Monday, March 1, 2010


I participated in a discussion with a couple of young professionals (I'll call them E) frustrated by their parents who did not seem to understand why they weren't getting ahead as quickly as they "should". Some interesting points came up.

E's parent's, successful baby boomers who recently retired felt that after 10 yrs of working, E ought to have more assets, more vacations, more real estate.

After all, E's parents were starting to peak in their careers and already had a family and were spending weekends on their boat by then. In fact, they were looking to buy land to build a cottage.

I'm glad they weren't my parents because I could already feel my blood get warm. I don't feel that this is a valid comparison. Here are some differences we came up with.
  • E's parents never had to attend university to secure their corporate and government jobs.
  • A base university (or college in the US) education without living on campus is still going to cost a pretty penny. As E is paying for their education themselves, they graduate with debt.
  • You couldn't get E's parents' jobs nowadays without a post secondary education and be totally bilingual.
  • An obvious point is the pension. E's parents, as they never had to save because they knew they had an iron clad fully indexed pension, were used to spending what they made so they felt that if you made "x", it meant a certain lifestyle should ensue.
  • E's parents do not know what it means or how much they would have had to put aside to create what they are enjoying as a pension. Their 6 figure pensions each are worth millions.
  • Had E's parents not have a pension, they wouldn't have been able to afford the lifestyle they have become used to.
  • Job security and loyalty isn't the same anymore. It is hard to find someone who is a younger adult who feels they are going to stay or be able to stay working for the same company for the rest of their lives.
  • In Canada, most jobs are contract ones now -- no benefits. Extended health care insurance cost money.
  • Of course there is the whole real estate growth aspect. E's parents' home benefited from the capital appreciation over many decades so now it is worth 5 times what they paid for it. Great news though not wealth they had to build with their own 2 hands.
  • E lives in the city I wrote about yesterday and the home I featured is in the price range of what they have bought and also in the range of what E's parents home is worth. It is a different reality to buy a home in current dollars with current income vs. having a home rise to that dollar value. E's parents have never had to pay that much for anything.

I'm sure after we left, the debate continued. I cannot imagine being able to spend most of our take home monies on anything we want and know I'll have even more to spend in retirement.


  1. Pensions, pensions, pensions. I don't think the majority of Canadians realize the coming problems that we are having. Only contract work at 75% of salaried, RRSP that don't compare to DB plans, 4 major down turns since '81 and taxes that are rising, house prices that are ridiculous. I've never understood why pensions are tied to your employer. Why some groups of people are allowed DB plans and others are not. Its time to make DB pensions available to all......

  2. Pensions are nearly extinct; social security in the States may not be around by the time I reach 65. That’s why we don’t & won’t rely on anything other than what we put away ourselves. When my kids are 18 yrs old, private college tuition + room and board will cost $400,000 USD for each of them. Along with time, our environment changes and we have to adjust to survive & thrive.

  3. @ Eccenntric Rogue;

    Wouldn't it be great to have DB pensions for all? It is very hard work to make rsps even remotely close to what DB's are.

    And it is hard to continue to have a life while doing so. I know we would be living close to poverty lines in order to be able to do it, something we aren't willing to do.

    Hi Sandra!

    So the situation isn't too different in the States either. I agree with overshooting in this case. It's good to have more than find yourselves short.

    Even in the 13 yrs since I've been done grad school, the tuition has almost doubled. If I were to be going to school now, I would be hard pressed to be able to afford it. I'm glad your children won't have to worry about it.

    You are right on about adjusting and thriving. Isn't that a hallmark of a successful person/business? I'm not the greatest with respect to change.

    That's why I think up all sorts of scenarios so hopefully should something happen, I'll have worked out something already and it wouldn't be as much of a shock as it could be.