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- Hacker News
- I am a Gen X. My grandmother, who was born in 1906 and passed on in 1994, worked at home, cooked, cleaned for most of her life. He had 3-4 dresses in her closet, and whenever I visited she gave some money to go buy a small bottle of Sprite for lunch.
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.
by freetanga - Young people have to get out of that mentality you have to start saving and living within your means early when you’re young you have time it’s amazing if you put a little bit away every month and stay at it how much it adds up over time but that will never happen if you never make the commitment to do it, and most people do not they always put it off until tomorrow and then one day they look up and they’re 59 years old.
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.
by Danox - > The reserve chute is the Canada Pension Plan. The CPP was originally intended to cover one-third of Canadians’ retirement income, but these days it’s more akin to what you might get from a part-time job: a sheet too small for most beds. The maximum CPP payout comes to about $18,000 per year; the average is just over $11,000.
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.)
by laurencerowe - > Isn't the reserve chute the Old Age Security pension along with the Guaranteed Income Supplement?
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...
by throw0101d - I've never understood the logic behind the idea of a "nest egg". Years ago, perhaps, it might not have been clear to the average person that money has to grow over time to stave off inflation, but that information has been widely available for decades and many people still don't put money into any kind of investment.
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.
by Rooster61 - It gets worse when you read financial "social media" people repeating BS like "high yield savings account" there is no such thing as long as I am alive, it is something from maybe 80's or 90's or even earlier. My cousin had the idea of "just put some money in savings account each month and never check it" - that's exactly super outdated advice or a crooked one where someone doesn't know anything about ETFs and heard you put money each month in it and forget...
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.
by ozim - Look around in any parking lot or stop light. Check out some real estate listings near you. Notice the number of deliveries going out at your local restaurants.by liveoneggs
- I know lots of folks (male and female) who would have retired fine, but for one word: divorce.by m463
- If everybody is rich, then no one is rich. In other words, if everyone has a lot of money, then the prices will be high enough to suck this money out of everyone.
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.
by pllbnk - It's pretty easy to see how it happens. People don't intuitively understand compound interest and defer.
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.
- > Years ago, perhaps, it might not have been clear to the average person that money has to grow over time to stave off inflation, but that information has been widely available for decades and many people still don't put money into any kind of investment.
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.
by throw0101d - Humans in general are short-term thinkers if you can put it off until tomorrow most will elect to do so. Personal finance classes should be required classes the first year of high school and all the way through the senior year.
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.
by Danox - He owns property, could afford raising two kids and can speak of social safety nets.
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
by Havoc - I find it hard to believe the author could not figure out personal finance. He's certainly smart enough with that economics degree and those epic writing skills.
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.
- I pay forced (happy with it) 11%, add extra and get extra from employer up to a total of 15%.
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.
by MrDresden - I'm not a fan of housing as an investment but ignoring that it is an investment is a social form similar to tax evasion.
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.
- > 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.
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.
- > 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.
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.
by brailsafe - Man, I though MacLean's was dead. I haven't see one of those in 25 years. But from the article:
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.
by 220hertz - Instead they have a house that they paid 40k for and is worth millions now. Younger generations won’t have that.by what
- > That's Canadians, aged 55-64.
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.
by georgemcbay - There is a lot of misguided thinking about retirement, as shown by things like "Canadian couples say they need $1.7M to retire. Are you on track?":
* https://globalnews.ca/news/11705204/canadian-couples-retirem...
This survey is released by a bank that makes money from AUM fees for things like mutual funds. It is in their interest to think you need more, but most folks do not need as much as they believe. The study tends to be released during "RRSP season", which is close to the last time Canadians are able to put in money into their retirement saving account (RRSP ~ 401(k)) for the current tax year (and get a taxable income reduction).
This (flat) fee-only advisor goes over some of the preconceptions that have:
* https://www.youtube.com/watch?v=5LmiW4FgAL8
He's put out videos about what you can expect if you have 'only' CA$ 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:
by throw0101d - I only watched part of 1, but the answer was “no, you can’t retire on 250k”.by what