make money in the trades these days. There is a shortage of people willing to work hard.

Trades? Eww that's dirty

[CivicBlues]

Originally Posted by Tapioca

One of her downfalls during her peak earning years was not getting married or securing a long term relationship and acquiring or building assets through that.

Her ace in the hole is an inheritance from her parents.

God dang if I ever heard a pick up line like that...

Hey baby, wanna enter a long-term cohabitation agreement so that we can build assets and leverage our peak earning years to secure a greater retirement income?

[Mr.HappySilp]

Originally Posted by syee

Many employers do RRSP matching and if you're in this situation, it's well worth it to scrape together any money you might have and contribute to your RRSP so that you can get this extra bit of "free money".

Mine work does that and what happens is they deduct it off your pay cheque depend on how much you want them to deduct (I set my to 10% every pay cheque and the my company will contribute up to a maximum 5% each pay cheque). The amount is so little that you don't even notice that that money is missing and when year end comes you will be surprise how much money you save for RRSP. I do the same thing with savings every time I get pay 30% of it gets transfer to my investment acct so I don't even see it. It works for me since I know what i have left is to pay bills, spend etc etc so I can spend all I want.

[dat_steve]

another tip/note for workplace RSP matching. try not to get locked into contributing into some sort of portfolio/fund with your monthly deductions (investments), as that seems to be what happens to most of my coworkers who don't know any better. these tend to have huge fees (2%+) and you won't be left with much growth. choose to have your contributions put into a self directed account, do a bit of research, and dump into low fee ETF(s) of your choice, or what have you.

[MarkyMark]

If people think this generation is fucked, wait a couple of more when only rich people's parents own a property here and everyone else rents. Sorry kiddos but no cool million dollar property to pay off all your debts.

[Nlkko]

“I decided I needed to move out of my mom and dad’s place and I didn’t want to rent, so I managed to save up enough and with a little help from my mom and dad, I had enough for a down payment for a home,” says Yan.

Great decision.

“At the time, I didn’t think about the debt load I was already carrying and got myself into trouble.”

Thinking, what's that.

[ZN6]

Originally Posted by Nlkko

“I decided I needed to move out of my mom and dad’s place and I didn’t want to rent, so I managed to save up enough and with a little help from my mom and dad, I had enough for a down payment for a home,” says Yan.

Great decision.

“At the time, I didn’t think about the debt load I was already carrying and got myself into trouble.”

Thinking, what's that.

She rather just pay someone else than her parents, that's all. Because living at home means you shouldn't have to contribute and fucking spend all your shit right? I feel no sympathy for people who make one wrong decision after another.

First of all, maybe those savings could have paid down interest incurring debt, second her credit is probably shit, third, goes to get a mortage on a place. Lastly, not moving home so she can have at least another source of income.

What people fail to understand is that a person can have more than one source of income and one occupation is not an end all, be all.

Why do people have assets? To generate income. There are many, many people who come from far worse off situations who have made it because they make smart decisions.

Kinda hard when she doesn't think about the shit hole she's already in.

[GS8]

Originally Posted by Hondaracer

Sounds like you're in a pretty terrible industry when crack head temp laboirers on construction sites with experience pushing a broom can make 18-20 almost anywhere.

In my industry, the companies open satellite offices in places like Mumbai and just hire people there. They get paid less and do very streamlined tasks (monkey work, not racist). Data transfers via Cloud.

Why pay 5 people a normal wage when you can pay 15 people a sub-normal wage?

[twitchyzero]

I'm convinced retirement will only be for the well-off for millennials and beyond.

We'll be working until we're literally physically unfit for work.

Most of us will probably have better life balance throughout our careers though, so it's not sucha gloomy outlook.

Anyways, am I the only one who feels kinda bad for her?

closing in on 50's and struggling with a 130k mtg? This is without a children in the picture.

before all perfect examples here go 'lol should've stayed at home'...just put yourself in her shoes for a split second.

We don't even have the full picture here...let's not be so quick to judge?

Originally Posted by ZN6

I went to work two jobs while in university to try and borrow as little as possible. Got good grades and in effect got some scholarships to help pay for school. I came out of school debt free WITH savings.

it is not white and black...so many factors here.

amazing it worked out for you...those trying to do more than 10-15 hours a week on top of full-time studies is generally at the expense of their grades.

Not every program is equal either...In my third year I had 40+ credits while others had 25.

and there are students who not only have no family support but may have dependents...a child..a sick parent, etc.

refer to the image I posted in the 'where should I send my kid to kindergarten' thread