Then my mother said to me, "What are you going to do for retirement!?" I told her I would worry about that sometime in the future, and I could tell that just made her crazy. I told her that people my age would go nuts if we tried to generate the same amount of worry over our financial futures as she does, because most of us don't have pensions, investments are anything but reliable these days, and most people I know don't really have enough money to invest anyhow.

This got me thinking about the difference between my generation and hers when it comes to money. Just about everyone I know who is in my age range and is pursuing post-secondary education pretty much shrugs when anyone asks them about their debt. It's not that we don't care about the debt, it's just that we seem to be resigned to it. When I ask my friends what they plan to do for retirement, they're pretty much like me - I don't know, that's somewhere in the future. A couple of friends contribute to RRSP's, but the vast majority of us are more concerned about making ends meet today.

Is there a difference between our attitudes towards money, and retirement? My mother dreams of retiring with security, but then she has a civil service job, one of the few jobs that have decent retirement pensions. Most of my friends are hanging on by the skin of their teeth. My retirement plan so far is to work until I'm 90 to pay off my student loan. Seriously though, I figure maybe if I buy a modest house someday, then at least I'll have somewhere to live when I'm retired.

What do you think, regarding retirement stuff and investments? Does our generation have a different attitude towards saving for retirement, etc.?

Oh, and about this thread - I would like us to discuss financial planning in layman's terms, not macroeconomics, not big pissing contests about who knows more about global tax structure and stuff like that. This is about personal attitudes towards money, not an economics class.

Also, although I may have left myself open for it, this is also not a thread for everyone to come in and trash people who have decided to go for post-secondary education. If you didn't, fine, but we've already had a thread where all of us university and college students were called stupid and dupes and that's not what I want this to be about. We can talk about financial planning without getting into that, I think.

I've racked up an enormous debt too. It freaks my mom and her family out too. But in my opinion, it was well worth it. I have a job that I love and do well. I've been well served by my Post-secondary education...although I do resent that my life revolves around the repayments of that loan.

Sadly, I feel more worried about money now than I did in my student days when I had a lot less cash.

[ May 29, 2002: Message edited by: kamiks ]

There is little you can really do about student loans till you get out of school and start working full time. I think you went into law(???) and though it is cut throat and alot harder to work in at times, there is plenty of money in it after you have been working for ten years or so.

As well there are firms that do pay a pension.
But first things first.

Once you are finished school, other than proffesional upgrading, you want to pay off that loan as fast as you can. A house is a good investment because it is something you have to have, it builds equity, and at the end of the day will be something you can pay off just before your retirement.

To begin, make those loan payments on time everytime. This will help when you ask for a mortgage later on. Before hand, look for a consolidation loan at a lower rate than what your paying on your student loan and with it pay off any credit card debt so that you have just the one lower interest loan.

Where ever you want to live, look for the dumpiest place on the nicest street. It will hurt at first but as the years go by and you renovate and restore, you will be making money when it comes time to sell. Just make sure that you get the house inspected by a qualified home inspector and if it hasn't been done, get it surveyed. This cost a bit upfront but can save you thousands later on.

Though it is kinda hard to do, think about what you will need in 20, 30, and 40 years from now.

Property taxes and utilities will be your big bills. Idealy if you can cover those costs, plus the other living expenses with some left over to invest, you will find that retirement will be a well earned holiday where you can get to the things you never had time for before.

If you can burn your mortgage 5 years before you retire, you should be able to build enough of a stake to see you through till you kick the bucket.

Plus when you get to a point in age when you can't keep the house up, and it is about all you can do to keep care of yourself, sell the house.

Look for a nice retirement living complex that is connected to a nursing home. This gives you a condo like place to live with all those things you are probably going to need later on. So that when you do need them, there isn't a big change in your life. But it is expensive as hell.

And what to do about that kid of yours.

Not long after my wife started working, we decided to buy Canada Savings Bonds. These aren't the best investment but, a small amount of money comes off each paycheck and goes into CSB. We don't really see it and out of sight is out of mind.

We think the best thing to give your kids is an education. And as you know yourself it doesn't come cheap. Our son didn't go on to higher education but rather wanted to start working right off. Oour daughter on the other hand has already decided she wants to go to University to become a Vet. So the money we have been saving for years now, without any pain, will really go a long way to covering the cost of her education and help her to avoid the debt that you yourself have to carry.

So once out of school she will be just that much further ahead and we hope this will give her the good start we want for her.

My son, I don't know, maybe he will change his mind and enter University or maybe he won't. If he doesn't then we will give him the money once he is married and buying a house.

This last bit is about wills and estates.

This is one fucked up area of the law. There are old statutes and new laws, they differ from province to province and alot of it is outdated.

We are going with a trust rather than a straight will. A trust is more flexable and once your out of your mind very protective of your care and finances. And beleive you me, there will be people out to take what you have away. About 50% of the families in Canada have a fight over the estate of their parents. So even kids can cause problems that you shouldn't have to deal with when your health is failing.

You would do well to read up on the subject as time goes by and set things up so there is no fuss later on. My advice is to look for a medium sized law firm that deals with Wills, Estates and Tax.
Have a good look at the lawyer that will be named in the trust. Make sure you trust that person.

My suggestion if you must divide your estate among multiple people is to absolutely make sure, in advance, that they know what they're getting and to give them time to change their minds.

As for me, I had an RRSP but cashed it in this year to help me get the Land Yacht. I'm also going to come out of school with some student loan debt, but I hope to teach, which is a relatively stable profession.

Retirement? Heh. I'm just hoping the cheap bastards running the CPP still have it around because I'll need it - cuz I'm not sure if I'll be able to stuff my RRSP up to the proverbial million-dollar mark while also buying the condo I want.

Pension plans were set up to reward employees for years of faithfull service, but it is becoming increasingly rare to see someone stay with a single organisation for 30 years. With corporations fluctuating their workforce with their profits its impossible to imagine that your job will be safe for that long. This has completely removed any sense of loyalty that employees feel for their company and its why many of the younger people entering the job market move jobs so frequently. Kind of a screw them before they screw me mentality.

I think this has forced many people to take a much more active role in their retirement planning. I have had 3 different jobs in the last 4 years since completing my degree. This has meant 3 different retirement plans. Two of these were pension plans the other an employer RRSP matching contribution. I find the pension plans to be frustrating because of their inflexibility. I have no control over where the money goes, I have no control over who is managing it,I cannot for any reason touch that money until I am 55, and I can't enjoy any of the additional benefits of having an RRSP. Now I realize that Pension plans, in general, are more stable than an RRSP eligible mutual fund or stock and that in the past that's what people were looking for, ie. that sort of - out of site out of mind mentality, my company and my gov't will take care of me when I retire. Regardless of what Dr. Conway says over in the CPP thread I am not entirely confident that the CPP will be around when I retire, and I don't want to have to rely on it, I am gainfully employed and I would rather see the money going to someone who wasn't able to save for their retirement. And I can't rely on my employer to have a nice little pension waiting for me at 55. I am young, the instability of the market, is actually a boon for me. I am taking advantage of the time-value of money, when the markets were down last year it was great because as I keep the nominal amount of my monthly contribution the same I have a greater purchasing power because I am able to buy more units of my designated funds, which gives me a greater ability to grow my retirement fund over time. The added advantage over the pension fund is that I was able to take advantage of the Canadian Home Buyers Plan, where I can borrow against money I have saved through my RRSP's to get a downpayment to buy a house. I don't pay the tax on withdrawing RRSP money and all I have to do is repay the money I borrowed back into an RRSP over the next 15 years. I also may take advantage of the Life Long Learning plan to go back to school next year, where just like with the HBP I can borrow against my RRSP's to fund my education, which would be great because I, like you, already have a gi-normous amount of student debt.

So, as for student loans, I have always looked at it as a trade off. I went to high school in a small-town, when I went off to University a number of the guys that I was at school with stayed behind and bought a brand new truck for $35,000. I funded my entire education through student loans, all 7 years of it (I am not a doctor or anything - just loved being there and learning about everything), when I was finally done meandering about those hallowed halls I was in $35,000 dollars debt as well. So, the way I look at it I could have went to school or I could have got a new truck, and I prefer the school. Moreso than any RRSP or pension plans that I have now, it was far and away the best investment that I have made so far.

One last thing, those 7 years on campus and $35,000 in student loans opened the door for me to work within the Canadian post-secondary sphere and just a word of advice. DO Not consolidate your credit cards with and government student loans you have. I realize that student loans can be frustrating and confusing especially with all of the changes of the last couple of years but there is also a number of advantages to having them. When you are done, the interest that you pay (and for the first couple of years most of your payments will be going to cover the interest on your loan) provides a tax credit. 17% of the interest that you pay in a year becomes a tax credit, which doesn't sound like much but believe me it adds up. Also with the gov't loan programs you are eligible for interest-relief programs that will allow you some payment relief if for at any time you have trouble making your payments during the life of the loan. You can also extend the life of your loan from 9 years to 15 years if you can't make the payments (don't do this if you don't have to as you will just end up paying more interest) As well there are loan fogiveness programs, I am assuming that your loans are through OSAP which calculates your forgiveness on an annual basis, but once you are in repayment the CSLP will forgive a good portion of your debt if you are unable to pay back after 15 years. These are all things that you can't get with a consolidation loan.

quote:

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Seriously though, I figure maybe if I buy a modest house someday, then at least I'll have somewhere to live when I'm retired.

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Buying a house is a good idea, Michelle. Willy also gave some good advice on what kind of house to buy.

I bought my first house with a low downpayment of RRSPs through the plan Flowbee mentioned. It was a 2 bedroom in very nice shape, character home in a neighborhood that was rising in popularity. 5 years later, sold it at a $25,000 profit (plus a little equity), which made it possible to move into a big house (same neighborhood, house values continuing to rise) in which we are likely to live until we can no longer manage the stairs.

When I bought the first house, I was single, and it had a finished basement. I rented the large downstairs room to students until the blond guy and I hooked up, which made the mortgage much easier to handle.

Also, don't get into credit card debt. It will make it so much harder to save. Trust me, the best thing I ever did was cancel my cards and pay it all off. I only have one, now, and pay it off every month. They can screw up your credit rating for years.

We're looking into RESPs for the kids' educations, but I plan to pick the brain of a friend who is a very sharp financial planner first. It's hard to make regular contributions right now, as it's a feast of famine kind of business I'm in. And a fairly young company.

ING offers two percentage points higher than other savings accounts, with zero risk, also without me having to leave the house.

ING charges interest on loans and mortgages, but doesn't support the kind of overhead in terms of branches because it's all on the 'net.

Edited to add: I wonder if any of those guys will even do a few months in a country-club prison.

[ May 31, 2002: Message edited by: 'lance ]