There is no need to save.  I have credit.  I have a pension.  Wrong.

I write about the virtues of saving (for retirement, for your emergency fund) or even saving for something you want, like a vacation.  I believe you should generally try and save up for things in advance.  The very use of credit means paying for something you don’t have money for.  This is how I am wired.  Certainly not everyone is plugged-in the same way, possibly to their detriment.

Take a few work colleagues, for an example.  Upon walking to the cafeteria for lunch one day, a co-worker of mine asked about my upcoming plans for a sunny destination this winter.  I said we have some plans and we’re in the process of saving for it.  The conversation continued like something along these lines….

Me – Yeah, we didn’t go south last winter.  Ugh, that was painful – it was such a long winter.  So we vowed to put away some cash this year to enjoy a week or so down south; winter isn’t in full swing yet and we’re already looking forward to the trip.  The recent time change (daylight savings time) makes these shorter days more painful.  I go to work in the dark and I come home in the dark.

Co-worker – Yeah, they are, but I don’t worry about saving for trips. They go on my credit card and I deal with that afterwards.  Everyone else does it, no big deal…

Me – Well, I suppose it’s OK if nothing happens to your job.

Co-worker – Do you know something I don’t? *laugh*

Me – No, just that you never know….*pause, shrugs shoulders*….right?

Co-worker – I guess…but I have a pension so I don’t really need to save.  My financial advisor told me so.

Me –…your financial advisor actually told you that?

Co-worker – Yes.  They said because I’ve been working here for over 25 years I don’t really have to worry about my future, the pension will take care of me.  They did say though I need to keep my job for another 10 years to get the pension that I need to retire on.

Me – So there are some strings attached eh?

Co-worker – Yeah…come to think of it, that doesn’t sound very positive!

Me – *keeps walking with co-worker to cafeteria*

This isn’t the first time I’ve heard this from some co-workers.  There is no need to save because there is a credit card they can enjoy on demand.  There is no need to save for retirement because some people have a workplace pension in their future.  Wrong.  Things happen.  The future is always cloudy.

You might have a pension in your future but for people who think and act this way, I hope nothing happens to their job or their ability to earn an income between now and retirement.  Roll your dice.

My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

26 Responses to "There is no need to save.  I have credit.  I have a pension.  Wrong."

  1. Shortly after I retired, the company that I had worked for went through a restructuring. It seemed that the layoffs were most common amongst those on DB pensions, especially those close to retirement. Cynics would sugest that thirty year veterans with exemplary service records receiving their first ever subpar review just before being laid off was part of a plan.
    With companies trying to reduce the DB pension liability, anyone believing that their pension is safe might be in for a rude awakening.

    We do buy things on credit, but the money will be there to pay off the bill as soon as it comes in.

    Obviously I will not name the company, they can afford to spend more on lawyers than I can.

    1. Good to hear from you Richard – been a while.

      I don’t think it’s a matter of it but when for many Boomers or Gen Xers, when they will be laid off. You need to prepare for it I think.

      With DB plans on the downturn and DC plans on the rise, companies are shifting the liability as you know. Unless you have a gold-plated pension, and about 30 years of service, and you can take CPP and/or OAS soon – I think many Boomers and soon my generation, Gex X, are in for a huge shock if they are not shocking away thousands of bucks per year now.

      Don’t get sued Richard!

      1. I have been “enyoying” the best of our healthcare system, with age comes the lesson that you haven’t exactly taken good care of the bod.

        Actually a good lesson for avoiding debt. I went to my doctor towards the end of October and was immediately refered to the heart clinic and had heart surgery within a week. If I was still working, it would be at least three months before I could go back to work. If you have no savings, can you imagine the stress that would result from trying to navigate your finances through that little drop in income.

        We do have an acquaintance who took out a mortgage on a new house just before he retired. All is OK at the moment, he is able to do part time jobs, but I have to wonder about what happens in five or ten years time.

        1. “I went to my doctor towards the end of October and was immediately refered to the heart clinic and had heart surgery within a week.”

          Geez Richard…I hope all is well?

          I worry for your acquaintance – debt is not your friend in retirement. Time and age are working against you.

        2. Best wishes on your recovery.

          Best wishes for your acquaintance.

          For me that would be a non starter creating too much stress and a need for work. That’s not being retired.

  2. “More at work are starting to find out about it. I don’t advertise it but it’s always interesting when they find out.”

    I can imagine that must be very interesting, in quite a few ways. A fly on the wall must have some stories to tell.

    1. Ha. It is. Some folks find out about the site and they go holy !@#$, I had no idea how much you knew and how much you enjoy that stuff. Pretty interesting.

      Everyone’s gotta have a hobby right? 🙂

      1. Good job. I bet you help some people or at least make them think about their financial situation more carefully.

        Always good to have an enjoyable hobby that makes you money, and could even help others build theirs.

          1. All of us have and do make money mistakes. You’re right, if we can avoid more of them we’ll do much better. Your blog is certainly worthwhile reading for those who do care.

  3. Well, this person took advantage of their pension, which was good – but because they have a pension they feel they don’t need to save or invest on their own for very much. I disagree of course but that’s their call.

    1. This more commonly happens in group RRSPs where it is up to the employee to sign up and make contributions (which the employer often matches, up to a threshold like 3%) rather than DC/DB plans where you are automatically enrolled. It amazes me to hear people not taking full advantage of those – they are literally leaving money on the table and shortchanging their retirements.

      I’ve explained to my wife (who has a DB) that because my firm doesn’t offer any group retirement plans, my retirement depends entirely on what I put away where hers is only partially dependent on what she herself puts away. To drive the point home, I say that’s like us riding bikes where she’s in top gear, cruising gently, and I’m in the lowest gear, pedaling furiously to keep up. An employer-matching contribution would shift the lever to top gear for me if it were to ever happen.

      1. I’ve never understood folks not using their group RRSPs, unless of course, their personal RRSP is already maxed out. Group RRSP matching programs are excellent. Too bad folks don’t use them to their pedaling max!

  4. Great topic Mark. You’re a better man than me with your polite questions and replies!

    I’m sure there are many people out there thinking this way about their spending and with a perception of invulnerability holding a pension. As a saver and someone who cares about our finances it is very odd to hear people be as cavalier about money and their financial future. Many people would be much further ahead financially and possibly happier if they spent a fraction of their social media time, truly building better savings, spending, investing habits.

    Re the investment advisor comment- maybe they only heard part of the advisors statement that they wanted to hear. Hard to believe any advisor wouldn’t also encourage savings, for big ticket items, trips and for financial independence/safety, even with a pension.

    1. Well, I try and be nice as much as possible.

      I know my wife and I are happy about our path, financial or otherwise, and I guess if folks are happy (and not hurting one another) that’s the main thing. It’s just annoying to hear people complain about money when they can do something about it. It would be like eating at McDonald’s and complaining about the cheeseburgers all the time. 😉

      1. Indeed you do try and it is refreshing to read. I try too but may not be as successful as you are at it!

        All my life I have avoided complainers and/or those who aren’t proactive with improving their lives. My guess is someone complaining regularly about something important means they probably aren’t the happiest.

          1. Chronic complaining = lots of energy. Yes.
            Patience = lower as you age for tiresome/bothersome issues. YES big time.

            Good luck to your colleagues. Hopefully they know about your site to get inspired and informed!

  5. On the back of today’s (Nov 30) Report on Business section in the Globe Careers section is an article about the City of Ottawa abruptly laying off nearly 200 employees, many of whom had spent decades working for the city and expected to retire there. The article focuses on the need to continually train and upgrade your skills but there is a clear lesson as well about not being complacent and reliant on your government or company pension. Your cheese CAN be moved, even late in the game.

    Fortunately, most who read and comment on this blog seem to have figured that out long ago, but it can be frustrating trying to impart those lessons to oblivious co-workers or family members.

    1. Absolutely BartBrandy…the cheese can be moved at any time. I try and live my life this way, things can and do happen to jobs and you should expect nothing to be guaranteed long-term. Thanks for reading.

  6. Retiring with debt, or forcing yourself to work extra years so you can have a big enough pension to deal with those debt, is nuts. I have so many co-workers that think that way, I have also asked, “What happens if your pension changes?”. No one believes things will change with the existing pension models for Federal, or Provincial employees, but, they must in some fashion. What happens then?

    1. This mentality is nuts, agreed. These plans will change over time for sure…how much…I don’t know but the taxpayer base is fed up – this mentality doesn’t help things!


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