A friend of mine just shared an article titled ‘More Wealth for Those Who Wait.’ I fully expected it to be another one of these seemingly good advice messages about the benefits of delayed gratification or working longer so you can save more money.
Instead, it was a very brief synopsis of some new government plans (Canadian) to keep workers in the workforce longer to help ‘lessen the anticipated labor shortage when the baby boomers exit the workforce’.
Hmmm… it seems to me to be sad enough that so many people have bought into the idea that retirement is an age driven event and that in order to retire, you have to have a big pot of money saved so you can draw on it when you’re not working. Now we have the government putting plans in place to keep people working longer – not helping them to become financially independent so they can work at whatever they want to because they want to, not because they have to because they need more money and haven’t saved enough.
If that’s not bad enough, this very short article quickly explained that if you did ‘leave work early’ i.e. at age 60, you could receive a government pension and your salary from work albeit a reduced pension and a larger reduction than the current government plan. It then went on to say that if you worked longer (to age 70), before you collected your magical pension, you would be able to collect a significantly higher government pension than what is currently in place.
In my experience, when a worker is presented with this decision, they might be tempted to look at the reduction or pension amount or increased amount and not have the skills to evaluable the effect of time value of money – and how it all tied into their day-to-day lives. There are so many factors to consider with something like this, I can’t help but wonder who in the government or who in the companies will be able to guide the employee with this kind of decision.
It seems to me that if all you do is look at the numbers without having a complete picture of what’s important to the person making the choice, then you can easily miss the opportunities that will exist to create wealth from an extra income coming from a reduced pension amount rather than staying in the workforce for an extra 10 years for those few extra dollars from the government. I’m pretty sure the corporate and government benefit departments won’t be skilled in providing employees with ideas on what other options are available to them. The only way is for the employee to educate themselves on what’s important to them so they don’t find themselves faced with a dilemma based entirely on numbers given to them by the benefit clerk. This is sad, confusing and wrong.
