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How Does this Retirement Thing Work?

Friends have done it. Targeted ads suggest it. Financial advisors all but salivate at the mere mention. There’s a government website, with a calculator. Retirement. Or maybe colonoscopy, if you leave out most financial advisors. 

Being of a certain age, the topic comes up. Actually, it’s been looming over my head since I had a stable income (or so a financial advisor thought) in my early 30’s. Contribute to your RSP, or RRSP1. As it turns out, decent financial advice.

The old model, of working for the man (i.e. some capitalist establishment) from the time you’re 20-something until ‘retirement age’, and then settling into life supported by the company pension, doesn’t fit all. Somewhere along the line, this free spirit2 realized she would be responsible for funding her retirement. And so, here and there for the past decades, I’ve put money aside to support myself when I quit being paid for doing things that people pay me to do. 

The concept of retirement, quitting working, doesn’t make any sense to me. Work should be play and play should be work. Or, whatever I’m doing, I should enjoy, or not do it.

There are parts of life that are not fun but we do because they’re important, ranging from attending funerals, speaking up about civil injustices, teeth cleaning or cleaning the house. Some parts of employment should be fun, like making a difference in your customer’s life, and some parts of fun are work, like changing a flat tire on your bike so you can ride through an enchanted forest. 

There’s nothing more enjoyable than spending the day labouring in the garden or working on a renovation project. Both of these pursuits could be leisure activities or ultimately result in financial gain. The garden yields free groceries. Home renovations increase property value. Even a bike ride improves health, reducing the costs of care and extending life expectancy. It’s all fundamentally interconnected.

Back to the practical. There is a certain cash flow required to meet monthly bills, keeping the electricity, heat, water and other necessities of life, like beer and kitty litter, flowing.

And thus I am faced with the ‘retirement calculator’ to determine what should be in my savings to keep me in the style to which I have become accustomed, including concert tickets, thrift store extravaganzas, and luxury hotels when I travel. According to generally accepted principles, this requires a monthly budget to decide how much is enough. 

After government and other sources of retirement payments, the required RSP size can be calculated. My first trial was appalling, until I realized the number was based on living off the interest of the money in the RSP and maintaining the principle. I plan on dying penniless, spending all my savings before I go. 

The tiny problem with that plan is, I don’t know when that will be. If I die tomorrow, I should plan one hell of a party tonight, but if I’m going to live another 70 years, I need a lot of coffee money and should watch my pennies (whatever those are).

What if I miscalculate, and run out of funds before I die? I have to start working at age 90, with a few chronic diseases and a pharmaceutical habit that would make most drug plan insurers weep. And write exclusion clauses for senior employees.

Based on the size of the boomer population, in a decade or two the streets could be overrun with people old enough to be your great-grandmother, who are looking for donations from strangers, rather than plying relatives with unwanted preserves, baked goods or perfectly good objects, like curlers, that became obsolete decades ago.

On top of estimating my expected time of death, how do I know what conditions will be 30 years from now? Rampant inflation could make the budgeted amount worth half what it is today. I could change my lifestyle to a more costly one. I dunno what I want next week, never mind next decade. Oh, and there’s major expenses, like buying a new car, getting a new furnace, or going to the moon (because all your friends have). 

Time to get entrepreneurial. My first jab was in the financial services, but it turns out the idea I had is already a hybrid insurance/annuity/retirement income product. An insurer is given a large, non-refundable sum, and pays out a monthly income for the duration of the insured’s life, even if its forever(ish). This works because, given a large population, the lower draw from the pool of funds of those that die young balances the higher draw of those that live longer than expected. It is an appealing product because it guarantees income for life. And allows the policy holder to spend all their money before they die, without knowing when that is. Essentially, this is the company pension fund without the company.

Great, the conservative solution is covered. A truly entrepreneurial approach would be to live with the uncertainty. This is essentially what I’ve done for most of my adult life, taking on financial risks with the assumption ‘I’ll make it work’. Oddly, the last time I took on more debt than I knew how to pay off, the pandemic intervened to make it work financially. Who could factor that into their financial projections in 2018?

The point is, ride the tide. Entrepreneurs are tolerant of risk, uncertainty and confident in their ability to manage whatever comes their way. Retirement should be the same.

Creative solutions I will entertain:

  • selling my soul to the devil, 
  • volunteering to be an early test subject for immortality treatments in exchange for stock options, 
  • getting on a spaceship to Jupiter which will include food and accommodation for remaining life, 
  • medically planned expiration to match financial resources (no, this one is too conservative), 
  • massive investments into cosmetic procedures to make me look and feel 20 years younger, giving me 20 more years to figure out how retirement works.

Oh, 🖕. Screw someone else’s major life milestones, and priorities. I’mma continue living as I always have. On what comes my way, from random employment and other gigs. It’s worked fine, to date. 

1There doesn’t seem to be a difference between RRSP and RSP. Not sure why there are two terms. 

2There are many free-spirits like me, who do not have a company pension, either because their company has no pension, they are their own company, or they drift from company to company, never staying long enough to get into the pension plan.

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