Suggestion: let's all of us just retire as millionaires

A poll was released by BMO Harris Private Banking last Friday, suggesting people need anywhere up to $2.3 million in investable assets to retire comfortably. The report was repeated by CBC, CTV and Global television networks, each providing additional material from an expert commentator — to be recycled every 20 minutes or so, to make sure their entire audiences could be fully depressed by it.

Not depressed enough, I looked for newspaper confirmation of the poll, and found one reference in the Globe & Mail. Print news came the closest to using accurate language to describe the poll, but did not actually say the words that were needed.

So I will say them here: the poll is bogus.

This is Christmas and Thanksgiving combined for the investment industry, the time of harvest for people helping those who need to rush some savings into their RSPs before the Feb. 28 income tax deadline. (Disclosure: that includes me.)

There's nothing like spreading a little panic and despair to spur sales.

BMO contracted polling firm Pollara to discover numerical evidence that a comfortable retirement is impossible for the 90 per cent of us who will never be millionaires. Pollara accomplished this by polling some millionaires.

Here's what they found. Canadians who happen to already be rich say they expect to require a nest egg worth anywhere up to $2.3 million, to be able to retire in the lifestyle to which they had become accustomed. Fully 95 per cent of respondents thought they would achieve that.

Good for them. As for the rest of us, 69 per cent of “average” Canadians say they expect to reach the $908,000 they'll need for their golden years.

How does that compare to your savings plan? What? You're not “average?”

It turns out that only the top 10 per cent of Canadian income earners can be “average.”

Totally bogus reporting. Pollara contacted all of 305 people to conduct their poll. Their sample size is so small and so unrepresentative of the population that their poll can't even be assigned a margin of error in reporting.

But BMO and by extension the entire industry that sells retirement savings products got millions of dollars worth of TV airtime, aimed at getting you to dig deep, dig till it hurts, to buy what they're selling. Even though for almost all of you, it will be impossible to reach the bar they've set.

Right now, Canadians are saving about four per cent of disposable income into retirement plans like RSPs and Tax Free Savings Accounts. At that rate, investment counsellors are taking fees and commissions on sales totalling more than $34 billion a year, according to Statistics Canada.

Even at that, in 2011, there was something like $684 billion in unused RSP capacity, before people would reach their contribution limits. Aren't we just a nation of slackers.

The truth is, the 90 per cent of us don't need to be millionaires to be happy in retirement. And setting the bar at some mythical million is only a pitch to make us unhappy and desperate.

Google “need a million to retire” and you will get page after page of websites promising that if you buy what they're selling, retiring as a millionaire is easy.

But it's not. In fact, if you're an ordinary working Canadian, it's practically impossible.

You've seen the charts. Start investing $2,000 a year from age 25, and your savings plan will have all of $301,478 in it 40 years later. Assuming Stats Canada's annual growth rates and inflation.

They don't factor in that in the last 40 years, we've had at least three major economic crashes that wiped out the value of those accounts three times over — each requiring a decade or so to get back to where they were before each crash.

Even so, in 2010, the average family with one income earner over age 65 had a total of $63,000 in income — from retirement funds, pension plans, part-time employment, you name it. Plenty enough for a comfortable life.

A huge block of Canadians in that demographic make substantially less — and most manage quite well, thank you.

If you can't learn to live and be content on your income by the time you're 65, then I suppose you need to be a millionaire. Check out the get-rich websites, and good luck to you.

Only about a quarter of Canadian tax filers use savings plans like RSPs every year. It should be much more of us. We do need to save, and we do need the expertise of financial advisors.

What we don't need is billionaire bankers setting hopeless standards, to scare us into believing the future will be impossibly bleak unless we give them our money.