NRR = Colleague who is not retirement-ready
RR = Colleague who is retirement-ready
DH = Dear Husband
A teacher at the high school where I work has become remarkably trim over the past year. “How much have you lost?” a colleague and I asked her this week. We got into a discussion about workouts from home vs. workouts at the gym and about different nutritional habits she has adopted to shed twenty-five pounds. It was a high-five kind of conversation. She looks great.
Two teachers. Two financial realities.
No one has come up to me and said, “You look like you’ve lost some debt this year.” Debt is invisible. Money-talk is frowned upon. As a teacher, I know that even within a group of people who earn similar incomes, financial realities are all over the map. I asked two colleagues who have a lot in common if I could use their personal situations in this post. I am grateful that they both agreed. Each is a man in his fifties. Each came to teaching as a mid-career shift. Each earned more in his previous job. Each has experienced divorce. Each is a father of almost-grown daughters. I’ll call one NRR (for not retirement-ready) and the other RR (for retirement-ready).
My ears are attuned as they never were before to hints of people’s money matters. A few months ago, NRR commented upon the fact that he couldn’t say “No” to his daughters when they asked for money, and he said that he’d never be able to retire. I approached him this week as diplomatically as possible to ask if I could interview him about his finances for my blog. I told him that I understood that he was not ready for retirement, and that I would be comparing him to another colleague who was. He seemed a bit surprised to have been pegged in this way, but he had nothing to hide.
NRR is fifty-five years old, and he plans to teach until he is sixty-five. At that time, he says, he will be eligible to earn a pension of $16,000 annually. The Canadian Pension Plan will boost his retirement income – though he’s not sure by how much – and he has about $14,000 in savings. He doesn’t carry much debt, but Christmas and tax time usually put him in the red for a while. He doesn’t like the idea of having to work until the age of sixty-five, but he doesn’t regret any of the decisions he has made leading up to his present state.
NRR earns a good income, and he spends all of it. Two of his daughters are university aged, and the youngest is about to start her final year of high school. Although there are two universities in our city, his daughters go out of town. “I think they should be able to go to school where they want,” he said. They all work over the summer, but when they ask for money, he gives it to them. “They’re not extravagant in any way . . . ” he started. Then he reconsidered. “OK, they could be extravagant in some ways.” What about making them partially responsible to fund their post-secondary education? I asked. “No.” What about putting limits on the amount given? What about saying, ‘I’ll give you a certain amount per month, but if you blow it, you’ll have to do without’? He started to shake his head before I had even finished asking the question. “It’s not an option because I just don’t think that way,” he said. I asked if he thought his daughters had learned a sense of financial responsibility. “I don’t think so,” he said. But he’s talked to them about it. And he has a financially savvy friend who will talk with them some day.
There were extenuating circumstances to NRR’s situation. An ex-wife, for instance, who offers little support despite her higher income. The divorce set him back financially. So did the years he spent as a stay-at-home dad. I asked again about retirement. “I’m not going to worry about what’s going to happen in the future,” he said. “I have a master’s degree in economics, but I’m not a finance guy. Why should I worry about money?”
RR is a man whose financial health I was able to identify shortly after DH and I started our journey out of debt. Aged fifty-two, he has been in a position to stop working for the past five years. But he enjoys teaching, and he’s waiting for family circumstances to line up with his retirement plans. No rush. When I asked about retirement-readiness, he told me that his teachers’ pension will not be his primary source of income. He has an investment portfolio that will bring in a greater sum of money. He hasn’t lived in extreme frugality over the years, but he has always consciously avoided allowing money to dribble away. He uses cash instead of plastic. And he has always saved.
When RR and his first wife split up fifteen years ago, he was not set back financially. Already mortgage-free at that time, he was able to meet all monetary obligations involved in the divorce without dipping into debt. “I had no argument with the financial arrangements,” he said. “The custody issue was the important one. My only concern was how my daughter would turn out.”
It was for his daughter that he changed his career. His former job required extensive travel, and he wanted to be around for her. I couldn’t discern to what extent RR has tried to impart financial wisdom to his daughter. “When she was in grade one,” he said, “I took her to the bank and opened up an account for her. I deposited $1,111,” he said. “At the end of grade two, it was $2,222.” And on it went through the years. So she has seen money grow, but does she have a sense of budgeting or of not overspending? I don’t know. I suspect she has absorbed her father’s money sense as much by osmosis as by annual trips to the bank. She attends a local university, but she’ll study overseas as part of her program this coming year. She has worked hard for scholarships. And she has a summer job. At the mint.
Harmful taboo against money talk
If you met RR and NRR, you would probably be struck by all that they have in common. Well respected teachers of about the same age – even about the same physical size – each possesses a quiet confidence and a rather dry air of knowing more than he lets on. You might be struck, as I was, by their value of family and love for their children. But I’m willing to bet you wouldn’t guess at the contrast between their states of financial health and readiness for retirement.
I wanted to ask RR more about how he is preparing his daughter to be economically self-sufficient. I wanted to challenge NRR with the idea that making plans of financial provision would not mean making money more important than people. And that putting limits on what he gives to his children would not mean showing them less love. But I had already asked so much in the face of a social taboo on conversations about personal finance. RR and NRR had been gracious in setting it aside. I didn’t want to push it.
I wish that people could engage in money talk with as much freedom as we discuss physical fitness. We see weight loss and weight gain all around us. We understand the difference between cardio training and weight-bearing exercise. We can identify protein and carbs – good carbs and bad. And it’s common to talk about these things – to disagree, debate, learn, and fine-tune our own attitudes and practice. But we don’t all know the basics of financial fitness. We don’t see each other’s debts or savings, and we don’t discuss incomes or budgets. It’s bad form to debate choices to borrow or spend. So we steer clear of money talk. And I think we deprive ourselves of great sources of wisdom because of it.