More Money Podcast - 180 Retirement Planning & Pensions - Tim Thomson, Financial Services Commission of Ontario (FSCO)

Episode Date: December 12, 2018

For my 5th Millennial Money Meetup (and my only event for 2018), I hosted the event in downtown Toronto selling out tickets in only a few weeks to 50 attendees. This event was sponsored by the Financial Services Commission of Ontario (FSCO) to celebrate Financial Literacy Month. I was joined by technical consultant and pensions expert Tim Thomson of FSCO, and we dived deep into the topics of retirement planning and pensions in Canada. This is the live recording of Tim and I’s discussion on the subject, but as we’ve mentioned throughout the event, make sure to learn more at fsco.gov.on.ca/retirement. For full episode show notes visit https://jessicamoorhouse.com/180 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, hello, hello, and welcome to episode 180 of the Momany Podcast and the final episode of season seven of the show. I'm your host, Jessica Morehouse. Thanks so much for joining me for this episode because it's a special episode. This episode is the live recording of my latest Millennial Money Meetup. Millennial Money Meetup number five. I've done five of these events so far, which is crazy, having started them in 2016. And the theme for this event that just happened a few weeks ago in Toronto is retirement planning and pensions. So I am joined by my special guest, Tim Thompson. He's a technical consultant and pension expert with the Financial Services Commission of Ontario.

And Bisco was so gracious in sponsoring this event. So without the wonderful support of the Financial Services Commission of Ontario, this event wouldn't have happened. So thank you so much, guys. First and foremost, and we kind of talk about it a little bit during our chat together. One great resource you're definitely,

definitely going to want to check out. I've checked it out so many times. I think it's so, so helpful. Is they made a special section of their website about retirement planning. So if you are basically kind of panicked because you have no idea how much to save up, what retirement planning actually means, how to get started, how to organize your finances so you are not going to be screwed when you're reaching retirement age, I highly recommend you go to this special website. It is Fisco, so F-S-C-O.gov.on.ca slash retirement.

So once again, that's Fisco.gov.on.ca slash retirement. I'll include it in the show notes, JessicaMorales.com slash 180, but basically a lot of great information, very easy to digest and understand, and we'll make you feel 100% better about, um, how to prepare for retirement. But, uh, here we go with me and Tim Thompson from the financial services commission of Ontario for the Millennial Money Meetup number five. I've worked with Fisco. I don't know if I call it Fisco. Does anyone else call it Fisco? Yeah, you can call it Fisco.

Because I don't want to say the whole word. I say it and it's like a very long word to say, but I'm very good Financial Services Commission of Ontario. I'm very good at saying it really fast. You're really good at that. But we can just say Fisco. Fisco is good. Okay, good.

So I've worked with Fisco in the past, and it was to promote financial literacy and awareness about mortgages and mortgage brokers, which was honestly a really good time. I love talking about mortgages, probably more than the average person. So I'm really, really excited to be working with them again during Financial Literacy Month this November. It's still Financial Literacy Month, to increase the awareness about the benefits of pensions and retirement planning. So this leads me to introducing you all to my very special guest, Tim Thompson. He is a technical consultant at Fisco. He has been at Fisco for 14 years, leading and managing projects and providing expertise,

advice, and oversight relating to the risk management of pension plans. You can also find Tim leading large business transformation change initiatives and helping pensions branch staff with the interpretation and application of policies, procedures, and regulations. And he's joining me because he is an expert when it comes to registered pensions. So welcome, Tim. Thank you. It's really nice to be here. Thank you. And I'm sorry that there were so many words there. If we could have like a FISCO version of that introduction, that would have been a lot better. I like it. But I'm really happy to be here and FISCO is

really happy to be a part of this. FISCO for the last several years in November has participated in Financial Literacy Awareness Month for the sectors that we regulate. Looking to obviously provide awareness to Ontarians as to different types of things like mortgages, as you mentioned. And this year is no different. We're looking at

retirement planning and we're trying to really focus as well, obviously, on millennials and trying to get millennials to understand all the options that are available for them and the things they can start doing now to plan for, which would end up being probably a very great time of your life. So Fisco is doing this event here. We've been doing some Twitter events. We did one with you last week as well, which was great.

So much fun. Yeah, it was really good. And we've got this great website, too. I'm a bit biased, but if you want to check it out, there's a lot of the stuff we're talking about today is up there and could help you with reinforcing things we're talking about today, which is at fisco.gov.on.ca slash retirement. Fisco.gov.on.ca slash retirement. Thank you for having me.

You're welcome. No, honestly, I obviously took a big, good look at that website. It honestly really is good. If anyone in the audience, which is probably lots of us, even myself, sometimes gets worried about retirement. How am I going to have like a million or two million dollars by the time I retire? It really does have kind of all the really important information that you need to know. It put my mind at ease. It made me like, it's also just a good place to be like, oh yeah, I'm doing it right.

I'm on the right path, I think. I i thought it was but now i've got that confirmation so yeah yeah reinforce things for me too actually to be honest with you even though i work in that sector or reinforce things for me too so absolutely so yeah lots of great content on there and i'll make sure to uh because you may or may not have memorized that uh url i'm going to email you a bunch of info after this. Um, so I've got your emails because you got a ticket. So I'll email you a bunch of great stuff after this. Um, now first I kind of want to start this off with a show of hands really quickly. Who here is already saving for retirement? Oh, that's most of us. Is that everybody? We got a few like, meh, halfsies, and that's okay.

Awesome. And who here feels 100% confident that they know what they are doing? I'm not going to raise my hand because I'm still in that. No one, yeah. Oh, good. Oh, really? Well, that's fair. I would hope so.

That's true. You're the expert on pensions. You better know what you're doing. That's true. You're the expert on pensions. You better know what you're doing. That's fair. So our aim for this event is to open your eyes to some things you may not know about pensions and retirement planning so you can become more confident about making your retirement plans. So we're going to discuss some of the key things everyone should know about pensions and retirement. And then at the end, we're going to open it up to a Q&A so you can bug us about any kind of questions. We'll try our best to answer everything you throw at us.

To get started, let's start with the why. Why should millennials be saving for retirement? We have other priorities, like paying off student debt and saving for a down payment, plus we're young. We have so many years ahead of us, them. Surely we have enough time to save later on down the road. That's probably a very common thing, I guess. Like, why do I need to start saving? I'm 25.

No, I get it. I mean, I was there. Yeah. I know what it's like. And now you're not there. No, I'm not there. I'm not young anymore. I'm not saying you're not young.

I'm just saying you're not, you know. I'm not there, though. But no, I was there. I had, you know, student loans, you know, saving from my first house, all that kind of stuff. But the reality is that people, good news is that people are living, you know, well into their 80s and 90s now. And so people are retired for a good 20, 30 years. And I think that's going to get even better for your generation with the way things are going. And experts say that you would need about 70% of the salary that you are going to be taking home just before you retire every year in your pensionable years when you're retired.

So that could be obviously a big chunk of change. And there's a lot of publicly funded plans like there, that we'll probably be talking about, like CPP and old age security and so forth. But, you know, those are not going to cover that type of a replacement of your income. You know, it's not going to cover that much. It's great that this country has them, but it's not going to cover that much, right? So I think the important thing is more that,

with all investments, as I'm sure you all know because you're a really bright, financially-minded group of people, the fact that you're even here, is that investments obviously are best if you do them over a long period of time. And there's a lot of tax incentives in this country, too, for the different types of saving vehicles. So there's a lot of priorities that you're dealing with right now when it comes to saving, when it comes to saving for a house or paying off your student loans. But I don't think that one should replace the other. It's like you can do, if you can do a little bit of the retirement stuff at the same time on the other things, it's good to do all of that at the same time. I'm not saying it has to be all your money at this point in time, obviously. But if you're going to try to catch up 20 years from now or something like that, you'll have to do a lot more. And to

get that money to grow to where you want it to be will be a lot more challenging. So in other words, the sooner you start, the less money you'll personally have to contribute to get to that big number. And that's personally why I'm a big fan of if you don't know where to start, how to start, just play around with one of the, there's so many free retirement calculators on there. All of them are pretty much very similar, but it's a good starting point to be like, should I contribute $50 or $75? What's the big difference?

And sometimes, like I recently just did, was testing out this one retirement calculator, and it told me if you just put another $18 a month in, you know, by the time you retire at 65, you'll have accrued, I think another, I think it was like $100,000 or something crazy. I'm like $18 a month. Yeah, I can do another $18. Like that's fine. So it's every dollar counts. You'll spend that at Starbucks, right? In two days. For one latte. One latte. Oh, I know. So there are basically three ways for us to save for a comfortable retirement. This is on the Fisco website, and I really liked it because this is a big question I get for people. They're like, how am I supposed to save? What are all the ways?

And I really like that you guys broke it down into kind of three different pillars. So I kind of want to talk about the different pillars of retirement. Can you tell me what all of the different pillars are? Sure, sure. I mean, one I already mentioned, which is the publicly funded runs, right, that are run by the federal government. There's Canada Pension Plan, Old Age Security, and there's also something called Guaranteed Income Supplement.

So those are like the publicly funded ones, or administered ones anyways. And then there's company pension plans, right? So if you have an employer, a lot of employers will sponsor some form of pension plan. And so that would be a second pillar. And that's kind of the business that we're in at Fisco when it comes to regulating those type of company pension plans, registered pension plans. And then the third one, of course, is our own personal savings through things like RRSPs, TFSAs, and other kind of unregistered savings. And I think that's really important to know, just to remind, because honestly, I talk to people all the time, and they kind of don't even realize that we have those different options.

A lot of people don't know that they have a group RRSP at their work or a company pension plan. They don't actually even know anything about CPP or OAS. So it's important to know the different... Yeah, and it's really important when you're... And we might talk about this more, but it's really important when you're with your employer or you're looking for a new employer to ask those questions.

Because you might be missing an opportunity, right? If they have that kind of a plan and it's maybe voluntary for you to join it, you got to join it. I know. I tell everybody, come on, come on, just join the plan. So we will get more into that because I'm very passionate about it. But let's first talk about the first pillar, which is we've got CPP, we've got OAS, we've got GIS. So that's Canada Pension Plan, Old Age Security, and the Guaranteed Income Supplement. Can you first kind of explain a little bit more how CPP works and how much does everyone kind of get?

We can kind of talk a little bit about that. Right, yeah, I can talk about it generally. Yeah, just generally, yeah. So that's run federally. It's not run by fiscal or anything, but of course I'm aware of it. So CPP, it's tied to your employment, right? So when you have a job, you will have contributions automatically deducted from your pay

that will go to CPP. And I think that most recently, I think that the deduction rate is about 9.9% that's spread out between you and your employer. Obviously, that's different if you're self-employed, you have your own business, right? But then basically how it's calculated as to how much you the amount that you're going to get out of it is not a ton of money. I think the maximum that people could get last year was around just under $14,000 a year. And I think only about 6% of people actually got that maximum.

It was more the average around $7,700 a year. That's not going to go far. actually got that maximum. It was more the average around $7,700 a year, right? So I think we handed out something to everybody on their chairs, kind of shows you what CPP, what portion might come from CPP over a long career and stuff like that. And it shows you where there's going to be those gaps. And there's some arbitrary numbers put on there

as to what you might want to save. That's not a number we're suggesting by any means, but it's just to kind of give you that flavor as to what you can expect from CPP. Yeah. One thing that I do too to have when you are kind of trying to figure out how does CPP, how will it play a role in my retirement plan is going back to some calculators the government of or the federal government has a really great retirement calculator and it will also I mean it's a bit of a tricky situation because in order for them to kind of give you a fairly ish accurate number for your CPP you have to like get a special code you have to mail them something and you get a special code mailed back

to you but once you do then you get that information about how much you've contributed. I've just done it recently. It's super, super helpful. So my recommendation is to go to that. Again, I'll email you this calculator because I'm a big fan of it. But it helps you have a better understanding of how will it play a role in my retirement.

But what you're kind of saying is don't expect it to really do that much it's like a boat like in my mind like it's a nice bonus but it's i'm not you know banking on getting that much out no it definitely is and i mean and and the one thing i mean well i mean i'm assuming that everybody here obviously is working in ontario too right is that quebec doesn't have the cpp they have qpp but i mean it's kind of the same thing but that's exactly the point is that you're not going to be able to rely just on the publicly funded stuff to retire comfortably yeah and another question too i i get often is uh oh will cpp be around by the time i retire i mean i don't know about you but i've

been hearing that story since i was a kid i don't know why my parents would talk to me about that maybe i was just hearing them talk about oh it's going to be around by the time we retire. It is. I recently did a podcast interview a few months ago with a representative of the CPPIB, so Canada Pension and Investment Board. And she has told me that it will be around for at least the next 80 years. So I'm pretty sure we'll still, I mean, we'll be dead by the time it stops running. So I think we will be fine is going to be around, so you can guarantee on that. So let's talk a little bit about the old age security because it works differently than CPP.

CPP is tied to kind of your working life, old age security not so much. Yeah, so old age security is basically tied to any years that you lived in Canada over the age of 18, right? And you don't contribute to it, so it's just something that you lived in Canada over the age of 18, right? And it's not, you don't contribute to it. So it's just something that you get for the years that I think the maximum you can get is if you lived in Canada for 40 years by the time you retire. And it's important to note actually with both these CPP and OAS that it also depends as to when you can actually get it. With CPP,

you could start getting it early when you're 60, but there'd be a reduction. And you can get it a bit later when you're 70, and it'll be increased a bit, right? So with OAS, it's not as generous as CPP, but every little bit helps, right? And I think that that graphic we gave out as well kind of shows that it's maybe about half

of what you could expect from CPP. But you don't contribute to that. It's just tied to the years that you lived in this country. Yeah, and it's just federally funded. Yeah, it's federally funded. I mean, well, we're all funding it. Well, yeah. Yeah, if you think about it in those terms.

But it's not like we're not like the CPP. It doesn't work that way. No, it's not directly tied to your salary and you making contributions based on employment. Absolutely. And then the kind of last one that I think a lot of people don't even know about is, and it's probably because most of us may never have to use it,

is the guaranteed income supplement. Right, and that's for lower income individuals, right? So knock on wood, none of us here will have to tap into that, but that's what that's there for. So it's mostly for lower income situations where they need a bit of extra to help them out. So kind of don't expect or hopefully don't bank on that. It's a good thing to not have to rely on that basically. Yeah, hopefully, right? Exactly. You've planned

appropriately. So talking a little bit more about pillar number two, which is employment-based pension plans and employer retirement savings plans. What's the difference between a registered pension plan and a group RRSP? And just to let you all know, people have a lot of different terms for group RRSP. Some people will call it employee-sponsored RRSP or whatever. There's so many different terms for that. So I think that's where people get confused about, wait, is it an RRSP or is it a pension? Right. And so, you know, anywhere where you see the word registered, it means that somebody is getting some sort of tax benefit out of it as well. Right. So a registered pension plan,

which Fisco regulates, are also registered with the CRA. So those ones can be two types. There's defined benefit and defined contribution. We'll probably go into that a bit more later. And those plans are watched over by the provincial regulators like FISCO. So there's a number of rules that they have to follow and so forth. And in those ones, the employer for sure is going to be contributing to them. And depending on the rules of the plan, you might be contributing to it as well. And those contribution rates will vary from plan to plan depending on the plan rules. Whereas a group RRSP, it's like a personal RRSP except it's a group pooled fund. And that pooling gives you the advantage

of not having to pay as high of fees and operational expenses and so forth. And a lot of times with those plans, your employer is offering you an opportunity to match your contributions. They'll say, okay, if you're going to contribute 4%, we'll match that for you. And they might actually even give you the option. They'll say, well, you can do it to a maximum of, I don't know, let's say 10%.

And we'll match it up to a maximum of 10%. So that's what I was kind of talking about before is that you want to ask those questions of your employer if you have that already. Or you want to ask those questions of new employers because you want to make sure that you're maxing out those contributions from your employer side, for sure, because that's free money to you. I mean, to me, I consider that really a part of your salary. It's a part of your benefit structure. Absolutely. Yeah, I feel like this is, yeah, what, you know, it's now I'm self-employed, so it's a bit different. But when I was working in the corporate world, oh, I was, I knew obviously a lot about this i did my research and so when i you know finished my um probationary period i actually i i wasn't able to for this particular employer i had to wait two years to be able to contribute um but then i

was you know so excited and then when i eventually left that employer like i left with an extra three thousand dollars that my those were the um you know matching contributions that my employer did like it is free money and a lot of people I worked with did not contribute that they weren't even, they had no idea about it. I mean, that was, yeah. And some of them are voluntary to even join. Well, yeah, mine was volunteer. So a lot of people don't, you know, uh, participate cause maybe they don't know, or they're like, Oh, I'm not interested or, or, or whatever the case. But I mean, in my opinion, if your employer's matching, that is just free money. And like you said, it's kind of part of your salary. So why would you say no? Why not? No, a hundred percent. I mean, you want to maximize that type of stuff. Definitely.

Let's talk a little bit about pensions. Is anyone lucky enough to get a pension in this room? Oh, we got some lucky ducks here. We do. Couple. Me. I'm lucky. Lucky, lucky ducks. So let's talk a bit about, because you mentioned defined benefit and defined contribution plan. Let's go into that. What do those mean? Okay. Well, I mean, for once with the financial term, the actual definition is in the title, right?

Yeah. Defined benefit means actually that the amount of money that you're going to get when you retire is defined. So let me give you an example. Maybe it's a career average earnings plan. And just to make my math easy, I'll say that let's say your career average earnings was $100,000. And they'll say, okay, the formula for your pension is going to be 2% of your career average earnings times your years of service. So let's say you worked 30 years at that company. You decided to gut it out at that company for the whole career. And that would be 2% of $100,000 times 30 years. That's $60,000 a year, right? That's nice.

And that's until you're gone, right? I mean, there's no stop to that. They're not going to say, after 20 years, that's it kind of thing. Those are the jobs that you hear people are like, I can't leave because I have this pension. Yeah. It's too good to leave, right? I mean, sometimes they're called golden handcuffs.

I've heard them called that. Golden handcuffs! That's awesome. But, you know, so those plans can be, for sure the employer is contributing to them, those defined benefit plans. In a lot of cases, the employee is contributing to them, those defined benefit plans. In a lot of cases, the employee is contributing to them,

and the amount that you're contributing will be variable depending on the plan. The contributions can be pretty high, but, you know, as we were just talking about, why wouldn't you? Those plans are really good, right? Now, defined contribution, as the term sets out, it means that the amount of money you're putting into it is defined. It's not defined necessarily what you're going to get out of it at the end. So it's more like a savings account. And you can have, a lot of times in DC plans, you have kind of more say into how that money is

invested. And for sure, once again, the employer is contributing to it, and you may or may not contribute to it. And it's kind of similar to the group RRSP situation. There might be variable contribution rates and stuff like that that you want to look into. But those plans, if they're company-sponsored registered pension plans, we oversee both of those as well. So there's a lot of DC plans, there's a lot of DB plans. But that's basically the difference between the two of them. So and what you get out of a DC plan when you retire is based on how much money has accumulated. And then you would, for lack of a better word, purchase some sort of vehicle

to pay out that retirement money to you because you don't get to necessarily cash it all out at once, right? You buy something called a retirement income fund or an annuity or whatever that doles it out to you over a period of time, right? And so it's not as easy to necessarily plan with those kind of plans because, as I said, you don't know exactly

or you can't estimate exactly what you think your benefit's going to be when you retire. So it kind of sounds like the defined benefit is the best one if you get lucky enough. Yeah, no, they are definitely considered to be better plans. But some people like the DC plans too because you have more control over the investment of that and so forth. And whereas with a lot of the DB plans, it is really the employer that's kind of controlling the investments of it and stuff. So some people like having that control.

And they might be a bit more easily kind of portable. Like if you're going to, a lot of obviously this generation are going to go kind of job to job to job uh they're kind of easier to understand if you're trying to transfer money probably gone job to job to job so so i mean yeah i there's different views on that but you know i think generally it's agreed that db plans are are considered the better plan yeah and i'd also just like to get an assessment of the room who like currently has like just a group RSP, like,

or an employer sponsored kind of thing, like not a pension. Some of us, or some of us maybe don't know. Well, well, well, if you don't know,

if you, your employer does have one and you're not contributing, I highly recommend you look at like your benefits booklet and take a look and see if it is, it's mostly, you know, it's probably a good idea just saying get groceries delivered across the gta from real canadian superstore with pc express shop online for super prices and super savings try it today

and get up to 75 in pc optimum points visit superstore.ca to get started um anyways uh lastly pillar number three is your own personal savings, which I feel like when we're talking about retirement, that's typically what we kind of think about. We just feel like we need to fund kind of a retirement ourselves, which is, you know, kind of as we talked about, probably true. Again, if you don't have kind of pillar number two and you just have, you know, CPP and OAS,

you need to probably save a good chunk of change personally, which can be kind of intimidating. So obviously there's a couple of different ways you can do that. The most popular ways are obviously using one of the, a TFSA or an RRSP, because there's a lot of great tax benefits for those. Of course you can, once you've really, the kind of the rule of thumb is to max out those. And then when you're lucky enough to have maxed out your TFSA and RRSP, move to an unregistered account and continue to invest your money that way. Most of us probably won't ever be able to achieve that, but that is a nice, exciting goal.

So talking a little bit about TFSAs and RRSPs, I want to kind of share some info. I won't go super in depth. Again, there's some really great information on Fisco's website. But basically, TFSAs and RRSPs are similar, but they work a little bit differently. A really common question I get from people our age is, which one should I use, my TFSA or my RRSP? It really depends on kind of where you're at in life and how much you earn. But typically, for the typical millennial that isn't earning a ton of money, still kind of starting out their career, makes the most sense to really use your TFSA because you don't need to really take advantage of that RRSP deduction room. So that's what most millennials probably do,

take advantage of your TFSA. And then when it makes sense, you really want it. Like for me, I'm self-employed. Oh yeah, I'm using my RSP. I need to lower my taxes. So the RSP makes a lot of sense for me in my situation. So you've got to look at your situation to see which, you know, how those accounts work and then how does it play into your own particular lifestyle. Another thing I always like to kind of preface when talking to people is, honestly, when I talk to clients all the time, a lot of them think that a TFSA tax-free savings account is just for savings, like cash. It actually isn't. I probably wouldn't recommend even putting cash in there. Put cash in just a regular account. TFSA, if you really want to

maximize it, optimize it, is really great for investing. So when we're talking about retirement and planning especially, it's all about, we're not talking about cash here. We're talking about invest in some investment products to kind of grow your wealth. So talking a little bit more about personal retirement savings, how much should someone save is like the most, the honestly the number one question I get because people are usually say that in a panic. Um, what's a common amount people think they should save and what is kind of an accurate number? Yeah.

Well, I mean, first of all, or whatever you can do is great, right? So I mean, but the experts say... Zero is better than nothing, but... Yeah, no, for sure. I mean, you start small and it's going to grow and you're going to watch that grow. But I think the experts say generally around 10% to 15% of your net income is a good place to be for saving. But, you know, as I said before, if that's not something that's doable right now, if you even do less and you start

trying to do it on a regular basis, like every paycheck and stuff like that, do some auto deductions and so forth, that's great. I mean, because it's going to put you in a better place than, I'll be honest with you, than I was probably at your age when it comes to my own personal savings. And that will grow much faster and will work for you much better. Definitely. So my kind of recommendations would be definitely, you know, I think having those rules of thumb are great starting points because most people, they just feel flustered. They don't know where to start. So having some like, okay, 10% to 15% of my net income, I think that's doable.

But really, and then, you know, that is probably realistic depending on like what your budget is. It just means kind of moving some things around um but i think really what's important and what people come to me is they're really focused on like that final number because hearing you know do i need one million or two because there's a big difference between both of them a million dollars is the difference um it's really important to like understand what kind of goes into figuring out what that final number is. Obviously, there's some great retirement calculators that kind of give you an idea. But really, it's what we kind of touched on earlier was it's determining what kind of income you want to live off of in retirement. And I think lots of people don't approach it that way. They really get focused on how much do I need, two million or what?

It's like, well, what do you want your retirement to look like? You need to define that retirement. Which is not an easy question to ask yourself when you're as young as you are. I don't even know myself right now, right? I know. Exactly. I mean, I know I like to travel, right? So what does that mean? That might be a bit more of expensive of a retirement. I don't know, right? Oh, I think a thing too that us millennials millennials are dealing with too, is redefining the idea of retirement. Because I think most of us, we don't want to just, you know, retire at 65 and then just hang out at home. Like that's not what we like to do. We like to be busy and do things. Well, that's even happening now, right? I mean, yeah, a lot of people go into more kind of, you know, consulting type work and so forth

after retirement. They might actually be collecting a pension while still working. Right. So, yeah, I think that that's definitely relevant. And, you know, even I think that you could say that, you know, is 65 even that relevant of an age anymore for retiring? Right. That age has been there for a long time. Yeah. It's like, are you saying that might be too early or? Well, I don't know. Or too late? I don't know. Depends on how hard your workday was, I guess. I guess it depends on what kind of line of work you're in. Maybe 60 seems too far on some days. Yeah. Yeah.

But so, no, you're absolutely right. I think that it's hard to figure out exactly what your retirement's going to look like at this point in time. And maybe you might even be thinking, like, why do I need to be saving for something that's so far away? I'm probably never going to retire anyways. I remember people would say that when I was, like, well, not a millennial, but when I was that age, you know, people's like, I don't know.

I'm not worried about it. I'm going to work the rest of my life. I'm sure of it. There's not going to be any CPP and blah, blah, blah. But, you know, take it from me. That's not how you're going to feel 20 years from now. You're going to be 80 and you're like, I don't want to work. Exactly.

So take it from now. You're going to be 80 and you're like, I don't want to work. Exactly. So take it from me. Yeah. And also you've got to think about, you know, just look at kind of your grandparents or friends of your family or family members, um, in their retirement. That's what I kind of do. It's like, what does their retirement look like? What are they kind of doing? And that kind of gives you an idea. Obviously things will change by the time we're their age, but there's lots of things we need to consider. And yeah, kind of having the idea that, Oh, I'll probably work forever. It's like, hopefully, hopefully you have the energy and the health that will allow you to do that, but you've got to be prepared for, you know, hope for the best, prepare for the worst kind of thing. Yeah. But I think that you also have

something to look forward to and that, you know, while that's like a positive note. Yeah. I mean, I went real dark for some reason. It's. Sorry. It's going to be good. You're not going to be confined to a house somewhere. You're going to have like 20, 30 years of doing what you want to do. So yeah, plan for it. It's exciting. You watch it grow. You're like, yeah, I'm really looking forward to doing that.

Yeah. Right? Yeah, that's true. Let's see. Okay, so now that we kind of all know, you know, retirement planning is super important. Um, let's kind of talk about how to do that, like how to get started. What are some of the kind of steps that people can take? I think this is really important to kind of get rid of that stress and that overwhelmed feeling. Um, especially when you're so young and you have

decades ahead of you and you don't, you know, like, how do I even start this process? Yeah, and I think, you know, we've touched upon a lot of it. I mean, you were talking about the Government of Canada Retirement Income and Budget Calculator. That's a really great place to start, but to let you know, you're going to need to kind of collect all of your financial documentation before you do that, right? Yes. You're going to need your, you to need your accounts, your investments, your RSPs if you have them already, information if you have a company pension plan or a group

RSP and stuff like that, information about all that kind of stuff. But it is a really handy tool because I was talking before about CPP and OAS, and it will automatically calculate those things for you, so you'll have a better idea. There's a lot of assumptions that will go into it as to how much you think you're going to want to be paid as a pension when you retire and stuff. But it really gives you a good starting point. And then after that, if you haven't already,

for sure, open an RSP or a TFSA. And then if you can do it, set up some sort of auto deduction type scenario. Kind of like you're going to replicate having an employer almost like this, taking money off your paycheck every two weeks or whatever it is. And however little it is, it'll be out of sight, out of mind. It'll automatically happen.

You won't be faced with that choice every two weeks as to whether you're going to put that money into the RRSP or whether you're going to spend it. It's just automatically going to happen, right? So I think that's really the best place to start. Yeah, no, those auto contributions are real. I was talking to my husband, Josh, over there. Shout out, poor guy. He hates when I do that. He hates it. And I, since my mid-20s, have been doing the auto contributions. I read that in a bunch of financial books. I'm like, all right, I'm going to do it. And so have been doing the auto contributions. I read that in a bunch of financial books. I'm like, all right, I'm going to do it. And so now it's just a habit.

But this year, I think I kind of put a pause on those my first year of self-employment because I was a bit like, I don't know how much I can afford or how much I'm going to earn. And then I kind of did a lump sum. But this year, now I want to get back to auto contributions. Set it up in a way, it really was out of sight, out of mind, completely automatic. And then when I took an account of how how much I've made new contributions this year, and I contributed $8,000 and I didn't even notice. I mean, you know, that's, yeah, I mean, that's, yeah, I'm surprised as you, I'm like, oh, I didn't even notice the money was gone. So it's

like, if you set up those auto contributions, pay yourself first, if you will, it really does work. It's just like it's a psychology thing. It's like out of sight, out of mind. Yeah. Yeah, it's already earmarked. Yeah. And I don't think, you know, especially if you're doing like a certain amount that you feel you can afford and stuff like that. Once it's gone, you don't even really notice.

Like it's not like I really needed that money. But if you kind of have it and then you have to go through the process of actually transferring that money to the RRSP and stuff, that might not happen. And next thing you know, you will spend it. Yeah, and that's also why I love using a TFSA RRSP because not only for the great tax benefits,

but also it creates a bit of a barrier. I know some people may not think so, but for me, I just know it seems very difficult to take the money out. So I've never touched any money that I've put into my TSA and RSP. So creating different systems for you that you know will mentally, oh yeah, if I put into my RSP and if it's not linked to my, if it's with this other kind of investment company and it's kind of out of sight, out of mind and I do those auto contributions, I'm like investing. I'm like taking the money away from myself before I can even spend it. I won't even notice.

No, I agree. Yeah. Well, I guess we're on the same page about that, so that's good. So yeah, kind of like you mentioned because you talked about it's important to get your financial documents sorted before you kind of start the process of financial retirement planning. So this is actually as super simple and should just be a good practice for figuring out what's going on with your money full stop anyway. So, you know, I know preach about this a lot, but it's like set up a budget, track your spending, track your net worth, and then make sure like for me, I have like a, just a list of all of the different kind of, uh, banks or investment companies that me, I have just a list of all of the different kind of banks

or investment companies that I use in just a browser tab, it's like a little bookmark thing, so it's all in one place. So when I know, oh, how much is in this retirement account or what's in this specific savings account, I know it's all super easy. So I'd say that for Financial Literacy Month,

make that a goal before the end of the year to get everything super organized, have like a Google drive or something and just like get that organized because it really won't take as long as you think. And then once it's done, it's done. Then you know how to easily kind of get all that stuff. But another thing too, because we kind of talked about figuring out, and this kind of goes into budgeting, doing your current budgets, is really understanding what your current expenses are. That will help you kind of determine what your expenses could possibly be in retirement, which will then help you determine how much you need to live in retirement. So that's why, you know, having a budget is super, super important. And then eventually, like we've mentioned several times,

using some sort of retirement calculator to help you get just an average. Again, it's not going to be 100% accurate, but you need to have some sort of number to work towards. Yeah, and those calculators too, the thing I didn't mention about CPP, of course, is that CPP is going to increase over the years. There's a cost of living increase for CPP and so forth. So it will use some assumptions as to what they think that's going to be worth when you are all 65 or 60 whenever you want to retire and so forth. So it does all that math for you automatically.

All right. So I've just got a few more questions, then we'll open it up to Q&A. So I know we've gotten a little longer just because I like to chat. I can't help myself. So, Tim, from your experience at Fisco, what are some of the things that you hear Canadians say they wish they'd known sooner in terms of financial or planning for their retirement? Right, so one thing to keep in mind is that people who are contacting Fisco are lucky enough to have a company pension plan, right?

But what we are generally hearing from those people is that, number one, they wish they'd understood it better, uh, right off the bat that they'd asked the questions that they had read their pension plan, employee document and stuff like that. Um,

because it's not obviously the most interesting read. Um, but there's a lot of important information in there and, and some of them can be quite complex and, and unless you read it, you won't really know how to take full advantage of it. Right. Uh, also we've heard kind of what we talked about before, like if it was voluntary to join,

people regretting not joining sooner. If there was different contribution structures, they're maybe regretting that they didn't max out the contribution so that they would get it matched by their employer, things like that. But myself personally, I left my job for a while for another opportunity for a few years. And then eventually I came back again. And when I came back, I didn't take advantage of something I wish now that I had, which was because there was a break in service there. And that affects my ultimate pension, especially with a defined benefit pension. I could have bought that back, which would have been kind of painful to do for a while. The amount that would have been deducted from my paychecks would have been

pretty significant. But to be honest with you, I regret that I didn't do that, right? So, you know, we hear things like that, right? And even myself included, you know, feel the same way. I'd say for me, and we'll probably talk about this in the Q&A, I'm sure this will come up, is for me, I regret not believing in myself and believing that I could understand how investing works. Because I know probably lots of us have the experience of talking to some people that know investing a lot more and us feeling like, oh my gosh, I don't know what they're talking about. I'm a total idiot. Maybe this isn't for me. Maybe I have to be an expert or something like that.

I'm just going to do the few things that I know or just delay and delay, delay. And believe me, I did delay investing. I wish I started sooner. So that's one of my big regrets is not believing that I could educate myself and understand how investing works because I now understand it. And I'm like, oh, it's not that hard. It's really not that hard, which is really exciting. You're like, oh, I got this, so anyone can get this.

No, I mean, it's all of these things, you know, pension plans, investing, and all these kind of RSPs, TFSAs. I mean, I think, you know, that's what Financial Literacy Month is obviously all about. But there is an intimidation factor there, right? But it's not as complex as you think it might be if you actually start looking into it. Yeah. And last question before we open up to the floor, any tips on simple steps to take today? So I'd be happy to start with some of mine from my own experience. I guess my first tip really would be to, well, kind of, as I mentioned, make it a priority to kind of set up that financial foundation we talked about. Budget, track your spending net worth.

Honestly, for me, it's changed, you know, how I viewed finance and makes me feel a lot more secure. But I would say pick up, if you're really still like unclear where to start with investing, pick up an investing book. Because it's probably the last book you'd pick up from a library when it comes to personal finance. You'd probably do something a little bit more like more general financial planning or budgeting because that's what i did for years so i'd say you know kind of challenge yourself to pick up an investing book and just give it a read um i've picked up some books i thought would be super dry and i just like read them like page up like you know i just devoured it i was like oh this is actually really interesting so you may surprise yourself and

actually be really interested in investing. That's kind of my little tip. Any tips, Tim? Yeah, I think we've touched upon a lot of it before already with regards to certainly setting up the auto contributions and so forth. Look for employers that have things like this. I think

that's a big one too. Ask those questions when you're doing a job interview, you know, what kind of benefit package they have, whether they have group RRSPs, whether they have a, you know, a registered pension plan. And if they do have something like that, find out, you know, what is the max that you can put into it so that they're going to match it and so forth. You know, look for opportunities. Like if you have, you know, Christmas is coming up, you know, maybe you're going to get some sort of monetary gift for Christmas and so forth. I'm not saying, you know, don't treat yourself whatsoever, but look for opportunities to maybe put some of that money into your RRSP, your TFSAs.

Maybe, you know, if you get a tax refund, you know, that's a good thing about RRSPs is that you might increase your tax refund, but then you can put that refund back into your investments again, right? So you're making that, you're doubling down on that. Maybe you're going to get a bonus at Christmas or something like that. Think about taking those opportunities to, you might think to yourself, well, I'm doing auto contributions every couple of weeks now. I'm going to actually splurge and treat myself. But think about treating your future self, right? So think about that as well. Yeah. And also I think thinking about it instead of like, oh, I have to put more money into my RSP or you're spending this

extra surprise money on buying some ETFs or index funds. You're still treating yourself. You're just buying a different thing. It's not a purse, but it's something that will increase in value. Maybe not as cool as I thought in my head.

I think you were at an event yesterday or something. I think this might have been touched on a bit too. There is, in today's society where we're becoming more and more aware of mental health and mental health strength and so forth, there is a mental health aspect to having those kind of savings. Yeah. There is. It really does decrease your anxiety. Yep.

It really does actually make you feel better. And in that way, when you're talking about gifting something to yourself, taking that money and putting it into something like that, when you bring it up on your phone or something like that and look at how it's growing and how much is in there,

it makes you feel good. It does. Yeah. It makes you feel real good. So thanks so much for in there, it makes you feel good. It does. It makes you feel real good. So thanks so much for joining us, everybody. You can bug us individually after this. Stick around. You don't have to leave right away.

We're going to be, I know, as if you didn't have enough food, but we're going to have dessert. We're bringing out more food. I told them as much food as possible. So dessert is coming out soon. They all, I don't know where they went. They're somewhere. They're here somewhere.'t know where they went. They're somewhere. They didn't, they're here somewhere.

They, I think, yeah, yeah, that's right. That's what they're doing. They're like on their retirement calculators, figuring out what to do. So thanks so much for joining me. And Tim, thank you so much for joining me. You're, I know more about pensions than I think I ever did. And I'm so excited that, no, no, I'm excited about pensions. I wish I ever did. And I'm so excited that, um, no, no, I'm excited about pensions. I wish I got one. I'm so jealous. Um, but thanks everyone for joining us for, uh,

the fifth money millennial money meetup. I hope to do many more and, uh, make sure to check your inboxes. I'll email you, uh, tomorrow with some more helpful resources. Thanks everybody. And that was episode one 80 of the Mo Money podcast and the live recording of the fifth Millennial Money Meetup hosted by myself. And thanks to the gracious sponsorship of this event by the Financial Services Commission of Ontario. Without them, this event wouldn't have been possible. And I thank them dearly. They're great to work with. And they're just a great resource. If you want to educate yourself on, I mean, a ton of stuff, they have a great website. But specifically, if you want to educate yourself more about

retirement planning and pensions, go to their website, fisco.gov.on.ca slash retirement. Once again, that's fsco.gov.on.ca slash retirement. And it'll take you right there. And there's so much great information there on just understanding what are the different, you know, kind of, as we talked about in this episode, the different pillars of retirement planning, what are the different things that you need to take into account? What are some questions you need to ask yourself? What are some other resources and calculators that will help you determine how much you need to save up? What are things that you can do so you don't panic about retirement, but instead you're

proactive and you're starting to make a plan so you're going to be totally okay, more than okay when it comes to retirement time? So I highly recommend that website. So again, this is the last episode of the season and the show for 2018. Thank you so much for listening. I'll be back here mid-January with another fresh season. So I'm super pumped. But again, I really, really, really earned you to get onto my email list because I have

a lot of exciting things that I will be announcing in early January. And also, again, I'm still putting out blog posts. I still have a lot of exciting things going on that I will be announcing in early January. And also, again, I'm still putting out blog posts. I still have a lot of exciting things going on that I will let you know about throughout December. So just go to jessicamorass.com slash subscribe. I also recommend if you want to chat with other people about finance in a totally cool online, no judgment, no shame game kind of situation, join my Facebook group. It's just facebook.com slash groups slash money life balance. We'll take you right there. There's over 1600 people in there from Canada, the US, all over. And basically it is a great space where you can ask your questions.

There's no such thing as a stupid question. And a lot of great people in the group. It is all about positivity, helping each other, educating each other and building each other up and empowering each other. So all good things. This is why I created the group. So make sure to check that out. What else? What else?

What else? Oh yeah. I'm going to bug you for my Christmas present or my holiday present. I, all I want for Christmas is an iTunes review. Oh, that's so cheesy. I know. But, uh, if you have been listening, if you like this show, if you, uh, want to give me your feedback, hopefully it's good. I hate bad reviews who, I mean, who does, who likes them. Um, but I would

really appreciate if you took two seconds to give me an iTunes review. It literally takes you two seconds. It means a lot to me. And then I'll give you a shout out on the next season of my show. And thank you on an episode of my show. So I'd really appreciate it. So that is it for me. Thank you so much for listening. I really, really, really appreciate it. I'm going to see you back here in 2019. So have a wonderful holiday. Have a fabulous New Year's. And I'll see you back here next year. This podcast is distributed by the Women in Media Podcast Network. Find out more at womeninmedia.network.