Baby Doomers

RETIRED modified

Close your eyes. Imagine ten years from now. Yikes.

Eighty-five million wretched Boomers will be between the ages of 60 and 78, the greatest number of retired old farts in North American history. If you’re a 28-year-old hipster and couldn’t care less, you should. This ain’t the greatest news.

Boomers are not only wrinkling, they’re slipping. There’s less money in individual RRSP accounts now than there when the Backstreet Boys were alive. A BeeMo survey found 46% understand they’re totally unready for what’s coming. Most people say retirement will take a pot of $600,000, and yet, on average, the wrinklies are $400,000 short. The average TFSA now contains $6,900, while the allowable limit is $31,000. And eight of 10 people with a tax-free account have the money in brain-dead high-yield (?) savings accounts or GICs.

This year the average RRSP contribution was $3,500, and the limit was $24,000. Together we have $500 billion in unused contribution room, which is expected to hit $1 trillion by 2018. Meanwhile the bulk of net worth is in houses, where it produces no income (and against which we now have a trillion in mortgage debt). By the way, more people are set to retire with mortgages in place than at any time previously.

(And remember, the public pension plan is a non-starter. The average CPP payment is $600 and OAS is just over $500 a month. Try living now on $13,200 a year now, let alone in a decade.)

In short, millions of Boomers have a big surprise coming.

But this is nirvana, compared to the US.

The results of a new poll there (Employee Benefit Research Institute and Greenwald and Associates) are little less than shocking. Here’s how USA Today reported it:

Most people have very little tucked away for retirement, and many aren’t even trying to figure out how much they’ll need later in life, a new national survey reveals. About 36% of workers have less than $1,000 in savings and investments that could be used for retirement, not counting their primary residence or defined benefits plans such as traditional pensions, and 60% of workers have less than $25,000.

Only 44% say they or their spouses have tried to calculate how much money they’ll need to save by the time they retire so that they can live comfortably in their golden years, the survey shows.  “What’s really striking is that 73% of those without a retirement plan… have less than $1,000 in savings and investments,” says Jack VanDerhei, the institute’s research director and co-author of the 2014 Retirement Confidence Survey.

A thousand bucks? See what real estate and debt have done to the mighty American middle class? In a single generation corporate pensions plans have been lost to a majority of people, real estate has become the only investment most families make, and a culture of saving has been swept away by consumerism and cheap, available credit. In the States, as you know, the real estate meltdown of 2005-2012 also destroyed $6 trillion in equity most of these folks were counting on. So much for having a one-trick pony financial strategy.

But why do we care if tens of millions of Yankee Boomers retire impoverished as the wrinklies here also struggle with monthly cash flow? It’s the economy, stupid. This could turn into the mother of all government expenses. All those Boomers vote, and in larger numbers than the rest of the population. It’s a massive special interest group whose priorities will be health care funding and enhanced retirement benefits. Hard to imagine a decade from now that our demographic overhang won’t be looting the GDP through increased taxation, enhanced deficits and reduced consumer spending.

Now, what are today’s kids doing to prepare for the absolute inevitable?

Simple, they’re turning into their parents. Great plan.

This week we found out that new homebuyers in Toronto are budgeting $408,300 for the purchase of their very first piece of real estate while in Vancouver it’s $506,500 and in Calgary $363,400. Nationally the number has risen by 6% in the past year. About four in ten of them expect their Boomer parents to throw in money to assist them – wrinklies statistically unlikely to have extra cash, and who will be taking equity from their own real estate to help their kids get more real estate.

Sense any problem here?

No?

Then you’re part of it.

238 comments ↓

#1 I'm stupid on 03.19.14 at 5:49 pm

The main reason for the last of savings due to the fact everyone believes things will just work themselves out. That’s a big mistake. Being financially secure in your golden years takes discipline and planning. But what do I know I’m stupid.

#2 gmc on 03.19.14 at 5:55 pm

Funny
Max Keiser on RT tv talked about the Canadian housing, the whole world knows it is mathematical impossible to continue the hosing orgy when the pop is 165% indebted
His quote, made howl…
The Canadian housing is a good example of what happens when you smoke maple

syrup.http://rt.com/shows/keiser-report/episode-576-max-keiser-482/

#3 eddyo on 03.19.14 at 5:57 pm

Doomed they are!

#4 Steve on 03.19.14 at 6:00 pm

Remember the episode when Archie Bunker pays off his house? Edith and Gloria and Meathead were all happy. I saw that episode on a floor model walnut tv resting in a bed of orange shag rug in our velvet wall papered living room. Those were the days… Dad eating ice cream right out of the pail wearing only his ginch. Mom sinking into the floral pattern over stuffed couch doing some crocheting. My sister languidly picking her nose. How did it all go so wrong? Why didn’t I get the chance to live like Archie? Life is so harsh….

#5 Let's stay within reason on 03.19.14 at 6:03 pm

Quite simple…some living expenses will also drop, if so many people won’t have the money. If ALL retirees would have the $600.000 it would be a disaster for younger generations, as prices would go bananas.

Everybody will be OK. Like we always were.

#6 lost on 03.19.14 at 6:16 pm

nothing makes sense anymore

#7 Mishuko on 03.19.14 at 6:17 pm

I’m one of those hipsters… okay maybe not, have a ft job at a big 5, with no shortage of work.

What really upsets me is my parents retirement. Mom’s a teacher, dad’s in the private sector. Unfortunately until last year his rrsp only contained mutual funds. Atleast he allowed me to reinvest 1/3 of it into a diversified set up. Some banks, preferred, and etfs. The sad part is he feels holding the rest of his balanced mf is smart and rather not bite the bullet in the mer. I keep trying to explain that their holdings are exactly the same how I have set up with what he’s given me to invest. Oh and that it would PAY him to own them… :( I keep trying to sway him but he’s stubborn and ‘doesn’t want to take any unnecessary risk’…

I looked at the mfs (a bank one recommended by a retail branch) which holds other in house mutual funds as part of their holdings. *doh*

How else can I convince my parents? I keep trying to push, own it to pay you, but his counter is ‘I need something physical’ ‘companies go bankrupt’… and even when I say ‘if a big 5 goes bankrupt, the last thing you need to worry about is your house’

#8 T on 03.19.14 at 6:18 pm

So there will be more people cashing in RRSPs (stocks) than contributing.

Meaning stocks will be dropping in value from the millions approaching the age.

Strange, if this was a house, vs a stock (rrsp) you would agree.

Hardly. More money will come out of houses and into financial assets. — Garth

#9 Omg on 03.19.14 at 6:19 pm

Plus boomers will keep working long past freedom 55 or even freedom 65.

So still working boomers will take job opportunities and job advancements from the next couple of generation behind them.

And its not just Mc-jobs that boomers are clinging to. Many of my buddies in the government and private sector who are in their late 50s plan to keep working to 65. What with funding university educations, building $300k house renovations and buying the $60k boat, they just cannot afford to retire.

#10 jan on 03.19.14 at 6:22 pm

What is the point Garth.
This country is run by crooks and they themselves will be just fine in their golden years.

#11 Westcoaster on 03.19.14 at 6:23 pm

“73% of those without a retirement plan… have less than $1,000 in savings and investments”
Chills…. up and down my spine. Great plan, grasshopper – not.

#12 T.O. Bubble Boy on 03.19.14 at 6:24 pm

Wow – those numbers are just crazy. The U.S. has a far higher percentage of wealthy families vs. Canada, and clearly a higher % of poor also.

From chatting with people at my work, the mentality is exactly as described here… all available $ goes towards RE, whether that means buying or paying off a mortgage.

And, with house values rising, everyone has recency bias, where they assume that the $600k house that became a $800k house will become a $1.2M house and beyond.

This will not end well.

#13 johnny d on 03.19.14 at 6:24 pm

Isn’t the allowable amount on a tfsa $31,000?

#14 Holy Crap Wheres The Tylenol on 03.19.14 at 6:27 pm

Crap Wheres my Geritol, and depends.

#15 Ford Prefect on 03.19.14 at 6:30 pm

Yesterday, on the VCI blog, Patriotz gave a breathtakingly perfect description of Flaherty’s departure:

“Debt Man Walking”

#16 Happy Renting on 03.19.14 at 6:31 pm

Well, that was depressing.

I always wonder what percentage of those with nearly zero savings are the true low-income poor. Like, “we’re poor now, we won’t notice a change being poor in retirement” poor. Having bugger all in retirement funds (beyond paltry government entitlements) matters most when your standard of living drops. If you’re used to spending $75k a year and it drops to $30k, you’re going to have a problem. If you’re already used to finding ways to stretch a can of Fancy Feast, you have problems, granted, but the most pressing is perhaps not unpreparedness for retirement.

#17 jess on 03.19.14 at 6:32 pm

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#18 Richard Beauregard on 03.19.14 at 6:32 pm

My strategy is to marry a wealthy woman – a thousand dollar penguin suite can go a long way .

#19 Barry Lainof on 03.19.14 at 6:39 pm

Thank you for acknowledging that this is a North American problem and not just a Canadian issue. As interests rise, the “recovery” will be further exposed for what it is – artificially low interest rates and government stimulus. Yellen will have to reverse the “taper” and inject further stimulus again in 2015. This roller coaster shall continue – until it can’t. Thank you for a message of diversification and rebalancing.

#20 Cici on 03.19.14 at 6:40 pm

YIKES!

This is looking scarier by the day…

#21 sheane wallace on 03.19.14 at 6:42 pm

It will continue until currency collapse, it is inevitable in the west.

People will be coming out of bonds and into stocks.

#22 LH on 03.19.14 at 6:45 pm

11 Richard

Ah the dilemma of Rastignac (of Balzac’s Pere Goriot)!

Just like the 19th century
The only way for many to get a decent house in M5T M5S M5R will be to marry into money.

Picketty has a great book on this idea (his, not mine)

LH

#23 Cici on 03.19.14 at 6:50 pm

#4 Steve

Hilarious! I too miss the 70s…life was real and good, and home decor and fashion was seriously hideous.

I’m so sick of condo fashion and fake wood and stainless everything…

#24 Cici on 03.19.14 at 6:53 pm

#31 johnny d

Yes, you are right.

#25 Steven on 03.19.14 at 6:58 pm

Garth I think the early mortality rate among boomers may become greater than most suspect. If there is too little capacity to bail out boomers via the real estate market, if wages stay stagnant and if the birth rate keeps going down I think there will be some real problems.
Even if you have plenty of employment at $10 to $15 an hour it is not enough to fix the problem unless the cost of big ticket items are slashed and people can get by living cheaply. That would play hob with the boomer retirement plan and of course they don’t dare jack up interest rates as that would bankrupt the government or force high inflation. There is no win win way out unless the government prints money to pay the boomers and subsidize real estate for the young and homeless. I doubt that will happen so I am expecting a crisis of some sort.

#26 Piccaso on 03.19.14 at 7:00 pm

Why the market sold off this afternoon…

Fed may raise rates as soon as next spring, Yellen suggests

http://finance.yahoo.com/news/yellen-fed-poised-trim-bond-050257961.html

#27 2CntsCdn on 03.19.14 at 7:04 pm

I’m picturing massive trailer parks, run down cars, a lot of card playing, crowded Walmarts, 20 different ways to serve macaroni, lots of cheap liquor and sad faces.

#28 hohoho on 03.19.14 at 7:07 pm

From yesterday …
> … one mess of angry homeowners in the autumn of 2015 …

I’m predicting PM Harper will be the Brian Mulroney of our times, he will retire a few months before certain defeat at the polls, Jason will stand in for a few months just to get the “right honourable” title, and the conservative brand will be in the recycle bin once again … hey, maybe Peter will get to sell it a second time??

#29 JohnL on 03.19.14 at 7:12 pm

Must be the reason that, in the states, the employment participation rates are falling for the younger demographic groups, while the older groups are staying in the work force longer.
It don’t explain why the total participation rate continues to fall though.

Check it out.
http://www.bls.gov/opub/ted/2014/ted_20140106.htm

#30 Cici on 03.19.14 at 7:12 pm

Oh well, at least some people are taking an early retirement :

http://www.theglobeandmail.com/report-on-business/tmx-chief-thomas-kloet-to-retire-at-end-of-august/article17538018/

Or so it seems – I don’t see his age, but he certainly doesn’t look anywhere near 65.

#31 Bizarre on 03.19.14 at 7:16 pm

Well, maybe it’s time to stop promoting healthy lifestyles and longer lifespans and start advertising smoking again? As in that “joke”: the ideal citizen dies on his first day of retirement…

Alternatively, there’re still some countries where it’s much cheaper to live, so today’s vacation properties in say Costa Rico might turn into the retirement ones.

(On the day my grandmother lost her “funeral money” that she’s been saving for years due to the bank default, I stopped worrying about the future. Well, without even starting :)

#32 Waterloo Resident on 03.19.14 at 7:21 pm

Hey, where did you get that photo of me working at that Part-time job at Wal-mart?
Ha-ha, just kidding.
Well, the Shit hit the fan today. The Canadian dollar took another HUGE DUMP, and then the U.S. markets did their thing and fell also.

In the morning the U.S. markets were generally up, but I noticed that the Canadian dollar was down once again. Normally that is a very bad sign for the markets, so I put a SELL STOP on my holdings and it was taken out just after 2 pm.

And there was a lot of talk about the Chinese economy falling and a growing risk of Chinese defaults.
Like I said yesterday; the news coming out of China is not good, not at all. In the next few weeks expect extreme volatility on the markets. Tomorrow the markets might rise 2%, only to crash 3% the next day, so prepare yourself accordingly.

You might wonder why China’s and Canada’s economy is behaving so poorly. Well, here’s why:
It is all due to the fact that the World is experiences a slowdown of oil production world-wide. This phenomenon is called ‘PEAK OIL’.

While the U.S. is experiencing a rise in production out in North Dakota, the other places in the world are slowing down production much faster, and that means the overall world price for oil is rising, and supply is dropping. That results in less economic growth since these days economic growth is tied to oil production. Oil production can drop by about 12% to 15% from the current production levels and our financial system will still keep rolling along nicely. After that, who knows? Maybe it might, or maybe it won’t. We’ll just have to wait and see.

Without continuous oil production growth and economic growth then you start to see the defaults like what are now going on in China. I just hope this won’t get worse over the next few months.

For anyone who wants to short the Canadian dollar, but does not own a U.S. trading account, then you can try this; ‘Horizons U.S. Dollar Currency ETF’ ticker symbol DLR.TO ( DLR on the Toronto exchange.)
Here is a 6-month chart of it on Yahoo Finance:

http://finance.yahoo.com/q/ta?s=DLR.TO&t=6m&l=on&z=l&q=l&p=&a=ss&c=

As for all of those retiring baby boomers with no savings; there is a perfect solution for them to live their lives: Buy a large shed at Home Depot, one of those 12 ft x 24 ft models, like this one

( http://www.homedepot.ca/product/columbia-storage-building-kit-12-feet-x-24-feet/924889 ).

Put it in the back yard of a family member so you don’t have to pay rent. Super-insulate it with 6 inches of Polystyrene insulation in the walls. Install baseboard electric heating (with that much insulation, it won’t use much electricity at all.) And install a composting toilet. That’s it, you now have yourself your own MICRO HOUSE in your family member’s back yard, and living is easy.

#33 Jeanne on 03.19.14 at 7:22 pm

The solution is to die young. And the poor die young!

#34 jean on 03.19.14 at 7:27 pm

“A thousand bucks? See what real estate and debt have done to the mighty American middle class? In a single generation corporate pensions plans have been lost to a majority of people, real estate has become the only investment most families make, and a culture of saving has been swept away by consumerism and cheap, available credit…”

Garth, people refuse to save because interest rates are too low and there is no incentive. As a result of the low interest rates people have been forced to chase assets that they think will give them a better return, like houses. They will be wrong of course, but you can’t fault them for rolling the dice on housing when the banks refuse to pay interest on their savings.

The only way to coax people into savings vehicles is to put up interest rates. This will blow up housing but so be it. Interest rates have to go up, plenty, immediately. Otherwise, don’t expect behaviour to change.

This is all the government’s fault.

#35 pitfield on 03.19.14 at 7:40 pm

It’s simple when the time comes or sooner the house is sold to the kid with a VTB Mortgage. A 400k mortgage nets $4000 per month that’s enough to live on without any bills for a house. The kid gets the house on condition I get the basement, that beats any argument on who gets what when exiting this world. The kid would not get the house if I had to sell it to live on and if he sells it, well I get paid by the mortgage, either way I’m ok but the kid will need to work for it just as I have.
Kind of Callous not wanting to just hand it over right?

#36 timoftrees on 03.19.14 at 7:43 pm

Loud and clear on the boomers squandering and then siphoning. My great frustration, and seeing what my own folks did with a half-million inheritance (Vegas and oxy-friggin-contin) where the heck do we put our money to keep their insatiable hands off it!

I’ve been hit up from the folks again and again, and if they could get the Gov to force me to pay they would. What the heck, then, do we do! I’ve got a baby on the way, and one still in diapers, and the greed, hypocrisy, entitlement of these people.

I just want a fair shake.

Really, they’ll take it all. They don’t give a shit about their children or grandchildren. They are a broken, pathetic generation.

Well, except you Garth, and my mother-in-law, she’s cool.

#37 Trojan House on 03.19.14 at 7:43 pm

This whole retirement thing is horses*&t. For centuries people basically worked until they dropped dead. It wasn’t until the late 19th and early 20th century that getting rid of old people became a priority for governments. The reason: people weren’t dying young anymore because of advancements in medicine.

Governments created mandatory retirement by promising people pensions in return for leaving the workforce. The mess we’re in today was created by governments. So, as usual, the government eff’s up the situation and we have to pay for it.

Financial markets weren’t really created for people’s retirement plans. It just evolved like that because of some hair-brained idea that we have to retire at 65.

#38 Chris on 03.19.14 at 7:45 pm

$600,000? I was always told it was closer to $2 million. Are you sure about that figure?

#39 Smoking Man on 03.19.14 at 7:46 pm

So true, once I completely off shore the bulk of my loot, got to figure out away to get my kids out of Canada. They will pay dearly for bad boomers.

McWynne, Chow, Trudeau…

DOOMED…..

#40 robert james on 03.19.14 at 7:48 pm

Sad story today.. I live in the Okangan next door to a really nice young couple (35 ish)with 2 little kids..They both have not too bad of jobs,,nothing like some of the people on this forum that make 250K plus year or God knows what..lol Anyway,, this afternoon, the wife comes over and wants to borrow my truck as they have to clean out the garage as they have a house appraisal tomorrow,,moved up a few days for some reason.. She has to make the house look really,really good as their 5 year mort. is coming due here in the pump and dump Okanagan.. Of course they bought pretty well at the peak and now the bank will only lend them 80 percent of the appraisal which will probably leave them about 80 K to 100 K short and of course they will not have the money to cover the differance .. They must have got the 5 and 35 year mort. and thankyou Flats, Harper and the rest of the f—ing money lending little rat friends.. Not sure how to help them, if I give them a 100 K interest free loan ,,I will never see it again anyway,, or just let them go BK and the bank can stick thier house up their ass and I will either buy it back or another house at a great discount if these banker priks start foreclosing and carry the mort. for them..There will be thousands of houses more for sale..The prices will drop out of sight .. And far as the Boomer Doomer BS,, what are you people talking about ??? I `M a boomer and I have never had so much money in all my life.. I have farm land in is SE Sask with lots of Bakken wells and mineral rights on 3 more.. But before that,, we have always lived within our means and payed the mort, off as soon as possible ,, at 9 and one eight percent was the mort. rate.. Other than that ,, if we couldn`d pay cash,, we didn`t need it.. We never had kiss the money lender`s asses,, I always pref to kick their asses..Sorry for the rant but I am pissed at the f—ing goofs in Ottawa have done to my country..

#41 High Plains Drifter on 03.19.14 at 7:50 pm

The concern for these fellow travellers is some of the most palpable hypocrisy in the ether, short of world peace and justice. I seem to be in the middle of the pack as described by Mr. Turner. and I can tell you, the secret is, do not count the missing in action. At 6 decades in I am glad I spent the last of my mad money on a trip to Russia for the culture and mucked around racecourses in Scotland and Ireland just for the drunken fun. Though for what looks like drunken fun, the P.M.’s office must be a ball or maybe their just unconscious comedians.

#42 takla on 03.19.14 at 7:53 pm

Hey relax,we only have to go back 50-60 years and most folks did just fine on the government stipince in retirement with little or NO investments to fall back on.IM one of the lucky ones,old enough to remember what my folks taught me about living a somewhat fruggle lifestyle,grow a garden,can fruit ,learnt how to harvest and preserve meat,cut firewood and build a fireplace.I may not get the generous government pension like F just did,but my clan will make out just fine.Good luck to the rest of you!!p.s,, im insureing the Harley tomorrow garth,will be sunny this weekend on the west coast!!

#43 gut check on 03.19.14 at 7:58 pm

“A thousand bucks? …. In a single generation corporate pensions plans have been lost to a majority of people, real estate has become the only investment most families make, and a culture of saving has been swept away by consumerism and cheap, available credit. In the States, as you know, the real estate meltdown of 2005-2012 also destroyed $6 trillion in equity most of these folks were counting on. So much for having a one-trick pony financial strategy.”

A. It isn’t just consumerism that’s done this, it’s the fact that a LOT of people do not have the money to save. They don’t have an income that’s kept up with consumer price increases (I don’t want to call it inflation since in today’s world we pretend there isn’t any)

B. Even people who can save a little can have their savings wiped out by one bad year: a major repair to car or home, an illness in the family, a move, etc.

C. Before the real estate meltdown there were the stock market crashes. 2 major ones. I know MANY people who got almost wiped out by those – so much for ‘taking risk’ in the market.

#44 Michael on 03.19.14 at 8:05 pm

Actually, it isn’t consumerism that’s the problem, it’s lagging wages. The borrowing has been necessary just to make ends meet and keep up with the economy.

http://houseofdebt.org/2014/03/18/the-most-important-economic-chart.html

If wages were ok, then all that additional debt would have made for above average growth. But actual growth has been below average the last 30+ years.

#45 IndexMan on 03.19.14 at 8:08 pm

I went to dinner last night at a place that rents out space to business meetings and such on slow nights. I could see the presentation going on in the next room from my seat.

The folks in there were selling a (likely legal) scheme promising “stock market free” “8% interest” on commercial mortgages as an investment vehicle. These were promoted as being “easy to understand” because “most people have money in the real estate market”. The rest of the presentation was all about what a disaster CPP and OMERS are except when they invest in real estate.

The avaricious yuppie larvae in attendance (with pre-approved HELOCs in hand to use as leverage) were foaming at the “opportunity” they saw. Evidently these people find stocks and bonds too confusing and “up and down” to own, which prevents them from sleeping at night.

Apparently none of them have ever read a mortgage.

Or a history book.

As a sort of mind-bleach from the self-serving nonsense I saw therein, I offer the following:

Dear Hobbled Garth:

Deliver me from financial porn.

Forgive those who sell mutual funds and mortgages, as we forgive those who sell us real estate.

Deliver me from F and his policies.

Deliver me from high interest savings accounts.

For thine is the blog, the wisdom and the light.

And Basel III-compatible preferred shares for everyone.

Amen.

#46 Trojan House on 03.19.14 at 8:12 pm

Btw, anyone remember the game Monopoly? What did it teach people? Buy real estate! Still one of the most popular games today.

#47 jan on 03.19.14 at 8:13 pm

#40 robert james on 03.19.14 at 7:48 pm
Sad story today.. I live in the Okangan next door to a really nice young couple (35 ish)with 2 little kids..They both have not too bad of jobs,,nothing like some of the people on this forum that make 250K plus year or God knows what..lol Anyway,, this afternoon, the wife comes over and wants to borrow my truck as they have to clean out the garage as they have a house appraisal tomorrow,,moved up a few days for some reason.. She has to make the house look really,really good as their 5 year mort. is coming due here in the pump and dump Okanagan.. Of course they bought pretty well at the peak and now the bank will only lend them 80 percent of the appraisal which will probably leave them about 80 K to 100 K short and of course they will not have the money to cover the differance .. They must have got the 5 and 35 year mort. and thankyou Flats, Harper and the rest of the f—ing money lending little rat friends.. Not sure how to help them, if I give them a 100 K interest free loan ,,I will never see it again anyway,, or just let them go BK and the bank can stick thier house up their ass and I will either buy it back or another house at a great discount if these banker priks start foreclosing and carry the mort. for them..There will be thousands of houses more for sale..The prices will drop out of sight .. And far as the Boomer Doomer BS,, what are you people talking about ??? I `M a boomer and I have never had so much money in all my life.. I have farm land in is SE Sask with lots of Bakken wells and mineral rights on 3 more.. But before that,, we have always lived within our means and payed the mort, off as soon as possible ,, at 9 and one eight percent was the mort. rate.. Other than that ,, if we couldn`d pay cash,, we didn`t need it.. We never had kiss the money lender`s asses,, I always pref to kick their asses..Sorry for the rant but I am pissed at the f—ing goofs in Ottawa have done to my country..

me – Amen brother :-)

#48 mitzerboy on 03.19.14 at 8:14 pm

we found out today in saskatchewan that all the saskaboom money is gone ….. were did it all go?

#49 T on 03.19.14 at 8:23 pm

Garth Wrote:
“Hardly. More money will come out of houses and into financial assets. — Garth”

Interesting.

I have direct real examples vs theories.

Take the house a couple doors down from us. 3 bedroom, 2 story house with pool. Two car garage. Sold for $550,000 .

People who bought guess???

Oh that would be a couple in there 60s who are downsizing from a multi million property in Burlington.

So much for theories.

These homes are no longer being purchased by the 5% downers.

These are the cash buyers.

An example of rich people, proving my point. Guess where the rest of their money went? — Garth

#50 joblo on 03.19.14 at 8:31 pm

Those without will always have options.
Say…. Mexico, Costa Rica, Thailand, Belize, Panama and no mukluks required.
So adios Kanada!

#51 Vangrrl on 03.19.14 at 8:34 pm

#34: it’s absolutely consumerism. You’re saying people will just spend their money if the banks don’t offer them high interest rates. Not everyone is that weak. You’re still saving money if you’re not buying stuff you don’t need.

#52 Rob on 03.19.14 at 8:37 pm

“But this is nirvana, compared to the US.”

And I doubt that even this statement is true, given you’ve been saying lately that the U.S. economy has been on the upswing as compared to Canada’s. If the U.S. wrinklies are in worse shape than us Canuks in preparing for retirement then I challenge anyone to name a country that is “nirvana”. Bottom line: each old fart is on his/her own to get things in gear and not hope for any last minute government cavalry to ride to their rescue with handouts because it ain’t going to happen.

#53 The Prophet Elijah on 03.19.14 at 8:50 pm

Gartho here is one of my observations, lately I’ve noticed “research” saying that if a male is having kids after 45 there is a good chance of birth defects. Why are these coming out now you ask? Simple, it’s all a trick to get those who have put off having kids till later in life to start doing it:

There is not enough population to support social programs as boomers retire. Now lets take it a step further, it’s because of legalized abortion that this phenomenon is occurring. If millions of babies were not killed we wouldn’t be in this jam.

Thank you dim witted politicians, next time remember not to play God. Ok.

#54 Smoking Man on 03.19.14 at 8:51 pm

Wealth is stored Labour credits. It takes many forms.

If you where a hypnotist and could get anyone to do what you want them to do, you would be rich and not need one cent.

Think about that one.

#55 G on 03.19.14 at 8:58 pm

The young are broke, the middle aged, the old, could it be that the system is rigged? What about all the prudent savers now languishing on 0% interest? Yes, there is enough of greed and stupidity in all of that, but how about the populace trying to make some money in ever increasing prices and 0% interest and no salary raise since 1980? Would not that lead them to real estate? And what did happened to all of the taxes paid by the wrinklies, all gone to where? How about we stop blaming the people and look at the banks and the governments , all too happy with the little fools we all are?

#56 hohoho on 03.19.14 at 8:59 pm

> … a couple in there 60s who are downsizing from a multi million property …

isn’t that exactly what Garth is saying? money coming out of houses and into financial assets.

#57 Freedom First on 03.19.14 at 9:01 pm

The sad sad truth Garth. Reminds me of one of your previous posts, where you said something about being able to live with no money when you are young, but how to live with no money when you are old is not doable.

Most unfortunately, so many people who refuse to live a simpler more frugal under their means lifestyle when they are young, are going to be forced into an extremely spartan lifestyle when they get old, and have no other choice. The #1 cause of bankruptcy for people past 65, is failing health. I would not be surprised if one of the biggest causes of failing health, is a lack of money, in a whole myriad of different ways. Garth has already told us how having the money available when he ruptured his ankle, really really helped his ability to be able to heal. Medical costs of all kinds, and Amazons, take money, and are vital for recovery. As we age, these things become life and death, and can be as simple as not being able to afford healthy food, let alone any kind of emergency.

#58 Pope Shostyburger Snugglebums the 666pq (aka Nosty) on 03.19.14 at 9:03 pm

Politics and politicos are about as stimulating as sloppy wet farts, so it was good to take a break!
*
[rant on] “A thousand bucks? But why do we care if tens of millions of Yankee Boomers retire impoverished as the wrinklies here also struggle with monthly cash flow? This could turn into the mother of all government expenses.”

After reading the post, I arrive at the same, worn-out conclusion, or word that our wonderful unelected masters (friends), the Infernal M-F’ers use on a regular basis to intimidate us sheeple: AUSTERITY, as when the time is right they will pull the rug out from under our feet. Then most will know what true pain really is. [end rant]

Billionaires and Austerity “Thanks to Republican-backed austerity measures, our nation’s scientific infrastructure has been hit with devastating budget cuts.” and Putin’s Pensions As compared to IMF-imposed austerity, they’re reasonable.

#59 Look! on 03.19.14 at 9:09 pm

Boomers have had it all, all of their lives.

No wars, no dust bowl financial depressions, no lack of vocational opportunity, no lack of educational opportunity, no lack of real estate opportunity, no lack of money, no lack of recreation, no lack of health care, no hunger, no political instability, no secret police disappearing people.

You get the idea.

Good luck trying to tell a Boomer that it’s over.

It ain’t over until the last Fat Boomer sings.

#60 Retired Boomer - WI on 03.19.14 at 9:12 pm

Shirley, your statistics have fleas.

Can’t speak for my Canadian Boomer Friends, but in the US the average 55 year old has nearly $242K in savings. I agree that is WAY short of the $500K needed for most debt free couples at retirement.
Notice that said DEBT-FREE at retirement, and our stats show thirty some percent will go there with a mortgage, unknown on the car payment, nor credit card debt.

At least our social insecurity is set to pay a tad more than OAS, but you will not live easily, or happily on that mana alone.

Boomers are the ultimate “What me worry” generation, o a peon to the Mad magazine character of the 1960’s.

My kid at 39 is putting away more as a precent than I was at his age, and I made it to 7 figures – with a family.
(RE is 15% of total net) He is still single, that allows him lots of time to screw-up so long as the little moron does not screw-off, he should do fine.

The young will do better than the spend-thrift boomers, but the young must remember to vote down the greedy-geezers when the time comes for that.

Sorry, members of my generation you had your chances, either you made it, or you did NOT. Don’t steal it from our kids. They will have their own problems.
Live the life styles you earned for yourselves, I’ll help if I want to, just don’t MAKE me.

Boy, that sounds like a greedy geezer doesn’t it? call it what you wish.

#61 Daisy Mae on 03.19.14 at 9:17 pm

“…the real estate meltdown of 2005-2012 also destroyed $6 trillion in equity most of these folks were counting on.”

********************

This $6 trillion equity lost — wasn’t that Wall Streets’ shenanigans? Which is supposed to be separate and apart from the real estate meltdown?

#62 Drill Baby Drill on 03.19.14 at 9:18 pm

Dear Pathetic Blog : way to outlast the little peckerhead. I have been in business planning meetings all week and the engineering business outlook in Alta is not good. The junior oil & gas co’s can’t raise funds, the major oil sands co’s can’t move additional oil production unless by rail car so many projects are pushed into the future and gas prices are sliding back down from the winter highs. We are getting big pressure from the producers to reduce our blended hourly rates charged for engineering services at the same time that head office wants more projects coming in the door. We are screwed here in Calgary but no one really wants to say “the emperor has no clothes.”

#63 Alison Redford on 03.19.14 at 9:27 pm

Howdy Garth!

Well, whodathunkit, but I’ve unexpectedly got some time on my hands. Mind if I settle in here for a spell?

Is there a first class lounge here? Are you the help here Garth, or who do I ask for a foot massage?

#64 gladiator on 03.19.14 at 9:39 pm

Interesting how much this will affect Vancouver house prices: http://www.zerohedge.com/news/2014-03-19/music-just-ended-wealthy-chinese-are-liquidating-offshore-luxury-homes-scramble-cash
Hong Kong may be just the beginning…

#65 Keith in Calgary on 03.19.14 at 9:39 pm

DING DONG the witch is dead.

Princess Alison Redfraud just resigned as Premier of Alberta !!!!

I’m gonna have one hell of a hangover tomorrow.

#66 TheCatFoodLady on 03.19.14 at 9:42 pm

#45 Index Man: Amen, brother!

As someone living on a very limited income I have to urge people to consider how bloody HARD that can be. The Main Squeeze & I are used to it, our needs few & wants fewer. He’s always been poor; I wasn’t & learning the changes that needed making was eye opening & difficult. I hosted more than a few pity parties along the way. It literally took years to find a happy balance & I am happy & content now – truly.

Those forced into our level or lifestyle for whatever reason, especially if that should come as health is failing may be walking a dry, dusty, stony road. It can grind you down emotionally if you’re not prepared. Be ready for lots of resentment towards others seeming to be doing better, lots of disappointment if you can’t do certain things you’d like to do, never or rarely being able to do things you take for granted now.

Yes, it’s easy to live small when we’re young. Life is an adventure & making do can be fun. How many of us furnished our 1st places in the style I dub ‘Early First Apartment’? Lots of bricks, 2-8″s & various coloured milk cartons? Add a few wobbly table lamps an old radio & the bare minimum of dishes & linens & we were set.

Not a way I’d like to live in my 60s – not that or anything comparable.

Anyone thinking it can’t be that bad, try this. After rent/mortgage, utilities & phone/cable/net, try living on $800/month for 2 people. That has to cover everything else. Remember periodically, it’s got to cover clothing, haircuts; it has to cover medications, transportation, entertainment… tough to do as you’re aging.

#67 learningfromyou on 03.19.14 at 9:44 pm

Thank Garth for the post.

I find another cultural problem here.
There is a lot of talking about saving and investing for the future, but the history ends making people calculate or guess how much they gonna need in their final years.

This model teach you to save your whole life and use these funds as the income afterwards, so slowly you will ‘eat’ what you were able to collect for yourself. You were born with empty pockets, you pass your life collecting and saving and you die almost with empty pocket again.

I believe in a better model where you save and invest in vehicles that will persist in time even after your death for your family without losing the inner value of the investment.

One example could be to buy an “opportunity” meaning in a good price and at the right time and place a block appartment of (lets say) 12 units.

With the proper “structure” in place that investment will pay for its mortgage, and provide you a monthly cashflow for living and your family keep it after you.

with this model you were born with empty pockets, you save and invest in your life and the value of your investment does not decrease in your final days, you do not have to worry about calculations of how many years you will live or how much money you will need at that time. I’m not a medium to know these numbers.

One more question to you
?I am aware of structures that allow you to pass your legacy (real estate) to your family with less taxation impact?

?How it could be done with pure financial vehicles?

Now its your time Gath to burn me alive, I’m sure with your knowledge and experience you can come out with a wiser idea what gonna be good because I will grow with it.

The family would rather have a million-dollar liquid inheritance than a building full of tenants and a needy boiler. — Garth

#68 Stupesing in Cabbagetown on 03.19.14 at 9:44 pm

And yet, Bank of Canada Governor Stephen Poloz recently blamed the slow Canadian economy on those penny-pinching boomers who are saving rather than borrowing.

Actually he blamed all the non-productive money going into real estate. — Garth

#69 Ripped on 03.19.14 at 9:47 pm

So we have an .88 cent Loonie but RBC gives me a .92 cent exchange rate depositing my U.S. tax return today.

The Scam bank pockets .04 cents for themselves.

#70 live within your means on 03.19.14 at 9:55 pm

Not worried about us but am about a few family members on my & hubby’s side. Receive criticism from an elder sis (still a shopaholic) cause she considers us too frugal in certain ways. In her late 60’s she’s finally managed to pay off her visa bills each month. Years ago her bank refused to give her a debt consolidation loan. I do love her but I don’t take advice from her or her hubby.

#71 brainsail on 03.19.14 at 10:01 pm

I realize that the typical Canadian boomer entering retirement may have the majority of their net worth in their house and at some point will need to sell in order to fund the rest of their years. But where are they going live?

My 93 year old mother has decided to leave her bung that she has lived in since 1958. Edmonton, maybe $500k. She has made an application for an assisted living unit and is now on a two year wait list.

Where are the boomers going to live after they sell their homes?

#72 John in Mtl on 03.19.14 at 10:02 pm

@ #58 Pope Shostyburger Snugglebums the 666pq (aka Nosty) on 03.19.14 at 9:03 pm.

I wouldn’t be so sure of all that. Either The BoE is the first to see the light on the consequences of our failed system, or they are up to something nasty toward the populace:

Bank of England Quarterly Bulletin pre-release articles:

‘Money in the modern economy: an introduction’
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q101.pdf

and
‘Money creation in the modern economy’
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q102.pdf

The truth is out: money is just an IOU, and the banks are rolling in it. The Bank of England’s dose of honesty throws the theoretical basis for austerity out the window:

http://www.economicvoice.com/bank-of-england-on-money-and-money-creation-in-the-modern-economy/

So much for modern economic theory!

#73 airhead princess on 03.19.14 at 10:04 pm

Yeah….but if we wrinklies all stick together and go on strike…WallMart and McDonalds will have to pay us $15 bucks an hour minimum wage and the retirement funding shortfall will go away….right?

Howz about a guaranteed wage based on the average salary of the civil service. C’mon people….lets do the Canadian thing and form a union so we can shut the whole place down.

#74 Mr. Frugal on 03.19.14 at 10:04 pm

We have good friends that bought a big house because they “deserve it”. There is a common misconception that we need to buy things because we work hard and therefore deserve to treat ourselves. The real question is whether you can afford these things. Just my humble opinion. I think the young kids will be alot like their great grandparents that lived through depression – cheap and cheerful. Don’t worry the kids will be alright. The boomers, not so much.

#75 T on 03.19.14 at 10:08 pm

“An example of rich people, proving my point. Guess where the rest of their money went? — Garth”

And you missed my point.

Why are people entering in there 60’s buying a 2 story houses? Not cashing in the mega house and heading to a condo?

A few years ago the potential buyers for a house like this would NEVER have been people entering in there 60s.

NEVER.

What this means, and you agreed, the demand for these homes are coming from TWO directions now. Ones coming up….as it has been….and now, ones coming down.

You have never discussed this.

#76 shawn on 03.19.14 at 10:14 pm

Show Me the Money!

From number 49, T

Take the house a couple doors down from us. 3 bedroom, 2 story house with pool. Two car garage. Sold for $550,000 .

People who bought guess???

Oh that would be a couple in there 60s who are downsizing from a multi million property in Burlington.

An example of rich people, proving my point. Guess where the rest of their money went? — Garth

*****************************************
Perhaps, the rest of the money was deposited in the bank where it funds the mortgage of whoever bough the multi million dollar place in Burlington.

Oh, they put it into stocks you say? Well then whoever they bought the stocks from perhaps has the money in the bank, funding mortgages.

Mortgages are financial assets. — Garth

#77 shawn on 03.19.14 at 10:14 pm

Retired and Broke?

Sucks to be them.

#78 KommyKim on 03.19.14 at 10:15 pm

I don’t know why we are worried about boomer retirement, RE crashes, and lackluster savings when Kias are about to get cheaper due to the Canada-Korea Free Trade Agreement. I-eeeeeee!

#79 WTF? on 03.19.14 at 10:22 pm

1st –> #48 mitzerboy
2nd –> #44 Michael
3rd –> #33 Jeanne
(HM)–> #6 lost

#80 Snowboid on 03.19.14 at 10:23 pm

#57 Freedom First on 03.19.14 at 9:01 pm…

“…The #1 cause of bankruptcy for people past 65, is failing health…”

According to the Office of the Superintendent of Bankruptcy Canada, here are the figures from a couple of years ago.

55+ age groups:

Overextension of Credit 29.21%
Medical reasons 14.66%
Insufficient Income 11.83%
Loss of employment income 11.24%
Money mismanagement 9.39%
Involvement in failed business 6.73%
Marriage breakdown 4.34%

Medical reasons are number one in the US, and may soon be in Canada as ‘broke’ boomers age.

#81 45north on 03.19.14 at 10:26 pm

TimOfTrees : Really, they’ll take it all. They don’t give a shit about their children or grandchildren. They are a broken, pathetic generation.

sorry about your parents Tim. I’m not them.

Robert James : Sad story today.. I live in the Okangan next door to a really nice young couple (35 ish)with 2 little kids.

funny, one day it’s the “Best Place on Earth” and the next it’s the “banker pricks” The transition from self-assured cockiness to bitter recrimination

#82 TheCatFoodLady on 03.19.14 at 10:38 pm

With apologies to William Ernest Henley…

Indebtedness

Under the debt that covers me.
Red ink as blood from my frail veins.
I thank whatever Gods that be
for my, (on paper), RE gains.

In the fell clutch of RE folk,
I’ve joined that granite ‘move up’ crowd.
I failed to see the cruel joke;
The calls to “buy!” were much too loud.

Now in this home of fake hardwood,
Looms but the horror of repair.
Inspector said: “It all looks good!”
Now bills have left me in despair.

The credit agencies berate
me, for how deep I’m in the hole.
MasterCard controls my fate.
VISA tars apart my soul.

#83 OlderbutWiser on 03.19.14 at 10:40 pm

I’m in my early fifties, not yet retired. I was speaking with my parents a few weeks ago about retirement. Both are retired with DB pension plans. I do not have a DB pension plan so I have had to set aside significant sums to be able to retire in 3 – 4 years. My mother mentioned that in her grandparents generation NO ONE had any kind of pension plan. Everyone had to essentially work until they died. Interesting that we have gone from no pension plans, to defined benefit plans being the norm, to defined contribution plans being the norm within 4 generations. Reminds me of the saying……clogs to riches to clogs in three generations. The stories she told of my grandfather walking to work in his 80’s were terrifying. That is the fate of those who fail to plan….unless you are content with living at the poverty line…..and then at least todays generation have the CPP, OAS and GIS to rely on.

#84 Kreditanstalt on 03.19.14 at 10:41 pm

“Try living now on $13,200 a year now”

We do it quite comfortably. House paid off years ago when others were paying mortgages. Good furnishings, woodstove, used car already bought. Firewood nearly free. Cook only at home.

Mandatory taxes: $2700+600+130=$3430/year
Mandatory car insurance: $650/year
Mandatory health insurance: negligible, as our “income” is nil.
Car tires every 1.5 years or so. Drive as little as possible.

We buy food only from cheapest supermarkets, in bulk and eat WELL.
No cell phones or smartphones, NFLX etc.

And…PLEASE don’t say we’re “suffering” ~ this is the fastest internet speed available, we afford cable TV & it’s warm enough here on V.I.

What kind of standard of living do retirees EXPECT???

#85 Nemesis on 03.19.14 at 10:51 pm

“A long time ago in a galaxy far, far away….” – Nemesis had an epiphany [and immediately left it all behind a ‘tad’ earlier than most – indubitably, being lucky combined with a dollop or two of residuals helps]:

http://youtu.be/geKPpNEDZeI

#Germane

[Salon] – Generation X gets really old: How do slackers have a midlife crisis?: Gutted by the economy, shipwrecked by nostalgia, Gen X stares down a midlife crisis. Winona Ryder can’t save it.

…“If anything,” says Wendy Fonarow, a social anthropologist and the author of the indie-rock chronicle ”Empire of Dirt,” “our generation is characterized by not hitting a wall of midlife crisis but having crises throughout.”

If you think this is typical Gen X whining, you are probably a boomer.”…

http://www.salon.com/2013/08/11/generation_x_gets_really_old_how_do_slackers_have_a_midlife_crisis/

[NoteToSteve#4: How quaint. Our shag was yellow and in the DogDays of a PrairieSummer Pappy was wont to lounge about in his favourite TankTop with one of these: http://tinyurl.com/pnolp8u …#BonusZen – This is the unadulterated PilotIntro just for you, Steve: http://youtu.be/jw_G3o1pGlY NoteToCatFoodLady#66: You never cease to astound me {in a GoodWay}. I am so proud of you – as, doubtless, your MainSqueeze is, too. NoteToKommyKim#78: Here’s how things are working out in Korea right now; as an aside – does this sound like a society we should be propping up with tariff reductions, SaltyDogz {?}: http://www.globalpost.com/dispatch/news/regions/asia-pacific/south-korea/140313/why-koreans-are-killing-themselves-droves NoteToSaltyDogz: SignNemesis “Dazed&Confused” – the VeritableVanguard of the XGen. It certainly wasn’t easy then – or since… &Objectively, it’s much harder now for those JustEmbarking on ‘AdultHood’. Trust me. I’m a scientist. TeeHee!]

#86 Calgary Car GUY on 03.19.14 at 10:52 pm

Re/DING DONG the witch is dead.

Princess Alison Redfraud just resigned as Premier of Alberta !!!!

I’m gonna have one hell of a hangover tomorrow.
——————————————————————
You got that right brother! You took the words right out of my mouth. I knew that woman was trouble right out of the gate. Good Riddance!!!

#87 Tiger on 03.19.14 at 10:54 pm

59 look !
You got that right, except for the fat part and the police thing, I hire and fire idiots like you every day, it’s a game called real life stupid!
Now go take your meds

#88 devore on 03.19.14 at 10:56 pm

#26 Piccaso

Oh, another market scare? Hope people took some profits from the recent peaks, and are sitting on a bit of cash.

#89 Inglorious Investor on 03.19.14 at 10:56 pm

Yup, it’s a potential disaster in the making. Higher and/or more taxes, levies, surcharges, etc. Stagnant economy and incomes. Pension crisis. Asset deflation as we continue to work through the debt overhang.

However, it will happen slowing, grinding away at the average family’s standard of living over time. Humans can become inured to almost any conditions given enough time.

However, it’s all relative. Incomes may indeed increase as a result of pent-up inflation, but not as fast as expenses. So in real terms (the only terms that matter) incomes will continue to decline. Even if the domestic economy were to perform well, the other problem is the competition (read, higher prices) for resources from developing countries (read, Africa, not to mention Asia).

The days of the West having the lion’s share of wealth are over, while we deal with massive debts. A double whammy. It’s going to keep the hurt on. The only way out is a massive boost in efficiency through smart technology and innovative practices, such that living can become drastically cheaper in a way to off-set the rising costs.

Then there’s always the war option. Bronco Bama is already beating the drums and ramping up the rhetoric against Putin (feeble though as it is: “you’re no longer invited to out party, so nyah!”).

The media has gone into full jingo mode, preparing the population to hate Russia. It started with Sochi and continues with Crimea. Putin has outsmarted Bronco and preempted an irreversible move by Ukraine into NATO (is civil war next?). Bronco can’t stand it that Russia has the gall to actually try and stop the US from strangling Eurasia. Doesn’t Putin know that it’s America’s destiny to rule the world, control all the oil and gas, and spy on everyone at the same time?

Then there’s China, but hey, they’re too busy right now preparing for their own financial crisis.

#90 Kang on 03.19.14 at 10:59 pm

This really is not a financial problem. It is a problem of social values and what we collectively think is important.

If we can buy useless F 35 jets to murder third world families in their beds, then we can afford to tax the corporations to provide living pensions to the people who did the work to build this country.

#91 Shawn on 03.19.14 at 10:59 pm

Explain Me the Money!

Number 72, a John in Montreal

The truth is out: money is just an IOU

***************************************
Yes, a startling secret… until you realize that the Americans and the Brits have it printed on their money “will pay to the bearer”

A gift card is an IOU from a store

Canadian Tire Money is an IOU from Canadian Tire

My daughter in grade 12 says, money is alike a gift card that you can cash in or spend any place.

With a $20 bill you have a claim check for $20 of goods and services that you can cash in anyplace, including on the streets of Montreal.

Spend less time worrying about the nature of money and more time accumulating money and other wealth.

The modern economy is doing just fine, thank you very much. It’s never been better. Prosperity abounds on this earth like never before.

The Pie grows by the second. The division of the pie may seem a bit unfair but the Pie is certainly growing constantly.

Even the poor have more pie than ever, but the slices for the Rich are growing faster, that is true.

Also, buy some bank shares already!

#92 lucyj on 03.19.14 at 11:01 pm

Garth there are a lot of comments regarding low interest rates as an excuse for our rampant consumerism and huge debt load. This of course is all the government’s fault. Is it not about time we took responsibility for our own actions? Just because interest rates are low do people have to borrow money for stuff they neither need or can afford? And when the day of reckoning comes blame the government for their stupidity and poor judgement. Sorry but you make the choice live with it and put the blame where it belongs. On you the purchaser.

#93 mark on 03.19.14 at 11:02 pm

#50 joblo on 03.19.14 at 8:31 pm
Those without will always have options.
Say…. Mexico, Costa Rica, Thailand, Belize, Panama and no mukluks required.
So adios Kanada!

I dunno if I’d want to be an infirm wrinkly crowding out poor locals in place with sketchy rule of law.

#94 KommyKim on 03.19.14 at 11:03 pm

RE: #53 The Prophet Elijah on 03.19.14 at 8:50 pm
Now lets take it a step further, it’s because of legalized abortion that this phenomenon is occurring. If millions of babies were not killed we wouldn’t be in this jam.

Really? Most people practice birth control with pills or condoms. Abortion is the last resort for most people.
The real reason for population decline in the developed world is industrialization and social services like CPP & OAS. We no longer need 6-12 kids to “run the farm” when we retire.
News flash: The world’s population is still increasing. There is no lack of people to go around.

#95 what a bubble? on 03.19.14 at 11:04 pm

…but the song will remain the same:

http://fullcomment.nationalpost.com/2014/03/19/john-ivison-joe-oliver-is-a-safe-hand-at-finance-and-will-likely-stay-the-course-flaherty-set-out/?utm_source=dlvr.it&utm_medium=twitter

#96 hohoho on 03.19.14 at 11:05 pm

> … the demand for these homes are coming from TWO directions now … You have never discussed this

Two directions: 1. smart money cashing out of mega houses and into financial assets, and 2. greater fools leverage up the wazoo and bet it all on RE. Seems to me like regular topics on this blog?

#97 Steven on 03.19.14 at 11:14 pm

I found this at Zero Hedge.
http://www.zerohedge.com/news/2014-03-19/music-just-ended-wealthy-chinese-are-liquidating-offshore-luxury-homes-scramble-cash

#98 Inglorious Investor on 03.19.14 at 11:15 pm

Boomer retirement will see the bank overloaded with reverse mortgages. And almost every home will become a multi-family dwelling.

This is because multiple generations of the same family will be living in the same house. Or because the owners will create basement apartments, attic apartments, garage apartments, closet apartments, cupboard apartments, TV timeshares, flatware rental, etc. A plethora of at-home businesses will crop up. Perhaps a new type of escort service for those looking for a “mature” experience will be the new Boomer boom industry. Party like it’s 1979, Baby!

#99 crazed and confused on 03.19.14 at 11:19 pm

Just sold my GDXJ with a $1200 gain plus dividends.
thank you Stop loss function…wasn’t even awake

just gotta keep fighting

#100 crazed and confused on 03.19.14 at 11:22 pm

is this it garth??
real estate will just keep going up. but im here in the lower mainland I’ve been to open houses since dec 2013. condos are stagnant , relisted .I don’t see bidding wars…the prices are lower . I don’t get it
burnabt, new West , coquitlam?

#101 TurnerNation on 03.19.14 at 11:22 pm

Whack! Thank you Fed may we have another :-(

Kaputs.

“There’s nothing half way about it, VIX says it all.”

http://www.youtube.com/watch?v=ZQFX0EOubow

(Which is funny as lately I’ve been drinking Ex at that downtown ‘dive’ bar, something I had last when I was 16. It’s actually pretty good.)

#102 Pope Shostyburger Snugglebums the 666pq (aka Nosty) on 03.19.14 at 11:25 pm

#55 G on 03.19.14 at 8:58 pm — “What about all the prudent savers now languishing on 0% interest?”

FWIW, we have a tiny amount in savings, a little more in more in chequing to pay monthly bills but the majority is in investments which pay us monthly.

The Golden Goose or Lucky

#103 Obvious Truth on 03.19.14 at 11:29 pm

The First Lady of the fed gave us the scoop today. More worried about being behind the curve that anything else.

Times are a changing.

Enough correction talk and let’s blow out these shorts. Even better if they get embarrassed and have to go long.

Anyone that doesn’t see the RE story for what it is by now never will. Their house is already down 12% and counting.

It will be about the societal impacts.

#104 cornstars on 03.19.14 at 11:29 pm

hey smoking man !
like every actor,musician and writer, your done!
Now Garth cut to the chase you know what happens next! DS

#105 TurnerNation on 03.19.14 at 11:34 pm

As this is kind of a boomer music blog (think of this post as user-generated content, what web site wouldn’t like?) from well before my time a seminal song of simpler times. Always brings chills; If it doesn’t, well…

I went to high school N of GTA, where there was nothing to do but drink, drive, and…
this song instantly transports back to late summer teenaged-nights, driving home in wee hours with window cracked and cold dewy morning air rushing in, following the trusty winding rural yellow line home…work on night moves:

http://www.youtube.com/watch?v=zPF_jEw5Kw4

#106 Lurker on 03.19.14 at 11:42 pm

An older guy I work with has SIX houses (notice I didn’t say he owns them)! That’s his retirement “plan”.

#107 World According To Garth on 03.19.14 at 11:46 pm

But this is nirvana, compared to the US.

But yet……….look at the US recovery? Um. Sorry Garth but can you have it both ways? Just sayin…….

#108 Nemesis on 03.19.14 at 11:47 pm

#BonusZen

http://youtu.be/DvmVYNr0lk0

#109 Lurker on 03.19.14 at 11:49 pm

Barbara Yaffe is at it again. Now she parrots a Sotheby’s “report” of how out of reach Vancouver Real Estate will remain. Every time she writes about RE she pumps. I guess she toes her employer’s line (go to the Vancouver Sun website and look at the ads) but what ever happened to critical thinking? For shame.

http://www.vancouversun.com/business/Barbara+Yaffe+Vancouver+houses+stay+reach+unless+inherit/9632940/story.html

#110 World According To Garth on 03.19.14 at 11:51 pm

#69 Ripped on 03.19.14 at 9:47 pm
So we have an .88 cent Loonie but RBC gives me a .92 cent exchange rate depositing my U.S. tax return today.

The Scam bank pockets .04 cents for themselves.

—————————————————————–

This is why people are using Bit Coin. No fees and tiny 0.5% fee on turning back into the currency of your choice at redemption which is 8 times less than the scam banks. Plus there is no fees like bank machines and VISA charges to retailers.

Good luck in the future banks !!

#111 saltpony on 03.19.14 at 11:53 pm

When I was hanging up used lingerie that had dropped to the floor at Value Village, wearing my red polyester smock, this gnarly old lady gripped my forearm, straightened me up, pinned me with her eyeballs and said, “If you have the ability, you owe it to yourself to educate yourself.” So I did.

I am always slightly bewildered that a sex-stained green satin teddy and a little old blue-haired lady are the catalysts for me changing my life. I would love to say she plucked the teddy out of my hands, winked, and sashayed to the registers… but she didn’t. She just looked at me for a long moment still pinching my arm hard and then, poor and bent, shuffled away towards the bedding. I realize now that she passed on a gift to me that she never got to spend on herself..

And that is the kindness of strangers.

#112 Yitzhak Rabin on 03.19.14 at 11:57 pm

Governments will simply print up the difference and accelerate the 100+ year decline in the purchasing power of our money. Meanwhile, gold will buy as much, as ever. Likely more as we will probably see deflation in terms of gold and high or hyperinflation in paper money depending on how stupid politicians and central bankers respond.

#113 Happy Renting on 03.19.14 at 11:59 pm

#7 Mishuko on 03.19.14 at 6:17 pm

The biggest question for your parents is, do they have enough for retirement? Will your mom’s sweet teacher’s pension be able to mostly carry them? If they’re going to be flush despite sub-optimal portfolio management, you don’t need to push as hard or worry as much as if they’re going to need monthly cheques from you because the MERs ate their retirement.

We blog dogs all know what your dad would ideally do. But you have to consider his level of investing knowledge and risk tolerance (okay, so it’s fake security he’s getting with mutual funds, but if they make him feel safe you won’t be able to force him out of them quickly.)

If you haven’t already, set up charts to show how your 1/3 portfolio has the same holdings as his mutual funds, and regularly compare on a chart the returns. Establish a track record of outperforming the MFs without any additional risk. If you can consistently show better results, you can slowly win him over. This might take numerous quarters or years, but you’re working on his comfort level so it’ll take time.

(I assume you’re using a big bank’s brokerage arm rather than a discount, internet broker he’s never heard of.)

If that doesn’t work you can also see if [email protected] the mutual fund sales office is super flirty/attractive. If so, you may have to resort to mentioning it to your mom… This, I guarantee, will get results. :-)

#114 NV'r on 03.20.14 at 12:14 am

Ok, $$$ into financial assets.

Should we put it into sectors of the market using ETFs or sectors using individual stocks within the market?

#115 Happy Renting on 03.20.14 at 12:21 am

#40 robert james on 03.19.14 at 7:48 pm

That is sad about your neighbours, but the kindest thing you can do is let them be grown ups and sort it out on their own. In their 30s they can afford to learn an expensive lesson to become smarter for the rest of their lives. They need to feel the pain of being foolhardy so they won’t do it again. Have them and the kids over for a meal if you think they’re going hungry, and lend a sympathetic ear (but no more.)

#116 Angela on 03.20.14 at 12:24 am

The word ‘budgeting’ and the number $408,000 seems like an oxymoron to me.

#117 bungalobill on 03.20.14 at 12:24 am

Statisically it would seem that over the broad range of soon to be retired boomers there has not been enough rrsp investment, but when you break it down, I think you would find large numbers of people have contributed religiously to their rrsp’s, accumulating significant holdings, and a lot of boomers have not contributed wisely, so if the savings investment numbers of boomers are being reported on a per capita basis, I don’t think it accurately reflects the real picture. Even before rrsp’s and the recent tfsa’s, there were always people who scrimped and saved and those who did not, smart people in years past set the table for their retirments and the live for the moment types struggled in retirement, that’s how was then and how it is now. What is different about today’s smart retirees, is as they start living off their rrsp’s, they become taxpayers again, thus giving the government of the day the gift of a taxable workforce and a taxable retirement populace, they get payback for the tax breaks they gave them in their working years.

If the taxable holdings of the combined rrsp’s of the retiring boomers were in the range of a trillion dollars taxed at an average of ten percent, they would be looking at a hundred billion in extra tax revenue over a 20 to 25 year period, I would think the total rrsp holdings and taxation percentage would be much higher than my example, so i don’t think things will be as bleak as is being reported

#118 Linda Mulligan on 03.20.14 at 12:40 am

#59 – easy to say boomers are the source of all economic evil but: boomers paid & still pay taxes, funded schools, raised families etc. & by the way – that easy time they had? How well do think you’d do competing for jobs etc. with 9 million competitors? Oh right – the younger generations can tell you how tough it is but at least they might live long enough to inherit the jobs. Bottom line is only so many ‘good’ paying jobs available & once that job was filled, the remaining boomers had to make do with the jobs no one wanted. As for the ones who had the good paying jobs, keep in mind those lucky ones always knew that if they screwed up, literally thousands of qualified replacements waiting to take the job. Younger generations complain when they don’t get the ‘good’ jobs out of high school, college, university & having to wait 10, 15 years to get started. Try waiting all your working life & see how easy that is.

#119 chapter 9 on 03.20.14 at 12:55 am

Alison are you in the mood to cut another cheque? How about the $19,000.00 Alberta taxpayers coughed up so you could meet with your globalist buddies in the Bilderberg Group.

#120 Andrew Woburn on 03.20.14 at 1:01 am

#75 T on 03.19.14 at 10:08 pm
Why are people entering in there 60′s buying a 2 story houses? Not cashing in the mega house and heading to a condo?
==================================
We are in our 60’s and bought a two-storey house. When we were checking out Qualicum, people who sell houses (can’t say the “R” word) told us that two-storeys there sold at a discount because retiree’s didn’t want them. Well that makes sense if you have an existing medical problem, but if you are basically healthy, babying yourself after 65 is going to take you down faster than anything. If you don’t move, you seize up. I watched my parents do it. When and if we need to, we will install a stairlift.

We never considered a condo. I have lived in high-rises with the sounds of neighbours urinating, fighting and fornicating. Adding an overlay of strata politics and special assessment threats was more than we could bear.

#121 Nemesis on 03.20.14 at 1:02 am

SaltyDogz… this is, seriously, a OneOff [blame it on the PinotGris if you must]…

TheSecretOfNemesis:

…”You’re a man of the mountains, you can walk on the clouds…
Manipulator of crowds, you’re a dream twister
You’re going to Sodom and Gomorrah
But what do you care ? Ain’t nobody there would want marry your sister
Friend to the martyr, a friend to the woman of shame
You look into the fiery furnace, see the rich man without any name.”…

http://youtu.be/1XSvsFgvWr0

#MeanwhileBackInCali #Harbingers #Portents

[LAT] – CompanyTown: Sony Pictures laying off 216 employees in Culver City

…”According to the notice, the layoffs will be effective between June 2 and July 18. Pink slips are being handed to workers at four Sony Pictures offices — three on Washington Boulevard and one on Corporate Pointe.

There are also layoffs underway at the studio’s international offices.

At an investors conference in November, Sony Pictures executives outlined $250 million in budget cuts that were already underway. The studio also hired consultancy Bain & Co. last year to identify $100 million or more in additional cuts.

The layoffs this week are part of that cost-cutting initiative, which was announced after Sony Pictures posted an operating loss of $181 million for the company’s fiscal second quarter that ended Sept. 30.

Last year Sony Pictures released a handful of high-profile movies that underperformed at the box office, though the studio has put out recent critical and commercial successes “Captain Phillips” and “American Hustle.”…

http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-sony-pictures-laying-off-216-people-at-culver-city-headquarters-20140318,0,6819426.story

Well. There it is.

Nope.

Bonus’Zen’:

[LAT] – Disney Interactive cutting about 700 jobs

http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-disney-interactive-layoffs-underway-20140306,0,4952297.story

#122 Here it comes... on 03.20.14 at 1:04 am

The Music Just Ended: “Wealthy” Chinese Are Liquidating Offshore Luxury Homes In Scramble For Cash

http://tinyurl.com/nuuuvhr

There are two possibilities. One, HAM is real, in which case it’s a matter of weeks until this tsunami hits the wet coast. Second, ours it’s our own making and the unmaking will be our own credit crunch. That could take until October.

#123 meslippery on 03.20.14 at 1:06 am

Well a lot of stress here tonight.The recurring thing here is
beside really bad moves (Think Chess) is I am 53 and
can remember, A Guy who will work hard, long hours back in the late 80s and 90s could with great sacrifice,
long hours hard work make good money with overtime
90 to 100 K and gas was 50 cents a liter, houses 150k
for something to live in. It,s paid off.. But what are my kids to do now. Even I make less than I did Then.

#124 Son of Ponzi on 03.20.14 at 1:25 am

#69
So we have an .88 cent Loonie but RBC gives me a .92 cent exchange rate depositing my U.S. tax return today.

The Scam bank pockets .04 cents for themselves.
———————–
Expect the IRS to collect another .50 cents for themselves.

#125 Barry in Pickering on 03.20.14 at 1:49 am

))) About 36% of workers have less than $1,000 in savings and investments that could be used for retirement, not counting their primary residence or defined benefits plans such as traditional pensions, and 60% of workers have less than $25,000.

Articles like these are pointless, as perhaps it is the youngest workers that haven’t saved for retirement. If the stats presented were from the over 45 age group, there would be some meaning to this article.

#126 sciencemonkey on 03.20.14 at 2:06 am

Whitekat, how does the Canadian bank know someone is a US person? How are penalties applied and collected, does the Canadian bank take the person’s money and give it to the IRS?

And I agree, I’m only 30 and it was already an accounting nightmare to get compliant. I would renounce except I might need to look for work in the US.

#127 Blacksheep on 03.20.14 at 2:06 am

Shawn # 76,

“Perhaps, the rest of the money was deposited in the bank where it funds the mortgage of whoever bough the multi million dollar place in Burlington.”

“Oh, they put it into stocks you say? Well then whoever they bought the stocks from perhaps has the money in the bank, funding mortgages.”
—————————————-
No Shawn, not funding mortgages.

“Far more important for the creation of bank deposits is the act of making new loans by banks.”

“When a bank makes a loan to one of its customers it simply credits the customer’s account with a higher deposit balance.”

“At that instant, new money is created”

http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q101.pdf

#128 Debtfree on 03.20.14 at 2:13 am

@78 kk . KIAs are going to get cheaper because Steve hates us . It was either that or make cpp a lottery .
No worries though . Why, with joe in charge of finance we’ll get lumps of coal as big as busses in our tax returns .

#129 Joe on 03.20.14 at 2:19 am

Just keep interest rates low and print lotsa money no biggie.

#130 drydock on 03.20.14 at 2:22 am

Looks like tech firm CEO’s were complicit in NSA spying on their customers.
Link to Guardian report.

http://www.theguardian.com/world/2014/mar/19/us-tech-giants-knew-nsa-data-collection-rajesh-de

#131 whatever on 03.20.14 at 2:43 am

20 Cici on 03.19.14 at 6:40 pm

YIKES!

This is looking scarier by the day…
—————————
Scarier for who?

If you position yourself well. your be ok. But if you think you can keep on hiding your skeletons in the closet. One they they will come out and bite you.

When the oldies retire or get fired. They either can live on 1100 a month. Man that doesn’t even pay for rent.
Or if they have a million dollar house the yearly expenses will eat up over 1/2 of that amount leaving them with about 600 per month to spend.

The oldies only have another average 10 to 25 years to live. The only real solutions is to bunk up with lots of oldies in one house or plainly sell the house and live on the livetime gains on the house.

Its a no brainer. But this may cause a flood in houses for sale. I guess we are headed into interesting times

#132 Tony on 03.20.14 at 2:44 am

Re: #26 Piccaso on 03.19.14 at 7:00 pm

A stronger U.S. dollar was the reason the market fell and of course gross overvaluation.

#133 Tony on 03.20.14 at 3:08 am

Re: #60 Retired Boomer – WI on 03.19.14 at 9:12 pm

The average 55 year old American has nothing. Where did you dream up 242 thousand in savings?

#134 drydock on 03.20.14 at 3:10 am

#54 Smoking Man

You’re absolutely right.

#135 Tony on 03.20.14 at 3:17 am

Re: #29 JohnL on 03.19.14 at 7:12 pm

They blame it on school attendance but if you go back in time to the last several decades people in America actually attended school longer than today.

#136 Bizarre on 03.20.14 at 3:24 am

My favourite Doomers: The Rolling Stones – Doom and Gloom :)

Meanwhile, in a parallel universe:

It is true. You too can become a Lunar land owner by purchasing acres of land on the Moon. THE LUNAR EMBASSY has been selling land on the Moon for the past 22 years. They were THE FIRST and THE ONLY COMPANY in the world to possess a legal basis and copyright for the sale of Lunar and other extraterrestrial property within the confines of our solar system.

(c) Purchase Moon Land – Authorized Lunar Embassy Agent

#137 drydock on 03.20.14 at 3:34 am

# 4 Steve and #23 Cici

I miss the 70’s as well, there was still optomism in the air.
Now the media and Gov’t try to divert everyones attention by making threats about the Crimea.
Hey, Gov’t goofs and media presstitutes when are you suiting up and shipping out?
Take the Protecteur, maybe someone will tow you over and then you can give Ivan what for, eh what!
They are nothing but a bunch of drama queen lying clowns.

#138 Nemesis on 03.20.14 at 4:23 am

This is how it starts…

http://youtu.be/Sa0N3JtEE3o

#139 Rob on 03.20.14 at 5:34 am

she gets just over $250/mo and I get about $750-800. Not enough to retire on. We Definitely cannot live on $1000 a month

This was a comment from a family member, same age as me 54, so I told him 3 things

1. Goverment pensions are the foundation you build on no the roof you live under
2. take a slightly delayed retirement (70 vs 67) this give you 16 years to save
3. Come up with a plan

A so so author made a comment that really changed my thing, he said you have to make a plan, a half assed plan is better than no plan. That’s what I did and I was surprised to find out we where much better off than excpected.

Regarding the comment about people pulling money out of the market in ten years, agree with Garth, people will be selling house desperate for yeild (income ) and will be buying things like BCE and Bank stocks pushing the yields down and the price up

#140 Detalumis on 03.20.14 at 5:53 am

The comments are better than the article – it’s a fruit salad. Complaints that people work until 65 instead of checking out at say 50 that’s a good one, so are the too many abortions, then we have a 93 year old who has to wait 2 years for assisted housing, and my favourite, the conspiracy theory against older men having children after 45.

1. If I am 60 ten years from now yes I should be able to work until 67 since that is the supposed new retirement date. A 60 and 78 year old have nothing in common just like a 1 and a 19 year old are not, we need to stop with the “generations”.

2. Abortion rates are falling since the introduction of OTC Plan B. The only women I know that had abortions all did it after being told they were having a defective fetus. Contrary to popular belief women don’t want the blessing of a Down’s Syndrome miracle baby and society doesn’t want to pay the 60 to 100K a year it takes to look after them in group homes either.

3. If you want to go into assisted housing don’t wait until 93, go on the waiting list 5 years early.

4. The rate of autism and other strange disorders spiked after the advent of Viagra. When the big V. first came on the market they had a “hard” sell, no man admitted to needing it. The little secret is that ED is approximately the same as age, 40% at 40, 50% at 50, men lie A LOT. That’s what happens when you play with Mother Nature, she had a plan to stop the spread of defective sperm and only the Lion Kings who were still virile were still procreating in their geriatric years.

#141 Grantmi on 03.20.14 at 6:31 am

#27 2CntsCdn on 03.19.14 at 7:04 pm
I’m picturing massive trailer parks, run down cars, a lot of card playing, crowded Walmarts, 20 different ways to serve macaroni, lots of cheap liquor and sad faces.

And medical weed for all… And all a good night!!

#142 Grantmi on 03.20.14 at 6:34 am

#71 brainsail on 03.19.14 at 10:01 pm
I realize that the typical Canadian boomer entering retirement may have the majority of their net worth in their house and at some point will need to sell in order to fund the rest of their years. But where are they going live?

My 93 year old mother has decided to leave her bung that she has lived in since 1958. Edmonton, maybe $500k. She has made an application for an assisted living unit and is now on a two year wait list.

Where are the boomers going to live after they sell their homes?

With you!!!

#143 truth seeker on 03.20.14 at 6:40 am

It’s not surprising that most middle-class Americans can’t save for retirement. Many are barely making it thanks to many well paying jobs being outsourced and many industries moving to China/India etc. as well as deregulation of industries such as airline and trucking. The US real estate meltdown wasn’t the only factor in Americans’ financial demise. The only winners are the 1% who benefited from government policies that made them richer.

#144 Steven on 03.20.14 at 7:22 am

More money will come out of houses and into financial assets. — Garth

Garth the limit to that is the the supply of optimistic greater fools willing and able to buy houses from the boomers. At some point that won’t be possible due to unemployment or low pay rates.

#145 pbrasseur on 03.20.14 at 7:45 am

The bright side of that equation is that boomers will have to keep on working, no fun for them but good for the economy.

That whole generation retiring at once would have been unsustainable anyways, goes to show the markets know what they’re doing, even if we don’t.

#146 pbrasseur on 03.20.14 at 7:52 am

truth seeker (6:40 AM)

“Many are barely making it thanks to many well paying jobs being outsourced and many industries moving to China/India etc. ”

Ok then lets suppose those jobs hadn’t left. That computer you just bought for $500 would cost $2000, same for the TV and plenty of other stuff. Less purshasing power, less purshases —> less jobs.

If the middle class dont save it’s because it dont want to. Big mistake, but its own mistake.

#147 Steven on 03.20.14 at 8:03 am

#59 Good luck trying to tell a Boomer that it’s over.

Technically I am a boomer and 53 years old. I have been underpaid, priced out of the country and still a virgin. All you have to do to be like me is live with in your means and have simular biological traits and world view. My 50 year old brother gets a 6 figure income and has a house and family and he is my polar opposite in world veiw and blood type. When you are well paid it is easy to be an optimistic liberal and talk down to those not so well paid who have to deal with a world that is economicly,socialy and politicaly hostile.
There are other differences between my brother and I .
I am a type O negative and my brothers and mother are type O positive. The differences in world view between them and myself is like the difference between black and white. It is like a difference between species. May be this explains my previous postings.
What does this have to do with real estate and my lack of progress along my life line?
May be quite a bit. As a thinker according to the true colors personality quiz I would be inclined to weigh the situation up in respect to income and potential expenses. This would prompt me to avoid excessive debt where as others would be inclined to follow the herd and get into debt to buy a house and everything else 85 % or more of the population would do. The system caters to this quite well. When real estate goes up the regular person sees this as progress where as I see it as an addition to an already excessive barrier to living.
Being a liberal minded, politically correct real estate cultist just isn’t natural for me.
I suspect that the problem may be more than merely a generational thing. It may have a lot to do with species differentiation and life experience. People are not all the same.

#148 Shawn on 03.20.14 at 9:06 am

Explain Me the Money!

Blacksheep at 127 quoted:

“When a bank makes a loan to one of its customers it simply credits the customer’s account with a higher deposit balance.”

“At that instant, new money is created”

*******************************************

Yes, that is true.

But what happens when the customer spends the loan, now the bank needs a new depositor.

Any bank can lend a lot to you if you promise to keep the loan on deposit at the dame bank, funding your own loan.

Anyhow, again, people should spend less time thinking about how money works and is created and more time accumulating money and wealth.

It is said that no one truly understands at the sub-atomic level how gravity works, yet we all understand in on a practical level.

Also, buy some bank stocks.

Understand compound returns, that’s how YOU can create real money for yourself. 5% of a million of $50k.

5% of $10k is $500. It takes time to compound.

#149 Franco on 03.20.14 at 9:09 am

Not all Boomers will retire, unless they have to. House prices will stabilize and perhaps will only have smaller increases. Doomers have been consistently proven wrong, with a few exceptions out of thousands of predictions. You Garth Turner are no different.

You sound insecure. — Garth

#150 Angie on 03.20.14 at 9:11 am

The Backstreet Boys died???

#151 Musty Basement Dweller on 03.20.14 at 9:19 am

It’s obvious that our housing arrangements are going to get a lot more cozy in the coming years.

More families and friends living together and sharing expenses out of necessity. What else can they do with jobs at McDonalds and Starbucks and high costs of living? Cozying up is how other cultures and poor countries handle the issue.

That is one more factor that doesn’t real help the demand for housing, of any type in the future.

#152 Dupcheck on 03.20.14 at 9:29 am

That explains why Gov is so inefficient, it is run by boomers that type with two fingers and do not have much knowledge of how to run essential computer programs. Oh and that is why the boomers need the unions; to protect their jobs from the much smarter youth that can do their job much better.
One thing could be said for sure, the young ones are getting pissed at the inefficient old fartz lingering around and holding innovation back.

#153 2CntsCdn on 03.20.14 at 9:33 am

#147 Steven
Boomers in peril
People are very “stear-able” and getting lazier and more entitled every day. Big business is very sophisticated and smart. It is good at using peoples lust for stuff, and weaknesses to steer them down a path …. separating them from every dollar they have and can borrow. Convincing them it’s ok to borrow for craved stuff now ….. not later. You “deserve” it …. “Life is short … what are you waiting for?” You’ve heard it all before.

The world is a crazy place …. and getting crazier. People have to simplify … for their own survival. And all this “stuff” we’re supposed to want will have to be put out of our minds …. or we face a life time of disappointment, dissatisfaction, envy, resentment and no future …. just running around buying the next shiny new thing to bring on temporary happiness. The future DOES eventually get here … and if you have made no plans for a future … you won’t have one. Don’t be angry about it. I don’t know if you’ve noticed yet or not … but the government hasn’t planned your future either … so they won’t be there for you. Well maybe if you can get your gov’t cheques forwarded to Bangladesh you might be able to exist there .. but no where in this country. You have to look out after you.

So simplify simplify simplify. If you think you can keep up … good luck (you all know we’ve been getting poorer in Canada the last 20 years). The top 1% -ers can and will be able to (and don’t get angry at them) … either become one of them or simplify. But many of them aren’t happy either …. so it’s not about keeping up.

Find happiness in simple stuff you can afford … block out the rest. Start with good coffee and a walk or bicycle ride … and work outward from there. And tell your kids and family you love them once in a while for crying out loud : )

#154 RVP on 03.20.14 at 9:36 am

Most 28 year olds won’t care and won’t have much sympathy for impoverished senior baby boomers. The baby boomers like to call us entitled when we complain that we can’t get a foothold in this economy. High housing costs and a brutal job market are just facts of life for 28 years old–most of us have just learned to accept it because we have no other choice. This blog would be surprised at how many people in their 20s are actually quite skilled at getting by on a low income. And I don’t mean by relying on baby boomer parents. There are lots of 20 and 30 somethings who get by on what would look like to a baby boomer is an impossibly low income and many of these younger folks just accept it and don’t complain. You just don’t here from us on blogs because we are too busy working and living our lives.

So now the baby boomers are going to have to learn how to get by on a low income too. Don’t complain to us about it. Your generation created this situation. We have to get by on low income are whole lives and won’t have any pensions or anything to look forward to when we are old. At least the baby boomers had some fun spending money when they were young and only get to experience poverty in their final years–that’s better than what the young folks get.

Baby boomers deserve every little bit of financial pain that is coming to them. Baby boomers will get very little sympathy from the younger generations. Your generation absolutely deserves to be going into an overburdened and underfunded medical system in their old age because that’s what your generation voted for.

#155 johnny d on 03.20.14 at 9:43 am

Garth,

What do you figure about this Joe Oliver guy as far as what his approach to the housing market may be? Can we expect 30-40 year mortgages again? Or will this guy have the guts to make things right again?

#156 TheManWhoStaresAtSheeple on 03.20.14 at 9:45 am

The Music Just Ended: “Wealthy” Chinese Are Liquidating Offshore Luxury Homes In Scramble For Cash

Linky here – http://tinyurl.com/nuuuvhr

No even a mention for “the best place on Earth” in this article…

#157 gladiator on 03.20.14 at 9:51 am

@91 Shawn:
“With a $20 bill you have a claim check for $20 of goods and services that you can cash in anyplace, including on the streets of Montreal.”

Wrong.
With a 20$ bill you have a claim check for 17.7$ of goods because the HST of 13% has to be paid as well, unless you buy food or gas – the latter has so many taxes included in the price that the authorities keep it away from the public eye.

And some further fun with numbers:
If you pay 30% of your income in taxes, then you have to earn 28.57$ to get 20$ after-tax, to have a claim check for 17.7$ of goods and services. This means that when you buy something that costs 17.7$, the taxes you pay are equal to (28.57-17.7)/17.7=0.6141= 61.41% above the price of the good or service you buy.
Mind you, I am just talking about income and consumption taxes and I didn’t include others like property, car and other taxes we pay, which would raise the percentage to over 65% easily.
This means that more than 65% of the year we work for the government. That’s over 7.8 months in a year = you start making money for yourself starting sometime around August 25th and enjoy the earnings of 4 full months and 6 days from a year of hard work. Funny, ain’t it?

#158 Steven on 03.20.14 at 9:54 am

I have to go from paying $428.50 a month rent to being evicted and paying double or more. If I could get a job I am looking at minimum wage or slightly better. I am being evicted because of the decisions of government and a landlord that has a government job. They just don’t give a damn about the consequences of their decisions.
I am looking for oportunities that don’t appear to exist on any decent terms.

#159 sciencemonkey on 03.20.14 at 9:56 am

Whitekat, do you have an answer for my Qs @ 126?

Boomers doubling/quadrupling up in houses, sounds like real life Golden Girls!

Speaking about exchange rates, at some point this year I will cash in some US options and get a cheque that I believe I can ask for in the original US dollars. Where is the best place in Canada/Toronto to not get raped on exchange fees?

Also on that topic, I like Canadian dollars for buying investments because it’s such a headache dealing with exchanging currency, but I still get foreign currency exposure by buying unhedged ETFs for foreign equity.

#160 ChaChing on 03.20.14 at 10:04 am

Using the phrase “the largest population of [whatever] in North American history is nice dramatic propaganda, but irrelevant since population has been increasing across the board for centuries.

Nice try tho.

Boomers, at 32%, are the largest cohort. — Garth

#161 ChaChing on 03.20.14 at 10:08 am

Boomers are the wealthiest cohort in Canadian society. They will easily kick in for a home for their children. This is a non-issue.

Who cares if Canadians have a total if $1T in mortgage debt when they have $9.4T in assets. If I had a $1m mortgage with $9m in assets I wouldn’t care either.

Ridiculous.

The aggregate net worth numbers are meaningless. You should read beyond the headlines. — Garth

#162 Holy Crap Wheres The Tylenol on 03.20.14 at 10:26 am

Do you think anyone outside of Olivia Chow, Rob Ford and John Tory has a serious chance of being elected mayor?
Sara Who (Thompson) has thrown her hat (bonnet) into the mess. All of these B list people are wasting their time and money. However it is going to be so interesting watching this election. So let the mud slinging, gaff-ah bashing, garbage digging show on the road. Thanks Chow for showing us your real colors and sticking it out as a representative of the people of your riding in Parliament. Based upon this, they’re all misleading, though Chow has the least to mislead on because after all……she’s done nothing for Toronto lately and will continue to do nothing. Ford on the other hand does have the best ‘lowest average tax increase record’ of all mega city mayors – especially when up against NDPer Miller. That one’s a slam dunk.
As for Tory he should learn to be noticed out there and at least people could consider him as a serious contender.
Lets see Ford wins again, the council will immeaditaly strip him of his powers again. Same old same!
John Tory wins, he could lead the city out of hell into at least middle earth.
Chow wins, well we’ve all been their comrades back in the good old “Rae days.” Oh pinko communist tree hugging rhetoric at its best, be prepared to start dishing out social services for everything, taxes up, road tolls, user pay services, outsourced city jobs brought back into the corrupt unions.

Oh how I love watching Toronto Politics from afar that is!

#163 High Plains Drifter on 03.20.14 at 10:33 am

The plutocrats that gave Alberta Alison Redford, in their wisdom, have taken her back. Now, who can spot the real buccaneers in this morality play? Ontario, you need to drop your green fig leaf and power yourself with Alberta energy. You have got to keep your eye on that neighbour of yours, to the south.

#164 Retired Boomer - WI on 03.20.14 at 10:41 am

#133 Tony

Daily Finance.com “retirement Savings by age” shows an interesting chart. Inferring by the reported percentages is how that number was derived.

Methinks a lot of Boomers will be much better off than you think. This is merely ‘retirement savings” not house wealth, not non-retirement savings.

At least I hope the majority of my generation used some of their resources to build a future stash. Heck most have a few more working years to as many as 22 years.
(Boomers 46′ – 64’)
A LOT can change in that time!!

Best.

#165 James on 03.20.14 at 10:48 am

10 years? Now you expect people to wait 10years for a potential correction? Seriously thats not even funny. Price will just continue to head north for SFH. Especially when rates will be remaining low for considerable amount of time.

#166 Ralph Cramdown on 03.20.14 at 10:48 am

#45 IndexMan — “The folks in there were selling a (likely legal) scheme promising “stock market free” “8% interest” on commercial mortgages as an investment vehicle.”

To a roomful of suckers. You can earn 7.4% owning part of a professionally managed diverse portfolio of mortgages, traded on the exchange and thus liquid at any time. Or you can earn 8% by holding part of one mortgage, illiquid and risky, with the cheap-suited salesmen taking a hefty slice of the yield for themselves.

#167 45north on 03.20.14 at 10:52 am

Steven : from your link:
“The most important thing for them is to sell as soon as possible,” It is going to have some impact on the local property market, that’s for sure.”

which is what I said about Chinese buyers in Vancouver, if you think that they bid the price up quickly wait till you see how fast they can drop it

“here it comes”: same link as Steven but he was first. Still I like your comment about the two different time lines.

#168 Aggregator on 03.20.14 at 10:54 am

Alberta Premier and Bilderberg member Alison Redford resigns

#169 Renter's Revenge! on 03.20.14 at 10:57 am

@sciencemonkey

I suggest you check out TD’s Borderless Plan. It comes with better exchange rates for USD:

http://www.tdcanadatrust.com/products-services/banking/accounts/u-s-dollar-accounts/borderless.jsp

You can see the difference between their regular and preferred exchange rates here:

http://www.tdcanadatrust.com/fx/rates.jsp

#170 Stickler on 03.20.14 at 11:01 am

“a culture of saving has been swept away by consumerism”

Well said!

Who needs savings when there are new taller boots and a new ithingy to buy!

——————-

@ #7 Mishuko on 03.19.14 at 6:17 pm

I’m one of those hipsters… okay maybe not, have a ft job at a big 5, with no shortage of work.

What really upsets me is my parents retirement. Mom’s a teacher, dad’s in the private sector.

>>> Your mom’s a teacher…they will be fine with a great pension. Want something to worry about? Worry about your job being outsourced.

————-

As an internet economist, I predict a growing # of boomers will retire to cheaper countries…

#171 Retired Boomer - WI on 03.20.14 at 11:02 am

#105 Turner Nation

Good post. While looking around found a cut from Seeger’s Back in 72 LP “Turn The Page”

That old vinyl Palladium LP still resides in my closet, and plays as well as it ever did.
Thanks for the Nostalga run.

#172 Ralph Cramdown on 03.20.14 at 11:29 am

#157 gladiator — “This means that more than 65% of the year we work for the government.”

Two things:

Referring to it as “the government” makes it sound like some malign rent extraction machine. If you think of it as paying for schools, roads, recreation facilities, running water and sanitation, health care, the social safety net, policing and defence, and everything else that sets civilized society apart from disease-ridden slums, it seems a little different.

Second, taxes are a great game. Do them yourself, longhand, reading all the instructions for all the boxes. Figure out how to gradually move your income from the high tax boxes to the low tax ones, and let somebody else spend 2/3 of their income on taxes to support your amenities! It is perhaps unfortunate from a societal point of view that taxes are complex and uneven, but from my family’s perspective, it represents nothing but opportunity.

#173 BajaLuis on 03.20.14 at 11:39 am

We tried to live in Florida, but those American’s are crazy about their guns. We tried Portland but living near our adult children was just heart ache and another drain on our pocket books. An old friend recommended we try Baja California, Mexico. We visited San Diego and then we crossed the border. We purchased a two story condo for less than 75k. We are three blocks from the beach and live on my 1600 per month pension. I am 25 mins away from my doctor in San Diego. We have a maid! One just needs to find a good second world country to call home in retirement.

Where the cost of living is 1/3 the cost of the USA. “We love the Mexican People!”

#174 Alberta_bound on 03.20.14 at 11:45 am

We’ve identified the problem so what’s the play here? This post basically written about my father, house rich, cash poor set to retire in 2 years.
He carries a very small mortgage and is bankin on living off rental income in his golden years and systematically selling off his property as his small RRSP dwindles.
It sounds like 10 million other “wrinkles” have the same idea.
Should he be sell sell selling right now and beat the other wrinkles to the buffet table?? I welcome any and all advice.

#175 gladiator on 03.20.14 at 11:46 am

@168 Ralph:
I am happy for you that you can lower the percentage of your overall income that goes into taxes. Good for you!
I do not have this opportunity yet as I am a salaried employee and pay over 30% in income taxes.

I am not saying that “the government” is some leech that shouldn’t get anything out of my hard-earned money; what I am saying is that it’s just outrageous that I get to keep what I earn in 4 months out of a whole year and I suspect I am not the only one feeling this way.

#176 gladiator on 03.20.14 at 11:47 am

Sorry, my reply was for 172.
numbers of posts changed while I was typing my response.

#177 Greater Stool on 03.20.14 at 11:49 am

Once again here is a link to a fantastic retirement calculator.
financialmentor.com/calculator/best-retirement-calculator

#178 Oceanside on 03.20.14 at 11:56 am

#120 Andrew Woburn on 03.20.14 at 1:01 am
#75 T on 03.19.14 at 10:08 pm
Why are people entering in there 60′s buying a 2 story houses? Not cashing in the mega house and heading to a condo?

I am 63, we sold our Okanagan home 3 years ago and are looking for a two story home around Qualicum as well. Lots of little homes on little lots selling like crazy to retirees ( in the $400K range). We have 4 bicycles, motorcycle, couple of cars a whack of skiing equipment and we have children and friends visiting a lot. We travel and hike as well. I agree that if we moved into a condo we would just get “old” fast. Every contemporary I know in their 60’s are very active and are years away from a condo or other caged living arrangement. We have owned a condo and would never go through that one again, as well we have found that the taxes and climbing strata fees have made condo owning closer to a SFH cost wise anyway. Just sayin’

#179 fixie guy on 03.20.14 at 11:57 am

“Boomers, at 32%, are the largest cohort. — Garth”

Statcan has it at 28.6%:

https://www12.statcan.gc.ca/census-recensement/2011/as-sa/98-311-x/2011003/tbl/tbl3_2-1-eng.cfm

‘Children of Baby Boomers’, another 20 year segment, are at 27.3% and those under 18 are currently at 21.9%.
For those interested in a realistic view of the future, click the tacky start button at the bottom left of this page:

http://www.statcan.gc.ca/ads-annonces/91-520-x/pyra-eng.htm

It’s an animated population pyramid (Flash required) covering to 2056. In 2031 when the Boomer peak reaches ~67 years old it’s already below the 40-50 age group. Happy days kids, to obvious delight your X-Box withholding parents will continue to kick the bucket as they approach 70.

#180 VICTORIA TEA PARTY on 03.20.14 at 12:11 pm

THINGS REALLY ARE GETTING BETTER…out there.

But, first:

I really hope that the generations following the Wretched Boomer Classes really DO rein in the oldsters’ expectations. Hey, out there! We can’t get out of this alive!! No matter how much Viagra you pound down the hatch.

Now this:

For the first time since the GFC, I’m more sanguine about things economic but still cautious.

Four reasons:

–Janet Yellen, the new Fed Head, told the lads/lasses of Wall Street yesterday that QE tapering will continue until gone later this year, followed by interest rate hikes starting in early 2015. This was met with the usual sky-is-falling BS and sliding markets.

A parallel reaction would be like telling some spoiled brat kid on the beach that low tide will be replaced soon by a high tide and will wash him away if he doesn’t move up the friggin’ beach. A tantrum follows as does the higher water. But the kids moves…anyway…

–China: At last the endemic corruption that hampers so much of Chinese culture is being properly prosecuted by the newly-revived Chinese administration. In short, SOME too-big-to-fail institutions will be allowed to fail starting March 31.

That won’t mean the end of shipments of Chinese-made crap to Wal-Mart.

Instead it will ultimately mean more open and transparent money markets for China and a greater influx of foreign capital there, something Wall Street will like but which US labor unions will bitch about because such change will inevitably mean holding down labor costs (BTW: the Chinese don’t have a lock on corruption. We all do).

–Europe: The endless list of bureaucratic nitwits and pols are FINALLY starting to bring the big insolvent banks to heel which means better economic times ahead, but still a long distance down the road; better than the last several years though.

–Joe Oliver is Canada’s new Minister of Finance. A long time Bay Streeter with contacts and clout everywhere has been given his marching orders by Stephen The Great: “win the next election.” We’ll watch for a Fall interim budget presaging some low-cost goodies next spring and I hope also for something to bridle the real estate beast within our midst.

On another issue: Ukraine. Who cares and what does it matter, geopolitically-speaking? Why doesn’t President Obama and all of his lick-spittle world “leader” buddies stand up and say to Putin. “Hey, man, better watch it next time. Oh, and have a nice day!”

Mr. Putin’s so-called “coup” is just another step in his rebuilding of the former Soviet Empire which he will manage to accomplish with aplomb. History may remember him as similar to another famous Russian czar, and builder of that country, Peter the Great.

Poor Ukraine. Being just one of many land masses at the center of political, military and commercial gravity, trying to be independent is tough. Very sad, indeed.

So, investors and little folks everywhere, St. Garth of Investment Persnickety was right! Imagine. Oh, well, we walk with a somewhat lighter step!

#181 Happy Renting on 03.20.14 at 12:14 pm

Curious to hear comments from the more active investors/traders here.

http://business.financialpost.com/2014/03/20/the-secret-trading-strategy-from-the-1930s-that-hedge-funders-dont-want-you-to-know-about-2/

#182 Cici on 03.20.14 at 12:16 pm

#111 Saltpony

Beautiful post! Thanks for sharing ;-)

#183 Holy Crap Wheres The Tylenol on 03.20.14 at 12:22 pm

#160 ChaChing on 03.20.14 at 10:04 am
Using the phrase “the largest population of [whatever] in North American history is nice dramatic propaganda, but irrelevant since population has been increasing across the board for centuries.

Nice try tho.
Boomers, at 32%, are the largest cohort. — Garth

____________________________________________

Boooo Yaaaaaa or should I say Booooooomer!

Yes we are large, rich, obnoxious and ready to spend all of that acquired wealth on Depends. Just think we can go to the Casino like Smoking Man, sit there until we either run out of money or crap ourselves silly. So invest in Kimberly Clark!

#184 John Prine on 03.20.14 at 12:24 pm

161 ChaChing on 03.20.14 at 10:08 am
Boomers are the wealthiest cohort in Canadian society. They will easily kick in for a home for their children. This is a non-issue.

With a few exceptions, the many 60 something Boomers we know have enough to live comfortably and have a nice life. Most of us have helped our children with things like college and university tuitions and the odd car repair but “easily kicking in for a home” Not many, that is a bit of a dream scenario.

#185 Just some guy on 03.20.14 at 12:26 pm

While I am grateful for all the good fortune I have had, and part of that has been surviving some bone-headed mistakes I made along the way, I also accept that there is only so much we can do on our own to protect ourselves. While my wife and I have accumulated sufficient financial assets to provide us with a modestly comfortable retirement, with or without government programs, I am concerned that on the horizon, there is a tax dragon soon to be unleashed that is going to make the dragon Smaug from The Hobbit look like the Geico Gecko.

Out of all this, I think that in the coming time span that Garth describes, there are two groups that will do well. One of course is the fee-based advisor. I urge anyone to follow Garth’s advice (and for the record, I am not a client of his but the people I work with are very similar in their approach).

The other area where I think there will be an increasing demand for services is tax law in the form of a tax lawyer (or accountant if that is your preference although you must try to stay awake in their presence as they tend to emit a sleep-inducing field that can subdue all but the most caffeine-infused).

A good tax lawyer is about as friendly and charming as a wolverine. Do not pet them or try to become their friends. Heed their advice or you may not be able to sit down for several weeks. What passes for humour amongst these creatures could see you walking with a limp for the rest of your life or having to learn to type with only two fingers (because that is all you will have left). Pay them and keep very, very quiet in their presence. They are one of the few creatures able to keep the tax demons at bay.

#186 :):(Ying Yang on 03.20.14 at 12:30 pm

#39 Smoking Man on 03.19.14 at 7:46 pm
So true, once I completely off shore the bulk of my loot, got to figure out away to get my kids out of Canada. They will pay dearly for bad boomers.

McWynne, Chow, Trudeau…

DOOMED…..
……………………………………………………………………..

Smoking Man unless you are going to a third world country or have an unlimited amount of cash, or your kids have great degrees and experience they will not be moving to another country. Perhaps you could set up a Smoking Man Corp somewhere and employ them? My buddy just left for the USA he had a degree in Engineering and even with that and a guaranteed job that required his expertise he was told it was close by the Immigration people. The USA is getting really anal about immigrants with all of the unemployment down there. I would imagine all other counties are the same. I do hear that they are hiring military people in Crimea?

#187 Aj on 03.20.14 at 12:43 pm

#40 robert james on 03.19.14 at 7:48 pm

Congrats on building up a great amount of wealth through prudent spending and saving. I feel for the couple you mentioned, but what I don’t get is why you are being hard on Harper and company? The fact of the matter is that this couple, as nice people as they are, bought in a peak period (as you mentioned). Had they read this blog, or done some research, perhaps they wouldn’t have purchased at that time and would be the ones buying the home now at a discount. In this case, I don’t think anyone in Ottawa ruined anything, these people simply bought high and are selling low….obviously they are going to loose. Had they had the fiscal sense you did, chances are they’d be well ahead today. Blaming Harper and Co. for making it easier for them to take money out is like blaming Mexico for getting Traveler’s diarrhea because you chose to drink the water (against clear warnings).

#188 Holy Crap Wheres the Tylenol on 03.20.14 at 12:48 pm

“The spring has sprung, the grass is rizz. I wonder where them birdies is?”
Sure as hell there’s a lot of For Sale Signs sticking out of the snow?

#189 Ralph Cramdown on 03.20.14 at 1:02 pm

“a culture of saving has been swept away by consumerism and cheap, available credit…”

#34 jean — “Garth, people refuse to save because interest rates are too low and there is no incentive.”

#44 Michael — “Actually, it isn’t consumerism that’s the problem, it’s lagging wages. The borrowing has been necessary just to make ends meet and keep up with the economy.”

I’ve got a theory that at most times and in most places, the only thing that can cause the mass of people to save is the credible threat of future starvation. The North American experience in the second half of the 20th century was, for a variety of reasons, unusual. People in general are lazy, stupid and not inclined to delay gratification. The good news is that it isn’t too hard to get ahead; just work a little harder and spend less of your income than the next guy, and collect diverse investments that pay. Most people won’t. They’ll convince themselves that their house value will go up, their penny miner will strike it rich, they’ll get a promotion and a raise, they’ll inherit big and they’ll win the lottery. Good luck.

#190 Shawn on 03.20.14 at 1:12 pm

Secret Trading Strategies

Happy renting at 180:

Curious to hear comments from the more active investors/traders here.

******************************************

Perhaps better to seek the advice of sucessful investors rather than “more active” ones.

My comment, the link is pure garbage. Anyone who thinks making money in stocks is about manipulation is on the wrong track.

Companies (mostly) make money. Buy and Hold (diversified) makes money. Trading is a zero sum game (negative after costs).

#191 Spiltbongwater on 03.20.14 at 1:22 pm

I will worry about my lack of retirement savings when I retire. Right now it is all about the golf and hookers.

#192 Blacksheep on 03.20.14 at 1:35 pm

Shawn # 148,

“Yes, that is true.”

According to resent revelations by Bank Of England, it is.

“Anyhow, again, people should spend less time thinking about how money works”

I would suggest people shed past perceptions and attempt to ‘discover’ how the system, actually works.

Many trusted people in our lives either, lacked the insight or outright mislead us. Our parents unknowingly, the education system by design, banks for profit and the church / state for control.

I think that covers everybody : )

#193 Ilona on 03.20.14 at 1:48 pm

Did anyone ever purchase these: TD Market Growth GICs for RRSP or TFSA? We’re thinking to try their 5 years Financial GIC Plus that promise maximum return of 25%, but wondering what real returns are more likely to be? 

Thank you in advance :)

Now why would you buy something as dumb as that? — Garth

#194 Holy Crap Wheres the Tylenol on 03.20.14 at 1:48 pm

#154 RVP on 03.20.14 at 9:36 am

Most 28 year olds won’t care and won’t have much sympathy for impoverished senior baby boomers. The baby boomers like to call us entitled when we complain that we can’t get a foothold in this economy. High housing costs and a brutal job market are just facts of life for 28 years old–most of us have just learned to accept it because we have no other choice. This blog would be surprised at how many people in their 20s are actually quite skilled at getting by on a low income. And I don’t mean by relying on baby boomer parents. There are lots of 20 and 30 somethings who get by on what would look like to a baby boomer is an impossibly low income and many of these younger folks just accept it and don’t complain. You just don’t here from us on blogs because we are too busy working and living our lives.

So now the baby boomers are going to have to learn how to get by on a low income too. Don’t complain to us about it. Your generation created this situation. We have to get by on low income are whole lives and won’t have any pensions or anything to look forward to when we are old. At least the baby boomers had some fun spending money when they were young and only get to experience poverty in their final years–that’s better than what the young folks get.

Baby boomers deserve every little bit of financial pain that is coming to them. Baby boomers will get very little sympathy from the younger generations. Your generation absolutely deserves to be going into an overburdened and underfunded medical system in their old age because that’s what your generation voted for.
____________________________________________

RVP many of us Boomers realized long ago that the current system may not be able to sustain the level of quality (or lack of it) that we already enjoy. That’s why many of us saved and invested for the future. What I do not use in my old age will be recycled through my children’s portfolios when I am dust! As for knowing how to get along without much, I don’t think so! My parents were from the generation that lost the most back in the twenty’s and thirties. They taught us not to waste anything and that the value of a penny saved was a penny earned (sorry no more pennies for you). Some of the boomers will end up in the poor house, a lot of us will croak on retirement day. So don’t worry we will get the hell out of your way as soon as is possible!

We saved!!!!!!!!!

#195 Smoking Man on 03.20.14 at 1:49 pm

#185 :):(Ying Yang on 03.20.14 at 12:30 pm

Obviously your friend is not a Canadian, under NAFTA, All that is require is a job offer, and resume. To get a TN visa. I’ve had several, and no I do not have a degree.. Just a good damn expert, and bullshit architect..

If he is Canadian his paper work is screwed up, or police have a file on him. Or he’s just damn ugly.

#196 };-) aka Devil's Advocate on 03.20.14 at 1:49 pm

#37 Trojan House on 03.19.14 at 7:43 pm
This whole retirement thing is horses*&t. For centuries people basically worked until they dropped dead. It wasn’t until the late 19th and early 20th century that getting rid of old people became a priority for governments. The reason: people weren’t dying young anymore because of advancements in medicine.

Governments created mandatory retirement by promising people pensions in return for leaving the workforce. The mess we’re in today was created by governments. So, as usual, the government eff’s up the situation and we have to pay for it.

Financial markets weren’t really created for people’s retirement plans. It just evolved like that because of some hair-brained idea that we have to retire at 65.

I’m inclined to agree with Trojan House. I don’t plan on retiring anytime soon. I’m having fun doing what I do and look forward to the challenges each new day brings my way. Besides I’ve seen so many save for that sedentary retirement lifestyle and never make it and those who do fill their day with a single task that would take others an hour or so. Was driving behind a retirement community shuttle the other day and felt a shudder down my spine; it’d be like… giving up on “living a life” and instead just marking time waiting to die.

I say; Keep contributing, making the world a better place instead of selfishly living off the fruits of your labour. The more you give the more you get and the more fulfilling and longer a life you will live.

#197 };-) aka Devil's Advocate on 03.20.14 at 2:09 pm

And like Oceanside @ 177 said;

I am 63, we sold our Okanagan home 3 years ago and are looking for a two story home around Qualicum as well. Lots of little homes on little lots selling like crazy to retirees ( in the $400K range). We have 4 bicycles, motorcycle, couple of cars a whack of skiing equipment and we have children and friends visiting a lot. We travel and hike as well. I agree that if we moved into a condo we would just get “old” fast. Every contemporary I know in their 60′s are very active and are years away from a condo or other caged living arrangement. We have owned a condo and would never go through that one again, as well we have found that the taxes and climbing strata fees have made condo owning closer to a SFH cost wise anyway. Just sayin’

There are more Boomers who are “young at heart” and looking forward to continuing to live a lifestyle like that they are today. The homes they own today still work and in many cases are far more affordable and comfortable than those walled community ranchers or compartments in the sky with all their rules, regulations, by laws, nosy neighbors who have diddly squat else to do, high strata fees…

I think this whole Babyboomer Demographic scare is a tactic some will buy into but others, and a growing contingent of them at that, will say “screw that” too as they continue on as they have. Ya we get old and frail and eventually die, and that’s EXACTLY my point. Use it or lose it. Skid in sideways. Maybe it’ll hurt, maybe not, but up until that point extract all you can out of this life by giving it all you’ve got. Be a valued contributor right to the end instead of a blob of lazy uselessness.

#198 airhead princess on 03.20.14 at 2:13 pm

DELETED

#199 Ilona on 03.20.14 at 2:35 pm

#192 Ilona on 03.20.14 at 1:48 pm

Did anyone ever purchase these: TD Market Growth GICs for RRSP or TFSA?

Now why would you buy something as dumb as that? — Garth

Because:

a) the stock market is too high up at the moment (I purchased CA, US and International Index funds anyway, but I’m sure everything’ll go down soon, so will have to sell at a loss or hold on to them for many years);

b) my husband has a very low risk tolerance and has mostly cash in his RRSP since 2008 – afraid to buy anything that might go gown, so the word “Guaranteed” in GICs beats the volatility and complexity of say ETFs;

c) I understand that you know better, but unless I find a financial advisor/money manager who’s willing to pay for his advice (if we lose the money) – we’re still on our own, so forgive me for wanting to try something safe :)

Why would you not buy stable preferred shares in the same bank paying 5%, with 50% less tax? Your husband has missed a 177% increase in financial markets by staying in cash for six years. His ‘safety’ is a self-inflicted wound. Get some help. — Garth

#200 bdy sktrn on 03.20.14 at 2:35 pm

boomers will , for the most part, stay where they are and not sell out of the dirt under their feet.

my parents are 5yr post boomer (just pre-war) and i see them in their house for a decade more. they are low on funds, but have kids who can keep them in the big country house where they can stay happy.

15 yrs before boomer max , maybe rates will rise by then!
.

Surveys consistently indicate between a third and half of the cohort plan to sell real estate to finance cash flow needs. That is more than enough to significantly impact the housing market. — Garth

#201 Ilona on 03.20.14 at 3:04 pm

Why would you not buy stable preferred shares in the same bank paying 5%, with 50% less tax? Your husband has missed a 177% increase in financial markets by staying in cash for six years. His ‘safety’ is a self-inflicted wound. Get some help. — Garth

I’m trying to get help – posted this comment in your blog 9 days ago (that you didn’t even open let along commented):

Based on the purchase price of $450/sq.ft., the NOI of $23/sq.ft. would translate into a Cap Rate (NOI/Price) of 5.1%. This is much greater than 2013 average 5 year Bond Yield and in line with the typical Cap Rate expectations of institutional investors purchasing entire rental buildings as investments.

http://blog.empirecommunities.com/2014/03/gta-condo-apartment-rental-numbers-continue-make-investment-sense/

or

The preferred issues we looked at averaged close to a 5% yield, considerably more than a GIC. Preferred stock has some potential for capital gain while sheltering the downside as it is not as volatile as common stock.

http://www.moneysense.ca/invest/preferred-shares-as-investments

_____________________________

I was gonna buy a condo this year as an investment (yes, to rent it out), but stumbled upon your older posts that mention preferred bank shares as a better alternative. But it seems that there’s much more info available about how to buy a pre-sale condo than preferred shares.

My husband went to a TD Bank branch to find out more, but I think they tried to sell him something else (and not eligible for our TD Waterhouse self-directed RRSP online accounts), quoting “some guy” who made more than 20% investing in those “guaranteed Big Banks shares”. My husband then went to see a financial advisor, who tried to sell him a mutual fund with huge MER (I’ve been buying no-load and index funds for years, so advised him to hold on).

We still haven’t even opened our TFSAs, and now are completely lost trying to figure out what’s the best investment strategy for us at the moment (paid off the mortgage last year – but no way we’d sell the house and rent as you love to advise :).

If condos are better than bonds and preferred shares are better than GICs (we never owned any of them, so wouldn’t know), but both are also riskier… do you have a post somewhere explaining the preferred shares in more details?..

Thank you :)

***

We don’t have that much money saved yet to score a good financial advisor, so asking readers of your blog (and followed two of their advices for myself already – but can’t force my husband out of his comfort zone…)

But thank you for convincing me that condos were a bad idea :) One step at a time…

#202 :):(Ying Yang on 03.20.14 at 3:19 pm

#194 Smoking Man on 03.20.14 at 1:49 pm
#185 :):(Ying Yang on 03.20.14 at 12:30 pm
Obviously your friend is not a Canadian, under NAFTA, All that is require is a job offer, and resume. To get a TN visa. I’ve had several, and no I do not have a degree.. Just a good damn expert, and bullshit architect..
If he is Canadian his paper work is screwed up, or police have a file on him. Or he’s just damn ugly.
………………………………………………………………………
He is a landed Immigrant, long time soldier! For a TN I know as I have worked in the US you have to fit into the classification of your profession with Baccalaureate or Licenciatura Degree; or Post-Secondary Diploma or Post-Secondary Certificate, and three years’ experience depending on what you do. That is unless you are a owner/sub contractor then they wave you through as they know you can be cut at any time. I checked on a good job offer last year in LA, they are getting to be real prickly now unless you are God! Perhaps its bad Karma? Who knows, anyway sticking it out here as long as I can. Weather is terrible but life not so bad. Where I lived in the US before you literally could not go out at night, you had to be careful what colour shirt you wore. Gangs! Need I say more, unfortunatly I’m a young Asian and not an old guy!

#203 TylenolFantasies on 03.20.14 at 3:27 pm

The aggregate net worth numbers are meaningless. You should read beyond the headlines. — Garth

The aggregate net worth numbers are meaningless but the aggregate mortgage debt numbers are not?

How about $1T in mortgage debt being offset by $1T in cash?

http://www.financialpost.com/m/index.html

Is that also meaningless?

#204 Pope Snugglebums Cheezwhiz the 666lb (aka Nosty) on 03.20.14 at 3:28 pm

#89 Inglorious Investor on 03.19.14 at 10:56 pm — “The days of the West having the lion’s share of wealth are over, while we deal with massive debts. A double whammy. Then there’s always the war option. The media has gone into full jingo mode, preparing the population to hate Russia. It started with Sochi and continues with Crimea.”

Good points. Who are the thugs? Not Putin or his henchmen.

#111 saltpony on 03.19.14 at 11:53 pm — “. . . this gnarly old lady gripped my forearm, straightened me up, pinned me with her eyeballs and said, “If you have the ability, you owe it to yourself to educate yourself.” So I did.”

She may not have been what appeared to you. Spiritual travelers, those who move and travel the next worlds freely are able to appear in various disguises to help humanity better themselves, no matter what path they’re on. Nice post!

#168 Aggregator on 03.20.14 at 10:54 am — Same with Gordon Campbell. After attending a BdB convention in 2009, he then bought the HST into BC without notice, and consequently his days (as was the HST) were numbered. They have done their damage.

#205 TylenolFantasies on 03.20.14 at 3:32 pm

The aggregate net worth numbers are meaningless. You should read beyond the headlines. — Garth

The aggregate net worth numbers are meaningless, but the aggregate mortgage debt numbers are not?

The $1T in mortgage debt is off-set by $1T in cash assets.

http://www.nationalpost.com/related/topics/Canadians+sitting+trillion+cash+mountain/2044036/story.html

Is that meaningless as well?

#206 jess on 03.20.14 at 4:17 pm

overcapacity /refinery

— Petroplus lists company on the Swiss exchange, raising $2.4 billion
2007 – Petroplus shares hit an all time intra-day high of 115.87 Swiss francs in July.
2012 – Company files for insolvency protection in January

31 Oct 2013 … All the majors have been hit by refinery overcapacity and weak demand for petrol
and diesel in slowing western economies,

19 Feb 2014 … PetroChina has put off starting up two new refineries and delayed expansion of
another to counter the threat of overcapacity as oil demand …

on fire no injuries
Neftekamskneftehim” is the largest oil refinery in Europe. It is located in Tatarstan,

http://en.wikipedia.org/wiki/Riverstone_Holdings
===
placement agents

6 May 2009 … The New York State Attorney General’s Office and the Securities … On May 1,
2009, New York State Attorney General Andrew M. Cuomo announced that …
subpoenas to over 100 investment firms and their placement agents

30 Jan 2014… who oversees $150 billion in pension assets, called for expanding a ban on
agents who solicit investments for the city’s five pension funds.

#207 Bizarre on 03.20.14 at 4:23 pm

#204 Pope Snugglebums Cheezwhiz the 666lb (aka Nosty) on 03.20.14 at 3:28 pm

#111 saltpony on 03.19.14 at 11:53 pm
She may not have been what appeared to you. Spiritual travelers, those who move and travel the next worlds freely are able to appear in various disguises to help humanity better themselves, no matter what path they’re on. Nice post!

Wow. Nice comment, too! Didn’t expect to see it here (and wouldn’t dare to share my personal beliefs in a quorum like this… :)

#208 Cici on 03.20.14 at 4:47 pm

#201 Ilona

I wouldn’t put all of your money in preferred shares, maybe 10% max. Personally, I’m convinced that this soft landing deal means SLOWLY rising interest rates for the next ten years to allow all of the overweight in real estate time to to pay it off before it takes too big a chunk out of the economy (and delaying significant price reductions = slow upward trickles will be good for convincing the hornies to get in NOW before rates rise higher and higher, etc.), then after about 10 years we’ll probably see higher interest rates that will last for at least another 15 years , which won’t be too good for preferred stock, especially perpetuals.

That said, Garth is bang on when he tells you NOT to go for that nonsense 5-year GIC. I got suckered into one of those once…it was in resources, and resources climbed during the same period, except the GIC only gave a 4$ return in all of those years = Huge loss after inflation.

Aversion to risk comes at a very high price.

I agree with Garth – get help. He understands preferreds (which are somewhat complex and sensitive to rate hikes), and can help you make the right choices and select the right asset allocations.

Preferreds in a balanced portfolio should not exceed 18%. Dividends are fixed and unrelated to rate changes. Capital values will be sustained by investor demand even as rates gently rise. Beats the hell out of make-believe ‘market-linked’ GIC. — Garth

#209 jess on 03.20.14 at 4:58 pm

Thursday, February 20, 2014

disclosing what it paid a placement agent would “harm our business efforts.”
http://pensionpulse.blogspot.ca/2010/10/millions-squandered-on-middlemen.html
==================
republican brand

political contractor called Direct Mail Systems

In addition, subpoenas were served on the House Republican Office, the House Republican Campaign Committee and the Office of Legislative Management,” Cafero said
http://www.ctpost.com/news/article/GOP-chief-of-staff-resigns-amid-federal-probe-5252216.php
The chief of staff for House Republicans abruptly resigned Thursday afternoon amid an apparent corruption investigation

George Gallo, former state GOP chairman,

#210 James on 03.20.14 at 5:07 pm

Surveys consistently indicate between a third and half of the cohort plan to sell real estate to finance cash flow needs. That is more than enough to significantly impact the housing market. — Garth

Just like you consistently say not to invest in RE because a correction is coming for the past 5 years. He is just as right as you are wrong.

Learn to read. I have nothing against owning a home, but doing so at the expense of accumulating financial assets is a big mistake. As I said, a large number of Boomers are discovering this. — Garth

#211 Smoking Man on 03.20.14 at 5:23 pm

HA Ukraine just upped it’s gas prices by 40%, pensions about to get a 50% hair cut, something tells me in a very short time actual Ukrainian people will vote to join Russia..

IMF = Austarity. Or I’m F-ed

Then Greece, Spain, who knows.

And we have cowboy Harpo ridding around on a stick pony, water pistol in hand.. Shouting

Go ahead punk (Putin) 1st make my day…

Has he fired all the back room boys, and now calling it like he sees it.

More embarasing than Ford.

#212 Ilona on 03.20.14 at 5:50 pm

#208 Cici on 03.20.14 at 4:47 pm

Thank you, Cici! I just thought that if I can help my husband invest into something safe – at least just to get started – it would still be better than cash… Personally, I like risk (and did a good job managing our daughter’s RESP account – her 4 years in university are fully paid by it), but he doesn’t… And says that he’s fine with 5% – as long as it’s guaranteed… I don’t know how to convince him just to go there: http://www.turnertomenson.ca – or write to Garth himself…

#213 Richard Stack on 03.20.14 at 6:00 pm

>> (And remember, the public pension plan is a non-starter. The average CPP payment is $600 and OAS is just over $500 a month. Try living now on $13,200 a year now, let alone in a decade.)<<

Just to clear up a point. Anyone who's only income is CPP ans OAS would also receive the guaranteed income supplement (GIS) which would be about $400 a month and it's tax free! Total monthly income would be more like $1700 a month. Any money from a RRSP or a RIF would be taxable and any dollar received would cut .50 from the GIS payment. Something to think about.

The GIS is intended for those in poverty. Think about that. — Garth

#214 Happy Renting on 03.20.14 at 6:02 pm

#175 gladiator on 03.20.14 at 11:46 am

Taking a stab at your numbers:

30% income tax (total rate, not marginal) requires $125k gross income in Ontario.

Source: http://simpletax.ca/calculator

Now some taxes paid (HST, property, gas, etc.) are consumption taxes.

Last year Tax Freedom Day was June 10. The average Canadian family paid 43.6% of their income in taxes.

Source: http://www.fraserinstitute.org/research-news/display.aspx?id=20020

If you’re paying 67% of your income in taxes (you stated you only keep four months’ income off the year), your consumption rate must be through the roof. At that salary level, surely there’s some room to save and save yourself the consumption taxes?

#215 DM in C on 03.20.14 at 6:14 pm

#200 bdy sktrain

their house for a decade more. they are low on funds, but have kids who can keep them in the big country house where they can stay happy.
+++

That’s great for them! There’s no way I’d further enable my parents’ bad decisions.

My boomer parents have squandered most money they have through poor financial decisions and have entitlement issues. Every time I call (they’re in HFX), my Dad is …. oooo woe is me, i have to get a job or we’ll lose the house…… expecting me to chime in, That’s ok Pop, we’ll buy your house and rent it back to you.

Not gonna happen. They are 63 and 65, ‘retired’ 10 years ago on questionable disability pensions, smoke like chimneys and just drink Tim Hortons’ and play computer games all day.

My reply, “Quit smoking and sell the house” It’s ~300k with 115k mortgage on it. Sell it, invest the proceeds and rent.

Nope. Won’t do it. Would rather it get ‘taken away’ cause then they are absolved of all responsibility.

Got news for them. We have kids going to university in ~4 years. We are not supporting both.

We will sell the house before we let them move in with us. Entitlement issues up the wazoo.

#216 Happy Renting on 03.20.14 at 6:16 pm

#190 Shawn on 03.20.14 at 1:12 pm

I probably should have provided some rationale for my question.

There’s periodic posting (boasting) in this blog’s comments from investors (gamblers) reaping profits using theories, systems, or flat out predicting the immediate future. I don’t have the badass skillz or stomach for that, but for those who do partake, I want to know what they think of that article. The source material is quite old, I’d like to hear the day traders’ take on its relevance in our age of high-speed computers.

#217 World Traveller on 03.20.14 at 6:29 pm

#211 Smoking Man on 03.20.14 at 5:23 pm
HA Ukraine just upped it’s gas prices by 40%, pensions about to get a 50% hair cut, something tells me in a very short time actual Ukrainian people will vote to join Russia..

*****

And the MSM making Putin look like a Villain while the US and EU are portrayed as angels, pathetic really. We invaded Iraq because umm hmmm yaaa whaaattt???
Zero credibility, you dorks!

The West gets involved in another Eastern conflict it doesn’t understand and wants to stir the geopolitical pot some more.
This time they are not taking on a country on with 30 year old MIGs, but a real superpower with nukes, that may or may not get fed up with being pushed around, tread lightly gents!!

#218 airhead princess on 03.20.14 at 6:33 pm

Bwahahahahahaha….live in Mexico….what a cruel joke. Let me understand this…..you promised to look after your wife and after a lifetime of hard work you tell her the best you could is Mexico?

“We visited San Diego and then we crossed the border. We purchased a two story condo for less than 75k. We are three blocks from the beach and live on my 1600 per month pension. I am 25 mins away from my doctor in San Diego. We have a maid! One just needs to find a good second world country to call home in retirement.

Where the cost of living is 1/3 the cost of the USA. “We love the Mexican People!”

Just days ago a group of human organ traffickers were caught kidnapping people children and adults off streets, parks and beaches to carve up and sell in pieces.

http://news.discovery.com/human/psychology/organ-theft-rumors-surface-in-mexico-arrests-140320.htm

The news reports of tourist murders is being officially supressed by the Mexican government…they have stated they are downplaying the lawlessness and violence because otherwise tourists would panic and flee……no duhhhhhh…….and then you show…..and think the condo’s are cheap because you’re an especially smart guy……….bwhahahahahahahahaha!!!

Do you want that kidney with chianti and a few fava beans?

Garth….why are you deleting my best work? The opposite of the truth is much more frightening.

#219 World Traveller on 03.20.14 at 6:37 pm

ahhh boomers its time to receive your penance, I hear the cheque is coming due now. run up of housing prices to unsustainable levels is going to catch up to everyone, it eventually does.
It’s been said again and again on this blog, the next generation is not going to have the moola to buy 750K + homes and even if they have the cash their mindset is not the same, they want adventure and less commitments, as long as they have an Iphone they’re happy. Auto companies can’t even get them to buy a car.

http://www.theatlantic.com/magazine/archive/2012/09/the-cheapest-generation/309060/

http://business.time.com/2012/05/02/gen-ys-take-on-car-ownership-not-cool/

#220 World Traveller on 03.20.14 at 6:39 pm

I thought Target was a failure in Toronto?

http://www.thestar.com/business/real_estate/2014/03/20/target_canada_to_open_downtown_anchor_store_in_2016.html

#221 OffshoreObserver on 03.20.14 at 6:55 pm

Grist for the mill:

http://robbreport.com/motley-fool/housing

–From my $450/month villa in Vietnam.

Lunch today: clams, oysters, morning glory and garlic, 5 beer = <$10.

#222 WhiteKat on 03.20.14 at 7:10 pm

@ ScienceMonkey, re: “Whitekat, how does the Canadian bank know someone is a US person? How are penalties applied and collected, does the Canadian bank take the person’s money and give it to the IRS?

And I agree, I’m only 30 and it was already an accounting nightmare to get compliant. I would renounce except I might need to look for work in the US. ”
You should pose all these good questions at isaacbrocksociety.ca which is a wealth of information regarding FATCA! I will give you my understanding, but I strongly urge you to check out isaacbrocksociety.ca.

Banks are not saying yet, exactly how they will go about determining whether or not someone is a ‘US person’ once FATCA goes into effect on July 1, 2014. My understanding re: preexisting accounts is that FATCA requires banks to look for an aggregate account balance of 50K or more. If you have less than 50K total at one bank, it is not required to report on you. However nothing stops the bank from ignoring the 50K threshold. Pre-existing Accounts between 50K and 1 million will be searched for indications of ‘US indicia’. If there are none, you might be fine. We don’t know if banks are going to do any type of generalized inquiries of customers regarding preexisting accounts. Aggregate account balance over 1 million is subject to closer scrutiny (again, not sure HOW they will go about this yet).

New accounts will be subject to different account opening procedures starting July 1 2014, intended to determine whether or not the person opening the account is a ‘US person’, but I am not sure how they will go about doing this. In Britain for example, passports are required for account openings, so once they see your place of birth on your passport they’ve got you, but my understanding is that some sort of self-certification that you are not a ‘US person’ will be enough here in Canada. Of course if your bank already knows you are a ‘US person’ for some reason, then you are caught.

Certain registered accounts have been excluded from FATCA reporting as per the IGA signed with the USA. These include RRSPs, RESPs, and TFSAs as well as a few more. Note: this DOES NOT MAKE THEM EXEMPT FROM US TAXATION AND REPORTING RULES. It just means that if you want to beat the system, keep all your money in these types of accounts. F has bragged about what a good deal this is, yet in the same breath says those born in USA are subject to American laws despite having a dominant nationality of Canadian and living in Canada.

The banks will pass account information (balances, and all transactions) to the CRA which then passes it to the IRS in order to ‘protect our privacy’. Apparently this indirect transfer of private information via the CRA does not violate our privacy laws, just our rights.

Re: penalties, this is where the IRS comes in. As a ‘US person’ you are supposed to be filing annual ‘foreign bank account reports’ for your local accounts which are ‘foreign’ since you are a US person. It is as if you actually lived in the USA with an account offshore. The penalties for not filing FBARS are SEVERE to the point of being confiscatory (i.e. you will have an account balance of zero if IRS gets your bank account balance from the CRA rather than from your FBARs). If you want to know exactly how the penalties are calculated, you will find the details at isaacbrocksociety.ca.

Re: collection of penalties, this one gets interesting. Flaherty has said that the CRA will not collect penalties or taxes from US persons that were also Canadian citizens at the time the penalties or taxes were incurred. Should we trust him? He’s gone now anyway. Do you think USA will be happy to calculate bonanza penalties and yet have no way to collect?

#223 WhiteKat on 03.20.14 at 7:34 pm

@ScienceMonkey, I agree that it makes sense for you to renounce your US citizenship if you do not plan on ever working in the USA. Since you are already ‘compliant’ renouncing will be a fairly straightforward process. The fee to renounce is $450, and you must certify 5 years of prior tax compliance, plus pay an exit tax which is high but only applies to those worth 2 million or more.

Consider yourself lucky that way. Those of us like myself (in my 50’s) who just found out we were considered ‘US taxpayers’ after years of living normal Canadian lives can not get out of this mess so easily. The legal, accounting and taxation issues for catching up on 5 years worth of compliancy, and the reworking of years of financial planning is complex, expensive, and extremely stressful.

Some entered an amnesty program that requires not only all back taxes to be paid up, but also guaranteed 27.5% penalty of their net worth for privilege of entering the amnesty program. Others sold their homes, only to find out that USA taxes capital gains on their Canadian residences. Imagine having your nest egg in a house in Vancouver and finding that out before you realized you were a ‘US person for taxpayer purposes’.

Some people are experiencing marital problems because the Canadian-only spouse refuses to allow their joint accounts to be reported on ‘foreign bank account reports’ to the USA.

It has been, and will continue to be, a complete emotional and financial disaster for many Canadians caught up in this.

#224 WhiteKat on 03.20.14 at 7:37 pm

ooops….re: above post, should have said:

Others sold their homes, only to find out that USA taxes capital gains on their Canadian residences. Imagine having your nest egg in a house in Vancouver and selling it before you realized you were a ‘US person for taxpayer purposes’.

#225 Cici on 03.20.14 at 7:55 pm

@Garth via # 208

Thanks for the clarification!

#226 Hohn in Mtl on 03.20.14 at 8:12 pm

@ #91 Shawn on 03.19.14 at 10:59 pm

“Spend less time worrying about the nature of money and more time accumulating money and other wealth.”

Already well on my way…

“Also, buy some bank shares already!”

Yep, that’s the only way I know how to “beat” them; by joining them and buying shares.

#227 Daisy Mae on 03.20.14 at 8:20 pm

#154 RVP: “Baby boomers deserve every little bit of financial pain that is coming to them. Baby boomers will get very little sympathy from the younger generations.”

********************

Quit blaming the ‘baby boomers’ for all your perceived problems. Please understand these boomers were conceived immediately after the SECOND WORLD WAR when the soldiers arrived home to their wives. Get a grip! They don’t owe YOU a damn thing.

#228 AngryMan127 on 03.20.14 at 10:24 pm

“Hard to imagine a decade from now that our demographic overhang won’t be looting the GDP through increased taxation, enhanced deficits and reduced consumer spending.”

Yes, the boomers will destroy this country in one generation.

#229 airhead princess on 03.20.14 at 11:23 pm

Dude….you couldn’t be more wrong..

“Certain registered accounts have been excluded from FATCA reporting as per the IGA signed with the USA. These include RRSPs, RESPs, and TFSAs as well as a few more. Note: this DOES NOT MAKE THEM EXEMPT FROM US TAXATION AND REPORTING RULES. It just means that if you want to beat the system, keep all your money in these types of accounts.

TFSA’s are treated as ‘foriegn trust gifts’….and are not exempt. In fact the TFSA and RESP must be reported separatley from the FBAR….the deadline was March 17th , 2014….unless you filed for an extension….if not the penalty for not meeting this deadline is $10,000.

#230 bdy sktrn on 03.21.14 at 2:09 am

hat’s great for them! There’s no way I’d further enable my parents’ bad decisions. ———— they did not have the knowledge or witty blogs to teach saving/investing back in the day – and they spent most of their money (at least in the first half of career) on their kids, so i can’t complain there. i also got them into some nortel once upon a time :(

Every time I call (they’re in HFX),
———————-
mine too

my Dad is …. oooo woe is me, i have to get a job or we’ll lose the house……
————————-
mine worked till 72 and would never complain – he is a pre-boomer

Not gonna happen. They are 63 and 65, ‘retired’ 10 years ago on questionable disability pensions, smoke like chimneys and just drink Tim Hortons’ and play computer games all day.
——————————
mine don’t piss it away like that. but the smokers need to save less (it pays for the smokes!)

Got news for them. We have kids going to university in ~4 years. We are not supporting both.
——————————
they have 3 kids, 2 with high incomes (and a lawyer) and only a single grandkid with a fully stuffed resp so there is room

We will sell the house before we let them move in with us.
———————-
mine are welcome to live in my van bsmt suite when they can no longer take care of a house, but i doubt they would leave ns

Entitlement issues up the wazoo.
———————
none here, just never learned about the need to save much

#231 WhiteKat on 03.21.14 at 8:29 am

@ AirheadPrincess re: “Dude….you couldn’t be more wrong..”

REREAD what I wrote. I am not wrong, and I am not a DUDE.

Certain registered products ARE EXEMPT from FATCA reporting, but ARE NOT EXEMPT from USA taxation and reporting rules.

Yes, there are nasty fines for not SELF-reporting your RRSPs, TFSAs, RESPS, as ‘foreign trusts’ and on FBARS if the IRS finds out about them, BUT THOSE ACCOUNTS WILL NOT BE REPORTED ON BY THE BANKS UNDER FATCA.

I never said that registered investment vehicles were not considered to be ‘foreign trusts’ by the USA, and I never said they were exempt from USA taxation and reporting rules. What I did say was that they are exempt from FATCA reporting.

In other words, YOUR BANK CANNOT REPORT ON YOU for most registered accounts (RRSPS, RESPS, TFSAs included in the exempt list).

In effect, the IGA on FATCA signed by the Canadian government gives ‘US slaves’ a way to hide from the US master, because most registered accounts (with some exceptions for example LIRAS) will NOT be reported on under FATCA. Flaherty brags about the FATCA IGA being a ‘good deal’, which makes me wonder why he is facilitating US tax evasion on the one hand, yet agreeing to help USA catch ‘tax cheats’ on the other. Perhaps he thinks FATCA and citizenship based taxation practiced by 1% of the countries in the world is immoral and akin to slavery just like I do (but of course he can never say this to our ‘best friend’ the USA).

Are you dyslexic? My comment was quite clear, yet you interpreted the message to be the opposite.

Got it now? If not, let me know, and I will provide you with links on the FATCA IGA, as well as USA taxation and reporting.

Repeat: RRSPS, TFSAs, RESPS are subject to USA reporting and taxation laws just like they ALWAYS WERE, but are NOT REPORTABLE UNDER FATCA (i.e. banks will NOT be reporting them to the CRA, and the CRA will not be reporting them to the IRS).

#232 WhiteKat on 03.21.14 at 8:31 am

Minor correction re: above post. RRSPs, RESPs, TFSAs. are not registered PRODUCTS, they are registered INVESTMENT VEHICLES.

#233 WhiteKat on 03.21.14 at 8:39 am

@AirHeadPrincess,

From the CBA (Canadian Bankers Website) regarding FATCA:

The following registered plans will be exempt from (FATCA) reporting:
Registered Retirement Savings Plans (RRSPs)
Tax Free Savings Accounts (TFSAs)
Registered Disability Savings Plans (RDSPs)
Registered Pension Plans (RPPs)
Registered Retirement Income Funds (RRIFs)
Pooled Registered Pension Plans (PRPPs)
Registered Education Savings Plans (RESPs)
AgriInvest Accounts
Deferred Profit-Sharing Plans

#234 WhiteKat on 03.21.14 at 8:44 am

ooops (lol) meant to say the Canadian Bankers Association (not Canadian Bankers Website).

Note that LIRAs are absent from this list. Therefore a non-compliant Canadian US slave, with a Canadian pension plan that was rolled into a LIRA upon termination of their Canadian job, better hope they have less than 50K in the LIRA(aggreate account balances under 50K are not FATCA reportable) or they better be over age 55 so that they can unlock the LIRA.

#235 jess on 03.21.14 at 10:23 am

faster with less human touch

The technology Maple Leaf intends to install with the government money is a fully automatic system for producing deli meats. cbc.ca

Now let us hope the slower human brain acts on the knowledge they knew.

#236 fixie guy on 03.21.14 at 12:38 pm

#219 World Traveller: “…the next generation is not going to have the moola to buy 750K + homes … their mindset is not the same, they want adventure and less commitments, as long as they have an Iphone they’re happy. Auto companies can’t even get them to buy a car.”

You mean hippies. Connected hippies. The more things change….

#237 think again on 03.21.14 at 1:30 pm

…NatGas will rise to almost 50% after tax.
The 40% is the gross amount.
Love those finance ministers!

#238 greyhound on 03.21.14 at 3:28 pm

If “most Boomers [are] screwed, with their children slavishly plodding in their footsteps”, what’s likely to happen?
Boomers will vote. For government assistance.

The very folks who follow Garth’s advice to save and invest are the ones who will pay much higher taxes caused by the increases in North American medical and retirement benefits that the aging cohort will demand.

Unfortunately, the saver-investors likely won’t have enough money to support the millions of indigent retirees.
Does a gradually lowering standard of living loom for most of us?