Planning for the future is something most of us have difficulty doing. We are psychologically wired to value the present over what may occur in the future. This helps explain many of the bad habits that afflict us such as smoking, overeating or lack of exercise. It also helps explain why so many neglect saving for tomorrow as they overspend today. We tend to ignore the implications of today’s decisions for tomorrow.
David Chilton in his best-selling book, The Wealthy Barber, has as its core theme the notion that you must “pay yourself first.” When we wait until the end of the month to invest our savings, we generally find there is little or nothing left to save. But if money is taken off the top and directly invested, we “miraculously” discover there is money left for savings.
This reality is the basis of the forced government saving plan known as the Canada Pension Plan, which theoretically ensures that we put away some of our earnings for those years when we will no longer be working. Yet, for many, what they may receive from the government is not enough and the expectation is that these payments will be augmented by personal savings, especially for the 50 per cent of Canadians who do not have an employer pension plan.
Unfortunately, far too many Canadians face a retirement at poverty levels. In a report released on Feb. 16, the Broadbent Institute noted that fewer than 20 per cent of those between 55 and 64 without a private pension plan have saved enough for retirement, and 32 per cent of those have less than $1,000 in total retirement saving! An additional 23 per cent have less than one year’s worth of financial resources needed to supplement government pensions.
Whatever the reason and whoever is responsible, this is an astonishing and frightening number. Millions of Canadians are facing a future of great economic hardship, one that will impact on all of us. It is this failure to save that lay behind the government of Ontario’s plan to introduce a provincial pension plan.
This is not a problem that affects only individuals. One of our new prime minister’s primary election promises was to run an annual deficit of some $10 billion, with the notion of balancing the books pushed off to the end of his mandate. I will let economists debate as to whether our economy can afford this, or even if the deficit should be raised further to help stimulate the economy, something the government has confirmed will be the case. However economic feasibility does not mean this is prudent.
“Who is wise?” our sages ask. “One who envisions the consequences of today’s actions, tomorrow.” Imagine if the federal government had not racked up an accumulated deficit of some $600 billion. And that’s before the hundreds of billions of provincial debt are added. While some of that may have been justified economically during times of recession, most of that debt resulted from calculated political decisions devoid of economic rationale and moral leadership.
What I find sad is the notion that government spending must always increase, with politicians debating only the extent of the increase. The idea of cutting back on spending no longer enters the political discourse. The only finance minister to do this in memory is Paul Martin, who courageously slayed an annual deficit of some $50 billion. In doing so, he set Canada on a course of great financial stability – one that allowed Canada to weather the financial crisis better than any other.
It takes a great political leader to think beyond the short term. It is the inability to think long term on both an individual and a collective level that risks creating years, perhaps generations, of financial pain for millions of people. That such should be the case in a country as rich as Canada is inexcusable.
Reach Rabbi Jay Kelman via email here.