The Mathematical Impossibility of Saving for Retirement

My observation has been, for some years, when asked is that young people should pick a number that they believe they're going to need when they retire. And then, TRIPLE it.

Assuming you could reach that goal in your savings (a sad assumption), I think you'd be fine.

It's easy.Start by being debt free.

I was hoping this would be about inflation.

A dollar earned when you're 15 will buy 40 cents worth of goods when you are 60. That's if / when the 2% per year inflation target isn't exceeded and measured honestly and consistently. If you make 90 years young that dollar only buys goes as far as 22 cents did when it was earned.

Ask the risk of being simple-minded, it seems to me that if you expect to earn for 45 years, and expect to live another 20 years, you must, from the onset, set aside almost half of your earnings, and be prepared to tighten your belt as the buying power of your money diminishes, a long-standing trend that seems unlikely to reverse.

If you are lucky, you can increase the money set aside by making successful bets with it.

If you are unlucky you could lose it all.

Its a ponzi scheme alright.
Government takes 30 to 50 % of our income every year.
The finance minister then blames nongovernment Canadians for failing to invest for our retirements.
Inflation eats our savings every year.
Government steals saved money(identified wealth), on their need.Think Cyprus.
And now we have to jump thro hoops to invest in real estate.
I am beginning to believe government is the number one enemy of civl society.

for every civil servant pension they should have a million bucks in the bank , they dont so they will either have to print it or fail the pension system ( my preferance)

"Hey, is this retirement planning thing even possible?"

Of course it's possible; but some have difficulty defining "retirement".

It's particularly difficult for young people to plan for something as nebulous as aging.

If schools had more interest in teaching these basic economics rather than how to give a good blow job, the mathematics of retirement might not be so impossible.

I am comfortable with my current retirement income and savings. However I think rampant inflation has to start kicking in within a couple of years as the bubble finally bursts.

This post taken to its logical conclusion can be used to make the case for more government expansion into the retirement options currently available, ie expanding CPP contributions. If it is mathematically impossible to care for ourselves in retirement, then the affected electorate will demand the government do it for us.

I rely on the words of Will Rogers. Buy land cause they ain't making any more. Good investment plan then and now.

Forget about retirement. Historically, people worked until they died. If you were lucky and better off than the average peasant, buy the time you were old you would pass our business on to your children and they would look after you for the last few years of your life. Its just a return to the historical norm made worse by the fact that we live a lot longer than in the past.

A few years ago I devoted an evening to to figuring out what my pensions and investments would net me 20 years after retirement at the current rate of inflation steaing4-7% of your wealth. The next weel U liquidated my mutuals and bought gold - it's essentia;y inflation proof - Ive never looked back

They just tax it away or give your earnings . What they call a tax haircut.
Like Cyprus. For any generation born after the 50's Unless well off Retirement is a pipe dream. by the way Civil servants your government has already spent your contributions.

I've made the decision to never retire. Sure, I might take a couple of months off/year but the concept of stopping working to sit in a chair in front of a TV for all of my waking hours is not at all appealing. I like what I do and I'm good at it. My unconscious competence has grown every year I've been in practice and it has surprised me a bit -- means that the cognition enhancing supplements I take are really working.

The only people I see wanting to walk away from their jobs are the 64 year old bricklayer who's got severe osteoarthritis from a lifetime of lifting heavy objects 16 hours/day or other people who work physical jobs. If you take care of your brain, it can last into the 80's and beyond. One of my former Vancouver patients is in his 80's, still runs a company, enjoys himself immensely and tires out people 1/3 his age.

The only thing I don't want to happen is to be so demented I can no longer figure out how to blow my brains out when I can't work.

I figure I might go live in a hut on the African coast. I've heard of a oil rig worker running off to Singapore and buying an estate on five years of work or something.

Sometimes I wonder if the Captain is a hard-core leftist at heart. He certainly seems to have the nihilism down pat.

Getting old is not for wimps.

The first thing any person needed (or needs) to learn is that the 80/20 rule applies to everything.

The second is that trusting the government is the worst possible choice.

I recall that even by the 1970s there were advisory warnings in financial news that government benefit plans were not going to be functional by the end of the century. This has been stated by governments, although not consistently or frequently enough.

Private pension plans are in the same boat.

The only recourse is to add to personal savings.

We were warned.

Cover all your bases and be prepared to live with the consequences.

The same thing applies to personal initiatives. 80% will always fail for reasons of poor planning, poor execution, bad luck or bad governance. 20% will struggle through in varying degrees of success.

The only retirement plans that are being protected right now are the government plans.

Personally ... I hope to see these lose the protection afforded through the theft of our tax dollars.

The most sensible thing in Clarey's post is the comment by Fearsome Pirate, who points out that the Captain ignores the math and assumptions necessary to back up his case. As the guy points out, Clarey is trying to solve a calculus problem with algebra.

Most people swallow the government line of 2% inflation. Deficit spending alone is devaluing the $ by how much each year. Citizens have disconnected themselves from the ultimate default. Many who owe more money (especially young adults) than they have equity simply don't care whether the system fails or not. They honestly think they will get a restart, something like bankruptcy only for the nation. They have no concept of a collapse where their means of income will be destroyed.

I continue to harangue the CPC for their not educating the Canadian population to what the risk of financial collapse means to them at a personal level. How else can one look at the situation in Euroland as they descend into anarchy. Lack of education. It is coming here but I guess ignorance is bliss.

I've been semi retired since 40; that's the advantage of being self employed. The older I get the more selective I am about the jobs I do. It's a whole lot easier to adopt a lifestyle that needs less money than trying to earn more.