The rose-colored retirement dreams of the young - MoneySense

The rose-colored retirement dreams of the young

If you hope to retire by age 60, either get a government job with a DB pension plan or be prepared to work hard, save harder and live frugally. Even then, there are no guarantees.


I hadn’t initially planned to comment on the latest BMO retirement survey since it’s had a fair bit of play this week in the national press. The item was included in MoneySense‘s Wednesday roundup (See High Hopes).

However, due to a newspaper home delivery snafu, I ended up reading the Toronto Sun on the subway this morning instead of my preferred National Post (old habits die hard!).

Two things struck me about the Sun’s coverage of this survey, even though I thought I’d absorbed most of the ideas in other reports. First was the headline in its print edition: Hope to retire early? Grow up.

Second was its infographic, which was probably the clearest of the coverage I’d seen, at least in the print edition.

The topline sound bite should by now be familiar: BMO Retirement Institute found those 18 to 35 are the least prepared for retirement  — Young adults slacking on saving, the Sun caption declared — but almost half of them nevertheless expect to retire before the age of 60.

Many boomers did the “right thing” and are still working

That got me thinking since at age 59, the clock is ticking if I personally wish to join the legions of Canadians retiring before 60. In my prior job, on occasions when markets were up and my work tolerance was down, I’d sometimes end my Wealthy Boomer blog with the number 59 to indicate my Declaration of Findependence. But as Beatles founder John Lennon reminded us in his final album, “life is what happens to you while you’re busy making other plans.”

Unless things happen beyond my control, I do not currently expect to “retire before 60,” even though I’ve done most of the right things when it comes to retirement planning. I’ve been in a few Defined Benefit pension plans, have maxed out my RRSPs since about age 30 (I blush to admit it wasn’t 20!), bought a modest home and paid it off quickly, bought mostly used cars and kept them running (evidence: my current 1999 Volvo), married a wonderful woman who’s equally frugal, maxed out TFSAs more recently, added to non-registered investments, saved in an RESP to ensure our daughter’s education (now in the withdrawal stage), and were (sadly) the recipients of modest estates upon the passing of our respective parents.

So if even we can’t retire before 60—actually we choose not to—then why are young Canadians who have yet to get serious about saving even dreaming about early retirement?

One surefire strategy for retiring in your 50s

Sure, many in this generation are entrepreneurial and highly proficient with technology. I have no doubt a handful are destined to become the Mark Zuckerbergs and Steve Jobs of the later 21st century—if they make it big they’ll be able to retire in their 40s or 50s if they so choose (although Jobs’ career is evidence that if you have a passionate calling, you’re likely to keep working till near the end in any case.)

My “rose-colored retirement dreams” quip is directed more at the majority who are likely to become salaried employees with governments or corporations. From my experience with fellow baby boomers who have already retired in their 50s, I can give you one tip: if you truly wish to leave the rat race before you’re 60, then get a government job in your early 20s—preferably upon graduating from university or college—enroll in the Defined Benefit pension plan, then hang on to that job for dear life for about 30 years.

But if you join the private sector or start your own business, expect to switch jobs frequently or to start several businesses. You’ll need to do “all the right things,” as described in my own case above and then if everything works out (no guarantees of course), maybe you’ll be among the fortunate minority declaring “Freedom Now!” while you’re still young enough to enjoy it.