Tuesday, January 25, 2011

Saving For Retirement

I find the media debate about what is wrong with the pension "system" in Canada to be somewhat amusing.  While the situation isn't funny, I do find it interesting how the politicians and the professionals in the financial services industry can't seem to put their finger on the problem.

In my personal experience, the opening to the pension bucket is too small, while the bucket, itself, is filled with too many holes.

By that I mean, if they really want people to save more, you would think they would make it easier.  When I was making sufficient money to actually top up my RRSP savings, there were too many income restrictions, and no Tax Free Savings Account to do so.  With all but senior executive and government compensation decreasing in real dollars I am afraid that window of opportunity is lost.  At the same time our governments, in my opinion, have done a lousy job of protecting hard-earned Canadian pensions from foreign controlled companies, and even the likes of Nortel.  Besides, given the state of modern computer technology, why are pensions not portable?  Why does it matter where I work, as long as it is in Canada?

The holes in the bucket I am referring to are the enormous commissions, fees, and charges imposed by the financial services industry on people trying to save for retirement.  What is worse, in exchange for all of that hard earned money that could have been going toward people's retirement, we receive terrible advice since most of it is designed to make the institutions money at the expense of the "client".  No person, it has been said, can serve two masters, and since one of the two is directly in charge of compensation, we can guess which one is being listened to.  At the same time, I am expected to save more so, in future, I can help pay for those indexed pensions of our faithful civil servants despite having no pension of my own.

It all reminds me of the debate over why people don't vote in Canadian elections.  The politicians run around acting like little children, while spending like drunken sailors (sorry to slight any sailors out there) on shore leave.  Then, when it comes time to vote they can't understand why everybody has lost interest or any hope of ever seeing any positive outcome.

It has always been my opinion that if people are not acting in the desired fashion then those doing the managing have failed in their job.  We can call people lazy, indifferent, and even ignorant, but wouldn't that tell you they have not been educated, motivated and inspired?  I keep hearing, "Save more, save more!"  I don't think, "Do as I say and not as I do", is going to inspire people in this situation any more than it has in the past.

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