Will I have enough money when I retire?

Rob Dawson, a reader in Waterloo, Ont., asks, “Will I have enough money when I retire? I’m in my 50s.”  Ian McGugan, The Globe’s Report on Business investment editor says the right ratio of what you earn now compared to what you’ll need in retirement is dependent on how much you make now, how much you spend now, and what your ambitions are for life after work.  “The good news,” McGugan says, “is that retirement is likely to be more affordable than you think.” He explains:

Most people find they need a retirement income that is 50 to 75 per cent (called the replacement ratio) of what they made while working.  Financial planners will tell you vanishing expenses like mortgages, daycare costs, tuition bills, and RRSP contributions eat up at least a quarter of your income during your working years. Therefore, planners typically recommend a replacement ratio of 75 per cent of your previous income will allow you to live in retirement much as you did while working.

But a 75 per cent replacement ratio is a guess, and one that tends to err on the high side. People who examine the facts on the ground often conclude that middle-income couples can live happily on 50 per cent to 60 per cent of what they were making during their earning years.

For instance, Russell Investments Canada analyzed Statistics Canada’s 2007 Survey of Household Spending and found that, for most retirees, a replacement ratio of 47 per cent of their working income was sufficient to cover the bare essentials, while 60 per cent of pre-retirement income was enough to cover both essentials and “lifestyle” expenses such as travel and dining out.

Focusing on the specifics of your own situation is important. Here are three questions to ask:

1) How much are you saving now? If you’re a single renter who’s never had to sweat a mortgage and is used to spending every penny you make, then buckle up. You’ll notice a painful drop in your standard of living in retirement even if you manage to replace 75 per cent of your working income.

If that describes your situation, consider what you can do to ease your path. That may mean saving more now or finding ways to work after official retirement age.

2) What expenses will vanish in retirement? On the other hand, Mr. and Mrs. Average Canadian often wind up with more spending money in retirement than they had while they were working and raising a family. Their disposable income soars because so many of their expenses disappear.

A financial situation of this type is quite common:

  • A couple makes $120,000 a year.
  • Taxes consume $20,000 of that.
  • Another $10,000 vanishes in child-related expenses.
  • A further $25,000 goes to the mortgage.
  • Another $10,000 is directed into RRSP savings.
  • Work-related expenses — ranging from clothes to lunches to commuting expenses – eat up another $5,000.

Total up all the expenses and the couple are spending only $50,000 on themselves – less than half their gross income. But many of their largest expenses will disappear when their kids graduate, their house is paid off and they start collecting from their RRSPs rather than contributing to them.

If they manage to a achieve a 60 to 70 per cent replacement ratio in retirement, they will find themselves living better in their golden years than they ever did in their working, child-rearing decades.

3) What type of retirement do you want? If you have big ambitions to travel, or buy a vacation property, or join an expensive golf club, you’re going to have to adjust your plans accordingly.

It’s also important to calibrate replacement ratios to reflect your income level.

If you’re not making a lot now, chances are you’re already devoting most of your income to essentials. As a result, you’re not going to have a lot of room to cut spending in retirement and your replacement ratio will be quite high – 70 per cent or more. Keep in mind though that government transfers – Old Age Security, Canada Pension Plan or Quebec Pension Plan, and Guaranteed Income Supplement  – should go a long way toward replacing your working income.

On the other hand, people who make exceptionally large incomes can often get by just fine on a smaller replacement ratio. It’s not that difficult for most people to go from a working income of, say, $250,000 to a retirement income of $125,000. (Or, at least, it’s more difficult for the rest of us to feel sorry for them!)

A touch of realism may help here: Statistics Canada calculates that the median senior family had after-tax income of $49,300 in 2011, about half of which came from government transfers.

Despite the widespread anxiety about retirement, a 2010 survey of Canadian retirees by Russell Investments found that 90 per cent rate their financial health as “good”, “very good” or “excellent”. Retirees are generally a happy lot – which suggests that most of us will do just fine, whatever our replacement ratio might be.

Do you have a question about retirement, RRSPs or personal finance in general? Globe columnist Rob Carrick is taking over the Report on Business Twitter account to answer your questions live, on Tuesday, Feb 23rd. Tweet your question with #AskTheGlobe 





What kind of books does The Globe review?

Our latest question comes from Sean Cummings. He asked the following question via Twitter: #asktheglobe Why don’t you review genre fiction? Your books section reviews that which most folks DON’T read.

For the answer we turned to Books Editor Mark Medley, who gives his response.

Hi Sean, I respectfully disagree with the assertion that the Globe doesn’t cover the books that people want to read. Just this past Saturday, for instance, we published a 1500-word profile of Jennifer Robson, who writes popular historical romances as is a fixture on our bestseller list. In fact, looking at this past weekend’s Canadian bestseller lists, we have covered every single book on the fiction list, and half of the books on the non-fiction list. (And the only reason we haven’t covered some of these books is because they are financial guides or self-help books, which we don’t generally review.) As far as genre fiction, Margaret Cannon has long been a fixture in our pages, and we publish six reviews by her (focusing on crime fiction) each month. Marissa Stapley also writes a regular column on commercial fiction, which debuted in early 2015. Shannon Ozirny writes a monthly round-up of the best in YA fiction, as well.

As you can see, The Globe regularly reviews genre fiction. Thanks for the question Sean.

If you have a question that you would like answered, use #AskTheGlobe and we will do our best to search for the answer.

What are the guidelines for how The Globe presents sponsored content?

This question comes from SurlyTorontoConsumer via Twitter: “Does the @globeandmail plan to ever disclose to readers which news articles are ‘sponsored’ by companies mentioned in them? #asktheglobe”

Sean Stanleigh, Managing Editor of Globe Edge Content Studio, responds:

In terms of stories that contain mentions of paying sponsors, we clearly disclose those relationships through use of the label Sponsor Content, highlighted at the top of each page, whether in print or online. These include advertorials and native advertising, in which advertisers have input into story ideation and final approvals on content prior to publication. These stories also use different visual cues, such as fonts and templates, and they live in a separate area of globeandmail.com, which you’ll find here.

Click here for more information about Globe Edge Content Studio.

Hope that helps SurlyTorontoConsumer. If you have a question that you would like answered, use #AskTheGlobe and we will do our best to search for the answer.

What is the difference between a hate crime and a terrorist attack?

“Why are attacks against some considered terrorism, while this is only a ‘hate crime’?” asks Joel Arthurs via Twitter in respect to our story about a Mosque in Peterborough, Ont. that was deliberately set on fire.

Sean Fine, The Globe’s justice writer gave this response:

The reader raises a good question. Terrorism and some hate crimes may overlap. Hate may be linked to a political, religious or ideological purpose – part of the definition of terrorism. And why do people commit hate crimes if not to intimidate? Intimidation is also part of the definition of terrorism.

But the Peterborough mosque example is straightforward. Someone threw a bottle with flammable liquid through a window, causing a reported $100,000 in smoke damage. Under Canada’s 2001 Anti-Terrorism Act, property damage qualifies as terrorism only if it is substantial, and likely to cause death or serious bodily harm, or endanger public health or safety. Or if the act “causes serious interference with or serious disruption of an essential service, facility or system.” A nuclear plant, for instance.

The wording of the terrorism law communicates the largeness of scale of terrorist crimes and motivations, as Parliament views them. The intimidation clause, for instance, includes an intention to compel “a person, a government or a domestic or an international organization to do or to refrain from doing any act. . .”

“Terrorism requires attacks on individuals, not just buildings,” Winnipeg human rights lawyer David Matas says. “It trivializes the concept of terrorism to use it for property damage.”

What is a hate crime? In Canadian law, it is a crime to advocate or promote genocide, punishable by up to five years in prison. It is also a crime to incite hatred of an identifiable group, if that incitement is likely to lead to a breach of the peace. (Maximum sentence: two years.)

But the term “hate crime” is most commonly used to describe any crime — assault or arson, for instance — in which hate is an aggravating factor. The Criminal Code written by Parliament instructs judges to increase sentences when there is “evidence that the offence was motivated by bias, prejudice or hate based on race, national or ethnic origin, language, colour, religion, sex, age, mental or physical disability, sexual orientation, or any other similar factor.”

“Hate crimes in Canada are simply a sentencing enhancement and not an independent crime,” University of Toronto law professor Kent Roach says. The penalty for arson would be increased if the court finds the arsonist’s motivation was hate.

But it is not always a simple matter to separate hate crimes from terrorism.
Imagine that a janitor working in the mosque was killed. Murder doesn’t require intent; it is enough that the person throwing the flammable liquid was willfully blind to the possibility. The charge could be murder, with hate as an aggravating factor. (Second degree murder, like that of first degree, carries an automatic penalty of life in prison, but the parole eligibility varies from 10 to 25 years; hate could mean more prison time.) Or the death of a janitor in the mosque could have resulted in a terrorism charge. All the elements — the intent to intimidate, the political motive, the death — are there.

The same goes for Justin Bourque’s killings of three RCMP officers in Moncton, N.B., last year, or Marc Lepine’s massacre of 14 women a École Polytechnique in Montreal in 1989. Terrorism or murder? That is where a prosecutor’s discretion comes into play.

 Follow Sean Fine on Twitter and if you have a question that you would like answered, use #AskTheGlobe and we will do our best to search for the answer.

Shouldn’t The Globe do away with anonymous commenters?

“Should the Globe require real names be used in your online reader comments sections?” asks Dave Ings in Toronto. “It might elevate and civilize the tone of the discussions and reduce the trolling.”

The Globe’s senior social media editor Melissa Whetstone says that’s a commonly-considered option in the newsroom – but we’re not convinced. “We’ve also wondered whether The Globe should require commenters to use their real names. and whether doing so would improve the level of conversation on our site,” Whestone says. It’s a subject of much debate with no simple answer:

How do you force commenters to use their real names in the first place? It’s easy enough to create a fake profile. You could force users to sign up with one of their social media profiles, but what’s stopping them from setting up a fake account there? Besides, it’s not like Facebook or Twitter is troll-free. People there are often not shy about posting abusive or offensive comments under their real names, right along with that profile photo of them and their smiling kids.

There’s also the argument that not allowing anonymity would stifle discussion around sensitive or controversial topics. Maybe you have a deeply personal story you think would add value to a conversation, but don’t necessarily want your co-workers to come across it. Chances are you wouldn’t bother to share it.

The Globe is aware that our commenting system is not perfect. But we have mechanisms to try and make it a place for valuable discussion and debate. We have options to report for abuse comments and users who break our community guidelines. Moderators review these reports and remove comments or block users when warranted. When covering topics that tend to attract a high number of abusive comments, we set articles to premoderation. This means all comments on that article must be reviewed by a moderator before appearing online.

Some news organizations have removed comments from their site entirely, unable or unwilling to tolerate the troubles any longer. That’s a shame. There’s still value in comments  -whether on our own site or social media. (Take a look at this piece we published last week as one example.) The Coral Project is one group looking at ways to improve community and commenting on news sites through technology. I’m eager to see what they come up with. I’m sure many readers are too.

Follow Melissa Whetstone on Twitter, and read more on the subject: Online anonymity is too precious to give up


Why do dogs bark?

“I have a small female dog and she barks often for no apparent reason,” writes Jacques Hache in Gatineau, Quebec. “Can The Globe tell me, why do dogs bark?” The Globe’s resident dog lady and Canada Q&A editor Amberly McAteer has your answer:

Dogs are adorable weirdos: Mine eat my socks, chew on each other’s faces, roll in anything that smells terrible.  But barking for no reason is not a dog trait I’m personally familiar with – so I called in the expert: Jeff Cooke, president and head trainer at Bark Busters Canada, an international company that specializes in dog training and therapy. “Asking why a dog barks is like asking why a child cries. There are a million possible reasons,” Cooke says from his office in Squamish, B.C. Typically, he says, a dog bark is meant to alert the pack. “It most often means there is something strange or alarming going on here, and you should know about it.”

Barking when the doorbell rings is a great example: “Your dog is saying someone is here, and we should decide if we want to let them in.”

Cooke recommends studying your dog’s body language at the time he barks – it’s a much better indication of how he’s feeling at the time. A bark to indicate an alert, or fear, or play all use very different body language.  “If he’s upset, you’ll see hair on the back of their neck, ears go up, look more aggressive and bark in a high shrill,” Cooke says. But it’s completely different body language when he’s playful, and barking a squirrel up a tree.

But in your case – if there are no strange noises,  new people on your doorstep, or any thing that looks like fun prey, Cooke says your dog is likely barking to get some attention. He recommends ignoring the bark until it stops – and then paying attention to your pooch. “Don’t react in the moment –  it’s like a kid in a cereal aisle,” he laughs. “If you cave in the moment, they know they’ve got you.”

“Dogs spend a lot of time studying our actions – they watch us and try to figure out what relationships they can build. So they start to figure out if they do this the focus can be all about me.” Your canine pal LEARNS quite quickly that when he barks, it gets your attention off THE television and onto HIM.  Cooke says he had a client who works from home, and every time she answered the phone, the dog would start barking. “That sounds funny – but if you’re trying to conduct a business, it’s embarrassing.”

It’s best, he says, to bring a dog behaviorist into your home, so you can be sure. “Every case is going to be different, but you’ve got to get the incessant barking under control. Even for dog lovers, that’s going to get annoying quick.”

Give your dog all the love and attention he deserves – but do it on your terms, when he’s silent.  “That way he’s getting your attention, but he’s not in control. Everyone wins.”

Follow Amberly McAteer on Twitter, and for more reading: Dogs are people tooMy rescue dog is perfect – How long will the honeymoon last? and Science confirms it: Your dog’s emotions are written all over its face