My eight-album retirement plan

luke-chesser-50-unsplash
Photo by Luke Chesser on Unsplash

It is the fall of 1985. My friend Clayton is on the phone; talking up a Run DMC autograph session at the Starsounds record shop on Toronto’s College Street. Sure, I say. I can scrape together $7.

We arrive and Clayton steers me toward a compilation that features the now legendary track Here We Go (Live at the Funhouse). Clayton’s taste is always impeccable, so I follow his lead.

We get to the front of the autograph line. Sixty-six per cent of Run DMC is standing there, right in front of me. Two quick flourishes, a smile and a nod. I look down at my new record, and there they are in thick blue marker. A pair of autographs: one says RUN, the other DMC.

“Really?”

Joseph “Run” Simmons looks me straight in the eye, incredulous. I have offended the world’s most important rap star.

I gave the record to my kid brother – as did Clayton – forever associating mid-1980s hip hop with poor customer experience. Rob has held onto it all these 34 years, thank goodness. I’m sure it’s worth at least a hundred bucks by now.

The truth is it took me most of those three and a half decades to get over the idea that my record collection would provide some degree of long-term financial security. I have a few gems that I long believed would deliver a payday eventually. Here it is: my eight-album retirement plan, complete with net present value.

  1. Elvis Presley: Elvis’ Golden Records – Collectors Gold Vinyl Edition. Released in 1978 on RCA. I lifted this from Mom and Dad’s collection. They were a lot cooler than I was in the 1970s. Current value: $20 or less, depending on which website you visit. (I’ve also got a red vinyl 45 of My Way and America that’s worth maybe $30.)
  2. The Rolling Stones – Original 1964 U.K. Mono Pressing of their Debut. I remember the day I found it, another collector stood beside me looking down his nose. “Terrible condition,” he said, which of course signalled to me that he wanted it. I’ve seen another copy on auction for £1,100, but who knows. Mine actually is in pretty terrible condition.
  3. Nirvana: Bleach – Their Debut on the Independent Label Sub Pop. I was a lot more excited about this one until I learned that the original pressing was on white vinyl. Mine is basic black. Still, it’s an indie Nirvana release from 1989. Worth about $25.
  4. Bauhaus: Bela Lugosi’s Dead – 12-Inch Single on Blue Vinyl. Beautiful to look at and listen to. Again though, only worth about $20.
  5. Simple Minds: New Gold Dream – Gold Vinyl. Really just a big personal favourite. I couldn’t resist the gold version. And when I got it home, I couldn’t bear to stick a record needle in it. Remains completely pristine. And worth a grand total of $1.
  6. Prince: The Black Album – Bootleg CD. This was the one he changed his mind about at the last minute (or so the story goes). Only ever released unofficially. I’ve seen it online for $35.
  7. Never Mind the Bollocks Here’s the Sex Pistols – Autographed by Drummer Paul Cook. To be honest, signed by P. Cook. So who really knows? Call it $10.
  8. Blue Rodeo: Diamond Mine – Autographed by the Full (Original) Lineup. I have to hurry up and sell this because the ink is rubbing off the cover. Interested?

By the way, while my brother and I were sitting on our high-three-figure record collections, Clayton’s kid brother Russell Peters went on to become a world-famous comedian. If I’m not mistaken, he still collects records too.

Kevin Press

The New Retirement

img_0451

One of the programs I’m most proud of from my time at Sun Life Financial is the Unretirement Index. Dean Connor, who at the time led the Canadian organization, asked my team and me to develop a study that dug into people’s plans and expectations for retirement.

We went in with a simple hypothesis. Baby boomers would transform retirement, just as they had so many social conventions over the years. Given how many Canadians in that demographic identify so personally with their work, why wouldn’t white-collar professionals keep doing what they do after 65? Hence the term, unretirement.

My team prepared the first annual survey over the summer of 2008. Little did we know that the worst financial crisis since the Great Depression would coincide with its fielding. There we were, asking Canadians about what age they expected to retire at the same time televisions across the country screamed about a financial apocalypse.

What seemed a disaster at the time, turned out to be an extraordinary research opportunity. In the years that followed, we tracked the evolving views of Canadians about retirement in light of the crisis. By 2011, the average adult expected not to fully retire until 69.

While our hypothesis held up, it was clear that economic factors were also driving unretirement. Among Canadians who said they expected to be working at 66, 61% said they’d do so because they need to and 39% because they want to.

New research from Aon confirms that while the anxiety so prevalent in the years immediately following the crisis has largely subsided, there remains a kind of low-grade angst among a lot of Canadians about their financial future.

The firm’s Global DC and Financial Wellbeing Employee Survey delivers useful insights into the views of Canadians who are lucky enough to have employer-sponsored defined contribution (DC) retirement plans. While not a representative sample of the broader working population, it’s not a bad proxy.

A few highlights from this year’s edition:

  • 30% “expect to continue working forever in some capacity.”
  • 29% “do not feel they are saving enough for long term needs.”
  • Nearly half say “their outstanding debts prevent them from saving for retirement.”
  • Two-thirds contribute less than 10% of pay to their DC retirement plan.

“The reality is that for most people, retirement will be different than in previous generations – likely starting at older ages and incorporating phased or flexible arrangements,” according to the report. “Our research shows that retiring in your 70s – or not at all – will become increasingly common.”

Two takeaways.

First that debt stat is neither surprising nor necessarily bad news. While I’m not a fan of delaying retirement savings until your home mortgage is paid off, it’s hard to argue against clearing credit card and other high-interest debt before saving for long-term goals.

Second, if you do have a retirement plan at work, take full advantage of whatever employer-match it offers. Aon found that only 78% of respondents have signed up for the plan their employer sponsors. And 41% of those who have access to an employer-match don’t take full advantage. If your boss is prepared to match the first $100 you save for retirement each month, take it. Take all of it. Save more if you can. Just don’t miss out on free money.

Kevin Press

Welcome to Today’s Economy

image 2019-01-09 at 6.18 pmHere’s a promise.

I’m going to do my best to help Canadians understand what’s happening in the economy – at home and around the world. I’m not here to sell you anything. I have no agenda beyond wanting to help readers understand the world just a little bit better so that they can take care of the ones they love.

A bit about me. I’ve been writing about economics, household finances and retirement planning since the mid-1990s. I was a journalist initially, and then joined one of the country’s top insurance companies as a marketing/communications leader. Both experiences taught me the value of learning and the feeling of confidence that comes from having even a rudimentary understanding of how money works.

You’re going to see a few key themes covered in this space:

  • Expect a recession sometime soon. This year marks the 10th consecutive year of economic growth in Canada. Yes, we’ve been mired in an extended period of slow growth since the financial crisis. Just the same, we’ve seen positive numbers every year since 2009. That’s not normal. The C.D. Howe Institute reports that economic expansions have averaged about half a dozen years each since The Great Depression.
  • Interest rates matter more than ever. Low rates began to emerge as an issue for long-term investors in the 1990s. But that was nothing compared to the super-low rates implemented by central banks around the world to spur growth after the financial crisis. The Bank of Canada announced today that it will maintain its target for the overnight rate at 1.75%. Like other central banks, they’ve been working to inch that rate up. (Canada’s key rate hit a low of 0.5% in 2009.) But they have to tread carefully. Rising rates slow economic growth, so of course the risk is that they will tip the economy into recession. But if/when a recession does occur, central banks need to have room to lower rates in order to help the economy recover. You can’t do a lot of cutting when your starting point is less than 2%.
  • Navigating all this means understanding risk. That goes beyond traditional investment risk. Canadians are living longer than ever. That means longevity risk, which is to say that you might outlive your savings. In a connected world where government decisions often have global implications, political risk is significant. Canadians who invest in the U.S. market are well aware of currency risk. There is much to consider.
  • All of this is affecting how Canadians plan for the future. That’s especially true for long-term savings goals like retirement. Don’t be surprised if you’re still working at 70. And don’t be put off by that. It may be the best thing for you.
  • More than ever, it’s up to you and me. Employers have been stepping back from the old-school, paternalistic approach they’ve historically taken with retirement, life and health insurance benefits. Much has been written about the move from defined benefit to defined contribution pensions for example, which puts the onus on individuals to make investment decisions. The discontinuation of retiree benefits is another big story. It’s not clear how this will play out as baby boomers continue to enter retirement. Few expect governments to fill the gap, but it’s too early to make bold predictions on that. Obviously though, we have to be prepared to take care of ourselves to an extent that our parents weren’t required to.

If you’d like to see something covered, please shoot me a note. And if you know someone who will value Today’s Economy, please share.

Kevin Press