Pension/Retirement Plans for Lawyers

[BlockedQuebecois]

Doubling your housing expenses unnecessarily when doing so would seriously affect your ability to save and emptying your emergency fund (or funds that could have been used as an emergency fund) in order to pay CMHC upfront are the two most obvious ones. 

Look, you make an income that easily puts you in the top decile of Canadians. Your household income is likely in the top vigintile. In the absence of exceptional circumstances that are obviously not present in your case, any amount of financial hardship is entirely the result of choices you have made. 

I get that that’s not a particularly pleasant thing to hear, but it’s delusional to think anything else. 

Edited May 3, 2023 by BlockedQuebecois

[hiccups]

There are multiple people who've commented above, stating that a 2 bedroom is a luxury.

I agree it's expensive, and that I am doing better finacially than other Canadians who not make as much as we do in the legal profession. 

It doesn't make it easier to make a living as a junior lawyer - For the older lawyers who have a penthouse or a home, if you bought a home before COVID - we simply aren't living in the same reality.  

Others have pointed out that I can have a roommates or live outside of downtown core: Firstly, I don't know how many married people do that. By the time most people graduate law school, most of us aren't 22 years old bachelors living with 4 roommates anymore.  And yes I acknowledge that living in downtown is my personal choice and I'm paying a premium, but I did look around before making that decision, and unless I was ready to make a 45 minute commute each way, there was a very neglible difference betweem rent downtown vs. uptown: the difference was between $2600 vs. $2250. It really isn't that much of savings year to year. Keep in mind a young couple needs around $150k for a down payment - and even then you're probably buying an older building. 

If, in your opinion, the only financially reasonable decision that young law grads should make is that we should be living with roommates, outside downtown, taking the commute, working long hours, trying to pay off debt, save for $150k in after tax savings regardless of how long it takes (meanwhile condo prices contiune to increase faster than you can save) - can you at least answer if you've lived like that yourself? 

 

 

[Mountebank]

3 minutes ago, hiccups said:

It doesn't make it easier to make a living as a junior lawyer - For the older lawyers who have a penthouse or a home, if you bought a home before COVID - we simply aren't living in the same reality.  

I think you're dead wrong on this point.

Honestly, I'm barely older than you. Your struggles are the same as mine are/were (and, I expect, the older lawyers too). Yes, prices have gone up. But so have wages. Yes, I was in the market pre-Covid. But, my base annual salary as a fresh call was something like $68k. Is that what you're making? Do you have a family to support?

Your struggles are real and your stresses/anxieties legitimate. But, all I'm saying is, they're not at all unique. And you're going to be alright.

[hiccups]

20 minutes ago, BlockedQuebecois said:

Doubling your housing expenses unnecessarily when doing so would seriously affect your ability to save and emptying your emergency fund (or funds that could have been used as an emergency fund) in order to pay CMHC upfront are the two most obvious ones. 

It's always easier for someone to make judgement on the internet. For anyone reading this thread, I just want to say to the new grads and not to BlockedQuebecois that the decisions I made wasn't decisions that I made lightly. There were made for the following reasons: 

• At first I was also trying to save for 20% down payment instead of CHMC insurance. My rent at the time($2600) took up a significant portion of my after tax income. Whatever was left over, I used to pay off my undergrad debt ($30k) which I was proud to have been able to do in the 1 year post articling.  
• Throughout law school, my partner and I saved around $30k a year. So we had around 120k in savings. But during COVID the investments did take a hit and we were left with $100k.
• This meant we needed around $50k more to have 20% downpayment. But we just had no more money left to save month to month! I think we ususally had maybe $800 left, after paying debt ($2500 a month) and rent ($2600 a month) and my partner paying our other living expenses. 
• It would have taken us longer to save up $50k than to simply pay CHMC so that we can purchase a condo faster, so we just made the best decision we could with the information we had. 

Just realized they also mentioned it was a mistake on my part to empty my emergency fund - well the levy was unancipated and double what was expected by the enginner reports. Inevitable we'll have to pay it.

Edited May 3, 2023 by hiccups

[BlockedQuebecois]

I’m not really sure why you would ask me what poor decisions you made if you were then going to say “It’s always easier for someone to make judgment on the internet”. You literally asked for my judgment!

Anyways, the “reasons” you listed are not why you made those decisions. You made those decisions because you were desperate to own a condo in downtown Toronto, and so you did whatever you needed to do in order to achieve that goal as quickly as possible. 

It’s fine to do that. Lots of people around our year of call make similar decisions. But you need to be honest with yourself about how you came to be in the situation you are in. Unfortunately, your posts in this thread seem to show you: (I) think everyone doing better financially than you are had it easier than you; and (ii) act as though you have no agency in relation to your own financial well-being. In short, you’re lying to yourself in order to avoid taking responsibility for your choices. 

I’ll repeat what I said above: any amount of financial hardship is entirely the result of choices you have made. If your sincerely held belief is anything except that, you’re delusional. 

[Whisk3yjack]

58 minutes ago, hiccups said:

There are multiple people who've commented above, stating that a 2 bedroom is a luxury.

I agree it's expensive, and that I am doing better finacially than other Canadians who not make as much as we do in the legal profession. 

It doesn't make it easier to make a living as a junior lawyer - For the older lawyers who have a penthouse or a home, if you bought a home before COVID - we simply aren't living in the same reality.  

Others have pointed out that I can have a roommates or live outside of downtown core: Firstly, I don't know how many married people do that. By the time most people graduate law school, most of us aren't 22 years old bachelors living with 4 roommates anymore.  And yes I acknowledge that living in downtown is my personal choice and I'm paying a premium, but I did look around before making that decision, and unless I was ready to make a 45 minute commute each way, there was a very neglible difference betweem rent downtown vs. uptown: the difference was between $2600 vs. $2250. It really isn't that much of savings year to year. Keep in mind a young couple needs around $150k for a down payment - and even then you're probably buying an older building. 

If, in your opinion, the only financially reasonable decision that young law grads should make is that we should be living with roommates, outside downtown, taking the commute, working long hours, trying to pay off debt, save for $150k in after tax savings regardless of how long it takes (meanwhile condo prices contiune to increase faster than you can save) - can you at least answer if you've lived like that yourself? 

 

Yes but the difference between $2,600 and $5,000 is certainly not negligible, especially when you could have just found a larger apartment for $3,000 and presumably you would be saving $2,000 a year now

Edited May 3, 2023 by Whisk3yjack

[Mal]

22 minutes ago, Mountebank said:

I think you're dead wrong on this point.

Honestly, I'm barely older than you. Your struggles are the same as mine are/were (and, I expect, the older lawyers too). Yes, prices have gone up. But so have wages. Yes, I was in the market pre-Covid. But, my base annual salary as a fresh call was something like $68k. Is that what you're making? Do you have a family to support?

Your struggles are real and your stresses/anxieties legitimate. But, all I'm saying is, they're not at all unique. And you're going to be alright.

I mean, pre-covid is a bit of a blip, but the bigger picture of home prices outpacing wages is simply factually accurate. Not only that but the cost of schooling itself has rapidly outpaced even home prices. This means that new lawyers are often squeezed from both directions, past costs, and future costs.

Arguing that older lawyers were in the same financial reality because they still had struggles is deceptive at best. Was the covid price increase really that meaningful in the big scheme of things? Probably not, a windfall of ~15-25% of your home value is nice but generally not life-altering, particularly if you don't plan on downsizing.

But my parents' generation was buying big houses in Vancouver on blue-collar salaries, today white-collar salaries are buying condos. 

@hiccups  Being house poor when you first enter the market is normal though. Given transaction costs, it is almost always better to grow into a place and stay longer than buy too small. One of the big advantages of home ownership is fixing your housing costs... which you don't benefit from until housing costs increase.

Beyond that, the fact of the matter is you are saving money it is just going into equity in your house as you pay down your mortgage rather than to a separate account. 

 

[epeeist]

Just picking on "... unless I was ready to make a 45 minute commute each way...". [emphasis added]

Um, many people commute that long or longer. I've known many lawyers to commute that long or longer. I commute longer than that (albeit for non-lawyer job). I was on a call with a lawyer last week who had to leave their office before the call was ended because of their commute they had to leave to catch a train (i.e. not a short commute).

I have definite sympathy for many things including surprise levy. I totally understand wanting to live in downtown Toronto rather than elsewhere and wanting a larger condo. But a 45 minute commute each way is not terrible, and avoiding it is much more a choice and a want, not a need.

[Mountebank]

31 minutes ago, Mal said:

Arguing that older lawyers were in the same financial reality because they still had struggles is deceptive at best. Was the covid price increase really that meaningful in the big scheme of things? Probably not, a windfall of ~15-25% of your home value is nice but generally not life-altering, particularly if you don't plan on downsizing.

I'm not really trying to get into an inter-generational argument (although, it still seems like the poster and I are in the same generation...). My point is that I get the poster has a lot of stress about this and I'm trying to ease that stress a bit by assuring him that he's going to be OK in the end (i.e. despite how fucked he is).

[123]

1 hour ago, BlockedQuebecois said:

your posts in this thread seem to show you: (I) think everyone doing better financially than you are had it easier than you

I'm surprised by how often high-earning lawyers believe that they are objectively financially struggling. There have been multiple threads about this since the new forum started. And I've heard it offline, too. I guess it depends on your comparator group? Like, I suppose people at major law firms are surrounded by affluent colleagues and clients, are probably living in fancy condos, etc, and are looking at how well those people are doing. I guess that's how it happens?

IDK, I'm probably going to sound like a debbie downer, reminding people about child poverty in Africa. But I feel like anyone earning low six figures and owning property is doing pretty well. I earn less than that, and don't own a home. Admittedly, I don't have children. But there are financial stresses. Even on my LAO practice/poverty law billings, I have more resources and financial ability to deal with unexpected expenses than almost everyone else alive. All my basic needs are met. Unless I get disbarred or develop a major disability, my future is secure. I will likely be middle-class to upper middle class until I die.

I don't if my expectations are lower, but it's always odd to see people who have more than I do so distressed by their financial circumstances.

[OnlyResident]

1 hour ago, Whisk3yjack said:

Yes but the difference between $2,600 and $5,000 is certainly not negligible, especially when you could have just found a larger apartment for $3,000 and presumably you would be saving $2,000 a year now

Not to mention that if you look at their mortgage payment and expenses, I highly doubt they are getting 2,000/month in equity (paying their principal). All the while being in a down market for condos. Yikes. Still better off than most tho. 

[hiccups]

2 hours ago, Mountebank said:

Your struggles are real and your stresses/anxieties legitimate. But, all I'm saying is, they're not at all unique. And you're going to be alright.

Thank you for this comment. Somewhere in the conversation I feel like perhaps what I wanted to convey was lost.  I want to emphasize that I realize I'm lucky that I can own a home, in downtown. I understand it inevitably cost more, and that was the choice I made. The only reason I made this tread in the first place was just a place to discuss financial planning for lawyers, and I'm not here to complain about how tough it's been. I'm also not trying to prove that my situation is wrose than others or anything of the sort. 

If anyone disagrees with my financial choises (for example my comment about not wanting the 45 minute commute), that's fine too. I wasn't ready to take on such a long journey when I was already struggling to adjust to working full time as an articling student, plus I did want to have some time set aside to be a good partner. But obviously there are others who can handle the pressure, in different family situations than me, as well as those who are less fortunate than me who won't even have the luxury of choice. 

3 hours ago, Mountebank said:

A 2 bedroom condo in downtown Toronto is, it seems to me, self-evidently a luxury.

But I completely get the financial concern/anxiety/stress that new grads/articling students are going through. I went through it too (and I expect a lot of lawyers of prior generations did too). You are making the least money you ever will in your career and are likely carrying the highest debt load you ever will. But, in a few years, it's very likely that you're going to be just fine. Until then, just keep your head down, make some money, and of course always be knowledgeable about your means and live within them.

What you described here is the problem I experienced. I get that "house poor is not really poor". I don't disagree. I was just describing to others what my experience as a junior lawyer is like, and yea I am going through the financial concern and stress that comes with that and it'll probably get better. But it hasn't been easy is all I'm trying to say.

 

2 hours ago, BlockedQuebecois said:

Anyways, the “reasons” you listed are not why you made those decisions. You made those decisions because you were desperate to own a condo in downtown Toronto, and so you did whatever you needed to do in order to achieve that goal as quickly as possible. 

You're just wrong... But if you don't believe it, that's fine. I'm not trying to convince you. 

28 minutes ago, OnlyResident said:

Not to mention that if you look at their mortgage payment and expenses, I highly doubt they are getting 2,000/month in equity (paying their principal). All the while being in a down market for condos. Yikes. Still better off than most tho. 

If you disagree then just don't buy a condo. Home ownership isn't for everyone. It's just a personal choice. 

[Mountebank]

10 minutes ago, hiccups said:

...

FWIW, I would also pay a premium to not have to commute (the commute robs you of time, whereas the premium is only money) and a special levy sounds like a legitimate use of your emergency fund. A new roof is, like, the go-to example people point to when they talk about the reasons for an emergency fund. So, if the money you would have been putting into the emergency fund is going into this, that seems completely fine. After it's paid, you'll get back to slowly rebuilding that fund and move on to the next emergency.

Also, if it makes you feel better about the mortgage insurance premium, higher ratio mortgages do tend to attract slightly lower interest rates these days. Once it goes through underwriting and the lender prepares its commitment, it is normal for the lender to give a slightly lower rate if the down payment is either under 20% or above 35%. The savings to you would not necessarily have been equivalent to the insurance premium, but you still probably didn't end up being out $20k net when you consider that a lower rate was probably baked-in.

[hiccups]

6 minutes ago, Mountebank said:

FWIW, I would also pay a premium to not have to commute (the commute robs you of time, whereas the premium is only money) and a special levy sounds like a legitimate use of your emergency fund. A new roof is, like, the go-to example people point to when they talk about the reasons for an emergency fund. So, if the money you would have been putting into the emergency fund is going into this, that seems completely fine. After it's paid, you'll get back to slowly rebuilding that fund and move on to the next emergency.

Also, if it makes you feel better about the mortgage insurance premium, higher ratio mortgages do tend to attract slightly lower interest rates these days. Once it goes through underwriting and the lender prepares its commitment, it is normal for the lender to give a slightly lower rate if the down payment is either under 20% or above 35%. The savings to you would not necessarily have been equivalent to the insurance premium, but you still probably didn't end up being out $20k net when you consider that a lower rate was probably baked-in.

Yes, it was a lower rate for the mortgage as a result of the insurance premium, which was nice!

[BlockedQuebecois]

11 minutes ago, Mountebank said:

FWIW, I would also pay a premium to not have to commute (the commute robs you of time, whereas the premium is only money) and a special levy sounds like a legitimate use of your emergency fund. A new roof is, like, the go-to example people point to when they talk about the reasons for an emergency fund. So, if the money you would have been putting into the emergency fund is going into this, that seems completely fine. After it's paid, you'll get back to slowly rebuilding that fund and move on to the next emergency.

Not to beat a dead horse, but my critique was about using their emergency fund to pay CMHC up front rather than blending it into the mortgage. Hiccups then conflated the issues for some reason. Nobody has suggested a new roof is not an appropriate use of an emergency fund. 

[hiccups]

15 minutes ago, BlockedQuebecois said:

Not to beat a dead horse, but my critique was about using their emergency fund to pay CMHC up front rather than blending it into the mortgage. Hiccups then conflated the issues for some reason. Nobody has suggested a new roof is not an appropriate use of an emergency fund. 

It's not a choice. CHMC is front loaded and paid first when you make your first months of mortgage payments.  Your critique is incorrect as I never once said I used my emergency fund to pay CMHC. I said I used it when a sudden special levy came up.  

You seem to really want to make it a point to prove that my financial circumstance is entirely of my own doing (and fault). I agree I am responsible for the choices I make. I disagree with you trying to characterize it as irresponsible decisions. 

What is it that you found so irresponsible in my choices? Is it the student debt? Or me ultimately deciding to rent downtown for less than 2 years while I tried to get accustomed to the job? Even the purchase of the condo was a decision I made after calculating the numbers and taking into account of how much my rent is.  I would add that the condo I rented, when I moved out, was rented to another young couple for $3200, so things have only been getting more expensive in the city. So when you say " any amount of financial hardship is entirely the result of choices you have made" you obviously haven't considered what alternatives are available to young grads like me. 

[PzabbytheLawyer]

I think we can acknowledge that:

Bay Street or similar junior lawyers tend to be some of the highest payed people of their vintage; and

They also tend to carry a lot of debt; and

They also tend to be aggressively life planning because of how much school they've been in; and

They can make financial mistakes which, in highly unpredictable markets, causes them severe stress; and

We are currently in such a market and period; and finally

Stress is normal. Privilege and golden handcuffs are also normal.

 

[Yogurt Baron]

When I was the age most articling students are, I was living on $5,000 a year, precariously housed, eating a small meal every second day. It got better from there, but not much better and not for fifteen years. Now I'm comfortably middle class, with a roof over my head, and I feel as rich as shit, making a third of what the average lawyer makes. I take Blocked's point to be that if you own a home in Toronto and you don't think you're rich as shit, that's a you problem.

Maybe that isn't Blocked's point. But it's mine, anyway.

[hiccups]

2 minutes ago, Yogurt Baron said:

I take Blocked's point to be that if you own a home in Toronto and you don't think you're rich as shit, that's a you problem.

To be able to afford a 5% down payment with a 95% mortgage for a 2 bedroom condo is not not rich as shit. But I guess we can agree to disagree.