-Learn how to align retirement savings with your regular income: how much to save and where. -Get familiar with financial multitasking to achieve your life goals while staying financially on track. -Understand why today’s generations might have a different timeline for their financial milestones.
Navigating rising housing and grocery prices, managing bills, and dreaming of homeownership by 30? Wondering if retiring at 65 is still feasible? The financial roadmap has shifted from what our parents and grandparents once knew.
The art of financial multi-tasking—juggling multiple financial goals simultaneously—can be a game-changer. It allows you to steadily chip away at your financial milestones, ensuring you're not just focused on one, but making progress across the board.
In this episode of Smart Advice, Globe and Mail personal finance columnist Rob Carrick offers a real-world view of modern finance. Drawing from over three decades of personal financial experience, he understands the evolving milestones of today, different from yesteryears.
Join us to explore whether you should still chase the financial dreams of previous generations or carve out your own path.
Resources
· Financial advice for every step of the way available on CIBC Smart Advice
· Connect with Rob Carrick on: LinkedIn | Twitter | Website | Globe and Mail
Carissa Lucreziano: Welcome to Smart Advice, a podcast bringing you financial advice, investment strategies and economic trends. I'm CIBC’s financial advice expert Carissa Lucreziano. And today we're going to do a deep dive into today's financial reality and the impact on personal finances of Canadians with Globe and Mail columnist Rob Carrick.
Everyone wants to be confident when it comes to their finances. Achieving financial well-being is something that we all strive for. And the interpretation of what that is, is very personal and unique to us. How confident we are in our financial situation can affect so many pieces of our lives, our relationships with our family, our quality of sleep, and our mental health, and how we feel towards our work environment.
It's probably a little surprise that for the year 2023, 55% of Canadians that we polled felt they needed to get a stronger grip on their financial situation. And I think that's a good thing. For my 20 years of experience in the financial planning and advice profession, there is more of an awareness today than ever before on the importance of financial health.
Building wealth and financial stability takes time. It's a journey and it doesn't happen all at once. And today, Rob and I are here to talk through it. My guest Rob Carrick is a well respected journalist, he spent 37 years mastering his craft, which started covering the Bay Street business scene for the Canadian Press.
When he joined the Globe and Mail his passion for personal finance led to the creation of one of the most read financial columns, Carrick On Money. If you asked him, this column is and I quote, “one regular guy’s attempt to make sense of the world of money.”
He has his finger on the pulse of how Canadians are feeling about money, and is dedicated to empowering others through education. Rob also just wrapped up his seventh season hosting a popular podcast called The Stress Test on how personal finance meets lifestyle and health.
Rob, thank you so much for being here.
Rob Carrick: I'm glad to do it.
Carissa: Twice a week, I have my coffee reading your newsletter, you're like part of my weekly routine. And now you're here like this is awesome.
Rob: Yeah, thanks. You know what I do, that twice weekly news. I've been doing it for a number of years. And I have to say I'm really pleased with how it resonates with people, I think I'm doing an okay job at providing content that reaches a lot of Canadians. And hopefully, it gives them some ideas about how to better manage their money.
Carissa: I couldn't agree more. I think you're doing an awesome job — being a big fan. And you know, being in the same profession, sharing your passion for helping Canadians with their finances like this is such a treat to have this conversation. And so as you said, you reach so many people.
But I'd love to know — like as a journalist, the words that you write, inspire, they inform, they reach so many people and you are something that you wrote really resonated with me, especially the last three words: “Come to me for my experience, my willingness to challenge stale consensus thinking, and most of all, my ability to make you say after finishing one of my columns, ‘Now I understand.’”
So where did this passion for personal finance come from? And why is it so important for you to educate Canadians?
Rob: Well, I think it came from two paths. One, I started off as a journalist who gravitated towards business and then economics, I got really interested in this stuff, in spite of myself, because when I started the journey, I thought, “I'm not really gonna like this.”
But it turns out I did, it was the best career move I ever made, was getting into business and economic reporting. And then I'm in my early 30s, and I've got kids, I own a house. And my wife and I, our careers are evolving. And I realized I've got all these financial decisions to make, and I don't feel particularly well equipped to make them.
So as I'm gathering information, I'm thinking, You know what, this would be a great gig for me. And I proposed it to my editor at the Globe and Mail. They said, “Yeah, I think you're right.” And they said, “Would you like to take it on?” And I said, “Hell yeah.” And that's where it all began.
Carissa: Through your column, you connect with a lot of Canadians. And you've also expanded your reach through The Stress Test Podcast, which I love by the way, I really liked that you were talking specifically to and giving advice to the Gen Zed and millennials. Why is it so important for you to talk to these specific audiences about personal finance?
Rob: Well, one reason is practical. I have two sons, 26 and 29. So their financial issues are in a way my financial issues. And also I think, as a journalist, it's a darn good story, what's happening with the personal finance of young people. And there is an attitude that millennials and Gen Zed, the young people today, they're just living the same financial lives as their parents of previous generations, they have all the same challenges. You know, the details are different, but it's all the same.
And I disagree with that. I think the world's changing in interesting ways and economic impacts. Our young people are unique, and I think they face particular challenges. I don't want to get into this battle of who had it worse or better or whatever, but I think it's different. I think we can all agree on that. And I find it really energizing to try and find solutions and ideas to help young people.
Carissa: Yeah. And again the insights I’m pointing to the Gen Z community, it's one of the most optimistic generations, they can't wait to see what the future holds. And they are some of the most proactive when it comes to seeking advice. And that's like all different platforms.
But you know, as you mentioned, they also have some of the largest financial barriers to overcome. What do you think some of those are?
Rob: Well, one of the biggest is the high cost of housing. I recall not too long ago, what it was like for my wife and I, when we bought our first house in Toronto in the early 1990s. And it was like, “oh, hey, let's buy a house.” Let's save for a little while and check the scene out, find a house we like. And then we bought it. It was really, it was sort of a natural progression from our days as writers and building up our careers and feeling like we were ready.
The hurdle of saving just wasn't that high. It was there, but it wasn't that high. And I look at what young people are up against today. And I feel that no generation has ever faced a bigger gap between what they were earning and what it costs to buy and own a house. So that's number one.
Up until recently, I thought career building was more of a challenge. But you know, the pandemic, how it's changed the job market, it's really created some excellent opportunities for young people. And I hope they're capitalizing because I think that door will shut, at least somewhat as the economy slows down. So that's another thing.
Climate change has provided a lot of anxiety about the future cost of having kids. So those are some particular financial challenges I've seen young people facing right now.
Carissa: Yeah. And I mean, I was listening to your podcast, why more Canadians are giving up on home ownership. And I was shocked, like, you did a study, and it was 19%, if I recall, that are confident they will achieve this top financial aspiration of buying a home. And I think you interviewed someone, it’s great you're interviewing real Canadians, and it was a 27-year-old and he related the homeownership goal to aspirations of being a major league baseball player. And I thought, oh, my goodness.
Rob: Yeah.
Carissa: But I also love what you said, within that podcast, where — and we'll talk a little bit more about it — is if you're in your 30s, and you're buying a home, it's okay. And you said something like, if you're in your 40s, and you buy a home, it's okay, it'll all work out, like don't cross it out. If you're extremely young, that was really a positive message, especially to send to Canadians.
Rob: You know, we're living longer and longer lifespans. A young person today who is in good health and has a healthy family could reasonably look to a lifespan of about 90, 95 years. In that context, why do we have to stop everything at 65 or earlier, you have a long lifespan, use it. Don't just say I'm going to have more years in retirement.
You can take longer to get your career going, you can take longer to save your down payment, you can take longer to buy a house. You may have to start a family in a condo, but before a few years go by, you're moving up to a house, let's say in your later 30s. That can work just fine. You may retire in your late 60s or at age 70, but it'll all work up because of this longer lifespan.
It's a gift to young people, it's more time to accomplish these goals which are getting harder. So maybe if we add more time, and we apply that against the higher difficulty level, we're going to end up with something that's doable.
Carissa: I'd like to talk a little bit more about this because this is really interesting to me. And like we're in a society that's evolved to this like instant gratification. There's so much at our finger tips, more investment solutions, opportunities to build wealth, and even greater access to online solutions than we ever had before.
So there is this heightened feeling, as you mentioned, to achieve our financial milestones, not only by a specific time in our lives, but also to the mass of that success. And so how do Canadians change their minds if we're putting unnecessary expiry dates on our financial goals? You know, if we didn't do it yesterday, is today not the best time?
Rob: Today is a great time, and tomorrow will work okay, as well. You're right. At the same time as we've got these expanding lifespans, and more time, we're also accelerating the timetable by which we have to meet all these goals. So it's the real financial go-getters are buying houses in their 20s. And they're saving for retirement at age 22 and all that. That's great. I applaud people who are able to pull that off.
But if you can't, I wouldn't want you to consider yourself not a success by comparison, that those are exceptions. If you talk to a number of people who know what they're doing, you're gonna very quickly find that there's a lot of people who are struggling to save for retirement, a lot of people who don't know when they're going to buy a house. And I think that if we were to talk to more people in our position, more of our peers honestly about money, we'd find that there's a lot of people with the same struggles as us.
I think that will calm and relax us and make us feel that I have time. And you know what, I got a late start on saving for retirement, but I'm doing it now. And I'm 100% committed, and I'm gonna make up for lost time. And I have other tools as well to help me. I might work a little longer to take the pressure off. And getting into the housing market as I was just saying, you could do it in your late 30s. You could even do it in your early 40s If you are willing to work past 65. Time can help take the pressure off.
Carissa: Yeah, I mean, we've had a chat before about even like what if you can't start saving until your 40s to your point, that's okay because if you notice to what you said earlier, if our life expectancy looks out to 90, 95, and you're starting to really hunker down and start to save in your 40s, you can still achieve a lot.
Rob: Well, I think a lot of people, if you did a survey, would admit to probably not starting a serious retirement saving until their 40s. I mean, and I think that's going to be more and more of a thing, because when you look at the mortgages young people have today, houses at peak prices, and mortgage rates are high as well, that's a big chunk of your change, you've got kids, you've got inflation, you've got the cost of groceries. Retirement savings may not be possible in your early to mid-30s.
And it may only be as you start to whittle their mortgage balance down or your kids get out of the young daycare years, that you start to have enough money to put into retirement. If that's how it is, you have to live with that. Those are reasonable constraints, that's a normal life, and you can ramp up your retirement savings. And also, in your 40s, you should be hitting the sweet spot of your career: raises, bonuses, new career opportunities, more earnings, that will help too.
Carissa: Yeah, and that was one of the things that really resonated from your podcast with that new 27-year-old that was talking. He was very early in his career, and he was making a modest salary, but there was so much room to grow.
So let's talk about financial multitasking is the topic I wanted to chat with you about. It's a reality for almost all Canadians. You gave a really great example just now like buy a house, get married, have a family, save for retirement, and what can say that those are like traditional goals, but the complexities and extensions of those aspirations today seem to be endless.
I could travel the world, buy a vacation property, own an investment property, desire to live abroad in retirement, and vast education options for children. The list goes on and on and on. It's a lot to juggle, but it's also so much financial stress to put on ourselves. How do you think Canadians will continue to keep up with their aspirations? And are they going to have to throw some of these aspirational goals out the window?
Rob: I would add one aspiration to your list there. And that is a new phenomenon I've noticed called experiences. It's this idea that we were all locked down through the pandemic. And now we're good to go. What did we miss? Let's double down.
You know, it's this idea of spending four figures on concert tickets and going on these trips with friends let's experience things and enjoy them while we can. Add one more spending pressure. How do you juggle it all?
What I think is a good idea is trying to do a little in a bunch of areas, you know. I mean, addressing your high-rate debt is your first priority. And I think that should take precedence over almost everything else.
But putting a little bit of money away, a token amount of retirement money away in your 20s and 30s is great, because you've got decades of compounding, it doesn't have to be like your full maxed-out RRSP contribution or the maximum TFSA. A little tiny bit of TFSA, or RRSP, depending on your situation is good.
I mean, the compounding that you'll see over 20, 30, 40 years will make that money more than worthwhile. Emergency funds. I think the economy and the state of the world is unpredictable enough today that we all need an emergency fund.
So I mean, there's a rule that you should have three to six months worth of expenses in your emergency fund. I mean, great if you can, I think a modest emergency fund, how about $500? Can you do $1000 and build it from there, do something even a little bit is better than just having a zero balance emergency fund. So when the car breaks down, or suddenly you lose an hour at work, you don't have any money to fall back on.
And that's the way I think the best way to sort of multitask is try to do a little bit in each area. And if you can't, forgive yourself. And make a point in time when you're gonna come back to it, and make that come into definitely come back to it because things can slide awfully easily in finance.
Carissa: Yeah, and I agree with you, don't be too hard on yourself. And a little bit goes a long way. Even if it's a regular savings to that kind of slush fund emergency fund, like to save six months worth of expenses is hard.
But to your point, if you know you need a new dishwasher, or you know, you need to fix something, even if you have 50% of that cost, it's better than zero. So I'm with you on that.
And I know you cover a lot on investing. This is a very hot topic, especially with the way the economy and the markets have been, are there any synergies to investing at different stages in our lives?
Rob: Well, the beauty of investing when you're young is that you can take on a lot of risks, reach for the better returns, and you've got so many years that you know that the ups in the market are going to offset the downs. And I hope young people are taking advantage of that.
I mean, I know there was this sort of risky investing fad in 2021 when all the markets were going crazy and a lot of people had a lot of fun. A little money was made, a little money was lost. It's all good, good learning experience.
But going ahead, young people have this opportunity to invest in a fairly aggressive way. And by that, I mean not crypto necessarily or tech stocks in particular. But just like a good diversified portfolio with most of the assets in stocks, a little bit in bonds, or cash or GICs. And let it ride for decades. I can almost guarantee you, you're gonna have a very good result 40 years from now, when you look back on money invested now that way.
As you get older, you have to be more mindful of the downside risk because you want to grow your money. But you don't want to run the risk that a bear market for stocks is going to like take 30% of it away in a flash, which could certainly happen. I've seen it, and as you get closer to retirement, you want to be even more cognizant of risk, because you don't want to amass this great retirement fund and then have the stock market crash the first year and cut it way down. That money will come back over time. But it's pretty traumatic to work for 30-40 years to save it and watch a nasty period for stocks really cut it down.
Carissa: Yeah, and especially if you need the income.
Rob: Well, totally right.
Carissa: Yeah. So I mean, and I know you write a lot about retirement, from planning for finances to lifestyle, and I love your writing about your focus on retirement. What trends do you see emerging? Like, what should Canadians be thinking about?
Rob: I think that there is still a mindset that the ideal retirement is one before age 65. And I totally get that for people who do physically demanding jobs, I mean, your body breaks down, and you reach a certain point where you need to not be working anymore. So I exempt all those people from what I'm going to say.
But for the rest of the population, I think working longer in a strategic way can be a great way to stay involved, stay active, stay interested, and also take some stress off your retirement savings. And I think we're going to see more and more people do that. So one way to prepare yourself for that is in your 50s, in your career, start thinking about, “how am I going to create a post-65 reduced workload consulting type of relationship from what I'm doing now.”
And if you can see your way to doing that, that might help you get an extra three, four years of working, two, three-day workweek bringing in extra cash, staying active, staying involved, and also bringing in extra cash and you know, sort of helping to lighten the load on your retirement savings.
Carissa: I couldn't agree more. And I think you alluded to it, but it's also for your physical and mental well-being to continue in some sort of work environment. I know it's helped a lot. But absolutely, maybe it's not the full throttle. But you're planning for that. So when you do retire, you're not saying okay, now what am I going to do next? And it may be something different.
You know, many people that I speak to that are nearing retirement or going into retirement or thinking of doing something a little bit different, they've always known that they wanted to do something in that realm. But even something a little different, something that they maybe never had a chance to do?
Rob: Absolutely. You know, retirement, I see some evolution in the way retirement is being depicted. You know, you go back about 10, 15 years ago, and you watched marketing for retirement savings products for investing picks that retirees and the retirees were all skiing, they were in Tuscany, they were driving scooters up mountain roads. And I think now the focus is still on that to some extent, because travel is aspirational for retirees.
But there's also a sense of having time to connect with your kids, and your family and your community and your friends to do volunteer work to get involved with educational initiatives, volunteer initiatives, and this idea of sort of having time to rest, reflect, recharge, but also to sort of give back, and I think that is sort of an evolving view on retirement that is not just about this candyland, rewarding yourself period of life.
Carissa: Yeah, it's more about the purpose and living a purposeful retirement. I couldn't agree more. Let's talk a little bit about kind of bringing it back to you. What's the best financial lesson that you have learned throughout your career? And I'm saying one that could be three, I'm sure there's a few.
Rob: Well, I think there's one lesson that, for me, stands out above all others. It's the guiding principle in my financial life. And I think it's the root of all success in personal finance. And that is to live a little below your means, always be saving money.
And by saving, I mean, that can include investing as well. So I sort of have a father who was an enthusiastic spender, and I had a mother who understood how to manage money and to be frugal. And the lesson I took out of that is sort of a blend of the both. I like to enjoy myself, but I always, always, always try to keep my spending below my capacity so that I can constantly be saving.
You know, my number one expense right now is saving for retirement. And it will be that way until the day I retire. And I think that I'm able to do that because my wife and I travel a lot. We enjoy going out for dinner. We have all kinds of hobbies and activities and stuff, but I keep those below what our income is in order to have a constant stream of money going into savings.
And I know there are people who are listening to this and who can't do that and I say hang in there. Get through this period, build your career and get yourself into a position where you can, and then you will find things start to fall into place.
Carissa: Yeah, my grandmother used to always say to me, I know how to spend, and I know how to save. And so your mantra is very much so close to my heart as well. And it's an art to be able to do that.
But it absolutely, if you almost always live below what you know, you can afford, you're always kind of safeguarding yourself and you can save a little more that way the bumps aren’t as rough along the way. So if you get into a groove where you can do that can absolutely make an impact.
So you are making a huge impact on so many lives through, I'm going to say your overall teachings and the many facets of what you do about money. Is there somebody that specifically inspired you?
Rob: I can't say there really is. I'm just the kind of person who sort of, I'll be living my life and get curious about things and all one answer. So that's basically how it started with me in personal finance I kind of muddled through for a long time, I was no personal finance prodigy.
I spent heavily in my younger years, I didn't incur a lot of debt, but I spent heavily wasn't a prodigious saver by any stretch. But I started to accumulate responsibilities, kids, house, etc. And I thought I need to know a little bit more about what's going on. And so I am basically a self starter.
Carissa: Yeah. And you know what, I think that's a perfect way of relaying the message that you know, it doesn't happen all at once. That it's a journey you learn along the way, and to give yourself that flexibility. Don't be too hard on yourself, there's time to do all this.
So I think that's a perfect segue. And what we've been talking about today is you have time you learn along the way, nothing happens overnight. But as you learn, you continue to evolve, and you continue to grow, and in this case, in financial well-being. So I know you said you're prepping yourself in terms of saving for retirement, but I know you aren't retiring tomorrow. What's next for you?
Rob: Well, I'm 60 years old, and I'm not retired.
Carissa: 60 years young.
Rob: Yeah. 60 years young. Yeah, I like that better, actually. Not retiring anytime soon. Because I enjoy what I do. And my God, there's so much to write about in the personal finance field, things are changing, like hour by hour, day by day. And it's exciting, and I enjoy what I do.
So I am going to spend my working hours trying to figure out what I can help people with and what can I explain to them about what's happening and help them get a better grip on their money.
Carissa: You're doing a fantastic job. Thank you for your reach to all Canadians. And you're passionate about personal finance. And thank you for sharing your time with me and our listeners today. As you do with your writing, you leave us inspired to learn more, and I'm confident after listening to this episode, many more will say to themselves: now I understand.
Rob: Thanks for having me, enjoyed it.
Carissa: You can find more from Rob Carrick and his weekly column in the Globe and Mail and the stress test podcast. If you enjoyed this episode, leave us a rating and review we would love to hear from you. You can also share this episode with your family, friends and colleagues. So that marks the end of season one.
Thank you to everyone who has made this podcast possible. And thank you, our listeners for tuning in. If you haven't already, go back and check out everything this season has to offer, including conversations around investing real estate, tax and estate planning.
Stay tuned for bonus episodes expected to drop over the next few months and for season two coming next spring. To make sure you never miss an episode, subscribe or follow on your favorite podcast platform and visit us for more advice at cibc.com/smart advice.