The Pension Blueprint podcast video transcript
Celine Chiovitti, Shannon Lee Simmons and Rob Carrick
0:00 Introduction
Celine: Welcome to The Pension Blueprint. I'm Celine Chiovitti, Chief Pension Officer at OMERS, and your host. For many people today, building financial security can feel overwhelming. Rising costs, social media, housing prices and an endless stream of financial advice can make it hard to know where to begin. But the good news is, you don't have to have it all figured out. Sometimes the smallest steps can make the biggest difference over time. Today I'm joined by Rob Carrick, personal finance expert and co-host of the Globe and Mail's Stress Test Podcast, and Shannon Lee Simmons, certified financial planner and personal finance columnist at CBC's Metro Morning. Together we'll cut through the noise, explore practical ways to build healthy financial habits, and talk about how small decisions today can lead to a more secure financial future. So, let's get into it.
Celine: Hello, Shannon Lee Simmons and Rob Carrick. Welcome to The Pension Blueprint.
Rob: Thank you.
Shannon: Thank you.
Celine: I am so excited to have this conversation about how we could start to think about savings in this crazy economy. I'm excited to be here with the two of you, who are two financial gurus and podcast hosts yourselves. I'd love to hear a little bit more about each of you, why you do the work that you do, and what you think about every day. And so let me start with you, Shannon.
Shannon: So I run a fee-only or advice-only financial planning firm called The New School of Finance. I've done that for a very long time.
Shannon: And I think for me, the thing that I'm most passionate about within the financial space is the financial planning. And I talk about this all the time with Rob, too. Like, I love the nitty-gritty of getting into someone's life and planning it out. So, it's never boring for me. It's always exciting, because you're actually talking about people, and every person is different.
Shannon: And you know, if you do that sort of financial planning piece, then you can really help them get to where they want to go. And there's nothing that's more satisfying than that. So for me, it's just the meeting of literally personal and finance together.
Celine: Rob?
Rob: I've been writing about personal finance for 30 years. I got into it because I was interested in it myself, and I thought my employer, the Globe and Mail, should really be writing more about it. And they agreed, and it's the best beat ever. Everything happening economically and politically ties into personal finance, and people are hungry to have it all explained to them, and that's my job.
Celine: Yeah.
2:31 Small Steps Toward Saving
Celine: Rob, maybe sticking with that, it's such a difficult economy. And I know over 30 years, you've sort of seen these cycles come and go, but it feels like it's just been so chaotic, and, you know, the cost of living is so high. And I imagine there's a lot of anxiety and overwhelm, even to just start thinking about, "How do I start?" How do we get beyond that overwhelm? What do you tell people when they come in and see you or when you're writing about this?
Rob: You know, I think one small step is all it takes to get started, and you have to pick what it's going to be. And I think the savings theme that we're talking about here is key, because I was at a conference recently, and someone from TELUS Health got up and started talking about the stress everybody's feeling and what can be done to get people to feel less stressed. And their research shows the number one thing is to have savings.
Rob: It sounds boring. It sounds like, "Can it hardly be that simple?" But that's what they found. And so I think the thing is to start saving. Put $10 away. If that's all you can afford, make it a start.
Rob: $10.
Rob: It's got to be starting somewhere.
Rob: We've got to basically take away the stigma of not having a giant amount of savings and putting a lot away. Start small. $1, $5, $10, $20, whatever you can do, that's the start. You can say, "Now I'm saving. I'm on the right track."
Celine: Do you think, Rob, is it still okay for people to sort of do that as long as they're paying thems— Like, are you saying, "Pay yourself first, put money away first," and then?
Rob: Well, yes. Paying yourself first frees you up to spend every last dime you have beyond that. I mean, that's the beauty of "pay yourself first." You've taken care of everything. You've said, "I put money away for my mortgage, and my property taxes, and my utility bills, and my X percent of my income in savings because I've calibrated with somebody like Shannon's help how much I actually do need to save on an ongoing basis." And after that, you can burn it down, enjoy, live it up. And you can do it with impunity because you know you've covered off everything.
Rob: But the problem today is that when I cover off everything, figuring out how much I have left over, the "everything" takes up most of it, if not all of it. The mortgage, and a lot of people are renegotiating their mortgages at payments now that are hundreds of dollars more because rates have increased. The amount left over for discretionary is very, very small, and it's starting to grab money away from savings and from other things, and that's leading to people taking on debt to finance their lifestyle.
4:48 Social Media and Financial Expectations
Celine: What I've been sort of thinking about and talking about— and I'd love to get your perspective on this, Shannon— is right now we're living in this Instagram world where it feels like everybody has everything. And so I have a 27-year-old daughter, and if I kind of go through and sort of see what she sees every day, you know, all of her friends are, you know, rocking these really expensive designer bags and drinking $15 coffees, and going on these fantastic trips. And so how do you reconcile the way we're perceiving people to live and the reality of, you know, this difficult economy and knowing that I, you know, ought to be putting something away? Like, how do you reconcile all of that?
Shannon: Yeah, I think that social media has created a sort of financial dysmorphia with what we think is normal. And so, and the more that we see it, the more it normalizes, right? So if you see people drinking $15 coffees and going on trips, then you think, "Well, that's just normal life. Those people are like me. And so that's what they're doing." Or, "If I'm not doing that, then I'm not really normal or I'm not like my peers."
Shannon: So I think we need to drop the stigma of keeping up with the Joneses as this shaming, petty, shallow thing. It's not. It's actually just wanting to fit in with your peers. And that's such a normal human thing to do, especially for young people. My God, my goodness. You know what I mean? I'm so grateful I didn't have this stuff when I was growing up.
Shannon: So I think that, number one, it's easy for us to sort of— it's impacting all of us, but I think for young people where there's already, you know, they're building a life and maybe they're not at the peak earnings yet and life is still so expensive. So other generations might be frustrated because it's like, "Why aren't you saving something?" But—and they're spending money on things that we think are too much. I think the motivating factor has to come from the person themselves, right? So I think that there has to be an acknowledgement that what they're seeing is not reality.
Celine: Maybe this is a question for both of you. When you see young people, what are their attitudes towards finance and sort of thinking about their financial future? Are young people interested in their future finance? Rob, maybe I'll start with you.
Rob: Yes, very interested. I think today's young people are far more in tune with finance than I ever was. I mean, you know, I was pretty clueless. I mean, one smart thing I did was not get into debt. So that sort of saved me. It kept me a kind of good foundation. But it took me a while to sort of figure out about the need to save and save for retirement and buying a house and all this stuff. But kids today are much, much more.
Rob: At the same time as they're being goaded to spend by social media, they're also very acutely aware of what they need to be doing and how expensive housing is. So we just need to equip them and empower them. They'll take it from there.
Shannon: I echo that completely. I really feel like they know more and, you know, they're online and there's a lot of financial content online that didn't exist when I was younger, and they're educating themselves. I think it can lead to some of the anxiety as well, because they know what they want to be doing, but they then also are very aware of how hard that's going to be in a way that impacts that hope. And so I think that that's where all of us need to, even that generation and anyone supporting that generation, needs to be careful there to make sure it stays in the hope.
8:04 Finding Financial Advice You Can Trust
Celine: And I want to touch on, you know, one of the things that you said, which is there's a lot of financial information out there, which I think is great. People can have access to information in a, you know, way that, you know, is free and they can consume it in a different way. It's more accessible, but it's also potentially dangerous as well, because how do you know who to trust? And so, what is your advice for just sort of, you know, narrowing it down and knowing where to go, where not to go? What are the trusted sources? How do you sort of quiet the noise around all of the advice that people are getting? What do you think, Shannon?
Shannon: Well, I think it depends on the age group, right? So if you're talking about teens, then parents need to be involved. They need to know who they're following. They're following influencers. And I've really noticed when you follow someone who's giving you financial advice, there's an immediate trust because you chose them. It's not being stuffed down your throat from a teacher or an uncle or a parent. And so I feel like that trust is both wonderful and also scary if they're following the wrong type of person.
Shannon: And it's the same red flags, even for, you know, young Canadians who are not teenagers necessarily. They're making their own financial decisions. It would be across the board. Does that person have any certifications? Do they have any experience? Like, who are they, and why are they talking about money to you? Are they promising a way to get, you know, money quickly? Or are they promising returns that seem like too good to be true? This is the same scam from time— like, snake oil salesman, right? Like, if it seems too good to be true, and they're not a certified person, and who are they being paid by? Because it's a sponsored post. Those are the three things that I would be flagging.
Celine: I love that. Who are they being paid by? Rob, what do you think?
Rob: Well, I think there's a lot of really good influencers out there who are good communicators. That's really what they are. I mean, they're just able to tell people a path to doing some basic things that are helpful. Like, I saw somebody talk about their TFSA and what's in it, and I thought, "Oh, I'd follow that advice. That's really helpful."
Rob: But my rule is, if they're selling something, don't be a buyer. So, I mean, there's a lot of people who are selling stock trading strategies. I mean, it's a bull market right now. And everybody's excited about investing. And there's a lot of predators out there trying to sell products. So money should never be changing hands.
Rob: And I think you've got to cross-check. You know what? Have your influencer that you follow, for sure, but cross-check. Check three other influencers and some people who you don't normally listen to. And find out what the alternative views are.
Rob: I mean, I saw a young—looked like a millennial-aged influencer talking about the Canada Pension Plan and telling all his listeners that, well, when you retire many decades down the road, you should take that CPP at age 60 because you get all this money and then you can spend it and add to your lifestyle. I think that's stupid advice. And that's the kind of advice that I would love to see people cross-check. Get another view.
10:52 Saving in the Gig Economy
Celine: I want to talk a little bit about sort of a new way of work. And so we are sort of approaching this, you know, economy that is— we're seeing more mobile work, more of a gig economy, if you will. People are getting jobs. They're not necessarily full-time jobs. Maybe they're contract or they're doing a few jobs. How do you save in that environment? Like, much less traditional than the path that we've had in the past. I certainly, you know, started off my career in public sector where you sort of were expected to sort of join an organization, stay there for you know, 30 years or so, collect a pension. That's not what we're seeing anymore. How do you go about saving in that environment? Shannon, what do you think?
Shannon: Yeah, I think this is tricky across the board for people. There's a rise in the gig economy, right? Not even just for young people.
Shannon: Whenever I see somebody who's sort of contract to contract or freelancing or something like that, immediately, the dollar monthly contributions just out the window. Like, let's just park that for me because it's really hard to do that if you're kind of coming up and down with money.
Shannon: So I use annual targets or percentages, right? So every time you get paid, you put a certain percentage aside for savings so that if it's small, you're only putting a little bit aside. if it's a larger amount of money that's coming to you from a contract payment or from an invoice or something like that, it's a bigger portion.
Shannon: And then we use sort of flags or, markers over time of annual targets, like, "Okay, in this calendar year, we were aiming to save this. Did that happen?" And it kind of takes the heat off of the short micro timeline for per paycheck or per cashed cheque or however it is that someone's getting paid.
Shannon: So I think that that a little bit of a longer stretch with an annual target and doing percentages can really be a helpful mechanism if your cash flow is kind of variable.
Celine: What do you think about the side hustle? Should people be, you know, especially for young people, should we be doing a side hustle? Should we be thinking in that way?
Shannon: I mean, yeah, I think so. I mean, especially for young people, it's really expensive. Life is so expensive.
Shannon: And I think this is, again, advice for whatever our new economy looks like. Having diversified income helps everybody. It's a risk diversification. If you have an income disruption, if you get laid off, if you're contract to contract and you have something else to fall back on that's different than this and a skill, then you can sleep more soundly at night knowing that you can always lean on that skill and you know how to do it.
Shannon: Plus, if you've got a job and you've got the little side hustle, then you can use that money for the more fun stuff that we're talking about that sometimes can't always happen.
Celine: Yeah. Do you agree with that, Rob?
Rob: I do. I mean, I really like the idea of diversifying income because I think, you know, risk diversification in any facet, you know, addresses risk.
Rob: But I would also encourage people to think about their front hustle, their main job, and building up their credentials there. And, you know, in today's economy, you need to prove your essentialness to your employer. Maybe a side hustle is one option, but maybe I should be taking a course or building my certification or somehow making myself more essential and sort of building my link to the next stage of my career. And that could be a good investment, too.
14:04 Pensions and Planning for Retirement
Celine: Let's talk a little bit about retirement. Obviously, we are a, you know, OMERS is a defined benefit pension plan. We're out there for public sector employees. I think it's really interesting. We opened up our plan voluntarily to non-full-time employees. And so we basically said, "You don't have to join the plan, but you can join the plan," back in 2023. And we've had an overwhelming number of individuals who have—over 150,000 joined. They tend to be younger.
Celine: How should young people be thinking about their retirement that feels so far in the future? Should they be saving? Should they be considering a pension plan? What if that's not on the table? What are some of the things they can be doing? Rob, I'm going to start with you.
Rob: Well, a pension plan is fantastic. And I'm in one, and I'm drawing on it, and I give it a big thumbs up. So DB plans forever.
Rob: But I think that young people don't— they believe they're unicorns, DB plans. And they think, "I'll never get one." And I would like to see the DB plan world go out there and say, "You might." And if you can, grab it up, because here's what it is, and it's money for life. And I think we really need to sell the idea of steady contributions towards retirement, whether it's through a DB plan or a DC plan or your own personal savings at every stage of life.
Rob: But at the same time, we have to be realistic that there probably isn't any money at certain points. But I think we need to make people consistently aware that this is looming, and you're going to be retiring, and you need to be preparing. And at every decade of your life, you need to have a strategy.
Rob: My 20s strategy: maybe, no, house first. 30s strategy might be, "Okay, get my mortgage squared away, learn to pay a mortgage and start to carve off some for retirement." 40s and 50s, you're dropping the hammer and you're saving hard. And then maybe in your 60s, you're still saving because you're going to retire at 70.
Rob: I think we need to introduce young people to the idea that you're going to be retiring later than your parents probably did. And it's okay, because you're going to live to 95.
Celine: Yeah, I love that. Have a strategy for every decade of your life. That's brilliant. Shannon, how about you?
Shannon: I echo that completely. The sentiment of "It's too hard to do the house or the down payment and the stuff that you need to do in your 20s and 30s, especially if you're contending with debt, and save for retirement," right? But, as soon as you're in your 40s, I think it should be on your radar.
Shannon: And I can say, I've had a lot of more 40-year-olds in my office doing retirement planning than ever before, which I think is a very positive thing.
Shannon: As far as the pension plan, I echo Rob's sentiment that sometimes there's this feeling of "It's a unicorn," right? Like, "Oh, it would never happen to me." And I'm like, "they still can." It's just getting more and more rare.
Shannon: I've even seen people put DB plans on their dating profile. It's like, "I'm in a DB plan." And it's like, "That's pretty cool."
Celine: I need to use that as part of our communication strategy.
17:00 Balancing Debt and Savings
Celine: So what would you—Rob, if I'm, you know, you've got—let's assume you've got a young person just starting out in their career. So maybe they've got some credit card debt. They've got some student debt. They want to, you know, save to purchase a home. They're starting to think about their future. What would you tell them to tackle first? how would you sort of go about advising them?
Rob: I'm a big believer in getting the debt cleared out first, because when you clear debt, you increase your cash flow. I mean, the debt payments can suddenly become your house— saving down payment or building your emergency fund. I'm not saying it has to be 100 cents on the dollar debt repayment, but I think that that's really when your life begins is when you get debt-free and all of a sudden the handcuffs get taken off and you can really dig into what you want to do.
Rob: Which is like, but I think having an emergency fund is important at any age. We're talking about the gig economy. That sort of doubles down on the importance of having some cash, even a few hundred dollars just to cover a car repair or something, so that you don't have to put it on your credit card and then add to your debt.
Celine: Yeah, Shannon, how about you? Let's assume this is now mid-career. I'm in my forties.
Shannon: Mmm, different. Totally different, right? Because we're in that sort of "Ooh, long-term is, now on the horizon," but I still am a big proponent of consumer debt first. So not including necessarily mortgage in that. I'm not including necessarily even a home equity line of credit, depending on the situation. But, if you've got credit cards and an unsecured line of credit or maybe even a ridiculous car payment on a car loan, we could look at those as somewhere to tackle first for the reasons that Rob said, which is freeing up the cash flow.
Shannon: But I've also noticed, there's a big emotional win to paying off debt that I don't know that we give a lot of credit to. So a lot of times I'll say, "This is part of your retirement plan." You paying down this debt is improving your net worth. So as a financial planner, I'm thrilled about it, but it doesn't feel as good. And that's because one feels like you're paying off a financial hangover, and the other one is building a future. But that's perspective. It's not that it's, not logical. It's our perspective around it.
Shannon: But I do find that when we have debt, if we feel like we're putting our life on hold until we do that at that age. So I often will try to get people to do it, because I think it's the best bang for your buck. But I will also back off and be like, "Let's do both things sustainably over a longer period of time," because that's an emotional win and it's a lot more motivating.
Celine: I think this is a whole other episode, but I think there's so much emotion and shame around money and talking about money and debt. And I think that you've touched on a little bit about that. It is—a lot of it is what makes you feel better and what— like, what steps can you take to make you sort of feel better in this space?
19:39 The Findustry Podcast and Final Takeaways
Celine: I wanted to talk about your new podcast, the Findustry podcast. You're doing it together. Tell me about it. What is it? How did it come to be and how can we listen to it?
Shannon: Yeah, so it's a podcast for financial advisors and their clients and people who are interested in the financial industry.
Speaker unverified: Right.
Shannon: So this is what it's about: trying to make it a better space.
Shannon: Rob and I have known each other for years and we always have these great conversations, and sometime last fall, I was like, "This is a podcast episode right here. We should do this." And then it was born. I don't know, Rob. You want to add to that?
Rob: Well, I agree. We just thought we're having the kind of conversations on financial topics from Shannon's perspective, working with clients, long history of doing that, very progressive ideas about how to be a financial planner and my experience of interfacing between the financial industry and its clientele. Both have been filling my ears for 30 years, and it's really enjoyable for us to just work our way through them.
Celine: Okay, my very final last question to both of you. I want you to just think about everything that you've told us today and all of the wisdom that you have. What is one takeaway that our listeners can get from each of you about their own finances and an action that they can take? Rob, I'm going to start with you.
Rob: Do something. Pick something to improve in your personal finances and take a micro step towards that goal. There's boxes out there. You need to pick one and put a tick in it.
Celine: Wonderful. Do something. Thank you, Rob. Shannon?
Shannon: Yeah, I would say similarly, just the habit of savings trumps a dollar amount. I think just the habit of savings over the long run is the most important gift that any of us have in personal finance.
Celine: Thank you.
Celine: I was so excited to have this conversation, and neither of you disappointed. Appreciate you taking the time, and I look forward to listening to the Findustry podcast. I am taking a vacation in a few weeks, and so you're both coming with me. So, thank you.