Running on empty

It may be Hallowe’en and some kind of ball game happening later, but today we have a serious topic. Yeah, your future.

Do you have enough money or assets squirreled away to retire? Ever? And how much do you need, anyway?

Financial advisors – most of whom have a vested interest in scaring the poop out of clients – vary widely in their estimates of what someone will need to survive until the final pitch. The average seems to be something close to 70% of what your work income used to be – from a variety of sources. Those include CPP, which employees and bosses pay into, corporate pension plans (if you have one), personal savings, wrinkly pogey (OAS) and, if you’re a financial failure, the GIS.

Most people, sadly, are not doing so hot. Here’s a current scorecard.

First, corporate pensions plans. Most of them suck, investing worker and employer contributions in a variety of (ugh) mutual funds. But that’s not the real problem, though. Scarier is the fact so few of us are covered by one of these.

There are 21 million employed Canadians (of the total population of 41 million). Of these, 7.2 million are part of a registered pension plan – roughly a third of the workforce. Almst four million of these folks toil for some level or form of government (including teachers, medical staff, firefighters, soldiers etc) and have comfy DP (defined benefit) pensions. Good for them.

That leaves just 3.3 million people with private sector plans, usually in the form of a group RRSP. Yes, only 19% of non-public-sector people have one of these. Eight in ten working Canadians have none. Oops.

By the way, a third of those in private pension plans save less than $5,000 per year. Merely 12% put aside more than $10,000 annually.

Okay, so that’s generally a bust. What about private savings? All those tax shelters the government has created to encourage financial self-sufficiency… how’re we doing?

The oldest in the nation is the RRSP, birthed after WW2 to encourage retirement savings. The idea is simple: if you contribute while working the feds will defer tax on that amount, then let you grow the money for decades without being taxed. After work, when in a lower tax bracket, you can draw income. Voila. All good.

Well, the average RRSP in Canada sits at $104,000. But only 22% of Canadian have one. Obviously, the amount saved varies massively by age. The under-35 set have an average of under $40,000 saved. In their forties, RRSP-holders hold an average of $150,000. And those heading into retirement have saved a little over $350,000.

But, as stated. Almost 80% of us have zip.

So what about TFSAs? These things are far more popular, with 50% of the population having opened one. But have we used them to get ready for the future?

Hmm. The average TFSA balance last year was $44,987. The kiddos (Gen Z) average $13,000; middle-agers have just under fifty grand; the retiring Boomers average $72,000. One problem here is that almost 80% of the money stuffed into tax-free savings accounts is dead in terms of growth – ‘high-interest’ savings accounts and GICs. Yuck. What a waste of tax-free space.

So, to summarize. A minority of Canadians have a decent pension plan. Eight in ten private sector workers have none. The vast majority of people have no registered retirement savings. Those with both RRSPs and TFSAs just entering retirement have, on average, nowhere near enough to replace lost employment income.

So the country’s population is becoming more and more dependent on public money in old age. Not only is this debilitating for the federal treasury – which is already buckling under the weight of OAS payments – but it makes it impossible for politicians to cut those benefits and balance the books.

In case you missed the point, this sucks. Our society’s real estate fetish is taking an immense toll on personal financial security. Seldom has this been more evident than now – when you can’t even sell your house.

If we’re too distracted or dumb to save for our own future, then Canada needs a mandatory private-sector workplace pension contribution plan.

Over to you, Mr. C.

About the picture: “Good morning Garth,” writes the poster known as AACI Homedog. “As promised here’s a doggie photo of Marigold enjoying the “vibes” coming off my 6 string.  Yellow Lab & Golden Retriever.”

To be in touch or send a picture of your beast, email to ‘garth@garth’ca’.

Source: https://www.greaterfool.ca/2025/10/31/running-on-empty-3/