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Retirement Is Dead

macleans.ca

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Re: Retirement Is Dead

#11

Post by laurencerowe »

> The reserve chute is the Canada Pension Plan. The CPP was originally intended to cover one-third of Canadians’ retirement income, but these days it’s more akin to what you might get from a part-time job: a sheet too small for most beds. The maximum CPP payout comes to about $18,000 per year; the average is just over $11,000.

Isn't the reserve chute the Old Age Security pension along with the Guaranteed Income Supplement?

Assuming a single person with no other income, they would add $11,378 to the maximum CPP payout of $18,092 for a total of $29,470 or $14,918 to the average CPP payout of $11,000 for at total of $25,918. (Unlike the CPP, OAS is clawed back if you have other income over a certain amount.)

Retiring at 70 would raise the maximum CPP to $25,690 and OAS to $12,272 for a total of $37,962.

https://www.canada.ca/en/services/benefits/publicpensions/ol...

Not a huge amount but substantially more. Renters also seem eligible for other help at these income levels which might amount to $5,000 per year in BC.

https://ageplacehub.ca/blog/affordable-senior-housing-canada...

(I am not Canadian but did try and look into pensions when I thought about moving there.)

Re: Retirement Is Dead

#12

Post by palemoonsinking »

heathrow83829 wrote: post #6

I find it hard to believe the author could not figure out personal finance. He's certainly smart enough with that economics degree and those epic writing skills. If we're just looking at how to improve the individual: The issue is lack of self discipline. as he said, it's just too easy to spend. The solution: more social security, in effect a forced retirement plan. Instead of 7.5%, make it 10% or even 15%, 20%, what…

I'm not a fan of housing as an investment but ignoring that it is an investment is a social form similar to tax evasion.

This author owns there own home and even if they have an infinite length mortgage they are likely to end up with new principal to do a reverse mortgage on and similar investment return to someone buying on margin with no interest. It's basically just moving the elitist pension system from the job to the housing.

The author ending up at an inheritance of no value is not all that different than someone leaving only the house if houses weren't an investment and they had a pension to death. The house acted as a vehicle to give them all the investment structure they lacked. The problem with this situation is the people who are excluded from home ownership and paying rents.

Re: Retirement Is Dead

#13

Post by MrDresden »

heathrow83829 wrote: post #6

I find it hard to believe the author could not figure out personal finance. He's certainly smart enough with that economics degree and those epic writing skills. If we're just looking at how to improve the individual: The issue is lack of self discipline. as he said, it's just too easy to spend. The solution: more social security, in effect a forced retirement plan. Instead of 7.5%, make it 10% or even 15%, 20%, what…

I pay forced (happy with it) 11%, add extra and get extra from employer up to a total of 15%.

Used to be in a union (in a sector I don't work in anymore) that bumped that up to 18%.

7.5% is woefully little.

Re: Retirement Is Dead

#14

Post by freetanga »

I am a Gen X. My grandmother, who was born in 1906 and passed on in 1994, worked at home, cooked, cleaned for most of her life. He had 3-4 dresses in her closet, and whenever I visited she gave some money to go buy a small bottle of Sprite for lunch.

My parents define their retirement as cruises, traveling, etc. My mother has 3 closets full of clothes, the latest iPhone and iPad to check Facebook…

Both generations worked very hard, and I don’t want to criticize them. I keep telling my father and mother that they should burn and enjoy all their money while they can.

My point is not to criticize a generation, but to try to contextualize that a comfortable wealthy retirement is relatively new in our social concept, and so far it seems more as a one-off trick that only baby boomers pulled after the huge economic growth post 70s, than a sustainable economic pattern.

Re: Retirement Is Dead

#15

Post by cagey »

ozim wrote: post #9
Rooster61 wrote: post #4

I've never understood the logic behind the idea of a "nest egg". Years ago, perhaps, it might not have been clear to the average person that money has to grow over time to stave off inflation, but that information has been widely available for decades and many people still don't put money into any kind of investment. Not judging anyone. Circumstances are different for each and every person, and financial literacy isn…

It gets worse when you read financial "social media" people repeating BS like "high yield savings account" there is no such thing as long as I am alive, it is something from maybe 80's or 90's or even earlier. My cousin had the idea of "just put some money in savings account each month and never check it" - that's exactly super outdated advice or a crooked one where someone doesn't know anything about ETFs and heard…

[Speaking as a US citizen]

> ... BS like "high yield savings account" there is no such thing as long as I am alive ...

HYSA are in 2026 readily available.

> ... well "money market accounts" seem better and kind of like of HYSA, but the hell those are not really that easily available.

Likewise readily available: open a free brokerage (or "cash management") account at Fidelity.com online (it is easy and acts similar to a bank account: your paycheck can be direct deposited there, it offers a billpay service, you can use it for electronic transfers, and outgoing wire transfers are free; no minimum balance and no monthly fees), cash by default goes into their SPAXX money market account (its 0.42% ER (Expense Ratio) is higher than some, but its 3.33% yield beats most savings/credit union savings rates; EX: Ally bank is yielding 3.00% these days). If you want more of the yield to go into your pocket you can buy (with no transaction fee) a ETF like Vanguard's VBIL which invests only in short duration US Treasury bills (now yielding 3.63% w/ER 0.06%). And if you're up for slightly higher effort, you can buy T-Bills directly at Fidelity with auto reinvestment, at no extra cost.

The preceding (including HYSA) are all near-zero risk, and as a consequence, do NOT pay truly "high" yields (which I think was your real point), they just pay yields that are at the upper end of 'near-zero risk'. These are NOT where you invest for long-term gain/appreciation. For the latter, conventional wisdom says: invest in the stock market, where the risk is much higher, but the historical long-term return is too. ETF's make this easy and efficient. One candidate for "fire and forget": VTI, Vanguard's Total [US] Stock Market Index ETF (as before, with an easy to open account at Fidelity, you can trade these for almost no cost; Fidelity has many competitors, I am merely a happy customer of theirs).

Re: Retirement Is Dead

#16

Post by Danox »

Rooster61 wrote: post #4

I've never understood the logic behind the idea of a "nest egg". Years ago, perhaps, it might not have been clear to the average person that money has to grow over time to stave off inflation, but that information has been widely available for decades and many people still don't put money into any kind of investment. Not judging anyone. Circumstances are different for each and every person, and financial literacy isn…

Humans in general are short-term thinkers if you can put it off until tomorrow most will elect to do so. Personal finance classes should be required classes the first year of high school and all the way through the senior year.

Most want the instant lottery win when you tell them they have to save and live within their means over time, eyes just glaze over and it doesn’t happen.

I also have given up trying to advise people to do differently in my life. They won’t learn/listen until they get to 50-55 before they start to realize that time has run out.

Unless you were born with a silver spoon, the treadmill starts when you turn 18. when you are young compounding interest/stock splits/dividends/blue chip stocks/401k/unions are your friend.

I was never in a Union, but in my profession, the pipe fitters who worked in the field at my company were, and their healthcare and their pensions, and their savings at the end of life were very very good.

It’s too bad. A large part of the country are anti-Union in fact, many people in the union were very conservative and didn’t quite realize how lucky they were to be in a Union.

Re: Retirement Is Dead

#17

Post by throw0101d »

There is a lot of misguided thinking about retirement, as shown by things like "Canadian couples say they need $1.7M to retire. Are you on track?":

* https://globalnews.ca/news/11705204/canadian-couples-retirem...

This survey is released by a bank that makes money from AUM fees for things like mutual funds. It is in their interest to think you need more, but most folks do not need as much as they believe. The study tends to be released during "RRSP season", which is close to the last time Canadians are able to put in money into their retirement saving account (RRSP ~ 401(k)) for the current tax year (and get a taxable income reduction).

This (flat) fee-only advisor goes over some of the preconceptions that have:

* https://www.youtube.com/watch?v=5LmiW4FgAL8

He's put out videos about what you can expect if you have 'only' CA$ 250k saved:

* https://www.youtube.com/watch?v=QLQk6X3NCPs (single)

* https://www.youtube.com/watch?v=_9-8CIvphfI (couple)

* https://www.youtube.com/watch?v=EkyvLe66G94 (couple)

Or even a single at 65 with $125k:

* https://www.youtube.com/watch?v=MEBjIFg08lM

Re: Retirement Is Dead

#18

Post by Danox »

pllbnk wrote: post #7
Rooster61 wrote: post #4

I've never understood the logic behind the idea of a "nest egg". Years ago, perhaps, it might not have been clear to the average person that money has to grow over time to stave off inflation, but that information has been widely available for decades and many people still don't put money into any kind of investment. Not judging anyone. Circumstances are different for each and every person, and financial literacy isn…

If everybody is rich, then no one is rich. In other words, if everyone has a lot of money, then the prices will be high enough to suck this money out of everyone. America, and now much of the Western world, runs on debt and taking on debt is being instilled from the early years, so no wonder why people can't save when their income is spent on interest payments. We know empirically that lower wealth inequality works b…

A tale of two cities both had access to the North Sea oil wealth one spent like a drunken sailor, the other side set up a sovereign fund guess who was doing better today. (and no population size has nothing to do with doing the right thing). Britain has a ton of excuses after 60 years.

And the point is to save and live within your means you can’t sit around and worry about what if the right thing to do is to save and live within your means you don’t sit around and worry about if everybody’s rich then no one‘s rich that sounds like an excuse not to do anything.

Many people who I worked with always had an excuse there’s no point saving or living within your means because inflation is gonna kill you or you’re going to be taxed.

Re: Retirement Is Dead

#19

Post by throw0101d »

laurencerowe wrote: post #11

> The reserve chute is the Canada Pension Plan. The CPP was originally intended to cover one-third of Canadians’ retirement income, but these days it’s more akin to what you might get from a part-time job: a sheet too small for most beds. The maximum CPP payout comes to about $18,000 per year; the average is just over $11,000. Isn't the reserve chute the Old Age Security pension along with the Guaranteed Income Suppl…

> Isn't the reserve chute the Old Age Security pension along with the Guaranteed Income Supplement?

CPP benefits are proportional to how much you pay in over your life. OAS is proportional to how long you've lived in Canada and thus 'contributed to society at large'; once your income is CAD >95k/indiviudal OAS starts getting clawed back (IMHO it should be clawed back much sooner).

On top of CPP and OAS it is your responsibility to have personal savings: RRSP/pension, TFSA, etc.

GIS is the 'poverty prevention' program, for people making less than 20-30k:

* https://www.canada.ca/en/services/benefits/publicpensions/ol...

Re: Retirement Is Dead

#20

Post by throw0101d »

Rooster61 wrote: post #4

I've never understood the logic behind the idea of a "nest egg". Years ago, perhaps, it might not have been clear to the average person that money has to grow over time to stave off inflation, but that information has been widely available for decades and many people still don't put money into any kind of investment. Not judging anyone. Circumstances are different for each and every person, and financial literacy isn…

> Years ago, perhaps, it might not have been clear to the average person that money has to grow over time to stave off inflation, but that information has been widely available for decades and many people still don't put money into any kind of investment.

When the CPP was being reformed in the 1990s:

* https://en.wikipedia.org/wiki/Canada_Pension_Plan#1998_refor...

There was a lot of debate about whether it should still be government run, or left to individuals, and it is exactly this situation that many folks said that there needs to be some component of retirement that should not be able to be touched by individuals.

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