Take it

boomers modified

A persistent myth among the great unwashed who surround us is that you can retire and the feds will support you. Wrong. Public pensions were always intended to be but one leg of the after-work stool. The others were your own stuff (RRSP, house, TFSA, livestock) and a corporate pension.

Well, these days seven in ten of us don’t have that corporate plan, and an astonishing number are heading into retirement with a mortgage, thanks to our societal fling with house porn. Plus I’ve already given you the sad stats. RRSP contributions collapsing. Nine in ten tax-free accounts under-funded. Half of us unable to weather one missed paycheque. The savings rate scraping bottom.

So lately the public plan, the CPP, is getting a lot closer attention. As the years go by, we have more people retiring annually than at any time in history. Millions will learn three important lessons. (a) Nothing is more important than cash flow. (b) Life is too long. (c) You can rent a place to live but you can’t rent income.

Soon this will translate into an eruption of real estate listings, but in the meantime we have a ton of pension tension. This year almost 400,000 people in Canada will turn 60, which means they become eligible to collect the CPP –  if they’re working or not, regardless of whether they need it. So, should they take it?

My opinion on that in a moment. First, be aware of what’s at stake. The average CPP monthly payment is $640. That’s it. And it’s taxable. You’ll get another $569 when you turn 65 (or, soon, 67) in the form of the OAS, which is clawed back starting at an income of $71,500.

Face it, this is chump change. You might think you’ll get old and be able to live on tree bark and creek runoff, but it usually doesn’t work out that way. People losing their jobs in their 60s have two decades or more to finance, lots of thirsty underwear of buy and maybe even a basement-dwelling needy Millennial to support. Everybody should strive to replace their employment income at least for the first decade of retirement, until they slow down and spend all day writing comments on some pathetic finance blog.

Now the clever people who collected CPP premiums from you all those years want you to gamble. They’ve got this bet about when you’ll die. They’ll give you less money if you start taking it at age 60, more at 65 or even more at 70. They understand actuarial tables and also avarice. So by reducing benefits which are taken early they’re trying to diminish the numbers of pensioners. And it’s working.

For the record, you can now collect CPP even while you still have a job, so long as you’ve achieved exalted wrinkly status at age 60. But the benefit is reduced by 0.58% for each month (it rises to 0.6% next year) prior to age 65. Thus early-takers might receive 30% less than if they’d waited five years. As I said, this was done deliberately so our innate sense of greed culls the ranks of recipients and saves the feds money. Why? Because lots of people who wait to collect more end up getting cheques for a shorter time. They croak. Bummer.

My view is simple. Everybody should lay down their calculators and just sign up for CPP the instant they turn sixty. Here’s why:

  • As a general principle, when the government gives you money, take it. After making contributions for two or three or four decades, why would you possible forego 60 monthly cheques waiting for a dollop more?
  • Do the math. It’s not worth taking the risk of waiting. On average nine years of greater payments (starting at age 65) are required to make up for the income stream you’d start receiving at age 60. That means only at age 74 or 75 does the needle swing in your favour. And at age 75 that might be the only thing still swinging.
  • Which brings me to the main point: take the money when it will do you the most good – when you’re still somewhat juiced and can enjoy the funds. God only know what sustained debauchery four hundred bucks a month will bring.
  • Anyway, you can take the smaller benefit at age 60, stuff it all into a TFSA and invest it in a nice balanced portfolio and come out ahead of the geezer who waited.  Have your CPP cake and eat it, too.
  • Also be aware that any government can instantly legislate changes, as happened when the age for OAS qualification was abruptly raised from 65 to 67, screwing GenXers a little more. (This goes back to my first point – if they offer it, take it.)
  • If you really need the money in retirement, take it at 60 and spend it. If you don’t need the money at 60, take it and invest it. Or buy a Harley. If  think you’re gaming the system by waiting, you’re not. Tempus fugit, babe.

219 comments ↓

#1 What-the-what on 10.13.15 at 5:05 pm

“..Nine in ten tax-free accounts under-funded”

Really? What we should do then is double the contribution room! That’ll get them all fully funded in no time!

The room accumulates and is there for deployment at any time. Like your RRSP room. That increases every year and doesn’t seem to fuss you. — Garth

#2 Mark on 10.13.15 at 5:08 pm

If one has the option, is the CPP worth contributing to at all?

I’m just wondering, for the small business owner types, who have the option of either contributing, or not. Assuming all other variables are held constant.

Anyone?

#3 Bytor the Snow Dog on 10.13.15 at 5:10 pm

First!

PS- Garth, are you ever going to DIRECTLY tell us who you’re voting for?

#4 MSM-Free Zone on 10.13.15 at 5:15 pm

Thanks for that.

Definitely tucking that one away in my financial planning folder for future reference.

#5 conan on 10.13.15 at 5:21 pm

Doubt those two voted for Harper.

#6 common sense on 10.13.15 at 5:27 pm

Perfect Mr. GT.

You paid into it, take it before our gov’t only goes into greater debt and has to start looking around at ways to fund our demographically challenged country.

OAS at 69? TFSA rules changed? Lower claw backs from 71k to 50K? Parking fees at National Parks along with higher use fees? Admission booths at Parliament? Billable phone calls from MP’s? Pay to vote fees? :)

#7 I'm stupid on 10.13.15 at 5:29 pm

Taking the money at 60 would require discipline, and every stat you publish regarding the boomers clearly shows they have none.

#8 Victoria Real Estate Update on 10.13.15 at 5:30 pm

Realtors on this site want you to think that Canada’s housing bubble will deflate in a safe and controlled manner. They spend a lot of time trying to convince potential buyers that there will be a soft landing in Canada. Of course they don’t mention that there is a housing bubble in Canada, although some may use the term overvalued when describing house prices. Realtors post comments with messages like these on Garth’s blog in an attempt to convince you that it’s safe to buy a house in Canada right now. It’s how they get paid.

They claim that there are no examples of housing bubbles that landed hard, other than the US.

They are wrong.

Thomas Holloway, an analyst at a Vancouver-based investment firm, put together this chart which explains what happens to housing bubbles (second chart). 48 housing cycles from different countries were charted.

This chart doesn’t accurately show that Canada’s housing market was more overvalued than the US at its peak. Also, it was put together 3 years ago, in 2012. Canada’s bubble has inflated even more since then.

Canada’s housing market is currently overvalued by 89% compared to rents and 34% compared to incomes according to The Economist (see chart). Imagine how bad Canada would look now if its information was updated on that chart.

On the housing bubble chart, the US corrected about 35% in terms of price to rent and price to income. Incomes in the US fell as house prices corrected. That’s not surprising. When a housing market is overheated the economy gets a huge lift. The opposite is true – when house prices fall the economy takes a hit and this affects incomes as well.

When house prices fall in Canada the Canadian economy will weaken as a result and incomes will take a hit. This will prevent incomes from catching up to house prices, resulting in a even deeper price correction.

The housing market correction that took place in the US isn’t the only example where families were affected in a negative way by falling house prices. Numerous examples exist. Canada’s housing bubble is, perhaps, the biggest the world has seen and the coming price correction could be one for the record books.

Overall, the inflation of Canada’s housing bubble has boosted the Canadian economy in a big way for over a decade. It has dramatically increased consumer spending in Canada via the wealth effect (home equity). Two thirds of Canada’s economy is based on consumer spending.

As house prices fall, consumer spending falls. The net effect of this is a (dramatically) weaker economy.

As house prices fall, construction slows down. This also weakens the economy.

Falling house prices results in slower house sales which negatively affects realtors, insurance brokers, bankers (finance) and all other occupations related to the sale of houses.

It will be unpleasant for many when house prices fall in Canada and many Canadian families will feel it, just as families in many other countries around the world have in the past.

#9 JSS on 10.13.15 at 5:35 pm

Was in a finance course today at the U of A. Prof expects Canadian bank failures to take place somewhere down the line, and that the Canadian banks don’t know what’s’really coming.

This guy is a teacher? — Garth

#10 Van real on 10.13.15 at 5:37 pm

Why would you take it if you’re still working. Wouldn’t the tax bite make it not worthwhile to take.

#11 Tudor on 10.13.15 at 5:39 pm

The CPP drop-out provision could also negatively impact those who may be out of work at 60 but delay getting CPP.

You can drop several years of low income from the calculation. But if you end up not working in your 60’s and have already taken time off work to study, raise kids, etc, you will potentially end up with a bunch of zero income years added into the calculation that will negate any gain from waiting longer.

http://www.servicecanada.gc.ca/eng/services/pensions/cpp/drop-out.shtml

#12 Drill Baby Drill on 10.13.15 at 5:45 pm

I am taking my CPP at age 60 while I am still working. I am making payment to CPP until I reach 65 or I get turfed before then. This amount I am paying into CPP while still working is called a GRP. I think when I turn 65 I get this amount back.

#13 Goldie on 10.13.15 at 5:48 pm

I just love that pic.

#14 who's to blame on 10.13.15 at 5:48 pm

so……..poloz claims that low rates are not the reason that house prices in canada are way high and the govt claims that offshore money is not the reason. so whats the reason? i would say they are both the reason???

#15 Freedom First on 10.13.15 at 5:52 pm

(a) Nothing is more important than cash flow.

This is a true and tremendously powerful statement.

Men, that is why you are nothing more than a wallet to the world. Live smart. Trust me.

#16 SunShowers on 10.13.15 at 5:55 pm

#1 What-the-what on 10.13.15 at 5:05 pm
“..Nine in ten tax-free accounts under-funded”

Really? What we should do then is double the contribution room! That’ll get them all fully funded in no time!
————————————————–

I’m so glad this got #1.

#17 Freedom First on 10.13.15 at 6:00 pm

#7 I’m stupid

I am a Boomer. Yes, there is many Boomers who are in/or going to be in, big trouble trying to retire. Thankfully I am not one of them.

Also, no discipline is throughout every age group. It is a human condition world wide.

Lastly, us Boomers, we still have all the money.

#18 Elmer on 10.13.15 at 6:01 pm

I find it hilarious you think the TFSA will still exist when I’m 65.

#19 jim dandy on 10.13.15 at 6:02 pm

“People losing their jobs in their 60s have two decades or more to finance, lots of thirsty underwear of buy…..”

“Now the clever people who collected CPP premiums from you all those years want you to gamble. They’ve got this bet about when you’ll die. They’ll give you less money if you start taking it at age 60, more at 65 or even more at 70. They understand actuarial tables and also avarice. So by reducing benefits which are taken early they’re trying to diminish the numbers of pensioners. And it’s working.”

Contradictory statements. I’ll go with the second one as being correct, that the CPP people understand actuary tables. It would appear that infant mortality factors into the average age calculations oft quoted in the media, which would skew the average age upwards. Repeat the lie often enough and the sheep will believe it, making it easier to raise the retirement age and cut benefits after a lifetime of contributions. We all saw it coming.

An unscientific method of determining lifespan is to ask anyone you know over the age of 75 how many of their friends and family are above ground. Then ask an 80 year old. The answer is usually around zero. As GT says, take the money as soon as you can.

#20 Jump on 10.13.15 at 6:06 pm

Garth, stick to Millenials.

I think they’re cute. — Garth

#21 Stuart on 10.13.15 at 6:07 pm

If cash flow is important why reduce it by 30% and not wait to 65.

to be accurate one needs to calculate the actuarial value of the increased pension vs collecting it early something a simplistic formula does not account for.
If one has other income such as a company pension and investment income and a well stuffed RRSP it can pay to take some of the money at a lower tax rate than 65 invest it then have a higher cash flow later.
I need to see hard numbers and the problem solved accounting for everything and a comparison done. Never seen it been done by anyone but I did it so anyone can do it.

#22 Playground for sale on 10.13.15 at 6:09 pm

Van real estate- hotter than ever
Van school board selling play grounds !!

http://www.cbc.ca/radio/thisisthat/school-real-estate-word-search-champion-water-smugglers-1.3194224/vancouver-school-board-cashes-in-by-selling-school-playground-to-developer-for-three-times-over-asking-1.3194246

#23 Kreditanstalt on 10.13.15 at 6:09 pm

Actually, if you don’t have a mortgage, $600-odd each a month is plenty to get by on, and even better added to a smidgen of savings.

As to having mortgages when you retire, that’s very likely the rich 30% who DO have company pensions.

The new wealthy are not all “banksters”: they’re your neighbours who are (or were) government, corporate, technician or resource industry employees.

Did you stop eating? Or leaving the house? Or paying property tax and insurance? — Garth

#24 would you ever opt-out of CPP? on 10.13.15 at 6:10 pm

If you had the option to not pay CPP premiums (and therefore, not collect any CPP), would you? i.e. if you are self-employed, you could choose to pay yourself a low salary and opt for dividends and just let everything grow in your corporation. Would you?

#25 mc on 10.13.15 at 6:16 pm

Slight correction – the reduction at age 60 will be 36% not 30%. This is irrelevant to the message and Garth’s logic is correct regardless of 30% or 36%. The main idea is to get the money into your hands asap. Whether you spend it or save it is a side issue.

#26 Mark on 10.13.15 at 6:18 pm

Why would you take it if you’re still working. Wouldn’t the tax bite make it not worthwhile to take.

As Garth argues, many (particularly male) clients over-estimate their longevity. One can theoretically invest the early received funds in a portfolio of their own for similar returns to what the CPP would return (CPP investment returns are diluted by paying disability benefits, example, and even the lump-sum death benefit to people who qualify by virtue of having only a single CPP qualifying year). And the most significant retirement funding needs are often early in retirement, as opposed to later in retirement where CPP amounts may result incremental reductions to social benefit eligibility.

Don’t know if I fully agree with Garth’s argument particularly for 60-year-olds in good health, non-smokers, with good hereditarily predicted longevity. But this is his blog, and he makes a living advising people — I don’t — so Garth’s view should be taken very seriously.

#27 April. on 10.13.15 at 6:26 pm

Thank you.

#28 TFSA investment goal on 10.13.15 at 6:28 pm

This picture gives a whole new dimension to why I must have plenty of money when I get old.

#29 Mark on 10.13.15 at 6:30 pm

“Was in a finance course today at the U of A. Prof expects Canadian bank failures to take place somewhere down the line, and that the Canadian banks don’t know what’s’really coming.”

I’ve outlined the case in a few previous posts for significant failures of Credit Unions in Canada, particularly ones that are in the hottest housing markets and participate significantly on an uninsured basis.

Namely the reasons include:

1) Higher cost of funds (depositors generally don’t put their money in a C.U. unless they get a higher interest rate!).

2) High cost of equity and an inability to issue new common or preferred shares if there is portfolio distress.

3) Poorer institutional risk control and oversight.

4) Less geographic diversification than the big-5.

5) Greater exposure to ‘small’ business lending.

6) Lack of diversification amongst business lines (ie: the big-5 engage in a whole multitude of businesses including brokerage, institutional finance, investment banking, insurance, credit cards, receivables factoring, etc., while the C.U.’s generally don’t).

7) Less access to the resources of the Bank of Canada in the event of portfolio liquidity problems.

Its my belief that the politicians will probably end up strong-arming the Big-5 federally chartered banks to clean up the remnants of certain housing-exposed insolvent credit unions that otherwise would require bail-ins.

But the big federally chartered banks themselves, as Garth points out, solid as rocks, and no serious risk that they will collapse. At least not without the Canadian economy also collapsing. They are basically “too big to fail” at this point.

#30 HellYeah on 10.13.15 at 6:32 pm

I’ll put today’s homily in my mental file folder, but expect that it’ll be irrelevant by the time I’m a slightly wrinkly 60. Plenty of time for our federal politicians to muck with that stuff between now and then.

To prove I’m younger than 60: would rather vote for Harpo than look at today’s crowd sourced image again. More genX booty, please.

#31 lee on 10.13.15 at 6:41 pm

#9,

I hear life expectancy grows here by three months a year. If you are a teacher, how long before your pension payments fail?

#32 lee on 10.13.15 at 6:42 pm

If someone has $200000 of RRSP space is it wise to use it all?

#33 piccaso on 10.13.15 at 6:45 pm

I’m taking CPP at 70

I’m 60 in 10 months and make 120K a year at a job I just started and plan on working till I drop hopefully.

I have zero pension, zero house and zero saved.

I don’t need CPP while I’m working, but I will need as much as I can get when i’m not working.

#34 What-the-what on 10.13.15 at 6:45 pm

“..Nine in ten tax-free accounts under-funded”

Really? What we should do then is double the contribution room! That’ll get them all fully funded in no time!

The room accumulates and is there for deployment at any time. Like your RRSP room. That increases every year and doesn’t seem to fuss you. — Garth

—————————————————
Doesn’t it? I didn’t even mention it. That’s a good idea though and I think that would make things fair.

Lets have a flat TFSA-RRSP contribution limit – you can put in 20K (for example) of combined TFSA/RRSP room.

That would then help the poor and downtrodden that don’t benefit from RRSPs but not overly help the wealthy by allowing them to double dip. Everyone wins!

I love it. make it happen Garth!

#35 Freedom First on 10.13.15 at 6:47 pm

#8 Victoria Real Estate Update

Thank you. Great Post. People will hate you for it. The truth is very painful to the herd. I do not have a PHD in Herdonomics, but I listen to smart people. Listen to the idiots/dickheads/nuts too, as they always provide examples of what not to do. This Blog reveals/will reveal all, the good, the bad, and the ugly. Trust me.

#36 Nora Lenderby on 10.13.15 at 6:57 pm

#22 Playground for sale on 10.13.15 at 6:09 pm
Van real estate- hotter than ever
Van school board selling play grounds !!

Hah! Those wags at the CBC! They’ll be first against the wall come the re-election of Mr. H.

#37 Smoking Man on 10.13.15 at 7:01 pm

Blobs of human fat.

Some are worshipable, others put out with the trash.

Nectonight aint any better.

You live in a perfect world, some drunkin artist challenge’s your programming.. Messes up the mission.

You get mad. Why wouldn’t you, your the expert of your experience and wishfull bias.

I love drinking…

Dr Smoking Man

#38 Tony on 10.13.15 at 7:05 pm

The birthrate will fall in the future. In America many are choosing not to work or look for a job. The same will probably happen soon in Canada. Healthcare costs will increase over and above inflation. Morals and pride are a thing of the past. CPP premiums can only be raised so much each year. Another reason for young people to even bother looking for a job. Low or negative interest rates mean a low return for the Canada Pension Plan each year. The best advice is take the money while it’s still there because the government can take your whole pension.

#39 Brian on 10.13.15 at 7:05 pm

Conventional economics don’t seem to apply anymore.
YVR RE continues its tear.

Friend of mine as looking at a N Burnaby SFH listed at 1M. Guess what it sold for? 1.4M

Think its local money driving that kind if increase? Globalization hasn’t been around long enough for people to consider it as a cause. New economic fundamentals now apply. Its the only logical conclusion i can make.

#40 Smoking Man on 10.13.15 at 7:13 pm

An original….

https://youtu.be/y5tOpyipNJs

A smoking man from the day.

Steel my book pricks, sort of my fault. Wont matter.

I don’t care. I love it.

#41 Steerage Bilge on 10.13.15 at 7:13 pm

Wynne and Justin leaping off cliffs together…they ain’t got no clothes. TFSA is so much better than expanding CPP.

http://news.nationalpost.com/news/canada/canadian-politics/wynne-says-ontario-would-drop-pension-plan-if-a-federal-liberal-government-expands-cpp

#42 Dave on 10.13.15 at 7:14 pm

Garth, why do you ignore the GIS? It changes the numbers significantly for those who haven’t planned retirement.

#43 Naish on 10.13.15 at 7:18 pm

Garth, your CPP numbers are a bit off. The reduction is actually going to be 35 percent instead of 30. 12 months x 0.6 x 5 years = 35 (or 7.2 x 5). Your point still stands regardless of if it is 30 or 35 though.

#44 Naish on 10.13.15 at 7:19 pm

Apologies, appalling math, should be 36 instead of 35.

#45 Smoking Man on 10.13.15 at 7:20 pm

https://youtu.be/2-hkpLXwHUQ

I don’t care…

#46 ANON on 10.13.15 at 7:27 pm

Take the money and run.
There are tens (most likely hundreds if you include derivatives) of trillions of promises (no human can conceive these numbers, even it they throw them around like they mean nothing) waiting to be broken, ’tis but a drop in the ocean.
Garth, kudos for not using carpe diem :)

#47 conan on 10.13.15 at 7:31 pm

Agree to a certain extent on this concept. If you need the money and will spend it on food/fun then take it at age 60.

Otherwise, leave it til age 65. Instead of comparing the returns in play vs a 100% equity account compare it to the income part of a conservative portfolio.
The CPP returns look quite nice in that regard.
So I only half agree with you on this one.
One can adjust the portfolio going forward to represent the CPP accumulation staying in play.

Garth you should run for the Pro Cons once his Harpership has sailed. Think big ,unless of course, you love the money game more then anything.

#48 BC Guy on 10.13.15 at 7:36 pm

If you’re under 30, your job prospects are grim, everywhere in the world:

http://business.financialpost.com/news/economy/if-youre-young-your-job-outlook-is-grim-no-matter-where-you-live-world-bank-warns

And hey, I wasn’t planning on retiring solely on the CPP and the OAS, but when I’ve paid into it my whole career, it kind of pisses me off that Harper had the audacity to take two years worth of OAS from me, just before I’m about to collect.

#49 Toronto_CA on 10.13.15 at 7:37 pm

We should do an updated Greater Fool poll later this week. Interested to see if among the Blog Dogs the sentiment has changed.

Possibly tomorrow. — Garth

#50 IHCTD9 on 10.13.15 at 7:38 pm

#1 What-the-what on 10.13.15 at 5:05 pm
“..Nine in ten tax-free accounts under-funded”

Really? What we should do then is double the contribution room! That’ll get them all fully funded in no time!
__________________________________________

You’ve got it all wrong!

We need to LOWER your TFSA contribution limit – that way if the face of good fortune were to smile upon you some sunny day years from now – you won’t be able to put nearly as much in your TFSA to save for your retirement! Sorry about your luck buddy!

You’d have no choice but to dump it all into RRSP’s and get a huge income tax refund from the Federal Government nearly immediately!

And not have to pay back any tax on any of it including the gains for 20 or 30 years!

Hell, you could even take that fat tax refund cheque and just blow the whole thing on beer and popcorn just like you did with your Universal Childcare Benefit cheque!

This is way better allowing people to invest money they’ve already paid taxes on!

#51 Herf on 10.13.15 at 7:47 pm

A nice summary of pending tax hikes if the MiniPET gets elected. Left-leaning students – wave bye-bye to your school text-book and bus-pass tax credits.

And if you think you can evade the tax hikes by escaping to the boonies and living off the land, prepare to pay a tax on firewood under Trudeau’s proposed carbon tax:

http://www.therebel.media/your_choice_in_this_election_who_will_let_you_keep

I agree with Brian Lilley – the election is about how much of your money you get to keep and/or the government gets to take.

#52 Ret on 10.13.15 at 7:53 pm

#31 “I hear life expectancy grows here by three months a year.”

Three weeks, maybe.

#53 Herf on 10.13.15 at 7:55 pm

Wynne flip-flops on O.R.P.P. if Trudeau gets elected (and if he increases CPP payroll taxes nation-wide (something Harpo has warned about throughout the election)):

http://news.nationalpost.com/news/canada/canadian-politics/wynne-says-ontario-would-drop-pension-plan-if-a-federal-liberal-government-expands-cpp

The ORPP is a nightmare – huge logistical costs, paltry benefit. Government at its worst. — Garth

#54 ANON on 10.13.15 at 7:57 pm

#38 Tony on 10.13.15 at 7:05 pm

Morals and pride are a thing of the past

“Morals and pride” are a direct consequence of being the first in line in an expansion. As a real life (and cyberspace) confirmation of this universal truth, please notice “morals and pride” evaporating even faster in those who have been among the very first in line, simply because they are no longer extracting what they think they are entitled to extract.

#55 Lea on 10.13.15 at 8:00 pm

#8 Victoria Real Estate Update

May your landing be softer than ours was in the California. Sadly, most people I talk to here in Vancouver refuse to consider the possibility that prices will cease to increase at some point.

#56 Arfmooocat on 10.13.15 at 8:01 pm

I don’t think one can make a blanket statement on when one should take CPP. It all depends on the individuals circumstances.

#57 Smoking Man on 10.13.15 at 8:04 pm

Lead belly. Perhaps its ok for someone else to take your thunder.

Im getting use to it.. Dont have the drive to finish.

https://youtu.be/SJGCbRBc-EY

#58 learningfromyou on 10.13.15 at 8:10 pm

Thank Garth for this post

Mark wrote in the previous post
http://www.greaterfool.ca/2015/10/12/trust-6/#comment-403129

>And what exactly was wrong with buy and holding >equities over the long term, deferring capital gains in >the process almost indefinitely?

I’d love to fully understand this process of deferring capital gains.

Thank anybody in advance for explaining it.

#59 One Week to an NDP Government! on 10.13.15 at 8:14 pm

When the NDP sweep to power next week, we will all see what an actually fair and constructive approach to pension reform looks like, one that is good for all, not just the one percenters.

#60 Patrick on 10.13.15 at 8:15 pm

¨Soon this will translate into an eruption of real estate listings¨
_____________________________________________

Every week I see another article on the financial post advising boomers to sell their houses to fund their retirements because all their worth is tied up in real estate.

I wonder how many people are in that boat?

#61 Scumop on 10.13.15 at 8:16 pm

Its like there are two worst case scenarios.

Worst case scenario one:
Don’t take early CPP and die young. Miss getting a few % of the taxes you paid back, a more comfortable lifestyle, or trips or whatever you might have wanted. Plus GovCo wins! Boooo.

Worst case scenario two: You live a lot longer than the statistical norm.
You have to have enough investment / savings to carry you well beyond the mean. No matter if you delay CPP or not, you need far more than an actuary would calculate for a defined benefit plan. It wont much matter when you took CPP, you better have your tfsa and everything gassed and ready for the long haul.

Which means Garth is doubly right: Take CPP asap, and pump the TFSA + RRSP because few people live to be 80 (or whatever the mean is). The majority (you) die younger or older often by a decade or more, so you need to cover both bets.

#62 Ronaldo on 10.13.15 at 8:23 pm

Great post Garth. Keep up the good work.

#63 For those about to flop... on 10.13.15 at 8:23 pm

#171 Daisy Mae on 10.13.15 at 11:12 am
#74: “So your saying that there is a chance you might vote Conservative ?”

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

LOL I just needed to let off steam….

///////////::///////////////
I’m glad I made you laugh,politicians can be infuriating but nobody’s perfect .

#64 IHCTD9 on 10.13.15 at 8:27 pm

#51 Herf on 10.13.15 at 7:47 pm

And if you think you can evade the tax hikes by escaping to the boonies and living off the land, prepare to pay a tax on firewood under Trudeau’s proposed carbon tax:
____________________________________________

Enforcing that one would take a couple hundred million in “wood police” to enforce – the whole industry is under the table. Almost impossible to think this could ever be a plausible revenue generator for the Feds. There are no dates or serial numbers on trees, totally untraceable. Maybe he’ll have the RCMP pulling over anyone driving along with a half ton load of wood in the back to collect the taxes?

#65 Ret on 10.13.15 at 8:27 pm

#48 You don’t pay into OAS. However, the OAS age extension to 67 for those born after 1958 did seem rather arbitrary and leaves one wondering, what’s next?

It really can’t be a money issue. You don’t have to look very far around Hamilton to see how millions of dollars get pissed away every year by all three levels of government with endless vote buying programs and questionable projects.

I am surprised that the OAS changes were not even a major issue in the election campaign for the electorate or the leaders.

TFSA’s and hijab’s were the hot button issues. A highly charged, emotional diversion from the major economic issues that the country refuses to face.

#66 Arfmooocat on 10.13.15 at 8:27 pm

Take CPP asap, and pump the TFSA + RRSP because few people live to be 80 (or whatever the mean is).

…………………………………………………………………….

My parents are both in their 90’s, my dad has been milking his company pension for 40 years, longer than he worked.

#67 IHCTD9 on 10.13.15 at 8:29 pm

#59 One Week to an NDP Government! on 10.13.15 at 8:14 pm
When the NDP sweep to power next week, we will all see what an actually fair and constructive approach to pension reform looks like, one that is good for all, not just the one percenters.
___________________________________________

I hate to break it to you, but…

#68 Drill Baby Drill on 10.13.15 at 8:33 pm

#59 One week to NDP Gov’t
You are without a doubt a dumbass. The commie pinkos love people with your IQ level.

#69 S.Bby on 10.13.15 at 8:34 pm

Be interesting to know how many readers have already voted in the advanced poll like I did.

#70 espressobob on 10.13.15 at 8:34 pm

Most Canadians have no plan “b”, just a fact. It seems the cost of living has taking over and debt is the new norm.

Savers are the minute minority, pity.

Where did this thing go wrong? Maybe is has to do with a lack of education?

Factor reality into Oct. 19 election, and still little will change.

#71 S.Bby on 10.13.15 at 8:36 pm

#39 Brian
It was likely priced low to generate a bidding war…

#72 TurnerNation on 10.13.15 at 8:41 pm

re. Long Branch. Buddy of mine bought pre-con here:

http://www.torontocondobubble.com/2013/11/selling-neighbourhood-minto-long-branch.html

(The ‘Branch Beer Store was deposed, for its provenance.)

Most interesting in link is original Phase 1 price list. Shall compare MLS in the the years coming.

#73 valleyrenter on 10.13.15 at 8:43 pm

Well, out here on the wet coast, there seems to be a shift in radio commercials. The constant bleating of HELOC offerings proffered up by lenders has now been tittilatingly augmented with….CHiP offerings! Every commercial break has one or the other, sometimes running both during the same break. Noticed this starting about two weeks ago.

#74 Love my Kia on 10.13.15 at 8:46 pm

Thanks for addressing the CPP at 60 so many of us were wondering about. Good advice, especially the part with taking the loot while still working and investing it to make more $.

Since this is a housing/finance blog, what is your take on reasonable sized homes to live in? I’ve read that the Wealthy Barber lives in a crib under 1300 square feet. Housing isn’t an ugly debt fueled machine if you live sensibly. A family of 4 can live comfortably in 1300 square with finished basement, but chooses to double and triple that to keep up with the Jones and this is where McMansions and house porn sets in. When I was building I found nothing online as a guide for ideal sized living space. I would be most interested in hearing your thoughts on the subject. Many people will never be convinced to rent, so giving up some advice on how to purchase a suitably sized home would be much appreciated.

Also very glad to see Amanda Lang leaving and watching the Ford brothers ‘support’ the Harper campaign.

#75 Linda on 10.13.15 at 8:49 pm

#2 Mark – if you can opt out of CPP why would you? This is a guaranteed, portable wherever you work in Canada (who knows, you might end up being an employee at some point) DB pension plan. Of course, the amount you get is small, but the amount paid in isn’t exactly huge either. So it depends first on whether you can opt out as a small business owner & if the answer is yes, whether you have the discipline to put all the funds you would have paid into CPP into a balanced, diversified TFSA first & then an RRSP. Because if you opt out & then do NOT save for your future, sucks to be you. OAS may or may not be available by the time you reach age 65, 67 or? Just because it is paid out now does NOT mean it will be paid out later. Unlike CPP, the feds can & likely will reduce the number of qualified applicants to those who (for instance) qualify to get GIS. Given OAS isn’t even $7,000 gross per year right now trying to live on OAS/GIS w/o CPP – well, hope you like living in a homeless shelter, because that is your future if you are still alive & no longer able to work. Even with CPP the amount per year to live on is very slim pickings indeed – you may as well scope out the local shelters now & get acquainted with your future abode.

Don’t believe me? Ask the mighty Google how many senior citizens make up the homeless shelter population where you live. Depending on what is considered ‘senior’ – some shelters count anyone over 50, those most use age 55 or 60 as the cut off – the percentage can vary considerably but many shelters say at least 5% of the population is senior. Expect those percentages to explode as hundred of thousands of ill prepared Canadians retire.

#76 Madcat on 10.13.15 at 8:53 pm

“It’s not the Bank of Canada’s job to fix bad decisions consumers make with regards to debt loads in the current low rate environment”, Stephen Poloz says.

“The bank is currently mandated to target inflation, but the five-year term of that mandate is set to expire next year. If politicians want to redefine the bank’s role in the economy, Poloz’s speech made it sound like Canada’s top central banker is open to it.

“The idea that central bankers should pay little heed to financial stability issues and simply ‘stick to our knitting’ of inflation control — a position once advocated by many — seems quaintly naive,” Poloz said.

http://www.cbc.ca/m/news/business/stephen-poloz-says-bank-of-canada-not-responsible-for-record-debt-1.3268738

#77 Roasted wildnut on 10.13.15 at 8:53 pm

Looks like this pathetic blog has turned you white Garth!

#78 Sponge on 10.13.15 at 8:55 pm

I think we found the middle! Hopefully he is ready.. 35.1% and gaining.. No far left or right for us!

#79 Sponge on 10.13.15 at 8:57 pm

http://www.cbc.ca/news2/interactives/poll-tracker/2015/index.html

#80 common sense on 10.13.15 at 9:03 pm

#74 Kia

No expert on the subject but a home size that is affordable and comfortable to YOU is a decision only made by you.

I am single, own my home which is too large for me but offered the best VALUE on the market (try to educate what value means to a RE agent!) at the time and with the best attributes to sell in the future.

Close to school, easy access to services/shopping, size of yard similar to size of house, easy of maintenance, costs, all house similar in size – up keep in neighbourhood, potential noise pollution, privacy, etc.

Before I bought I was already planning selling strategies..

#81 Rexx Rock on 10.13.15 at 9:05 pm

I understand Victoria real estate update is maybe jeolus not being a homeowner like her friends and relatives who have large wealth due to just owning a small home.Victoria is the San Diego of Canada and wealth starts when owning a home in this city.

#82 Sfh my a$$ on 10.13.15 at 9:06 pm

Here is an example of how to pay a half million home in Maple Ridge with 5% down:
Monthly mortgage @2.5% is 2200$
One suite helper -700$
One foreign student boarded -800$
Tax per month 200$
Then my friend pays 900$
If rates go up 2% he is doomed though but for now i look stupid renting
Right after buying the house they got a brand new hyundai suv and went for a europe holidAy
Their income is 100k … max nurse and restaurant manager

#83 bigtowne on 10.13.15 at 9:08 pm

Time flies. I voted this weekend in Rexdale burb where the working class lives and there was no line up. My passport was insufficient so I had to show my OHIP card. Quebec seems to be very affordable for rentals and it has better architecture than Ontario. Basically Ontario is a replica of hideous 19th century British architecture.

#84 Paul on 10.13.15 at 9:08 pm

#78 Sponge on 10.13.15 at 8:55 pm

I think we found the middle! Hopefully he is ready.. 35.1% and gaining.. No far left or right for us.
————————————————————-
P.E.T. Found the middle too only it was his finger , I guess Justin deserves his chance to give it too us as well!

#85 espressobob on 10.13.15 at 9:10 pm

Based on the link below it seems better to stuff CPP into a TFSA at 60, if your in a position to do so. Better tax free returns. Just sayin.

http://www.servicecanada.gc.ca/eng/services/pensions/cpp/retirement/age.shtml

#86 Arnprior88 on 10.13.15 at 9:13 pm

re:collecting cpp at sixty
my question is: if I take it now, and its added to my taxable income, what is the chance that it could push me into a higher tax bracket, reducing the benefit even more? ( I have a good income now, 75% salary and 25% dividends, and will be working for another 5 yrs)
I worry about the taxman getting even more of me!

#87 Randy on 10.13.15 at 9:17 pm

If you live in Ontario, get rid of your shades…You’re future ain’t too bright.

#88 Smoking Man on 10.13.15 at 9:19 pm

Only man on earth I would ever considering switching teams for.

Loved him

https://youtu.be/BcSbxsmQwFI

#89 I am the Babblemaster on 10.13.15 at 9:20 pm

Every retirement is different. If you are a) currently working and b) earning a high salary and c) expect to have much less income after retirement, then you should take your CPP later rather than sooner. If you do take it while you’re earning a high salary, you’ll be paying back a hefty portion (of a reduced amount) in taxes.

#90 Steve French on 10.13.15 at 9:20 pm

Now I’m being blocked from posting a Financial Times story on global inequality !

This GF censorship is getting out of hand….

The story was fine. Your smartass comments about me were not. Get lost. — Garth

#91 Sponge on 10.13.15 at 9:30 pm

P E T… ] Years later, on a train trip through Salmon Arm, British Columbia, he “gave the finger” to a group of protesters through the carriage window – less widely remembered is that the protesters were shouting anti-French slogans at the train.

#92 espressobob on 10.13.15 at 9:34 pm

Some complain about CPP bumping them into a higher tax bracket along with clawbacks with OAS. My sympathies.

Isn’t the idea overall to create taxation efficiency by using any legal method available?

Man give me a break.

#93 Take it | Realties.ca on 10.13.15 at 9:35 pm

[…] Source: http://www.greaterfool.ca/2015/10/13/take-it-2/ […]

#94 Peter on 10.13.15 at 9:38 pm

2014 Thanksgiving message from GT for those who have not read it

http://www.greaterfool.ca/2014/10/10/thankfully/

#95 Nemesis on 10.13.15 at 9:40 pm

#SteveMiller’sIndomitableFinancialAdvice…

https://youtu.be/U5U71_66l-0

#PlanB,Or… #’Fast’Company…

[TheStar] – Greying inmate population strains Canadian prisons

http://www.thestar.com/news/canada/2014/04/06/greying_inmate_population_strains_canadian_prisons.html

#96 Julia on 10.13.15 at 9:44 pm

Realtors creativity to sell houses?
http://www.buzzfeed.com/nicholaswray/open-house#.xaYG6WKJwE

#97 Victoria Real Estate Update on 10.13.15 at 9:47 pm

# 81 Rexx Rock

You make a number of assumptions that may or may not be true. You know nothing about me.

House prices in Victoria are no higher than they were in 2010, despite 6 years of emergency rates. Imagine how much prices would have fallen if rates hadn’t fallen from near normal to emergency levels. 35%?

You assume that the only way to make money through investment is in real estate. Victoria has proven that wrong as prices are the same as they were in 2009 in this city.

There have been many ways to actually make money through investment since 2009 and
none of them have been through real estate in Victoria’s case.

Many of my friends have lost money as a result of buying real estate in Victoria at near peak prices.

You are wrong on all accounts.

You sound like an angry realtor.

#98 lee on 10.13.15 at 9:56 pm

#52

According to an organization named Fast Future cited in an article recently in the Toronto Star, research from Britain suggests life expectancy is growing by five months a year there. I assume it’s similar here. I’m sure that will decelerate eventually, but that’s what they say. Not sure how credible the article is but I’m sure they include time we’ll be spending in a Hospital bed waiting for death. It’s all the same to a pension fund, it has to pay you whether you’re breathing on your own or a machine is doing it for you. I still don’t see how pension funds can afford to pay people at 55 with more years to live than they paid into the fund. Something doesn’t add up. I misquoted when I said three months a year earlier. But it is definately months and not weeks according to the study.

#99 CalgaryCarGuy on 10.13.15 at 9:57 pm

Tonight’s topic is definitely one I mull over. I’m almost 58 and have been through a divorce. Still paying alimony until May of next year. I have a pretty solid job even now in the cowtown recession. I live in a diesel pusher motorcoach that is completely paid for and pay 500.00 a month rent on a 112 acres west of Calgary in the shadow of the mountains. The only hook-up I have is power. I haul in my water. I love every second of this semi-rustic way of life and live pretty cheap over-all. Few people would like to live the way I do but for me it is perfect. On top of it all many of my ancestors on both sides of my family have lived well into their nineties. My grandfather smoked three packs of cigs a day until he was 55, then quit, and lived to be one month short of a 100. My great,great,great grandfather died at 96 in 1892. Unheard of at the time. My point is I am very healthy and suspect I have a pretty good prospect of living to a ripe old age. I plan to work until at least 65 since I really love my job. I hear what Garth is saying but I will need every dime that the government will send my way when the time comes. I think I’ll probably wait until 65. I think you just have to play the odds in your own situation.

#100 Panhead on 10.13.15 at 10:01 pm

Hallelujah Garth … I took it … I took it.

#101 IHCTD9 on 10.13.15 at 10:19 pm

#87 Randy on 10.13.15 at 9:17 pm
If you live in Ontario, get rid of your shades…You’re future ain’t too bright.
—————————————————–

Updated version:

Got a shitty job waitin, after my graduation
30 grand a year won’t be buying many beer
Things aren’t going great, and they’re sure not getting better
I’m doing all right, gettin good grades, but my futures not bright… I can’t afford shades, I can’t afford shades

This could be the modern day ballad of the millennials!

If you know the tune that goes with those lyrics off the top of your head, then you can keep wearing the shades

#102 I'm stupid on 10.13.15 at 10:20 pm

Freedom first

If you read this blog, I have no doubt you’re not one of the boomers I’m referring to. I agree that not only boomers mismanaged their finances. That’s why we have 1% and 99%. Being wealthy, for the most part, takes a lot of discipline and a lot of time. It’s easy to count how much money someone has but rarely does anyone look at the amount of sacrifice and effort was put in.

#103 Leo Trollstoy on 10.13.15 at 10:24 pm

Was in a finance course today at the U of A. Prof expects Canadian bank failures to take place somewhere down the line, and that the Canadian banks don’t know what’s’really coming.

Prof of philosophy lol

#104 Ontario's Left Coast on 10.13.15 at 10:25 pm

Trust me.

Hey Freedom, already getting sick of your new shtick. You sound like the worst kind of used car salesman. Trust is earned, not commanded with every uninspired, repetitive post. Time for a new catchphrase…

#105 BS on 10.13.15 at 10:32 pm

Friend of mine as looking at a N Burnaby SFH listed at 1M. Guess what it sold for? 1.4M

Think its local money driving that kind if increase?

Yes.

Your friend is local and your friend is trying to buy a SFH is Burnaby for over $1 million. He is the problem.

#106 George S on 10.13.15 at 10:38 pm

Here is a life expectancy with age calculator to play around with.

http://www.sunware.ca/illustrations/longevity.aspx?tempID=tm45tli5&selectedLanguage=en-CA

This is what actuaries do for a living. This is a good calculator because it gives you a general population life expectancy and your personal life expectancy. Every defined benefit plan including the CPP uses calculators like this to ensure that they are fully funded.

At age 60 a male has a 50% chance of living until 84. Females live longer, I think 87.

#107 Leo Trollstoy on 10.13.15 at 10:39 pm

My parents are both in their 90’s, my dad has been milking his company pension for 40 years, longer than he worked.

Lol

#108 Jerry van Zuuk on 10.13.15 at 10:40 pm

Some people seem to have the impression that “few people live to 80”. In actual fact, according to Statistics Canada, and based on recent mortality data, 63 percent of Canadian men and 75 percent of Canadian women who celebrate their 60th birthdays can expect to live until they are at least 80 years old.

#109 TurnerNation on 10.13.15 at 10:46 pm

No mention of F35 scandal from other two?

The dog that didn’t bark.

(They’re all in on it.)
Like the Avro Arrow was ordered quashed.
Just following orders.

Countries are a nice distraction and for sports (distraction). Anything else is overhead us. Look up. Way up.

#110 Sideshow Rob on 10.13.15 at 10:49 pm

Once you see that you can never unsee it. Where did I put the eye bleach?

#111 jane 24 on 10.13.15 at 10:52 pm

I have been retired now for 1.5 years. I went for Freedom 59. Couldn’t make the fabled Freedom 55.

I am amazed how little a good life costs with no big bills. I have no mortgage, no car payments, no visa debts, no child car, no university fees, no rent, no pension saving or really any other kind of savings to make each month. I have paid the bills of life. It is now all mine and I can spend it.

I have a holiday home which I swap for other holiday homes to make travel cheap and travel is cheap when you can go at any time, at the last minute.

People get your calculators out and see what life would really cost you to live it. If you can swing it then retire. Now. A long time dead my friends.

#112 Washed Up Lawyer on 10.13.15 at 10:55 pm

I am quite certain that my wife (60 yrs.) will outlive me (59 yrs.). Something about those glances over the tops of her glasses sends a cold chill up my spine.

“Bucket residence. Lady of the house speaking.”

I will stay at the grist mill until I keel over.

#113 goiden dipper on 10.13.15 at 11:02 pm

A persistent myth among the great unwashed who surround us” Garth

Great pic…those two old farts look like the “great about to be washed.”

#114 BS on 10.13.15 at 11:06 pm

#2 Mark – if you can opt out of CPP why would you? This is a guaranteed, portable wherever you work in Canada (who knows, you might end up being an employee at some point) DB pension plan.

Simple. If you are self employed you will pay in more than you will get out. Who cares about ‘guaranteed’ when you are guaranteed to get less than put in.

CPP was good for people who contributed prior to Paul Martin revamping it. People who contribute now (when you include both employers and employee contribution) will get less than they put in if they live an average life. The people contributing today and in coming years are paying for the underfunding of the past.

The people just starting out working today are paying a much higher premium than in the past where the people retiring now get the same benefit but will have paid way less. That is the problem I have with increasing the CPP is the government decides who gets what. It often has little to do with how much a person contributes but more how many years. Boomers will be getting the same benefit today as Millennial’s in the future but will have contributed a fraction of the contributions because contributions used to be 1/4 of what they are now. At least with a TFSA you get what you put in. Nothing more and nothing less.

#115 goiden dipper on 10.13.15 at 11:07 pm

The others were your own stuff (RRSP, house, TFSA, livestock)…

Livestock?????? All those cows and chickens running around the hood are gonna interfere with the road hockey games….

#116 Mark on 10.13.15 at 11:34 pm

“My parents are both in their 90’s, my dad has been milking his company pension for 40 years, longer than he worked.
..
[Trollstoy] Lol

What’s so funny? Is it not reasonable for someone who worked for a company for 40 years, and put aside a modest amount of his salary, to accumulate enough equity in said company to fully replace his wage?

Considering that a mere $10k/year into a TFSA, at the long-term stock market average real return of approximately 6% can generate a $1.5M (non-inflated) nestegg (easily enough to replace a $70-$80k/year salary) — it doesn’t seem so unreasonable after all.

Of course where the pensioners run into trouble is that their DB pensions are effectively invested in an obligation of one company (as opposed to being diversified). This is why Garth is such a strong advocate of commuting a DB pension and investing the money in a diversified fashion instead of being vulnerable to the downturn of its issuer.

#117 Ponzius Pilatus on 10.13.15 at 11:37 pm

Justin.
I think he’s ready.
Harper.
Gotta get a new shirt.

#118 Kreditanstalt on 10.13.15 at 11:38 pm

Garth, here’s how you do it (with no mortgage): (per month), with two @$600 government cheques.

Admittedly we are in the unusual position of having next-to-no income but a lot of assets. But the point remains: anyone without a massive house and consequent mortgage can make it easily on $1500-$2000 a month. EASILY.

Property tax exaction: $200
Garbage, sewer, water: $50
Food (usually on sale, in bulk) $400
Gas & repairs, tires max. $200
Car insurance exaction: $60
Nat. gas $30
Electricity $80
Internet, phone $90

$1500/month and you & spouse can live like Kings. GST refund cheques and child benefit cheques add up to a decent amount.

I buy in bulk whenever something essential is on sale. Eating out, or ordering out, in Canada is RIDICULOUSLY expensive so we never do it. Cook always. Firewood is free here, which cuts electricity bills. Plenty of free hiking, fishing, photography, clubs and groups, library and cycling, etc., here on Vancouver Island too.

PS Any stock-selling profits are on top of this!

#119 Bottoms_Up on 10.13.15 at 11:43 pm

#108 Jerry van Zuuk on 10.13.15 at 10:40 pm
——————————–
Male – take cpp at 60.
Female – take cpp at 65.

#120 Edward on 10.13.15 at 11:48 pm

“Liberal Leader Justin Trudeau says he would tell off Russian President Vladimir Putin “directly to his face” if he becomes prime minister.”

I’m sure Putin is shaking in his boots.

http://www.cbc.ca/news/politics/canada-election-trudeau-putin-1.3268798

#121 Bottoms_Up on 10.13.15 at 11:55 pm

#67 IHCTD9 on 10.13.15 at 8:29 pm
—————————-
Actually the NDP will wield some power as they will be relied upon by the liberal minority to pass bills.

#122 Sheane Wallace on 10.13.15 at 11:55 pm

#14 who’s to blame

Are you surprised that the governor of BOC is incompetent? If he was competent he would be running hedge fund.

GT, nice picture.

#123 Bottoms_Up on 10.13.15 at 11:59 pm

If you cared to read the UN report on climate changw you would see that the major sources of carbon pollution come from the petroleum industry, automobiles, and agriculture. No one is coming after wood burning.

#124 Snowboid on 10.14.15 at 12:03 am

#81 Rexx Rock on 10.13.15 at 9:05 pm…

“…wealth starts when owning a home in this city…”

As a close follower of the area we used to own in (near the Inner Harbour), prices were going down in 2010 and haven’t caught up yet.

Although we missed the peak by a few months, our saying is “wealth started when we sold our home in this city”

Most of the information provided by Victoria Real Estate Update is pretty accurate.

#125 Sheane Wallace on 10.14.15 at 12:04 am

#76 Madcat

Poloz’s behind will be whipped. He is solely responsible with his buddies at CMHC, as well as the finance minister for the debt and he know that he will be investigated and prosecuted.

Too late buddy to claim innocence!

#126 Bottoms_Up on 10.14.15 at 12:07 am

#50 IHCTD9 on 10.13.15 at 7:38 pm
——————————
Capital gains inside a TFSA is still new money that you are generating. Sure, you put after tax dollars in, but the money grows and the gains are not taxed. This is not the government righting a ‘wrong’, this is a clear gift to individuals/families that have an excess $20k kicking around every year to invest. In a perfect world (maybe the 1960s) this would be a boon to the average family, but today primarily the TFSA benefits the wealthy.

#127 golden herder on 10.14.15 at 12:08 am

Garth

I think there will be a lot of unexpected demographic shifts….expect to see an exodus of the herd to low cost international destinations with nice weather just to be able to survive…..Ecuador, Asia, Africa, etc….

#128 TRT on 10.14.15 at 12:10 am

BINGO!

Post 42 gets todays prize!!

#129 Snowboid on 10.14.15 at 12:15 am

Nearing the age you are eligible/want to retire? I highly recommend a pension advisor, a service I took advantage of at 54, ten years ago.

Looking at my overall situation (retirement goals, health, etc) the recommendation was to take early retirement at 55, start CPP at 60 and OAS at 65.

With that advice, and the sage wisdom of the esteemed professor, we ended up with a comfortable retirement income. We got a head-start on our bucket lists, something that may have been impossible retiring at 65 or 70.

I don’t see how anyone can reasonably expect to live on CPP/OAS/GIS alone.

#130 Bottoms_Up on 10.14.15 at 12:36 am

#49 Toronto_CA on 10.13.15 at 7:37 pm
————————————
As has already been established, a poll on this site is biased in the following ways:
-it reflects voting intention of those that are inclined to fill in the survey on this site and,
-it relects those of us that have actively come to this site, being those that are more inclined to do research on the housing market or finances. Thus, it is not a representative sample of the general population.
I’m not sure what the point would be to conducted another survey here but to reaffirm that 45% of those that vote on this blog on such a survey would cast their vote for the Cons. This percentage makes sense given the previous polling of net worth on this site. Actually, I’m surprised the number voting con isn’t higher.
The statistical bias is essentially equivalent of taking a poll of voting intentions on a climate change website.

#131 Cici on 10.14.15 at 12:37 am

#39 Brian,

Did you consider the effects of all-time low interest rates, and easy lending practices?

Did you not notice that each time the BoC cuts, house prices rise proportionally?

Why can people not see this, and what is the obsession with blaming Asians? It’s seriously embarrassing and makes us all look like xenophobes.

#132 Bottoms_Up on 10.14.15 at 12:41 am

#48 BC Guy on 10.13.15 at 7:36 pm
——————————-
“Just before” is a bit of a stretch seeing how those born in 1957 can still get oas at age 65. So that means you were born in like 1960, and therefore won’t be collecting until 2025? Keep in mind oas is a government hand out and not something that is actively contributed to such as cpp.

#133 Love my Kia on 10.14.15 at 12:54 am

#80 Common Sense
—————————————
Thank you on the feedback on appropriate home size. I too am single and knew ‘location, location, location’ was the main thing to aim for so I built on a cul-de-sac (nowhere near Van or TO). My location I am happy with, but being single I find having a home with 3 baths excessive. Value for resale is good in a sense but for me long term I wish I built smaller. I think the trend will be towards smaller and more affordable homes for many people and this can be looked at as value as well.

#134 Cyclist on 10.14.15 at 12:56 am

75 Linda – If your small business nets $100K and you split it with your spouse the CPP will cost you almost $10k. Now instead lets invest that $10k over 35 years
as per garths balanced and diversified portfolio.
Chances are you will out-do the CPP payout handily.

The problem right now is the CPP has to make up
ground for past and current payouts. I’m paying for my
parents CPP. Mark will pay for a good chunk of mine.

#135 S.Bby on 10.14.15 at 12:57 am

I did a Google street view of that rental house that was profiled here a few days ago. Image date is June 2015 and there is a For Sale sign in the front yard. My guess is someone bought it as an “investment”, the sale has closed, and they are now renting it out. BC Assessment value is $1,322,000 but the current sales data has not been updated yet. So it likely would have sold for around $1,400,000 easily. So they pay $1.4 mill and rent it for $2900/month??? It does have a nice pool though.

#136 Fuzzy Camel on 10.14.15 at 1:15 am

Sell your real estate and hide your money in a good investment. Canadian real estate is played out.

Interest rates are going to rise soon, when the IMF makes an announcement later this month that will royally screw the US.

I’m not saying what it is, but the good days of printing paper at no interest will come to an abrupt end. Canadians are going to learn that their borrowing competitions are over.

#137 nonplused on 10.14.15 at 1:20 am

Great post again tonight Garth but I think I can make it a lot shorter:

“A bird in the hand is worth 2 in the bush”.

Of course they were talking about girls when they came up with that but I think as you explained tonight it applies to money as well.

#138 Great Canadian Bubble Co. on 10.14.15 at 1:28 am

I think any pension tension we had quickly went away upon viewing that picture Garth … yikes.

#139 Herf on 10.14.15 at 1:32 am

#64 IHCTD9

“Enforcing that one would take a couple hundred million in “wood police” to enforce – the whole industry is under the table. Almost impossible to think this could ever be a plausible revenue generator for the Feds. There are no dates or serial numbers on trees, totally untraceable. Maybe he’ll have the RCMP pulling over anyone driving along with a half ton load of wood in the back to collect the taxes?”

Maybe he’d create an entire new bureaucracy to detect and enforce the rules against people suspected of harvesting and burning untaxed wood. Say, hire some biologists whose specialty is trees, to perform DNA testing on wood core samples of suspect untaxed wood, then penalize the persons accordingly. Just like the “gubmint” to spend $10,000 to try to recover $1 in taxes.

#140 Freedom First on 10.14.15 at 2:37 am

#33 piccaso

geeez Buddy, I feel for your predicament, however it happened to end up that way, but man, do I ever admire your resilience. I sincerely wish you the best. Freedom First.

#141 Freedom First on 10.14.15 at 2:42 am

#104 Ontario’s left Coast

I agree. It won’t happen again.

#142 Freedom First on 10.14.15 at 2:50 am

#102 I’m stupid

Yes. Pursue knowledge. In every area of life. Few do it.

#143 chicho on 10.14.15 at 3:00 am

“Do the math. It’s not worth taking the risk of waiting.”

I’ve done the math. It’s worth waiting.

The biggest risk is outliving one’s savings. Delaying CPP helps mitigate this risk.

#144 Londoner on 10.14.15 at 5:18 am

“Was in a finance course today at the U of A. Prof expects Canadian bank failures to take place somewhere down the line, and that the Canadian banks don’t know what’s’really coming.”

I work in Finance. I’ve worked for Canadian banks, American banks, British banks and European banks. I see what banks report on their balance sheets and I see what they hide off balance sheet. There’s no chance a Canadian bank is going to fail before it’s international peers.

#145 IHCTD9 on 10.14.15 at 6:46 am

#126 Bottoms_Up on 10.14.15 at 12:07 am
#50 IHCTD9 on 10.13.15 at 7:38 pm
——————————
This is not the government righting a ‘wrong’, this is a clear gift to individuals/families that have an excess $20k kicking around every year to invest. In a perfect world (maybe the 1960s) this would be a boon to the average family, but today primarily the TFSA benefits the wealthy.
__________________________________________

I agree so much that it is a “gift”, but not for whom you perceive it to be.

I know a guy who paid off his house in 5 years while raising a family on a single income – that probably does not compute in your world, but I respect this guy, because I have some idea what it takes to do something like that.

I know a 21 year old who bought a truck worth just less than 1/2 of what I paid for my house 14 years ago with a big down payment, and has been making the monthly payments with no issue.

The problem is the resolve to save, not the money. I DO have the funds to pack into a TFSA, but you would not see me as some rich guy. I keep my cost of living low, pay myself first on an automatic withdrawal. I maintain my house and vehicles (including brake jobs) myself. I have been doing this since I was a teenager

My net worth when I retire is virtually guaranteed to be 7 figures, and I live and work, in a slowly dying dead end blue collar town. Resolve, consistency, and time has worked for me, and will work for anyone who applies it.

There are others like me. And as Garth has said multiple times now, the RRSP program benefits the rich much more than a TFSA does: “get rid of that too?”

#146 maxx on 10.14.15 at 7:32 am

#102 Ponnaps on 10.12.15 at 9:49 pm

“Nora Lenderby on 10.11.15 at 10:26 am
#259 Ponnaps on 10.11.15 at 1:23 am
Is the wearing of niqab about religious freedom or is it about personal choice? Everyone seems equally ignorant…

Actually it’s not any of my business (or yours).

If someone breaks a law, that’s different.

—————————————–

A rather foolish assumption that all laws that are needed to be made are already made..

It might not be any of your business but it isn’t your business to tell me it isn’t mine..”

No kidding….what atrocious, presumptive arrogance. Well put Ponnaps.

Back to finance.

#147 IHCTD9 on 10.14.15 at 7:53 am

#139 Herf on 10.14.15 at 1:32 am

Maybe he’d create an entire new bureaucracy to detect and enforce the rules against people suspected of harvesting and burning untaxed wood. Say, hire some biologists whose specialty is trees, to perform DNA testing on wood core samples of suspect untaxed wood, then penalize the persons accordingly. Just like the “gubmint” to spend $10,000 to try to recover $1 in taxes.
__________________________________________

Chips implanted in all trees, GPS location sensors, wireless information transmission to wood tax headquarters in Ottawa. 500 new Inspectors, 1000 C”W”RA agents, 250 undercover agents to sift through your ash pile out in the garden at night looking for telltale signs of tax evasion. 1500 new pages of legislation, 50 new parole officers, 2 new prisons to lock up offenders. 25 new rehabilitation centers to prep illegal wood burners for reintegration back into society. 500,00 “smart” wood stove loading door interlocks that scan your wood for tax payment prior to allowing you to open the door.

#148 Linda on 10.14.15 at 8:01 am

#175 Cyclist: I agree. My husband is self employed & pays into CPP, but also has a fully funded TFSA & RRSP. My point to #2 was that if you chose to not pay into CPP that you need to have the discipline to set the funds you would have paid into CPP into a TFSA/RRSP/investments. Sadly, most people who opt out of paying into something all too often spend the money that they should have set aside for their future. Then, when & if that future arrives (not everyone lives to be old) there is much wailing about how they are living a subsistence life & how society should take care of them.

I don’t mind giving someone a helping hand. What I do mind is having people living it up all their working life – not saving a dime for their future – then expecting those of us who did set aside funds for our future to hand it over to them – ‘share the wealth’ – because hey, they ‘deserve a helping hand’. And while there are plenty of folks who had a hard life & certainly did not have the means to ‘party’, there are plenty who do just that. See them every day. I can understand wanting to party & enjoy life – do it myself – but what I do not do is expect someone else to pay for me because I blew all my money on parties.

#149 3 yr lease on 10.14.15 at 8:07 am

My CPP is just enough to blow on a 3 yr new car lease…..it’s otherwise cat food.

Wynne has proposed to double the paycheque deductions to fund civil service paycheques….er…pensions for all…..unless you vote for Trudie….then she’ll claw back the threat.

I’m spending mine on friviolity…..’cause I can. Thx guyz.

#150 The Other Chris on 10.14.15 at 8:51 am

CPP has been ridiculous ever since the post-Martin reforms. If I wasn’t forced to pay 9.9% of my earnings into the CPP (that includes the mandatory employer match), I’d be so much farther ahead in terms of savings. Wish I could opt out.

#151 Holy Crap Wheres The Tylenol on 10.14.15 at 8:54 am

#40 Smoking Man on 10.13.15 at 7:13 pm
An original….
https://youtu.be/y5tOpyipNJs
A smoking man from the day.
Steel my book pricks, sort of my fault. Wont matter.
I don’t care. I love it.
_____________________________________________
Smoking Man Led Belly is not the original creator or singer of this version of the song. It goes back to 1905 and has been sung by many. Before Led Belly sang it Woodie Guthrie recorded it in 1941 and then Josh White. Led Belly recorded his version in 1948. By the way if you like old blues and folk Woodie was great. You may have heard of his son Arlo. By the way his famous quote on his guitar was “This machine kills fascists”
https://www.youtube.com/watch?v=uX_bEDqxHFw

#152 Patrick on 10.14.15 at 9:24 am

#148 Linda on 10.14.15 at 8:01 am

¨And while there are plenty of folks who had a hard life & certainly did not have the means to ‘party’, there are plenty who do just that¨

The problem is that even those who didn´t have a hard life THINK that they did. I have friends who INSIST that they have to eat-out 4 times a week AND take vacations 2x a year. To expect them to do otherwise is reducing them to poverty (in their eyes).

#153 Daisy Mae on 10.14.15 at 9:33 am

#38: “The best advice is take the money while it’s still there because the government can take your whole pension.”

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

Highly unlikely. We’d all be dumpster diving. Anyway, the CPP, OAS, and GIS work their way back into the economy — some into government coffers by means of various taxes.

#154 Sideshow Rob on 10.14.15 at 9:37 am

“Liberal Leader Justin Trudeau says he would tell off Russian President Vladimir Putin “directly to his face” if he becomes prime minister.”

Hahahahah!

That girlyboy empty suit? The guy who makes the current potus seem almost manly. He would soil himself if he had to meet Putin. Justin you crack me up!

#155 cramar on 10.14.15 at 9:42 am

When we turned 60 we did the calculations and decide to wait for 65 to begin collecting CPP. The goal was to maximize income as we get older and would need more. I saw what the cost of a retirement home was for my aging mother and decided to play the same game. My mother did well since she collected CPP/OAS until her 98th birthday.

#156 Broke Dick on 10.14.15 at 9:46 am

(c) You can rent a place to live but you can’t rent income. – GT
==============================

Think within the box, so to speak.
You rent out your basement and you have income. Voila!

Why would you want to live with strangers in your home? — Garth

#157 SunShowers on 10.14.15 at 9:55 am

#50 IHCTD9 on 10.13.15 at 7:38 pm

We need to LOWER your TFSA contribution limit – that way if the face of good fortune were to smile upon you some sunny day years from now – you won’t be able to put nearly as much in your TFSA to save for your retirement! Sorry about your luck buddy!
__________________________________________

So the only way an increased TFSA limit benefits average Canadians (like the 83% of TFSA holders who were unable to max out the previous limit of $5500 per year) is if they win the stinkin’ lottery and suddenly have a colossal lump sum of cash they need to shelter?

You know that doesn’t come across as a point in favor of expanded TFSA limits, right?

“Expanded TFSA limits benefit everyone! Wealthy folks are guaranteed to benefit immediately, while everyone else (at least 83% of Canadians) can THEORETICALLY benefit if all the planets align and they somehow happen upon a mass of cash at some undetermined time in the possible future (thus becoming ‘wealthy folk’ and leaving the 83% behind anyway).”

The vast majority of annual RRSP room also goes unused by most people, with the wealthiest among us racking up the greatest tax refunds by making full contributions in the $24,000 range. Stop politicizing the TFSA, which is universal and far more democratic a retirement-savings vehicle. — Garth

#158 Daisy Mae on 10.14.15 at 10:11 am

#74: “I’ve read that the Wealthy Barber lives in a crib under 1300 square feet. Housing isn’t an ugly debt fueled machine if you live sensibly. A family of 4 can live comfortably in 1300 square with finished basement…”

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

Exactly. What size were houses following WW2? Everyone managed quite nicely. HGTV has a series now — ‘Tiny Homes’ — average 400 sq.ft.

#159 IHCTD9 on 10.14.15 at 10:17 am

#153 Daisy Mae on 10.14.15 at 9:33 am

Highly unlikely. We’d all be dumpster diving…
____________________________________________

Not highly unlikely. I was younger than 54 in 2012, so the government has taken some of my “pension” already, and I still have 24 years to work!

What are the chances of more changes in the next 2.4 decades which take more little bites out of OAS/CPP? I’d say they’re pretty good. Those little bites may add up to a pretty big one by 2040.

They won’t take all in one shot obviously, they’ll do it like government does everything – a little bit at a time.

I think with the way things are going in Canada and the World, you’d be a fool to make any retirement plans that require $X from OAS and CPP – counting on an amount and a date is not smart – as demonstrated by the 2012 Federal Budget.

#160 Daisy Mae on 10.14.15 at 10:26 am

#99: “I think I’ll probably wait until 65. I think you just have to play the odds in your own situation.”

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

I delayed, also. Applying at 60 would have relieved the ex of spousal maintenance and would not have benefited me in any way — it would have just simply sentenced me to reduced CPP for life.

#161 Cyclist on 10.14.15 at 10:29 am

148 Linda – For a small business owner to opt out you would have to declare the earnings as dividends which I believe requires incorporation, and would also reduce your RRSP contribution to zero (no earned income). This would be a very conscious decision which would require the cooperation of your accountant, so I dont believe most would use it for party funds. But the CPP is a form of forced savings.

I do know of people taking a “CPP holiday” if they figure they wont use up the years of low earnings you are allowed to exclude from the calculation.

My accountant continues to recommend me paying into it for now.

#162 Broke Dick on 10.14.15 at 10:29 am

(c) You can rent a place to live but you can’t rent income. – GT
==============================
Think within the box, so to speak.
You rent out your basement and you have income. Voila!
Why would you want to live with strangers in your home? — Garth
==================================

Who says they have to be strangers? They could be friends who are renters.
On second thought you’re right again. All renters are low lifes, friends or not.
sarc/

#163 Broke Dick on 10.14.15 at 10:33 am

A retirement calculator can be a wonderful tool for those thinking of telling the boss to shove it. Play with some numbers and you might find out that you can take the step sooner than you thought. I made the jump at 49. A piece of advise though, track every dollar you spend for a few months to help determine how much you will be comfortable living on.

http://financialmentor.com/calculator/best-retirement-calculator

Have fun! Good luck!

#164 busman7 on 10.14.15 at 10:52 am

“If one has the option, is the CPP worth contributing to at all?

I’m just wondering, for the small business owner types, who have the option of either contributing, or not. Assuming all other variables are held constant.

Anyone?”

As one who only paid sporadically when in business, my opinion is YES, OUI, SI it is definitely worthwhile contributing!

#165 IHCTD9 on 10.14.15 at 11:01 am

#157 SunShowers on 10.14.15 at 9:55 am

So the only way an increased TFSA limit benefits average Canadians (like the 83% of TFSA holders who were unable to max out the previous limit of $5500 per year) is if they win the stinkin’ lottery and suddenly have a colossal lump sum of cash they need to shelter?

You know that doesn’t come across as a point in favor of expanded TFSA limits, right?
___________________________________________

I never won the lottery. No colossal lump sum of cash suddenly appeared in my bank account. But I can still dump more than 5K per head per year in my TFSA – how the hell can that be!?!

In my world, good fortune smiles on me when the wife and I remain employed in a decent average job for long periods of time. Also good fortune smiled when we bought a house in 2001 before the madness started.

I don’t buy your assertion that the 83% of those who didn’t max out their TFSA were killing themselves trying to save up 5K but just couldn’t do it. Everywhere I look I see 4 wheelers, massive 4×4 trucks, camping trailers, new garages, Harleys, Horses, and yes brand new monster houses. The money is there for the saving, the resolve to save it is not, or just very low on the priority list.

I assert the vast majority of the 83% had other plans for their money which took priority over maxing out their TFSA’s – like buying a new dirt bike…

#166 SunShowers on 10.14.15 at 11:01 am

“The vast majority of annual RRSP room also goes unused by most people, with the wealthiest among us racking up the greatest tax refunds by making full contributions in the $24,000 range. Stop politicizing the TFSA, which is universal and far more democratic a retirement-savings vehicle. — Garth”
____________________________________________

Yes, RRSPs are also under-funded, and yes people who make more can shelter more in an RRSP. But the point is that many Canadians can easily shelter 18% of their income in an RRSP and still have some left over to save (especially if their employer matches RRSP contributions into a group plan, which many do now). This made TFSAs a great idea. Maybe not EVERYONE, but lots of working stiffs were able to put some money into TFSAs in addition to RRSPs.

I’m not politicizing TFSAs, they’re literally great for everyone. I’m politicizing the INCREASE of the TFSA limit (which, lets be honest, the Conservatives kind of politicized first). As the data has shown, 83% of Canadians with a TFSA couldn’t max it when the limit was $5500. So who primarily (as opposed to theoretically, when/if they win the lottery) benefits when that limit is hiked? It’s pretty black and white…

And yes, I also realize that group RRSPs from employers usually go to crummy, high fee mutual funds with people like Manulife, but you can always liquidate everything (including your free money and growth) when you quit and move it over to a fee based adviser. I was certainly grateful for the opportunity.

#167 Lillooet, BC on 10.14.15 at 11:04 am

#112 Washed Up Lawyer on 10.13.15 at 10:55 pm
I am quite certain that my wife (60 yrs.) will outlive me (59 yrs.). Something about those glances over the tops of her glasses sends a cold chill up my spine.

“Bucket residence. Lady of the house speaking.”

I will stay at the grist mill until I keel over.

***************
Keeping up with Appearances — hilarious!

#168 Lillooet, BC on 10.14.15 at 11:10 am

#129 Snowboid on 10.14.15 at 12:15 am
Nearing the age you are eligible/want to retire? I highly recommend a pension advisor, a service I took advantage of at 54, ten years ago.
*********************

Hi Snowboid: I work in the public sector. Is the Municipal Pension Plan commutable?

Really want to retire at 55 but may have to work until 60. Sigh.

#169 AB Boxster on 10.14.15 at 11:11 am

RE: #228 Mark on 10.13.15 at 4:25 pm

———–
Thanks for your thoughts, Mark.

What is interesting is that for many preferred shares, even those with top ratings (eg Great-West : GWO) shares that were initially priced to give dividend rates in the range of 5.65 + (GWO.PR.L, GWO.PR.M) have held their price fairly well (near $24).

Those floated later, with lower dividends (GWO.PR.R @4.8%) are now trading in the $20-21 range, effectively giving them a yield of 5.7%+.

This it seems that for many investors, a yield of close to 6% is what they are demanding to hold these items.

Again this is not for rate-reset shares, but just for normal perpetuals.

For rate resets (such as GWO.PR.N now trading near $14) they are getting killed.

Easy to find many old articles spouting the glories of these new rate resets, as expectations at the time were that rates were supposed to gradually increase, and these were excellent protection.

Turns out, in a continued low rate environment that these securities, while providing a good yield prior to reset, will soon reset in an even lower rate environment, and thus their share prices have crashed.

It would be pretty tough to have bought shares at $25, only to have them trade at $14 today.

Yes the dividend is nice, but the hit to the portfolio would be tough to take.

This absurdly low rate world continues to cause distortions and volatility that cannot be reasonably predicted.

#170 Toronto_CA on 10.14.15 at 11:21 am

All this talk of TFSAs; I’ve gotten my company to dump Canada Savings Bonds through payroll deductions and move to allow TFSAs. This, coupled with a few information sessions to show the benefits of the TFSA, will hopefully get more people to use the vehicle.

I swear the whole thing was so badly marketed when it came out and calling it a Savings Account did no help. I think Garth said earlier that it was deliberately done to minimize impacts to tax revenues; the long term impacts of how it was rolled out is that MANY people think the TFSA = High Interest Savings account for cash only and do not think of it as a way to shelter tax on long term gains/income. This includes the HR “professionals” at my firm that are in charge of making changes like allowing TFSA payroll deductions.

It drives me batty.

#171 TRT on 10.14.15 at 11:26 am

Detached House prices up 23.5% and 28% year over year in Richmond and Vancouver BC respectively.

Yeah, low interest rates and CMHC are driving this :S

“The benchmark price for a detached property in Metro Vancouver increased 18.9 per cent from September 2014 to $1,179,700,” says the Greater Vancouver Real Estate Board. — Garth

#172 TRT on 10.14.15 at 11:29 am

And all this doom and gloom about pensions.

I’m sure the majority would vote for a 25% increase in tax of income from capital gains and dividends.

Problem solved.

#173 Mark on 10.14.15 at 11:46 am

“I swear the whole thing was so badly marketed when it came out and calling it a Savings Account did no help.”

So true. That’s why I’ve been insisting all along that the TFSA was little more than a Tory ploy to herd more cash into the banks, so they could continue funding the expanding RE bubble at a relatively low cost. After all every dollar a bank lends out ultimately has to be borrowed from somewhere, and what better way to keep a RE bubble alive than to create a tax incentive towards bank deposits.

That’s at least how its turned out in practice. Which is why I’ve been writing so critically of the TFSA in my comments.

#174 Pre-Retiree on 10.14.15 at 11:56 am

Those are the exact reasons and principles that explain why I will take my pension at age 55, after which I will be looking for similar work but as a contractor.
Would have to live until 80 before the punishment for early retirement kicks in, and that is assuming I have not invested any of the money received.
Makes sense to me.
You are right, Garth. An actuarian would be able to help with this but they are counting on greed.

#175 Panhead on 10.14.15 at 11:56 am

My Pa worked for a Canadian airline for just 10 years before he retired at 65. This gave him a pension from them. He still collects just shy of $400.00/mo. He is now 93. I keep telling him to watch out for hitmen as I’m sure there must be a price on his head …

#176 Pre-Retiree on 10.14.15 at 11:58 am

#9 JSS Was in a finance course today at the U of A. Prof expects Canadian bank failures to take place somewhere down the line, and that the Canadian banks don’t know what’s’really coming.

This guy is a teacher? — Garth

____________________________

Yes, a teacher….like Trudeau. Oh sorry, I meant an assistant art teacher.

#177 Ralph Cramdown on 10.14.15 at 12:02 pm

#165 IHCTD9 — “I never won the lottery. No colossal lump sum of cash suddenly appeared in my bank account. But I can still dump more than 5K per head per year in my TFSA – how the hell can that be!?! I don’t buy your assertion that the 83% of those who didn’t max out their TFSA were killing themselves trying to save up 5K but just couldn’t do it. Everywhere I look I see [toys and consumption] …”

I think there’s three important ways to view the TFSA, ind the increase to $10k/year:

1) What does it do for my family? Most people here seem to have figured that out.

2) What does it do for the government’s fiscal position, and the tax system as a whole?

I think it’s underappreciated that a LOT of the benefit from this will go to the wealthy. In fact, a disproportionate amount. By benefiting the wealthy disproportionately, it effectively flattens our progressive income tax system. Also, by lowering some people’s taxes but raising nobody’s, it lowers government revenue (federal AND provincial). Because the total amount in all TFSAs grows exponentially as years go by, so does the tax loss to governments. If you think government is too fat and needs to be put on a starts-small-but-gets-inexorably-more-severe diet, this is the tax plan for you. If not…

Also, the banks benefit disproportionately. By adding two more accounts per couple, with fees, the plan increases customer lock in (i.e. the pain in the ass to switch financial institutions). Don’t expect bank fees to go down. And the banks sell the product as a good place to park cash and GICs, lowering their cost of funds at the expense of uninformed or unworldly savers. Don’t expect interest rates on savings to rise.

3) The political angle.

I think politically, the Harper Government’s decision to raise the limit to $10,000 just before an election, in a period of not-superb economic growth was a disastrous blunder. The creation of the TFSA could be viewed by voters as aspirational (“sure I’ll save more”), but increasing the limit caused everyone to think “am I already maxed out? If not, this does nothing for me.” As the only announcement of five figures aimed at families, it was his biggest direct promise to voters. Many centrist, middle class independent voters probably figured that, if they couldn’t take advantage, it was aimed at richer people. Disastrous politics.

It’s no use, in an election campaign, saying that most people could and should save more (I agree) or that putting the money in a GIC paying 1.25% isn’t a great idea (I agree). Centering a campaign around “keeping your promise” to enact a tax saving strategy most people can’t/won’t take advantage of — for whatever reason — was politically tone-deaf.

The only thing that can save this government now is that magic voter database the Conservative Party keeps. If they’re able to get out their voters in key ridings to a much greater degree than other parties, then who knows? But I suspect local organizers are a bit demoralized. Seeing Harper play game show host and personally accept the Ford brothers’ endorsement has gotta hurt. The whiff of desperation wafts across this great land.

#178 bdy sktrn on 10.14.15 at 12:27 pm

#131 Cici on 10.14.15 at 12:37 am
#39 Brian,

Did you consider the effects of all-time low interest rates, and easy lending practices?

Did you not notice that each time the BoC cuts, house prices rise proportionally?

Why can people not see this, and what is the obsession with blaming Asians? It’s seriously embarrassing and makes us all look like xenophobes.
——————————–
van sun

The four-bedroom home on West 21st Ave., featuring a two-bedroom basement suite and views from its second storey, was listed by realtor Andrew Hasman in late September at $2.788 million. The winning bid — of the 12 received within nine days, all from “immigrant” buyers — was $3.6 million.

#179 Leo Trollstoy on 10.14.15 at 12:34 pm

The vast majority of annual RRSP room also goes unused by most people, with the wealthiest among us racking up the greatest tax refunds by making full contributions in the $24,000 range. Stop politicizing the TFSA, which is universal and far more democratic a retirement-savings vehicle. — Garth

Agreed.

The TFSA complaints that I’m reading from posters are silly. Likely from the financially ignorant.

#180 S.Bby on 10.14.15 at 12:37 pm

It’s not only the houses themselves that are getting larger all the time, it is the appliances we put inside them too. Look at the large gas ranges you can buy now, or the massive built-in refrigerators or the laundry mat sized washers and dryers. We need extra space for all that stuff.

#181 TurnerNation on 10.14.15 at 12:44 pm

#147 IHC. Even easier drones set to look for smoke. Alerts central operator who zooms in to view.

Soon, killing a tree will bring penalties similar to manslaughter. No joke. Earth worship is the new religion pushed upon us. But let fighter jets drop away! No matter how dirty. Our way of life.

#182 bdy sktrn on 10.14.15 at 12:44 pm

#139 Herf on 10.14.15 at 1:32 am
#64 IHCTD9

“Enforcing that one would take a couple hundred million in “wood police” to enforce …

Maybe he’d create an entire new bureaucracy to detect and enforce the rules against people suspected of harvesting and burning untaxed wood.
—————————-

we already have the carbon tax in bc, about 5 yrs now.

2.5 cords/yr x 5yr is 12.5 cords, or about 12,000 pieces.

each piece fed to the fire is a chance to feel good about not paying an ignorant tax on plant food (air).
that’s alot of feeling good!

never fear the govt cant screw things up in novel ways, however.
moonbean and co have made it near impossible to cut down any tree in the city, putting a sharp halt in the free wood i was always oversupplied with.

at 400/cord its cheaper to run the natgas fireplaces which are quite efficient.
gas being dirt cheap keeps the obscene percentage of the carbon tax somewhat tolerable.

leaves lots of money for a big dirtbike fleet

#183 pinstripe on 10.14.15 at 12:46 pm

The mood at the coffee shop is showing signs that the CPC armour is exposing a lot of cracks. The verbal backstabbing amongst the soldiers and generals is similar to when the alberta PC’s failed. The picture is not very pretty anymore.

It takes a long time to build a political party but the downslide happens fast. It happened in Alberta and now it is happening nation wide.

The savers cannot accept the CPC money policies where interest rates are cut to the bare bone to stimulate borrowing. Now the savers are being pacified with the increase in TFSA’s. for eg, losing 20 Gs on interest to get a 5 G boost in TFSA does not deserve a vote.

CPC money policies reward DEBT Money and punish CASH Money.

Enough is ENOUGH.

Canadians DEMAND Better.

ABC

#184 IHCTD9 on 10.14.15 at 12:57 pm

#162 Broke Dick on 10.14.15 at 10:29 am

Who says they have to be strangers? They could be friends who are renters.
On second thought you’re right again. All renters are low lifes, friends or not.
sarc/
____________________________________________

Son…., You NEVER rent your residence to friends (or family).

Don’t lend them money either.

#185 Gonkman on 10.14.15 at 1:08 pm

#166 SunShowers on 10.14.15 at 11:01 am

I’m not politicizing TFSAs, they’re literally great for everyone. I’m politicizing the INCREASE of the TFSA limit (which, lets be honest, the Conservatives kind of politicized first). As the data has shown, 83% of Canadians with a TFSA couldn’t max it when the limit was $5500. So who primarily (as opposed to theoretically, when/if they win the lottery) benefits when that limit is hiked? It’s pretty black and white…

—————————————————–

83% Couldn’t Max it out….. or 84% Didn’t Max it out.. Big difference…

Don’t assume they Couldn’t max it out.

$5,500 into TFSA or.. $5,500 spent on…..

– Mortgage Interest on an Oversized house
– Granite Counter Tops for the Kitchen or whatever they saw on HGTV that got them horny
– A new Lease on new Car that wasn’t needed
– New Shiny Toys!
– An expensive Vacation

I could go on… there is a difference between Couldn’t and Didn’t.

I don’t care if people don’t save for their future… I care when people whine to take it away from everybody else because they choose to spend rather than save.

#186 Ronaldo on 10.14.15 at 1:21 pm

#179 Leo Trollstoy on 10.14.15 at 12:34 pm

”The vast majority of annual RRSP room also goes unused by most people, with the wealthiest among us racking up the greatest tax refunds by making full contributions in the $24,000 range. Stop politicizing the TFSA, which is universal and far more democratic a retirement-savings vehicle. — Garth”

Leo says:

”Agreed.

The TFSA complaints that I’m reading from posters are silly. Likely from the financially ignorant.”

If those that are speaking against the TFSA took the time to understand why it was put in place to begin with, they would have a totally different view about it. But like Leo says, “likely from the financially ignorant”.

Here, educate yourself.

http://www.shillington.ca/

#187 Mark in Guelph on 10.14.15 at 1:34 pm

Walmart tanks, profits down. Must be this roaring US economy, everybody now shops at Nordstrom’s.

Or maybe that recession Garth says can’t happen is happening. Just like the rate rise call, Garth will be wrong. QE4 in 2016, bet on it!

Maybe you should learn to do a little research: “The company raised its base employee wages to $9 an hour in April and plans to boost hourly pay to at least $10 next year. The effort, combined with an expanded training program, added about $1 billion in costs this year and $1.5 billion next year.” — Garth

#188 OXI in GREECE !! on 10.14.15 at 1:35 pm

A persistent myth among the great unwashed who surround us is that you can retire and the feds will support you. Wrong. Public pensions were always intended to be but one leg of the after-work stool. The others were your own stuff (RRSP, house, TFSA, livestock) and a corporate pension.
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

Unless you actually work FOR the govt. Then you are set up for life.

You mean, like in Greece? — Garth

#189 Ronaldo on 10.14.15 at 1:35 pm

Here is something else the TFSA bashers should read and heed. These are the people that would have benefited from the TFSA instead of getting into the RRSP trap.

The idea of enhancing the CPP benefits would create further clawbacks to the GIS by low income persons. It may very well be that is the intention of such a move.
There needs to be more done to educate these people to ensure that they receive the benefits they are entitled to. This is who my vote is for, not myself, I can do without the OAS and certainly don’t qualify for the GIS. Let those less fortunate take advantage of it. We all know that if the gov were to fiddle with the clawsback provisions of the OAS, the biggest whiners would be those in the highest income levels.

http://www.shillington.ca/benefits/torstar_article.htm

#190 Mark on 10.14.15 at 1:35 pm

“The TFSA complaints that I’m reading from posters are silly. Likely from the financially ignorant.”

What’s ignorant about pointing out that the TFSA, in practice, is only used to increase the effective after-tax returns on fixed income (as it is mostly invested in fixed income)? What’s ignorant about pointing out that for long-term buy and hold equity investing, taxation rates are already minimal and the TFSA is only of a slight benefit? Or that certain people might derive a disproportionate benefit from the TFSA relative to others not based on their present investing behaviour, but rather, based on their previous behaviour?

I think the TFSA opponents, who look at the overall macro picture of the TFSA in terms of its impact on government revenues, taxation policy, and its role in the economy shouldn’t have their views treated to some petty insult from a simpleton.

Heck, even a Macleans Magazine commenter pointed out that over the long term, the TFSA will have a dramatic impact, that is to effectively eliminate, investment taxation:

http://www.macleans.ca/economy/economicanalysis/stop-pretending-the-tfsa-expansion-wont-be-felt-until-2080/

“The TFSA expansion means that by 2025 almost no one under 40 will pay tax on investment income. We should at least debate whether that’s bad or good. ” (emphasis my own!)

The TFSA is not a ‘fixed-income’ investment vehicle – that is completely silly, and wholly incorrect. Nor is the capital gains tax rate, which averages 25% for those making over $150,000, to be considered ‘minimal.’ The TFSA’s highest use is to take a portion of one’s non-registered portfolio and render it tax-free. Over time this will supplant the RRSP as the primary retirement savings vehicle. Except for anyone dumb enough to fill it up with fixed income, of course. — Garth

#191 Dup on 10.14.15 at 1:40 pm

I would opt out of CPP in a heart beat. I can make a lot more if I invested that money myself. CPP is an illusion of a safety net.

#192 Mark on 10.14.15 at 1:46 pm

Sorry, meant to say, “*mostly* used to increase effective returns on “, not “only used to increase” in my previous post. Please accept my apologies.

#193 IHCTD9 on 10.14.15 at 1:55 pm

#177 Ralph Cramdown on 10.14.15 at 12:02 pm

I think there’s three important ways to view the TFSA, ind the increase to $10k/year:

1) What does it do for my family? Most people here seem to have figured that out.

2) What does it do for the government’s fiscal position, and the tax system as a whole?

I think it’s underappreciated that a LOT of the benefit from this will go to the wealthy. In fact, a disproportionate amount. By benefiting the wealthy disproportionately, it effectively flattens our progressive income tax system. Also, by lowering some people’s taxes but raising nobody’s, it lowers government revenue (federal AND provincial). Because the total amount in all TFSAs grows exponentially as years go by, so does the tax loss to governments. If you think government is too fat and needs to be put on a starts-small-but-gets-inexorably-more-severe diet, this is the tax plan for you. If not…

Also, the banks benefit disproportionately. By adding two more accounts per couple, with fees, the plan increases customer lock in (i.e. the pain in the ass to switch financial institutions). Don’t expect bank fees to go down. And the banks sell the product as a good place to park cash and GICs, lowering their cost of funds at the expense of uninformed or unworldly savers. Don’t expect interest rates on savings to rise.

3) The political angle.

I think politically, the Harper Government’s decision to raise the limit to $10,000 just before an election, in a period of not-superb economic growth was a disastrous blunder. The creation of the TFSA could be viewed by voters as aspirational (“sure I’ll save more”), but increasing the limit caused everyone to think “am I already maxed out? If not, this does nothing for me.” As the only announcement of five figures aimed at families, it was his biggest direct promise to voters. Many centrist, middle class independent voters probably figured that, if they couldn’t take advantage, it was aimed at richer people. Disastrous politics.

It’s no use, in an election campaign, saying that most people could and should save more (I agree) or that putting the money in a GIC paying 1.25% isn’t a great idea (I agree). Centering a campaign around “keeping your promise” to enact a tax saving strategy most people can’t/won’t take advantage of — for whatever reason — was politically tone-deaf.

The only thing that can save this government now is that magic voter database the Conservative Party keeps. If they’re able to get out their voters in key ridings to a much greater degree than other parties, then who knows? But I suspect local organizers are a bit demoralized. Seeing Harper play game show host and personally accept the Ford brothers’ endorsement has gotta hurt. The whiff of desperation wafts across this great land.
____________________________________________

1. If you can save, make it a priority, and do it for decades – the TFSA is excellent for anyone that earns an income. Yeah, I got it figured out.

2. Most of what you’ve written here is bunk. Tax losses to Government is much worse with RRSP’s as stated about 56 times now.

Folks who are not near rich can indeed max out their TFSA’s unless they’d rather spend the money on _________.

3. This amounts to your opinion, and you know what they say about those…

#194 IHCTD9 on 10.14.15 at 1:57 pm

#185 Gonkman on 10.14.15 at 1:08 pm
#166 SunShowers on 10.14.15 at 11:01 am

I’m not politicizing TFSAs, they’re literally great for everyone. I’m politicizing the INCREASE of the TFSA limit (which, lets be honest, the Conservatives kind of politicized first). As the data has shown, 83% of Canadians with a TFSA couldn’t max it when the limit was $5500. So who primarily (as opposed to theoretically, when/if they win the lottery) benefits when that limit is hiked? It’s pretty black and white…

—————————————————–

83% Couldn’t Max it out….. or 84% Didn’t Max it out.. Big difference…

Don’t assume they Couldn’t max it out.

$5,500 into TFSA or.. $5,500 spent on…..

– Mortgage Interest on an Oversized house
– Granite Counter Tops for the Kitchen or whatever they saw on HGTV that got them horny
– A new Lease on new Car that wasn’t needed
– New Shiny Toys!
– An expensive Vacation

I could go on… there is a difference between Couldn’t and Didn’t.

I don’t care if people don’t save for their future… I care when people whine to take it away from everybody else because they choose to spend rather than save.
____________________________________________

Thank You Sir.

#195 Rational Optimist on 10.14.15 at 2:01 pm

177 Ralph Cramdown on 10.14.15 at 12:02 pm

“3) The political angle.

I think politically, the Harper Government’s decision to raise the limit to $10,000 just before an election, in a period of not-superb economic growth was a disastrous blunder.”

The Tories can take for granted that their base (however big exactly it is) can’t vote for anyone else, but they could stay home. Increasing the TFSA contribution limit, and introducing income splitting, were promised in 2011. If the Tories had balanced their budget (which they had to at least claim to do) and not followed through, a certain proportion of their base would have stayed at home, or perhaps even defected.

If the opposition parties want to help losers who can’t save (because that’s how they view most of us, remember), they should cut the RRSP contribution limit and raise that of the TFSA. The TFSA is accessible to all; the RRSP limit (three times higher) is only earned if you have a high income, and is a vehicle only suited to high-income earners.

I take your point that, if a person (or his parents) are able to contribute to the TFSA at 18, that’s a big advantage over someone who can’t strap scraping it together until 25 or 30. The same does happen with the RRSP, by the way: I have known people whose parents funded their RRSPs through their twenties, only to claim those contributions later when they are inevitably making the big bucks. The difference is, the TFSA will eventually be useful for everyone, and that’s not true of the RRSP.

If you’re a working class slob who wants to save, you can scrape together ten thousand a year and invest it very simply within your TFSA. For many people, the thought of all the complication of a non-registered account is a big disincentive. If the contribution limit is rolled back, they will adjust their level of savings accordingly.

In a somewhat-related note, I am sick of hearing the Liberals talk about tax cuts for the middle class. Under their plan, if you are two working spouses earning $90,000 each, you’re benefited more than anyone else. If you earn $80,000 between the two of you (that’s the median household income but apparently not “middle class”according to the Liberals…), well, I guess you didn’t need that tax break as much…

#196 OXI in GREECE !! on 10.14.15 at 2:17 pm

#188 OXI in GREECE !! on 10.14.15 at 1:35 pm
A persistent myth among the great unwashed who surround us is that you can retire and the feds will support you. Wrong. Public pensions were always intended to be but one leg of the after-work stool. The others were your own stuff (RRSP, house, TFSA, livestock) and a corporate pension.
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

Unless you actually work FOR the govt. Then you are set up for life.

You mean, like in Greece? — Garth
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

Yes. Like in Greece. That is where Canada is going with its 3 levels of incompetent gigantic govt.

I will vote for whomever says they will cut the size of govt like that of Germany. But this is Canada and no candidate has said such a thing in any level of govt.

#197 Mark in Guelph on 10.14.15 at 2:19 pm

Maybe you should learn to do a little research: “The company raised its base employee wages to $9 an hour in April and plans to boost hourly pay to at least $10 next year. The effort, combined with an expanded training program, added about $1 billion in costs this year and $1.5 billion next year.” — Garth

I thought raises were a sign of a healthy growing economy, why is Walmart hurting? Does paying employees slightly less impoverishing wages lead to sluggish sales? Strong dollar, cheap oil and free money and still Walmart struggles, imagine if we didn’t have this great US economy.

QE4 on deck, no rate hike coming.

#198 Andy on 10.14.15 at 2:28 pm

Great advice Gartg, as usual! I can’t believe the number of recent 60 year olds that delay signing up!

#199 SunShowers on 10.14.15 at 2:28 pm

#185 Gonkman on 10.14.15 at 1:08 pm
83% Couldn’t Max it out….. or 84% Didn’t Max it out.. Big difference…

Don’t assume they Couldn’t max it out.
____________________________________________

Yes, lets instead assume the massive amount of data showing that Canadian wages have stagnated, reliable jobs have been replaced with part time or temp work, and the rising costs of necessities such as food due to droughts and our weaker dollar is completely unrelated to Canadian’s inability to save money.

After all, it feels so much better to look down your nose derisively at 83% of the country because you think you might have seen a couple of random people with fancy new toys.

#200 Nora Lenderby on 10.14.15 at 2:36 pm

#146 maxx on 10.14.15 at 7:32 am
No kidding….what atrocious, presumptive arrogance.

Heh, heh…Of course I do have a lot to be arrogant about :-)

#201 Ralph Cramdown on 10.14.15 at 2:37 pm

#193 IHCTD9 — “Tax losses to Government is much worse with RRSP’s [than with TFSAs] as stated about 56 times now.”

Can you point me to the math on that one? It is my understanding that:

– if I pay my taxes upfront and contribute to a TFSA, the earnings on the money inside that TFSA compound tax free until I die and they pass to my spouse or estate untaxed.
– Whereas if I defer taxes by contributing to an RRSP, the capital and earnings that compound inside the fund are all eventually taxed, as regular income (even if they were Canadian dividends or capital gains), with limited deferment possible after age 71 with the residual fully taxed as income in the year of death of the beneficiary or surviving spouse.

Also, RRSP withdrawals can claw back eligibility for OAS and GIS, increasing the effective tax rate. TFSA withdrawals have no effect.

So the government always gets its money, eventually, on RRSPs, though possibly at a lower tax rate than when contributed, and maybe has to pay less in benefits besides. But the government gets no tax whatsoever from the growth in assets inside TFSAs, ever, nor can withdrawals reduce other benefits.

And you say the government loses more to RRSPs? Not in the long run, and it can afford to wait.

Besides, TFSAs weren’t introduced as an either/or versus RRSPs. My household maxes out both.

#202 Nora Lenderby on 10.14.15 at 2:45 pm

#111 jane 24 on 10.13.15 at 10:52 pm
…People get your calculators out and see what life would really cost you to live it. If you can swing it then retire. Now. A long time dead my friends.

I agree with this.

btw, has anyone come up with a more sticky marketing slogan than “Freedom 55”? Branding in more than one sense – it has burned a mark in the psyches of a generation.

#203 Nora Lenderby on 10.14.15 at 2:52 pm

Would it make sense to make TFSA contributions mandatory, like CPP?

#204 Gregor Samsa on 10.14.15 at 2:56 pm

The TFSA is a generally good idea.

However, willy-nilly TFSA increases, such as the 100% (!!) increase that Harper undertook in a single year is an example of reckless, uncosted policy. It was done for one simple reason: to get people like Mr. Turner and others on this blog to ignore 10 years of bad government and vote for Harper anyways. A bribe, if you will.

Rolling it back would be the responsible thing to do. And this is coming from a person who already has 10K saved up to drop into my TFSA Jan 1. If Trudeau wins, 5K will go to the RRSP instead. The earth will continue to rotate.

#205 Pamela Velos on 10.14.15 at 2:56 pm

Garth, Thanks for this post. Hope to get my first CPP cheque tomorrow age 60.75, if CRA hasn’t lost the paperwork to give me credit for the couple of years spent out of the work force being primary caregiver for my 2 kids.
Thanks to the link provided by #106 George S, the actuaries say I’ll likely live til 89, with 50% chance to 90 and 25% chance to 94. Mom with moderately severe Alzheimer’s is 91 tomorrow. Caring for aging boomers should be a growth industry – tell the millenials, who should hope those aging boomers have $ to spend on personal care. For those carping about the RRSP, it was an indispensible tool for the self employed to save for retirement, before the TFSA came along. If a self employed person can contribute to both the RRSP and TFSA they need to, otherwise they’ve got $0 come the golden years. Here’s a history lesson. Years ago at tax time, every Canadian could claim up to $1000 per year, in interest income, tax free. Things change and things stay the same.

#206 Ralph Cramdown on 10.14.15 at 2:59 pm

#186 Ronaldo — “If those that are speaking against the TFSA took the time to understand why it was put in place to begin with, they would have a totally different view about it.”

We don’t really know why it was put in place. With budget announcements, often ostensible reasons aren’t the real ones. Only those in Cabinet or the PMO know for sure. But it doesn’t matter. The road to hell is paved with good intentions. If the TFSA was created so that some seniors could upgrade from dry dog food to the wet stuff, but had the unfortunate side effect that most of the tax benefits went to the wealthy, it was bad policy. A more targeted policy would have been better.

From http://www.shillington.ca/go_figure/index.htm
“Families with incomes over $100,000 are 24% of families, 35% of TFSA holders and hold 42% of TFSA assets” [as of 2012].
Doubtless the skew has grown given this year’s higher limit. We can guess that the larger TFSAs of the wealthy are less likely to be in low yielding GICs, and we KNOW that those people are in higher tax brackets, so you can extrapolate the above numbers to guess what % of tax saved has been by families with incomes over $100,000.

It doesn’t matter that middle income families “could” save more, except that it can be sold as a boon to the middle class.

Besides, my attitude toward the Harper government’s tax policies is “never ascribe to stupidity what can be adequately explained by malice.”

#207 Leo Trollstoy on 10.14.15 at 3:00 pm

#190 Mark on 10.14.15 at 1:35 pm

Wrong. Misleading. Disingenuous.

#208 Pamela Velos on 10.14.15 at 3:34 pm

Looking forward to 91 years old with moderately severe Alzheimer’s – Tempus Fugit indeed

#209 Edward on 10.14.15 at 3:34 pm

In a report Tuesday, Canaccord Genuity Group said a Liberal victory “could mean further Canadian dollar depreciation and higher bond yields,” with a risk that those deficits could become permanent.

http://www.bnn.ca/News/2015/10/14/Loonie-traders-paying-up-for-insurance-ahead-of-tight-election.aspx

#210 Nemesis on 10.14.15 at 3:54 pm

“Maybe you should learn to do a little research: “The company raised its base employee wages to $9 an hour in April and plans to boost hourly pay to at least $10 next year. The effort, combined with an expanded training program, added about $1 billion in costs this year and $1.5 billion next year.” — HonGarth

#FunnyYouShouldSayThat,Or… #GF’sAnalystEnjoysRareDayOff?…

[Guardian] – Anger at Walmart heiress’s $1.4bn gallery as art market becomes focus for protests

…When Alice Walton, heiress to the Walmart supermarket fortune and the the 10th richest woman in the United States, opened a spectacular fine art museum in her home town, she might have expected plaudits and gratitude. It hasn’t quite worked out that way.

The long-awaited opening of the Crystal Bridges Museum for American Art in Walton’s home town of Bentonville, Arkansas, has provoked mixed reactions. Some have celebrated the unveiling of a significant new private art institution, but many have criticised the decision to spend $1.4bn of company and family foundation money as the retail colossus cuts back its workers’ benefits…

http://www.theguardian.com/business/2011/nov/20/walmart-gallery-crystal-bridges-museum

#211 Tony on 10.14.15 at 3:57 pm

If anyone cares gold has moved above its 200 day moving average in U.S. dollars.

#212 Marabuto on 10.14.15 at 4:14 pm

Now while TFSA participation rate so low, and 70% home-ownership rate, losing government revenue is more on R/E capital gains.

Any long term tax free cumulative gains, for merely $5,000~$10,000 / year, give $300K to $1MM tax free gains in say 30 year.

It is a lot of fre money for middle class citizens, but not so much for the very wealthy.
($1MM represents 1% or less of those very wealthy people’s net worth)

Don’t think about $ amount, think about amount cap vs: net worth of middle class and very wealthy people.

Same effect for RRSP.

Anyone who makes more than $140K, their max RSP is capped to $24,930 this year.
Those who make $1M~$2M income (lawyer, doctors), their max is same as who make $150K.

Do you know very wealthy do RESP?
I personally don’t, because $50K + tax deferral growth & $7,200 life time government grant is NOT enough for those wealthy’s kids attending school.

All those are best work for middle class people.

#213 Marabuto on 10.14.15 at 4:20 pm

Just to add, do you do $50 annual limit TFSA account?

That is exactly how TFSA is for very wealthy people.

RRSP, high income individual receive 50% refund.
Tax free growth before retirement, but those people are
likely paying 50% of every dollar they take from RRSP / RRIF.

I read an article years ago, a financial guru in Toronto who has $700M in RRSP in his late ’60s.
Nice story, but the government will say “Thank you for the $350M!”.

#214 Snoboid on 10.14.15 at 4:40 pm

#168 Lillooet, BC on 10.14.15 at 11:10 am…

I’m not in a Municipal Plan, but believe you must take the commuted value before you turn 55.

#215 Bottoms_Up on 10.14.15 at 5:56 pm

#195 Rational Optimist on 10.14.15 at 2:01 pm
————————————–
Yes, that is how tax breaks work in our progressive tax system. Those at the top of the bracket see the largest benefit. However you fail to mention that lower income families with children will benefit greatly under the new liberal child credit.

#216 Bobs Uruncle on 10.14.15 at 9:47 pm

did the survey. my salary is $250,000 US, what does that mean?

#217 DON on 10.15.15 at 2:37 am

If the polls are somewhat accurate and Ontarians are swinging liberal. (ON has always been the game changer) and if Alberta swings liberal yikes a majority gov.

I much prefer a minority government in times when a cautious approach is warranted. All or nothing is not the way to go.

So if Ontario goes liberal – most likely we’ll get a liberal minority, but there is also a possibility that the Cons will keep their Albertan base (anything is possible) as they get their vote out. (I wouldn’t think there numbers are as strong as the last time around) but who knows depends on public sentiment at the time. Oil Industry downturn will not help the situation.

In a minority government the NDP could influence bills in return for support hopefully in the interests of all Canadians or at least challenge the nuttiness that is commonly associated with bills introduced by majority governments.

#218 CPP on 10.15.15 at 11:25 am

Perfect timing

I like the survey quick and simple.
I am wondering, I have heard allot about strategic voting, I would have been interested if people are going to vote strategically?

Good timing on the retirement issues. I am retiring in January I am lucky I have a defined pension. However my income will drop about $700 a month and yes I am planning to work Part time.

The CPP advice is very good thank you! I am surprised you advised people to spend the money? I did some simple math and like you said saving the money in a Tax free account and investing is the best way to go! By my simple math you could make up the difference on the amount you lost by taking CPP at 60 vs 65 way past 75 to almost 90.

However many of your readers may not know if they have a company pension plan that started before 1965 (CPP legislation) individuals have what is called bridging. So they should be aware that taking a reduced CPP at 60 might bite them at 65 when they loose the bridging which is calculated at the max CPP.
For example Bridging is lost at 65 $1,000 CPP early is $600 therefore you loose $400 from your company pension plan. Be informed and read the retirement package!

#219 Numner of people retiring on 10.15.15 at 11:29 am

I apologise for multiple postings under different heading, but Blog instructions are keep it short!

Garth many times you have written about the boomers retiring in mass. My question with all those people retiring should the unemployment rate not drop in proportion to people retiring? Because in Theory with 400,000 turning 60 I would say in five years we can assume those same 400,000 would retire. Therefore there should in theory be 400,000 more jobs?
Or are companies phasing out those wriggly jobs?

An interesting topic for discussion?