Kick a$$ ways to kill your retirement plan

This blog chronicles my saving and investing journey to early retirement.  Our goal is to have a $1 million dollar portfolio to retire on in another few years.  This portfolio value is in addition to our paid off home, any valuation of our workplace pensions and it excludes all future government benefits like the Canada Pension Plan and Old Age Security – although the latter will certainly be icing on the cake.

I write about our saving and investing journey all the time.  For today’s post however, I want to share some kick a$$ ways you can use to kill your retirement plan.  If you don’t care about saving or investing (for anything) then this post is for you.  Let me know how many of the following made your list!

  1. Always carry a monthly balance on your credit card.
  2. YOLO (You Only Live Once) spending.
  3. Take payday loans when you can.
  4. Screw the emergency fund.
  5. Buy a McMansion you cannot afford.
  6. Ignore TFSA contributions.
  7. Forget RRSP contributions.
  8. Play the lottery as often as you can.
  9. Carry a fat balance on your home equity line of credit.
  10. Buy penny stocks.
  11. Day trade.
  12. Drink lots.
  13. Smoke lots.
  14. Hope for an inheritance.
  15. Assume your kids will take you in.
  16. Use debt to repay other debt.
  17. Buy mortgage life insurance.
  18. Finance new cars for as long as you live.
  19. Own as many cars as you can.
  20. Put all your savings into GICs forever.
  21. Ignore the stock market.
  22. React to every move of the stock market.
  23. Invest in pricey mutual funds or pricey segregated funds.
  24. Own the latest iPhone every year.
  25. Dine out with your friends as much as you possibly can.

Do some of these things often or many of these things and you have it made my friends.  Good luck and party on.

How many major money mistakes have you made?

My name is Mark Seed and I'm the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've grown our portfolio to over $700,000 now - but there's more work to do! Our next big goal is to own a $1 million investment portfolio for an early retirement. Subscribe and join the journey!

33 Responses to "Kick a$$ ways to kill your retirement plan"

  1. Fail to take advantage of government sponsored programs e.g. RESP, RDSP
    Fail to take advantage of employer contributions to retirement fund.
    Signing up for “plans” (cell phone/cable etc) you don’t really need.
    Fail to take advantage of coupons/sales.
    Fail to get everybody in the family on board with the plan.

    Reply
  2. Thanks for the great reminder mark. Those are seriously some wealth destroying habits.
    To each their own but I’d rather build wealth and enjoy them sweet dividends. The feeling is like no other.
    Thanks for sharing and take care bud.

    Reply
  3. When I first started reading this I thought you had been to one of those new “drug” stores that are now approved. LOL. On a serious note; lots of food for thought there Mark.

    Reply
  4. Take Drugs
    Listen to Financial Advisors
    Invest in Commodities
    Avoid the Tried & True for the New & Exciting

    Nice list Mark and too bad the majority don’t worry about their future

    Reply
  5. Strive to be penny rich and dollar poor/focusing on the trees instead of the forest.
    (e.g. clipping a fifty cent coupon while investing in 3% MER mutual funds)

    How many major money mistakes have you made?
    Several. Not really listening and not really understanding being the really big two.
    A lighter wallet makes for fast learning. 😉

    p.s. — almost everyone is on “drugs” of one type or another, legal and/or illegal. Coffee. Liquor. Carbs. Commuting. Stairs. Hallmark cards — anything which alters your brain chemistry from its normal state. All the drugs you need are already inside your head; pretty amazing, really.

    p.p.s. — all those “new” drug stores…we could all take a page from those entrepreneurs who are exploiting the current loophole between legal/illegal to make a lot of cash (yes, it’s an all-cash biz) while we all wait for legislation to pass. Savvy people.

    Reply
    1. Exactly. What’s the point in coupon clipping to the point of being OCD about it when you own a new car every few years or you bought too much house?

      Legalization will pass at some point with Justin in the big chair.

      Reply
  6. Looks as though the Baby Boomers have been doing an exceptional job of killing their retirement:

    Retirement Savings
    https://d3n8a8pro7vhmx.cloudfront.net/broadbent/pages/4904/attachments/original/1455216659/An_Analysis_of_the_Economic_Circumstances_of_Canadian_Seniors.pdf?1455216659

    “For families [age 55-64] with income in the range $25,000–$50,000…the estimated median value is near $250. For those with incomes in the $50,000–$100,000 range, the median value of retirement assets is $21,000…Only 15–20 per cent have enough [savings to supplement their income] for five or more years.”

    W. T. F.

    Perhaps we need even more personal finance books. LOL (but not really).

    Reply
    1. I recall there isn’t a personal finance book you need or like, among the 85,000 published! 🙂

      Ouch.

      “Only a small minority (roughly 15–20 per cent) of middle-income
      Canadians retiring without an employer pension plan have saved
      anywhere near enough for retirement. The vast majority of these
      families with annual incomes of $50,000 and more will be hard
      pressed to save enough in their remaining period to retirement
      (less than 10 years) to avoid a significant fall in income.”

      “In summary, regardless of income, few of these families have enough savings to
      supplement their income for even one year. Only 15–20 per cent have enough
      for five or more years.”

      Thanks for sharing this…very interesting…

      Reply
    2. Believe I’ve said this before, but they don’t refer to why those seniors have so little saved for retirement. Was it lack of earning, spending\living habits, not bothering to save, etc. So the only solution is to have gov’t or the public support them. The other suggestion is to go back to DB pensions which didn’t work either.
      Why not start educating people earlier, in school and get after the families to take a more active role.

      Reply
      1. Hard to say. Boomers grew up in an age full of jobs, a huge growing economy that they generated. It’s too bad many seniors will have nothing. Circumstances sometimes happen, I get that, however, for the majority of seniors to not be prepared is sad. I believe in a basic (modest) standard of financial care, education, and healthcare by our government – but that’s it.

        Outside of extenuating circumstances…people need to be responsible for themselves. Too harsh?

        Reply
        1. Interesting to note that current retirees, very few of which are Boomers, managed to save enough for their retirements without all the financial and economic benefits available to Boomers. Boils down to different mentality — saver vs consumer.

          But also a lot of different systems — education, health care, etc — are greatly lagging in competence and subsequent results. Perhaps a Scandinavian model needs to be studied/adopted.

          The report does exclude those whose current income will be replaced ~100% by CPP/OAS/GIS, basically all those on the lowest end of the income scale.

          Bit frightening to think about what economic effects this will have in 15-20 years time…e.g. how exactly will the government pay for 100% of Boomer health care as well as (perhaps) 75% of Boomer poverty?

          Reply
          1. It will probably become the US model where S.S is a liability but totally unfunded, putting the gov’t/public deeper and deeper in debt, the ponzi scheme where the new work force will be paying for the older ones.

          2. Very frightening actually….and there is no money for Boomers. The only hope they have is Millennials.

            The thing is, those that don’t make very much today won’t need to save much in retirement – it’s all they know. What I’m worried about are the folks that feel because they have good jobs today, they drive their BMWs, they don’t need to save – because of a sense of entitlement. It’s wrong and that bothers me. People aren’t entitled to anything – but that’s just me!

  7. Mark, your list made me chuckle. Thanks.

    I don’t know where to begin on the findings from the Broadbent Institute and Richard Shillington of Tristat Resources. Really?

    Reply
      1. I believe you also read a few books by Fred Vettese, a respected expert on Canada’s retirement income system and chief actuary of Morneau Shepell. In a nutshell IIRC he says Canadians will be fine in retirement-things are not bad like some people believe. I don’t know but this report seems to be in significant conflict with his research and statements.

        What I do know is the Broadbent Institute is a left leaning socialist organization with a strong focus on income equality, and are motivated to present a case that helps their cause. http://www.broadbentinstitute.ca/income_inequality
        Richard Shillington is an academic who worked for several governments and also been providing research to various organizations for years, dedicated to helping social conditions for those with lower incomes and promoting income equality. http://www.shillington.ca/

        There is more than a small chance this report is designed to scare the government into increasing social programs like GIS, reduce TFSA limits, amend taxes (read raise) taxes on higher income working and retired people that have saved, amend CPP further etc.

        However having said all of that, if the report is even half true it is indeed a very scary reflection of the future for all Canadians, since paying for the unpreparedness of so many will be more than a little challenging. Fortunately this boomer hasn’t done such an exceptional job killing his retirement…and that of other generations by being overly needy. I’m sure anyone already on this site is or will be in the same situation.

        I agree with what Cannew said that we should be focusing more on finding out why many more people have not saved and don’t seem to want to act to look after themselves. Much more financial education is needed from an early age to engage people financially, make smarter choices, and become much less dependent on others to support them, without good reason.

        Reply
        1. To be fair, RBull, as stated, the “savings” accounting omits those whose current income will be replaced wholly by public transfer payments. The stats also focus on those without workplace pensions. As well, the stats give the median value, thus we can assume that perhaps 20% of Boomers have indeed saved enough (and another 20% being fully covered by gov’t cheques). Thus leaving ~50% of Boomers very financially vulnerable for retirement. I believe most of their numbers were lifted from Stats Can.

          The truth most likely lies somewhere between the Vettese/Morneau and Broadbent research. Political bias and agendas aside, does it seems reasonable that 50% of retirees will face a severe shortfall in funds? I would say so, given the recent stats that come out claiming 50% of Canadians live paycheque to paycheque.

          re: “…focusing more on finding out why many more people have not saved and don’t seem to want to act to look after themselves.”

          It’s what’s going to happen when you create a society of consumerism, which is exactly what the Boomers did. They lived through 35+ yeas of falling rates, money lost the power of scarcity thus causing people to increase spending and decrease saving. Almost everyone looked at only one side of the equation (and with no foresight). When earners are constantly inundate for decades with corporate slogans like ‘Spend More. Save More’, what do you think is going to happen? People aren’t stupid, but they are easily swayed. The ‘kill your retirement’ crisis is mostly the result of financial, economic, and cultural phenomena.

          Reply
          1. To be fair SST, I read the full report; and did not suggest the report from the Broadbent Institute is necessarily wrong. I stated “I don’t know …..”. I did point out the conflicting conclusions between Vettese and Broadbent, and then outlined the obvious motivations of the report authors, for the benefit of those who may not know. I am not aware of any such motivations for Fred Vettesse other than perhaps to encourage more retirement savings through companies and their payroll. (Good) I wonder about the value of a report if after reading it we now have to “speculate” at the number of “boomers” that are actually financially vulnerable concerning retirement, let alone the generations coming behind them.

            I wonder if there is evidence boomers are exclusively responsible in creating a “society of consumerism”. If almost everyone looked at only side of the equation with no foresight “then”, I wonder what’s the excuse now? If people aren’t stupid and are easily swayed I wonder why some people weren’t easily infected by “consumerism”? I would suggest it may be more accurate to say (most) people aren’t stupid and (some) are easily swayed. My answer to your question is simply what I think would happen is more people would resist temptation and make financial decisions that are truly in their and their families long term best interest-like many others I know did. Obviously not. Maybe they follow the poor example governments set financially. The financial choices some people make continue to surprise me, particularly with the best educated society ever by far- but not likely financially.

            Your “kill your retirement” phenomena covers a lot of territory. Yes, it’s those things but also simple apathy like we’re even seeing with personal health, increasing dependence on government for many things (waning personal responsibility)-not just marketing messages eating into their brain. Along with this many probably just consider it too big a job with sacrifices so just give up easily or never bother to start saving. This all seems to cross a number of generations. Living longer and with families less inclined to look after their elders in old age exacerbates the problem.

          2. “The truth most likely lies somewhere between the Vettese/Morneau and Broadbent research.”

            I believe so.

            We hope that saving the $1M portfolio and having a paid off home will be enough. We’re more than halfway to each goal now.

            We need people to spend money (consumerism) but it must also be a balance as well. The claims that there are 50% of Canadians living paycheque to paycheque is alarming but at the same time, it’s hard to say if these folks truly cannot save money due to a lower income, other circumstances beyond their control, or these are modest-to-higher-income families that simply don’t know how to save.

            The marketing of spend more, save more campaigns is likely not helping us with any savings gene – businesses are in business after all to make money. Lots of it. Banks are very, very good at it in particular!

        2. Yes, I have read a few books by Vettese. Smart guy. Much smarter than I am…so I believe him that folks “won’t need as much” in retirement as many bankers believe but I also believe, most Canadians have not saved enough – unless they intend to work until age 65 or 70.

          I find the Broadbent Institute suspect – more politically motivated.

          I suspect there are many factors why folks haven’t saved what the should have…but the biggest reason is mass consumerism and lack of financial constraint and willpower that goes along with it. I am guessing of course! 🙂

          Reply
          1. I’m inclined to agree with the things you’ve said in the 2 posts above.

            It’s interesting to me the focus here seems to be boomers and a stated belief that the generation before them saved enough to retire fine. Anecdotally I would agree however I note of the 4 groups listed in receipt of GIS (poorly prepared for retirement) on page 9 the boomers (age 66-69) have the lowest percentage of usage vs the other three older age categories all with higher usage of GIS. As an example – 41% of age 85+ vs. 30% of age 66-69, if this Broadbent estimate is to be trusted. I wonder why an estimate for this? Aren’t these statistics available?

            If the amount of information reported from different sources on high debt levels and low savings (ways to kill your retirement) is any kind of accurate indication Canadians of all ages will eventually be negatively affected.

          2. “If the amount of information reported from different sources on high debt levels and low savings (ways to kill your retirement) is any kind of accurate indication Canadians of all ages will eventually be negatively affected.”

            And I think that’s the bottom line…if all age groups and cohorts continue to fall into the high debt levels and low savings, we’re definitely not in a good place. I would like to see a comprehensive study that stratifies net worth (for one measure, although not an ideal one) across the decades. That would be better than some study saying folks aged 85+ are not saving enough for retirement. They don’t need to!

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