What are we thinking?

Let’s bust some myths. Like: plopping interest rates will set housing ablaze. Or: if I grow a million I can retire at 40.

It’s time to understand most Canadians are pretty much pooched. The next decade will make that obvious. So it’s a good time to avoid the fate lying in the weeds for them.

Here’s the problem:

First, real estate lust has had terrible consequences. Sure, some people in some places bought low and have made a pile of dough. Most have not. Instead they’ve saved little and borrowed much. Theirs is a one-asset strategy and, sadly, houses don’t pay you a pension.

Second, interest rates are so low nobody can retire on GIC income. This won’t change. Those who fear investing, or don’t know how, may suffer as a result. See below.

Third, our culture of savings has been shot. It’s astonishing how we’ve changed. A generation ago people routinely saved 10-15% of what they earned. The average over the previous decade was 7%. Now it’s collapsed. It’s dead. After inflation our national savings rate is negative. Hard to overstate this – we have the worst rate in 60 years at just 0.7% of income (inflation is 2%). That’s 63% below the level of just a year ago. In other words, in the first quarter of this year we saved (on average) just twenty bucks per person per month. Ouch.

Fourth, people grossly underestimate the pile they’ll need. Life is long. People retiring at 65 require enough to last a quarter century. Those FIRE weirdos who seek to stop working at age 40 (to do what?) need a pile so big it’ll last 50 years. Good luck with that.

Fifth, public pogey won’t save you. At least if you dislike poverty. And corporate pensions are disappearing, or being turned into crappy insurance-company, mutual-fund puddles. CPP and OAS? The average collected is $679 a month. The old age thing is $607. Combined that’s only $15,400 a year. For a couple, it would equal less than $31,000 – and yet StatsCan says the average amount spent by retired households is $61,000.

Where will that extra thirty grand come from? If you’re a GIC ‘investor’ making 2%, you need a million bucks sitting there. But we know only 0.85% of the population has a seven-figure portfolio of liquid assets, whether that’s Bitcoin or GICs. So the only way an army of boomers will be able to pull this off is by selling their houses or (yuck) taking out costly reverse-mortgages and eating up their kids’ inheritances. Neither is good for the housing market, regardless of where interest rates sit.

In fact, a long and costly retirement for most simply cannot be met by a house sale alone. Savings and investing is critical. A mill is the starting point. Given the 4% withdrawal rule that would kick out about $30,000 annually over thirty years. Some people will be happy living on that plus CPP/OAS. Many will not – especially if you made a six-figure income during your working life. After all, you spend more retired at age 70 than you do working at 50. Don’t believe me? Wait and see.

Okay, so how do you get two million by retirement?

Given record household debt levels, a negative savings rate and a 70% homeownership level plus nine million wheezy Boomers, there’s no way the housing bonanza of the last two decades will be repeated. If you need and can afford a property, buy it. But don’t mistake it for a retirement plan. Those days are kaput. It doesn’t matter if mortgage rates drop to 2% or below, since the stress test remains in place and the pool of potential buyers relative to inevitable sellers is inadequate.

Better to concentrate on saving and investing. The benchmark has to be 10% of your income. More is better. Like 18% – which is the maximum allowable annual contribution to an RRSP. Look at the Notice of Assessment you received a few weeks ago from the CRA. It tells you exactly how much money you can put into an RRSP this year, plus the unused contribution from years past. If you are not filling up this sucker, you’re falling behind.

Best of all, there’s the TFSA. Six grand a year for you, your spouse and your adult kids. A couple investing the max in two plans (a grand a month) reaping 6% returns in ETFs over 30 years ends up with a million. Given that all withdrawals are tax-free, that would kick out $60,000 a year. Add in the CPP/OAS for both, and the household income is over $90,000 – with no clawback.

But, wow. Canadians save only $20 a month. Thanks to monumental house debt, and unprecedented servicing costs – despite some of the lowest borrowing levels ever.

So just imagine what happens if there’s a recession, erasing home equity, causing more unemployment and reducing household incomes. Or when, inevitably, interest rates rise again (and they will, unless the business cycle has finally ended. Not.).

Yes, most people are pooched. They may live in nice houses. They may have new cars. And they might take two vacays a year. But there’s a cliff ahead.

Fortunately you know how to bolt the herd. So do it.

157 comments ↓

#1 Ubul on 08.29.19 at 3:36 pm

Buffett saves a lot just now. In cash.

According to Bloomberg “reportedly hoarding a record $122 billion in cash at Berkshire Hathaway Inc., leading to some speculation that he sees a recession on the horizon, or at least is sending some sort of warning. The cash pile is more than half the value of Berkshire’s $208 billion portfolio of public companies, and the only time that percentage has reportedly been higher since 1987 was in the years leading up to the 2008 financial crisis.”

#2 Jager on 08.29.19 at 3:38 pm

Kyle Bass interviews the “infamous” Miles Kwok (Guo Wengui) and allegations of enormous corruption within the Chinese Communist Party.

Watch for the Ren (RMB) M2 chart…
A chilling prediction for Jack Ma? Time will tell…
https://youtu.be/4cwXifDaCjE

P.S. Kyle Bass @Jkylebass
Aug 27
“It’s actually lunacy that a country sending satellites into geostationary orbit while using quantum computers to send energy pulses to destroy our satellites is classified as a “developing” country. It’s absolutely crazy. The story at the WORLDBANK is worse than anyone knows.”

P.P.S. Is this, in part, why the U.S. allowed the INF treaty with Russia to lapse? i.e. Naval force vulnerability in the South China Sea?

#3 Calgary Man on 08.29.19 at 3:39 pm

Garth, you speak so much truth.

#4 Rargary on 08.29.19 at 3:45 pm

Head-Smashed-In-Buffalo-Jump is in Alberta. A great tourist site. The herd will be the next historical attraction! All we can say to those watching the stampede of hoofs and horns get closer and larger… get out of the way!

#5 KS on 08.29.19 at 3:49 pm

35 and saving $1400/month. Thanks for this Garth, makes the daily sacrifices meaningful

#6 Smartalox on 08.29.19 at 3:56 pm

Could this be an ‘inequality’ of savings?

Lots of people are not saving enough – or not saving adequately (GICs, HISAs etc.), but then some, like the FIRE types are saving too much?

I save about $27k per year in mine and my spousal RRSP, barely hitting the contribution limit each year – and I STILL have over $100k of contribution room accumulated from earlier in my career, when a hefty contribution was barely 50% of the max.

It annoys me to see all that unused contribution room go to waste.

#7 Almost A Boomer on 08.29.19 at 3:57 pm

Congratulations to you and Dorothy on a long, happy and successful marriage. Not to many of those around anymore.

Wishing you both all the best.

#8 Another Deckchair on 08.29.19 at 3:58 pm

Well spoken.

But you know, it’s hard to make coffee at home, hard to live without your own car (sharing with your spouse takes talking and decision making) hard not to go out to the patios for beer and pizza; actually, it’s hard to actually make pizza at home – easier to get someone to drop it off.

Oh – and, instead of cleaning out the closets (which is hard, as you know you’ll never fit into those slim clothes again, and it takes time out of Netflix binge-watching) it’s easier just to go and order an extension on to your house, or shove stuff in one of those storage places. Of course, your double car garage is stuffed, like everyone elses.

Yes, first world life is hard.

Ok – tongue in cheek – but honestly, somehow we’ve got it so that we’ve gone from 1 family wage earner to both parents working and having lots of cash, now it’s both parents working and NO extra cash?

What’s the next step? Child labour is not allowed, at least not yet.

#9 Wait There on 08.29.19 at 4:04 pm

Next episode Garth, you need to create a simple case of a typical household and their income in the GTA. People will be able to slot themselves in somewhere and get an idea.
Have someone build a spreadsheet for that. Have two cases, renting and owning.
I was thinking about this recently suppose someone decides to start saving for retirement at 40 years old and have a family at the same time. My conclusion is they are pooched. If they don’t start at say 25 years old, they are not going to make it.
OTOH, if everyone decides to deleverage, what does that do to the economy?
Working past 70 years old will be the new norm.

#10 Wait There on 08.29.19 at 4:09 pm

#5, you’ve getting close to a hypothesis I have, parallel to technology advancement where a lead does not last, a similar thing happened to households. When women joined the workforce en masse to move “up” , they created more disposable income which fueled inflation and that caused the NEED for two incomes and this also pushed housing costs as well. The fallout is the decay of the family unit.
Technology works the same way. Leads or advantages never last forever and then becomes the norm.
You’ve missed the obvious, it’s not child labor but presently it is possibly Multigenerational household income. Learn that word…MULTI-GENERATIONAL household income. That is what is happening now.

#11 crowdedelevatorfartz on 08.29.19 at 4:24 pm

Co worker.
Divorced.
65 years old.
Rents.
No savings. Nothing
No pension except CPP(drawn at 60) and O.A.S.
Pay cheque to pay cheque.
Might get a car accident settlement of $4k or so.
“Well at least next years’ car insurance will be covered and a bit left over to splurge,” says I foolishly….

Nope.
Plans on spending the all the insurance money on a Hawaii vacation …..

#12 expat on 08.29.19 at 4:25 pm

If we all believe real estate will crash then why do we not believe the markets will.

Or bonds blow up?

Where did I mention a crash? – Garth

#13 jess on 08.29.19 at 4:25 pm

Kyle Bass interviews the “infamous” Miles Kwok (Guo Wengui) and allegations of enormous corruption within the Chinese Communist Party.
Want to Meet With the Trump Administration? Donald Trump Jr.’s …
The Exiled Chinese Billionaire With a Mar-a-Lago Membership
https://qz.com/968941/what-you-need-to-know-about-chinas-most-wanted-man/
April 21, 2017

https://www.propublica.org › article › trump-inc-podcast-tommy-hicks-jr-…

Jul 22, 2019 – … his connections to arrange for a hedge fund manager friend, Kyle Bass … for impromptu chats with various officials, including Jared Kushner.

=================
thinking in swedish

“skill, experience and a strong moral compass, which is exactly what the bank needs right now.” Hum..should that be all the time? rinse lather and repeat

lookback : Stopping a Financial Crisis, the Swedish Way

in Sweden that deflated during 1991 and 1992, and resulted in a severe credit crunch and widespread bank insolvency. The causes were similar to those of the subprime mortgage crisis of 2007–2008. In response, the government took the following actions:[1wiki

The country was so far in the hole in 1992 — after years of imprudent regulation, short-sighted economic policy and the end of its property boom — that its banking system was, for all practical purposes, insolvent.
By CARTER DOUGHERTYSEPT. 22, 2008
https://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?_r=0
==================================================
After repeatedly denying any involvement in money laundering, it was forced to backtrack earlier this year when Sweden’s main broadcaster published a series of reports tying the bank to a vast network of dirty-money transactions stemming from the former Soviet Union. That prompted authorities in Sweden, Estonia and the U.S. to start formal investigations into the bank. Investors have dumped its shares, and Swedbank is down almost 40% this year.
Bonnesen then hired Ernst & Young to help Swedbank compile a new report, but was soon forced to rethink that choice after realizing the accounting firm was itself being investigated in Denmark for failing to identify suspicious transactions in a much bigger money laundering scandal at Danske Bank.
Swedbank has appointed a new chief executive as it attempts to rebuild confidence in the bank after it became embroiled in a money-laundering scandal.Jens Henriksson, the chief executive of insurance group Folksam, will take over from interim boss Anders Karlsson who stepped in after Birgette Bonnesen was dismissed earlier this year. The lender accepted the resignation of its chairman and lost more than a third of its market value after its Estonian business was caught up in money-laundering allegations. Sweden’s oldest retail bank admitted some failings in its money laundering processes in April and pledged to launch an internal investigation.
================
Recent allegations, reported by Swedish state broadcasters earlier this year, say the bank processed transactions worth up to €20bn a year from high-risk, mostly Russian non-residents through Estonia between 2010 and 2016.
Swedbank CEO Defends Client Privacy Amid Money Laundering Probes
…. He acknowledged that these restrictions on transparency might cause “irritation” in some quarters, which he said he understands.“But at the same time, as a bank, you have such a unique insight into people’s most private financial affairs,” he said. “Customers and companies need to be able to trust that we won’t share that.”

#14 360 degrees on 08.29.19 at 4:30 pm

Naive Garth, you’ve never heard about expats in Thailand, Vietnam, Cambodia, Indonesia, etc.
You need 1k/month to have moderate life there, 2k/month will make you crazy rich.

I’ve spend 5 months in Asia.
For example, in Bali:
$300/month for room, breakfast included
$100/month for scooter
$150/month for food, even if you eat at the restaurant

Do the math, if you can.

Yeah, that’s my dream. Live in a room in a Second World country and ride a scooter. Paradise. – Garth

#15 PA on 08.29.19 at 4:32 pm

Did it. Doing it. Aiming for 3M w/o house at 65. Not a 60/40 split, but all etfs. Not expecting to retire even when I hit this mark. Life is too expensive in maple land.

#16 Swanson on 08.29.19 at 4:33 pm

Thanks Garth for another nice post.

I get that house-rich, cash-poor households having to sell their properties to finance their retirement is bad for the housing market, but how does it work with reverse-mortgages?

#17 Hans on 08.29.19 at 4:33 pm

I think housing can be pension-like if youre strategic about it. Buy a triplex, keep the main floor for yourself and rent the other 2 for income. Hire what you cant handle yourself. That way your not banking on a windfall sale to retire with some income.

#18 Sask to AB on 08.29.19 at 4:47 pm

Outstanding post.
We have set up TFSAs for our two oldest, and are trying to do all the things you have taught us.
Thank you for your knowledge, and that you care enough to try and educate us. We really appreciate it.

F56AB

#19 Lee on 08.29.19 at 4:48 pm

#14- 360 Degrees

Actually, better yet, I hear prison is free. But you don’t get the scooter.

#20 Linda on 08.29.19 at 4:50 pm

Curious minds want to know what the cited 70 year old is spending their money on. Hopefully on fun stuff:)

Back in the ‘good old days’ when most folks kicked the bucket before age 65 running out of money in retirement wasn’t an issue. Seems like people are still adjusting to the idea they will actually live past age 65 & thus need to figure out how to cover their expenses in retirement. For those who are retired involuntarily – a fate that not a few older workers have met – ensuring the future doesn’t consist of staking out the best dumpster/bridge to enjoy the ‘golden years’ is important. The expectation that someone – usually the government – will take care of things so you don’t have to is not the smart way to bet.

#21 Mattl on 08.29.19 at 4:52 pm

First, real estate lust has had terrible consequences. Sure, some people in some places bought low and have made a pile of dough. Most have not. Instead they’ve saved little and borrowed much.

———————————————————–

This is not true. RE is the major markets has been on a bull run the past 10-15 years. It has slowed the past 2. Most – by any definition of most – are way ahead on the RE game. This includes almost everyone I know in BC. Anecdotes aren’t worth much, so let’s look at how many people have mortgages on their RE – about 45% don’t even have mortgages.

You are bang on that a one asset strategy is stupid, and some folks have used their homes as banks. But most homes bought in Canada over the past 15 years are worth quite a bit more then was paid and RE has been a god send to most Canadians.

That is likely to change but no need to try and re-write history.

#22 MF on 08.29.19 at 4:56 pm

Yeah, that’s my dream. Live in a room in a Second World country and ride a scooter. Paradise. – Garth

LOL savage^^^

MF

#23 Doug t on 08.29.19 at 4:58 pm

I’m 55 and have fortunately done well the last 15 years – BUT I often feel that the way the world is being destroyed Enviromentally, financially, politically and spiritually, that what is the point in working to put away a nest egg. I’ve been in the recycling industry in this country for 28 years and have travelled to many Asian countries over the years – what has been happening globally for the last 2 years in our industry is unprecedented, and I feel it is a reflection of the global condition that exists. The world is on a collision course to a very dark place and people the world over are either ignorant to this or completely resigned to it. Look around with an open eye ( and mind) and what makes you think that things are going to be much better because you invested wisely for retirement.

#24 Nonplused on 08.29.19 at 5:02 pm

A very reliable secret source ha told me that spending in the Canadian oil sector is set to fall below 2016 levels in 2020. It looks like the great Alberta recession is about to get worse before it gets better.

#25 The Wet One on 08.29.19 at 5:06 pm

Savings (I actually have some $200K)

Pension an actual good one (DB and indexed).

Government money.

Some inheritance coming my way in the next 20 years.

Aged 44.

I hope I’ll be ok, but we’ll find out. I also expect to die relatively young given family history. Maybe 5 – 10 years of retirement, rather than 20.

We’ll see.

#26 DM in C on 08.29.19 at 5:08 pm

49. Started from scratch in a pretty big hole post bankruptcy (shitty house purchase) in the early ‘aughts.

Moved cross country, raised the kids, took em to Disneyland a couple of times.

Have owned, now rent. Been saving $4k/month for a while and quickly filling up RRSP/TFSA room. Not including work RRSPs (which is another 12k annually or so) or RESPs. Net worth is just shy of $300k.

I know we don’t have the luxury of time like a 30 year old, so we’re maximizing while we have a little. Kids grown, downsizing and saving while enjoying life and do some bucket list trips too. #noregrets

Fingers crossed we can do this for at least 10 years, maybe 15.

#27 Ustabe on 08.29.19 at 5:09 pm

https://finance.yahoo.com/news/most-canadians-now-better-off-123010516.html

If you read nothing of the article, I implore you, beseech you, ask you to at least read the final paragraph.

And then quite your whinging, you whinging bunch of the whingeingest whiners ever.

#28 The Wet One on 08.29.19 at 5:10 pm

BTW, in respect of this whole thing, the reason why this has happened is because of the great enemy. Namely the Ad Man.

That creature, the enemy of everyone’s financial well being, tells you to spend, spend, spend and from the financial industry, borrow, borrow, borrow.

That’s the killer.

The Ad Man has gotten more powerful over the years.

Do yourself a favour and silence advertising in your life as much as possible. Recognize your enemy and don’t let it into your life. You’ll be better off for it.

#29 Herkunft on 08.29.19 at 5:15 pm

A mill is the starting point. Given the 4% withdrawal rule that would kick out about $30,000 annually over thirty years. Garth
=========
Why do you say $30K? I thought $1mln x 4% = $40,000 annually.

Taxes. – Garth

#30 Tony on 08.29.19 at 5:19 pm

Re: #11 crowdedelevatorfartz on 08.29.19 at 4:24 pm

If you’re completely broke just take the guaranteed income supplement and take the Canada pension plan and old age security both at age 70 and gamble everything from age 65 to age 70. This is for all the people approaching age 65 who have nothing this is what to do.

#31 Yukon Elvis on 08.29.19 at 5:21 pm

#14 360 degrees on 08.29.19 at 4:30 pm
Naive Garth, you’ve never heard about expats in Thailand, Vietnam, Cambodia, Indonesia, etc.
You need 1k/month to have moderate life there, 2k/month will make you crazy rich.

I’ve spend 5 months in Asia.
For example, in Bali:
$300/month for room, breakfast included
$100/month for scooter
$150/month for food, even if you eat at the restaurant

Do the math, if you can.

Yeah, that’s my dream. Live in a room in a Second World country and ride a scooter. Paradise. – Garth
…………………………..
I’ve been doing it for the past 10 years. 6 months here, 6 months there. I come back to visit the kids and grandkids. Live in shorts, a wife beater, and flip flops. Nice hotel room with pool, gym, and restaurant. Eat out 3 times a day, 7 days a week. Taxi to everywhere. Scooters are fun too. Beach, babes, beer. 70 years old. I’ve had more fun in one weekend than you have had in the last decade.

#32 jess on 08.29.19 at 5:23 pm

20 Linda on 08.29.19 at 4:50 pm
Antibiotic resistance could kill us before climate change some say

#33 Tony on 08.29.19 at 5:30 pm

Re: #16 Swanson on 08.29.19 at 4:33 pm

People who go senile and/or hate money take out reverse mortgages. They only benefit the people who sell reverse mortgages.

#34 Flop... on 08.29.19 at 5:30 pm

Live in a room in a Second World country and ride a scooter. Paradise. – Garth

///////////////:

Garth, look at the big picture.

Breakfast is included…

M45BC

#35 RE_Investor on 08.29.19 at 5:33 pm

Instead of a reverse mortgage, some seniors are doing RE deals of “Sell and Leaseback”. They get the rewards of a house sale, stay in the house they lived in so long, and then pay a nominal rent on a long term lease. Most important item in these sell and leasebacks is a lawyer written long term lease. The selling price is usually slightly below market value, but the benefits to the seller outweigh the price sold. Having the cash nest egg upfront is a blessing and also having a place to rent, especially the familiarity, is the added bonus.

#36 marcus on 08.29.19 at 5:36 pm

NEVER run with the herd. Be an “edge runner”. stay at the periphery so you can bolt when needed but still close enough to make money from the herd. Canada is screwed big time. For all the reasons Garth has mentioned PLUS the demographic shift over the next 50 years that is importing a less than stellar work force and tax base. Best of luck Canada.

#37 marcus on 08.29.19 at 5:44 pm

“Yeah, that’s my dream. Live in a room in a Second World country and ride a scooter. Paradise.” – Garth

Actually I spend a few months a year in the Philippines, stay in 5 star accommodations in Makati (manila’s Wall Street) for 18-25 dollars US per night via Air B&B. Nice dinners cost me less than 5 bucks with a beer and the scenery is ever changing. Next stop Bangkok over Christmas/New Years. Butt in the sand ….. beer in the hand …… oh what a land!

#38 DINKS on 08.29.19 at 5:48 pm

Boy are you lowballing it. At 72 130K$ Per couple is only a middle class lifestyle where I live so you need over 7 figures just at that spend level at that age. Means you gotta save way more. We are not even in one of the two most costly Canadian cities but the average household income in my suburb is 185K$. One neighbor had to opt for a home equity pension due to lack of income and a few others are existing on dog biscuits and cat food Now only a few will have a good retirement income. Even a guy working as a VP in finance is clueless how much is needed in retirement while they blow their income it on house Reno’s and 3 kids education
. One house flipper who bought trying to do a Reno went bust who sold to a real estate sales couple who had to finish it. Another flipper hardly paid for all his months labor.

#39 Flop... on 08.29.19 at 5:51 pm

I’ve copped a good ribbing on here before because I’ve admitted I don’t have a credit card.

I had one once and it got cancelled due to non-use.

There’s nothing to be jealous about when it comes to me, but some of these folks would probably rather be in my shoes right about now…

M45BC

“Credit Card Debt Burden in All 50 States.

Total private and public debts in the U.S. have hit an all-time high $70 trillion. One contributor, fueled by high interest rates and expanding services, is credit card debt. Per capita credit card balances top $3,000 in the U.S., with the most expensive states to live in impacted the most.

Credit card interest rates have hit a 25-year high, with average rates at 17%

Growing technological adoption has also contributed to push credit card debt per capita in the U.S. to $3,200

Alaska, the District of Columbia and Hawaii lead the nation in credit card debt balances.

Mississippi, West Virginia and Kentucky are the states with the lowest credit card burdens.

The data comes from the Federal Reserve’s New York branch, which puts out quarterly reportson household debt and credit for all 50 states. Our viz shows credit card debt balance per capita by state as of Q4 2018. A darker shade of blue indicates a higher debt load.

The Top 5 Credit Card Debt Balances by State (Compared to National Average)

1. Alaska: $4,350 (135.09%)
2. District Of Columbia: $4,180 (129.81%)
3. Hawaii: $4,060 (126.09%)
4. New Jersey: $4,040 (125.47%)
5. Maryland: $3,910 (121.43%)

Despite overall low interest rates, credit card rates have hit a 25-year high, with average interest rates at 17%. At the same time, total consumer debt in the exceeded $4 trillion for the first time, a figure which includes credit card debt.

Key players in the credit card industry have seen impressive gains with the rise in credit card debt. Card spending at JPMorgan rose 11% in the last quarter. Shares of Mastercard and Visa, the largest card processors, have risen 47% and 37%, respectively, in 2019, compared with an increase of about 20% for the S&P 500.

Credit card spending continues to rise with the ever-growing presence of online commerce, which increased by 15% in 2018 alone. Purchasing from anywhere on earth has never been easier, but paying for it is another story – 70% of U.S. consumers admit they wouldn’t be able to pay their credit card debt off in a year.”

#40 Jackie Disante on 08.29.19 at 5:52 pm

We are a rare breed as we are both working together at our own dental practice started 3 years ago by both of us.

We did have $800,000 in mortgage, business, student loans and others debts 3 years ago and now we have cut that to half, $400,000 total debt. We have $200,000 in just plain savings 3.0% promotional rate for another 4 months. We will transfer that $140,000 in to our RRSP’s this year to get back a refund of $60,000 taxes back.

We will be debt free in 3 more years and probably have $500,000 by then. We will be $2 million in 10 years and $5 million in 20 years. Our net take home pay is $9,200 a week between us so when we reach $4 million each , $8 million both of us we will probably retire from dental business.

#41 Sean McGrath on 08.29.19 at 5:52 pm

This is a day late, but just wanted to say ” happy 48th” to you and Dorothy! My wife and I just celebrated our 13th the other day. Each year the anniversary seems to mean just a little more, as we reflect on our lives together, trials and tribulations, and the growing trust that we each have a partner for life. I look forward to matching your 48 one day! Cheers, and keep doing what you do. We need you!

#42 Kyle on 08.29.19 at 5:56 pm

If you blow it all when you are young, you could end up in these seniors’ situations.

https://www.cbc.ca/news/canada/newfoundland-labrador/new-seniors-support-group-poverty-1.5263034

Hopefully people can see that retirement can be pretty rough if you don’t plan for it and less will go for the YOLO mentality.

#43 Jason on 08.29.19 at 6:01 pm

Garth,

You have misinterpreted the definition of National Savings Rate, as the National Retirement Savings Rate.

In actual fact, the National Savings Rate, takes into account all households, which is positive for those saving (workers) and negative for wrinklies (retirees). It is so low now due to demographic factors.

See CD Howe Paper.
https://www.cdhowe.org/sites/default/files/attachments/research_papers/mixed/commentary_428.pdf

The number quoted comes from Statistics Canada. Go fight with them. – Garth

#44 Sparky zczc on 08.29.19 at 6:03 pm

I’m so happy I rolled my navy pension into my coast guard pension, then rolled that into my PS pension.

Not sure why the CF has such a recruitment problem – I loved my job…

#45 Mean Gene on 08.29.19 at 6:05 pm

I did the poor Caribbean Island project 12 years ago when I turned 40.

It was a wonderful 1 year hiatus and gave me food for thought for when I retire… having a hurricane go north and south of the island during my stay was also entertaining.

The lifestyle will shorten your life expectancy and/or exacerbate any health issues.

Beware what you wish for or desire!!

#46 Shawn Allen on 08.29.19 at 6:09 pm

Alberta oil spending

#24 Nonplused on 08.29.19 at 5:02 pm
A very reliable secret source ha told me that spending in the Canadian oil sector is set to fall below 2016 levels in 2020. It looks like the great Alberta recession is about to get worse before it gets better.

****************************
Alberta oil industry vastly over-invested. Now they need government mandated production cuts. Self-inflicted wounds. Additional investment needs to fall to zero for several years until pipes come.

Alberta economy has remained surprisingly strong so far.

#47 Dogman01 on 08.29.19 at 6:24 pm

Great post Garth (yesterday) , thanks for all the insights and being grounded when some of us are more volatile.

I like hearing others opinion on big issues:

Climate Change: Somethings is happening, unfortunately the agenda has been hijacked as a vehicle for unrelated social change. I see no realistic solutions proposed. Accepting a lower standard of living seems to be the purpose under cover of the banner of Climate Change virtue.

It is morally difficult for me to ask the rest of the world to live at a lower standard of living then I have. But my western standard is far too impactful to be a mass model . But Nope, I am not willing to go backwards; Bicycle to work in -30 c weather, live in a 600sq foot box in the sky and becoming a vegan.

“Whatever your cause, it is a lost cause without population control” , No kids, – generations worth of impact, to be taken seriously the eco crowd need to be harping on root cause and solution, population control measures….. but it is easier to ask others to pay more tax.

Fortunately the book Empty Planet makes the case that growth is rapidly decreasing:
https://www.penguinrandomhouse.com/books/545397/empty-planet-by-darrell-bricker-and-john-ibbitson/9781984823212/

The loss of animals and ecosystems is so sad.

I see it here; moved to Calgary 35 years ago, I used to be able to hike in National Parks on weekends. Now it is a human zoo, simply crowding out the animals. It seems once a week a stupid human feeds a bear a tim-bit and the bear gets euthanized.

Calgary was way better at 600 population then it is now close to double.

#48 Sail away on 08.29.19 at 6:28 pm

#20 Linda on 08.29.19 at 4:50 pm

Curious minds want to know what the cited 70 year old is spending their money on. Hopefully on fun stuff:)

—————————————–

Weed, booze and sex. Check out Yukon Elvis at #31.

Hey, no mortgage and no commitments, and the cogs might start to slip in 10 years, so may as well have fun now.

It’s not like compounding is feasible at 70. Spend, baby, spend.

#49 Divorced and Downsized on 08.29.19 at 6:42 pm

It’s like you read my mind. As soon as I start feeling a little broke and sorry for myself (the divorce kicked me in the butt good and hard), you write one of these posts. I know I’m being financially smart living with teenaged kids in a small townhouse with no yard, investing 15-20% of my income, and making my own coffee, but it’s sure nice to hear I’m on the right path as I watch the new BMWs drive around the neighbourhood and into their three car garages. Thanks!!

#50 FreeBird on 08.29.19 at 6:45 pm

Woke up a few years ago. A little late but not too late. What many don’t plan for or at least factor in is unexpected chronic illness/pain. Some are progressive. Most are not. Both will erode any savings and throw off plans like few other. The reality some homecare is covered but add’l may (probably) be wanted/needed and paid out of your pocket (~$30-$50/hr). In many cases it’s much needed caregiver relief. If professional supervised care is needed or assisted living the wait for public spots are LONG (up to 1-2 yrs in some cases). If you plan on private costs vary depending on how much/type of assistance, benefits, type or level of housing. Safe to assume it’s thousands per month. If you’re lucky enough to have a benefits plan check it to see if it covers homecare and or assisted living. Don’t assume. The young think this is all years away and too many older just plan by hoping. Plan for the worst and hope for the best. Seriously. Expect the unexpected. Always.

#51 Dolce Vita on 08.29.19 at 6:45 pm

“Yeah, that’s my dream. Live in a room in a Second World country and ride a scooter. Paradise. – Garth”

THAT was hilarious and I agree. Still loving 1st World Italia, crazy politics and all.

You know, I told my fellow Boomers in the early 80’s that this day, as you have described it, would come and here we are.

A lot of it was about EGO.

Buy the big house, drive the big car, spend on the big vacations on borrowed money – Hyacinth in BBC’s “Keeping Up Appearances”.

WHAT a mess. A sad verification today.

————————————

Buonanotte e Ciao d’Italia.

PS:

GDP tomorrow, we’ll see if the numbers live up to the media hype.

#52 Sunshine on 08.29.19 at 6:47 pm

You never write what you read or what has influenced you. Being old, beardy do some favour on millennials who come to your blog. Give us some of your fav book recommendations.
Pls.

‘Old and beardy’, and then you expect advice? Fuggedaboutit. – Garth

#53 Shawn Allen on 08.29.19 at 6:58 pm

Media hype on GDP?

Dolce said:

GDP tomorrow, we’ll see if the numbers live up to the media hype.

*****************
Most media and most people pay zero attention to GDP report. Only a tiny minority care.

#54 Yukon Elvis on 08.29.19 at 6:59 pm

#37 marcus on 08.29.19 at 5:44 pm
“Yeah, that’s my dream. Live in a room in a Second World country and ride a scooter. Paradise.” – Garth

Actually I spend a few months a year in the Philippines, stay in 5 star accommodations in Makati (manila’s Wall Street) for 18-25 dollars US per night via Air B&B. Nice dinners cost me less than 5 bucks with a beer and the scenery is ever changing. Next stop Bangkok over Christmas/New Years. Butt in the sand ….. beer in the hand …… oh what a land!
………………………

San Mig or Red Horse ?

#55 Yanniel on 08.29.19 at 7:07 pm

“Those FIRE weirdos who seek to stop working at age 40 (to do what?)“

I’d go back to the University, do a PHD and become a full time researcher on Quantum Computing. I love that field but it is hard to make money on it. If “retire” with money I could purse that dream.

To put it another way: If I become a Quantum computing geek today; I won’t be able to fill that balanced portfolio with money. The hope is to reverse this.

The FIRE crowd is not just about drinking margaritas on a beach until death arrives. Many just simply hope to have sufficient wealth to do “useful things” that do not necessarily pay money.

#56 Dolce Vita on 08.29.19 at 7:07 pm

A lot of Comments today preening financial superiority and calculations with a lot of:

“should”

and like words interspersed in the prose about a financial state TBD and projected to decades from now.

Then, I RE-READ YOUR Blog Garth and conclude:

Good luck and you will need it…well, unless Garth you have cornered the Top 1% of wealthy Canadians and they all decided today to be giving, caring and sharing in your Comments section. Unlikely, but there it is.

-‘Outta Here

#57 expat on 08.29.19 at 7:08 pm

Where did I mention a crash? – Garth

I said if “we” all believe. Its about all the people who are calling for a crash in real estate

#58 Chaddywack on 08.29.19 at 7:13 pm

“Those FIRE weirdos who seek to stop working at age 40 (to do what?)”

Easy…..”Let’s just sit around and smoke some pottttt!”

Source: my FIRE millennial neighbours!

#59 expat on 08.29.19 at 7:22 pm

If one is debt free – one does not need 100K to live in retirement.

You can live a great life in a smaller town for combined income of 40K a year.

We’ve done it for 10 years. No problem.

Your needs drop by 50%.
You consume 30% of your former costs.
You stay closer to home as you get older thus your costs plummet.

Where the cost grow is when you need extreme health care and supports. But you close to done anyway so don’t sweat it. You won’t even knwo it anyway at that point.

I know 100’s of people who live great lives living simply.

You consume crap like hell till you are 65 then you stop buying crap. Most are too tired to travel alot.
It’s gets boring really fast.
Snowbirding works and you can do that very cheaply.

Save the best you can and adjust your risk as you age
relax

You are sure living the high life. – Garth

#60 Vision on 08.29.19 at 7:23 pm

Great advice! People who read this blog will listen. However, most of the Canadian population do not.
Interesting times we have.

#61 Lost ....but not leased on 08.29.19 at 7:24 pm

More Fake Happy News About Jobs

https://www.paulcraigroberts.org/2019/08/02/more-fake-happy-news-about-jobs/

QUOTE:
The Bureau of Labor Statistics reports that the US economy created 148,000 new private sector jobs during July. The jobs number does not translate into employed people as increasingly Americans hold two or more jobs. For example, the BLS reports that from June to July the number of multiple job holders rose by 233,000 which is 85,000 more than the 148,000 new private sector jobs. What we are seeing is not more people employed, but more multiple job holders. Since May the number of multiple job holders has increased by 534,000

The claim of a falling rate of unemployment over the past decade is inconsistent with the falling labor force participation rate. Normally, when employment prospects are good the labor force participation rate increases. To explain away the inconsistency, economists claim that the decline in the labor force participation rate reflects the increased retirements of the baby boomer generation. However, the BLS reported that the labor force participation rate for older workers of retirement age surged to the highest level in 7 years.

So, what is really going on? The answer is that retired people, thanks to the Federal Reserve’s low to zero interest rate over the last decade, cannot live on their pensions and their savings. They have to take part-time jobs to make ends meet. Younger people, however, cannot form independent households on the basis of part-time jobs, and as they have no pension income to supplement the meager pay of a part-time job, have dropped out of the work force.

The reason the reported unemployment rate is low is that the millions who have dropped out of the labor force because they cannot find life-sustainable employment are not counted as unemployed. What do these people do? They live with parents or grandparents and they work cash jobs house sitting, walking dogs, cutting grass, and various handiman jobs.

There are many problems with the payroll jobs report, and always are. For example, the July report finds 16,000 new manufacturing jobs, but the manufacturing index weakened for the fourth consecutive month. How do manufacturing jobs rise when manufacturing activity declines?

Another anomality is the collapse of seven trucking companies this year. if the economy is so good, why has demand declined for transportation to move goods from producers to warehouses and from warehouses to retail outlets?

#62 Mark on 08.29.19 at 7:27 pm

We have entered twilight zone again!!!

#63 will on 08.29.19 at 7:33 pm

Very stimulating post as usual. But I have to say I am astounded that we are not yet talking about the recent statements of the former BoC governor, currently the governor of the BoE Mr Mark Carney. How did that go off the radar so quickly?

#64 TRON on 08.29.19 at 7:37 pm

I believe FIRE is not retire and never work again. It is to have enough passive income that you don’t HAVE to work. Big difference as most people who have the discipline to achieve their goals typically also keep working at something like a business of their own, consulting and so on. The nice thing about that program is if someone calls you at 11am to go golfing at 1pm it’s easy to say yes.

#65 TurnerNation on 08.29.19 at 7:38 pm

In summary, having kids is a sin against the Climate Gods.
But Canada needs more migration, irregular the better, to replace our falling birthrates.
The newspapers celebrate it.
Pass the flouride I’m in need of another dose.

Immigration moves people. It does not create them. If you think your kids are superior to others, go ahead. Human conceit is boundless. – Garth

#66 TO-KO on 08.29.19 at 7:39 pm

For those who might have missed it:
https://www.youtube.com/watch?v=QIWimSN_cGk

…and all the schmuks who go after these things

#67 oh bouy on 08.29.19 at 7:42 pm

@#31 Yukon Elvis on 08.29.19 at 5:21 pm
#14 360 degrees on 08.29.19 at 4:30 pm
Naive Garth, you’ve never heard about expats in Thailand, Vietnam, Cambodia, Indonesia, etc.
You need 1k/month to have moderate life there, 2k/month will make you crazy rich.

I’ve spend 5 months in Asia.
For example, in Bali:
$300/month for room, breakfast included
$100/month for scooter
$150/month for food, even if you eat at the restaurant

Do the math, if you can.

Yeah, that’s my dream. Live in a room in a Second World country and ride a scooter. Paradise. – Garth
…………………………..
I’ve been doing it for the past 10 years. 6 months here, 6 months there. I come back to visit the kids and grandkids. Live in shorts, a wife beater, and flip flops. Nice hotel room with pool, gym, and restaurant. Eat out 3 times a day, 7 days a week. Taxi to everywhere. Scooters are fun too. Beach, babes, beer. 70 years old. I’ve had more fun in one weekend than you have had in the last decade.
___________________________________

sounds more interesting than florida or arizona.
apparently Ecuador is a big destination with older folks as well.

#68 TurnerNation on 08.29.19 at 7:44 pm

Look around maybe 25% of the population is visibility overweight. Add to this the staggering amount of prepared foods thrown out and we could cut food production by a 1/4 and be fine I’d guess.
We are drowning in food via technology.
So much so millions of acres in greenhouses are being globally erected in support of growing…Weed.
The psychotropic to keep us unthinking. The real undesirables are given fentanyl and the like but I’ve said too much

#69 yvr_lurker on 08.29.19 at 7:44 pm

For me, my expenses will be lower in many ways when I am retired. No need for fancy clothes, lunches out at work, all the extra commuting and gas, kid grown and gone (and so no big expenses with that). All our trips (besides Iceland in 2017) have been to places that are interesting but cheap (Nicaragua, Mexico, Indonesia, Thailand, Phillipines). As long as I have my health, which I think is the most important factor in any retirement, I don’t plan to change it up. Currently, am living on 4K per month for all the expenses (house is paid off), and socking away 7.5K per month. Should have around 2.2M when I retire in 10 years. It will generate around 10K per month (with CP), which will be well more than what I need.

When you are retired, you have the time to make meals, get books from the library, do some basic home repairs, etc… all of which save $$$.. If you are addicted to getting on a stupid cruise (because you never traveled when you were young, and are too afraid of figuring out travel plans on your own), then you need big $$$….

#70 TO-KO on 08.29.19 at 7:47 pm

Moving people to a higher carbon footprint post-national area is not exactly environmentally friendly – it’s talking from both sides of the mouth

#71 aerozone on 08.29.19 at 7:47 pm

Hey #4
Southern Albertan cyclists lovingly refer to it as “Head Smashed In Bicycle Jump” because of the superb riding,
and Waterton being a short distance away. Rocky Mountain paradise!

#72 TO-KO on 08.29.19 at 7:55 pm

There’s two groups of people who should get together and start a club:
SJWs who never talk about what’s going on in S. Arabia on a daily basis and keep beating on the locals AND the environ-mentals who never talk about the effects of ‘movement of people’ (I guess that’s what we are calling it these days) to higher carbon footprint areas

#73 Work and Tumble on 08.29.19 at 7:55 pm

Thank you Garth, my wife and I are on solid ground because of your sound advice and 6 years till freedom 60.

But I can go anytime because I followed your advice. Funny how the companies of today don’t value the old guy experience that got them there.

#74 Linda on 08.29.19 at 8:08 pm

#32 Jess: yes, the antibiotic resistant strain of germs is a real issue. I hear that antibiotic ‘cocktails’ are now the norm as a single type is no longer effective. Immunize, keep washing the hands & do the work to stay healthy & not require medical assistance!

#48 Sail Away: sounds like Yukon Elvis is enjoying the golden years!

#42 Kyle: sad to read but not unexpected. CPP contribution rates were a lot lower in the early years plus women of the older generation much more likely to have spent years out of the workforce due to maternity, plus were likely to have held lower paid positions. Both would have a direct impact on the amount of CPP received. Throw in inflation for the trifecta of bad economic news.

People would have hysterics, but really the solution is already in place. Instead of the patchwork of employer pension plans, no plans, voluntary plans etc. the only way to potentially stop the cycle of retirees in poverty is to make CPP much more lucrative across the board. Which means vicious increases in the amounts deducted. The recent ‘fix’ which begins to increase the eventual CPP paid to 1/3 earned income (estimated) from the current 1/4 earned income (estimated) is a step in the right direction, but given that most people would rather spend $ on anything but their future the only way to stamp out the cycle of senior poverty (& put an end to pension envy) is to make CPP the only pension plan available which everyone contributes to AND at least triple the current annual maximum deduction paid to boot. People want a ‘guaranteed’ income they can actually live on in retirement? Shazam & stop howling. There ain’t no such thing as a free lunch, though folks sure seem to think it is possible.

#75 Bag Holder on 08.29.19 at 8:08 pm

So you bought the largest and nicest suitcase you could afford and filled it with all your stuff like everyone else.

Now the trend has shifted to short trips and you can get by with carry on luggage.

Now you have more fun, more time and travel more often to more places and don’t have to lug along all your crap.

Wake up folks – it has all been Marketers playing with your heads for the last 20 years. You don’t want to be anything like the Jones’s and be buried in all the useless crap and bills that no one wants – e.g. like the freak hoarders you see on TV.

THINK!

#76 Dog Breath on 08.29.19 at 8:23 pm

“Yeah, that’s my dream. Live in a room in a Second World country and ride a scooter. Paradise. – Garth”
———————————–
Now that’s funny!!

#77 Shawn on 08.29.19 at 8:34 pm

Bali is beautiful Garth. Maybe if you escaped the dark Canadian winters you’d smile a bit more.

#78 Paracho on 08.29.19 at 8:35 pm

Reply to Yaniel :
You could not have explained it better !
Thank you !
It is not always how much someone has. , but how little the person needs.

#79 akashic record on 08.29.19 at 8:38 pm

If you think your kids are superior to others, go ahead. Human conceit is boundless. – Garth

Only as much as your dog to other dogs and your wife to other women. Superior is a curious choice from all the words you could have picked, but there is a word for it.
It’s only human that way.

#80 Flop... on 08.29.19 at 8:45 pm

Immigration moves people. It does not create them. If you think your kids are superior to others, go ahead. Human conceit is boundless. – Garth

//////////////

Probably never gonna get this point across properly until we have a blog barbecue in Lunenburg and people see guys like me and NoName there with our spouses.

People come here for all different reasons, mine as documented to simply keep a family unit together.

Sounds like I was supposed to be living on a barge on Burrard Inlet waiting to come ashore once a year…

M45BC

#81 mark on 08.29.19 at 9:00 pm

When I retire I’ll move in with my parents to save costs…

#82 Bill Puffle on 08.29.19 at 9:17 pm

The big problem with retiring to SE Asia is that you lose your healthcare. If you want to be able to use Canadian healthcare, you have to keep a residence in Canada and live here for 6 months of the year. So if you don’t have much saved for retirement, this plan doesn’t really work unless you just want to risk it and live without health insurance which isn’t a good idea when you’re a senior citizen.

I agree that many places like Thailand are amazing, but I wouldn’t count on that as a cheap retirement plan. Yukon Elvis has the right idea where you spend 6 months a year in SE Asia (avoiding the Canadian winter) and living it up. You can eat every meal at restaurants for cheap (and the food can be relatively healthy too), you can get cheap maids, you can get a massage every day, swim in the best oceans, lots of cool places to travel and explore, etc. There are really nice places to rent with ocean views, lots of TV channels, and Internet. But if you have to keep a place in Canada and live in Canada for 6 months of the year and fly back and forth every 6 month, you’re going to need to have some serious savings.

It’s possible that by the time I’m ready to retire that the Canadian public healthcare system will be such a disaster that I wouldn’t want to use it anyways. So that might not even be much of an issue in the future when the wait lists in Canada are so long that you end up having to pay out of pocket if you actually want proper treatment. That’s why I’m trying to maintain a healthy lifestyle so that I will have the freedom to travel and live abroad and not be reliant on socialized healthcare and government promises.

#83 TurnerNation on 08.29.19 at 9:26 pm

No kids here and I’m sure everybody thinks their dog is the best!!
I support womens’ reproductive rights that is until Canada’s One-Child policy arrives.
(I’ve always argued that the prohibitive costs of daycare serve this function. You’ve come a long way baby. ?)

#84 Bali on 08.29.19 at 9:43 pm

People in Bali and southern Italy are running for their lives due to the recent huge volcano explosions.

#85 Hildie McLaderton on 08.29.19 at 9:57 pm

Garth, Do you think JT will take the TFSA limits down to $1,000 per year because only the rich can afford it, and people are only saving $240 per year anyways?

#86 Nothing Surprises on 08.29.19 at 10:03 pm

After all, you spend more retired at age 70 than you do working at 50. Don’t believe me? Wait and see….Garth.
…………………………………………………………………………….
Not everyone!!

Married 52+ years.
Not a pot to pee in at the time of the hitch.
Served Canada proudly in a naval uniform.
Paid my own way through university.
Now 74+ years old.
Two children.
Five Grdkids: 18 -22 in age – 3 in university, 2 apprenticing.
Spent $38,000 in 2018 on living expenses and as happy as we have ever been.

Net worth: $8 + 6 zeros.

How?….. Worked our asses off, saved and invested, entrepreneurial, went broke, started again, took some risks, lost most of it, started again, perseverance, some luck as well whatever luck is.

Taught our kids and grdkids about what is important in life……not money.

and

Never regretted firing the two little guys up the tubes to give us what we have!
It’s all what you choose. Each to his/her own.

Garth and Dorothy best wishes on 48 years.

It keeps getting better.

#87 Yukon Elvis on 08.29.19 at 10:07 pm

#82 Bill Puffle on 08.29.19 at 9:17 pm
The big problem with retiring to SE Asia is that you lose your healthcare. If you want to be able to use Canadian healthcare, you have to keep a residence in Canada and live here for 6 months of the year. So if you don’t have much saved for retirement, this plan doesn’t really work unless you just want to risk it and live without health insurance which isn’t a good idea when you’re a senior citizen.

I agree that many places like Thailand are amazing, but I wouldn’t count on that as a cheap retirement plan. Yukon Elvis has the right idea where you spend 6 months a year in SE Asia (avoiding the Canadian winter) and living it up. You can eat every meal at restaurants for cheap (and the food can be relatively healthy too), you can get cheap maids, you can get a massage every day, swim in the best oceans, lots of cool places to travel and explore, etc. There are really nice places to rent with ocean views, lots of TV channels, and Internet. But if you have to keep a place in Canada and live in Canada for 6 months of the year and fly back and forth every 6 month, you’re going to need to have some serious savings.

It’s possible that by the time I’m ready to retire that the Canadian public healthcare system will be such a disaster that I wouldn’t want to use it anyways. So that might not even be much of an issue in the future when the wait lists in Canada are so long that you end up having to pay out of pocket if you actually want proper treatment. That’s why I’m trying to maintain a healthy lifestyle so that I will have the freedom to travel and live abroad and not be reliant on socialized healthcare and government promises.
………………………………
Was having a beer with one of my Irish buds in the city of Cebu ,PI recently. He was having a full body MRI with contrast done at Chong Hua hospital. Just for a checkup. Went in, signed up, paid the equivalent of about $550 cad, was told to show up the next day. Got it done in a few hours, Australian trained doctors and techs. Got a small novel-like report two days later, he was all good to go. Try that in Canada….I had to see a specialist there once to get a prescription renewed. No appointment necessary, go to room xyz, waited half an hour, got my scrip, cost me twelve bucks. For a specialist, a retired phil-am doc from usa. Not so bad.

#88 Yukon Elvis on 08.29.19 at 10:20 pm

#59 expat on 08.29.19 at 7:22 pm
If one is debt free – one does not need 100K to live in retirement.

You can live a great life in a smaller town for combined income of 40K a year.

We’ve done it for 10 years. No problem.

Your needs drop by 50%.
You consume 30% of your former costs.
You stay closer to home as you get older thus your costs plummet.

Where the cost grow is when you need extreme health care and supports. But you close to done anyway so don’t sweat it. You won’t even knwo it anyway at that point.

I know 100’s of people who live great lives living simply.

You consume crap like hell till you are 65 then you stop buying crap. Most are too tired to travel alot.
It’s gets boring really fast.
Snowbirding works and you can do that very cheaply.

Save the best you can and adjust your risk as you age
relax

You are sure living the high life. – Garth
………………….

Your idea of having fun is bobbing around the grey Atlantic in an old tug boat and honking your fog horn. Big whoop de doo.

#89 fishman on 08.29.19 at 10:26 pm

Old & Beardy; You just can’t get no respect. Take my wife for instance. No, really: take her.

#90 Greg on 08.29.19 at 10:37 pm

Kinda sounds like the gig economy is working exactly as intended.

https://www.bloomberg.com/news/articles/2019-08-29/uber-lyft-pledge-60-million-to-possible-labor-law-ballot-fight

#91 Capt. Serious on 08.29.19 at 11:23 pm

Is it weird that if I achieved FIRE I would most likely end up cycling 300+ kms a week for fun, at least while there is no snow? And the. We should n the winter spend most of my mornings skiing?

#92 Marcus on 08.29.19 at 11:30 pm

Yukon Elvis San Mig or Red Horse ? 25 years ago I would say San Miguel but now I like Red horse. My father in law hates that I drink that because it is the “street beer” or poor man’s beer but I think it tastes better than the new San Miguel Light.

#93 SoggyShorts on 08.29.19 at 11:58 pm

#82 Bill Puffle on 08.29.19 at 9:17 pm
The big problem with retiring to SE Asia is that you lose your healthcare.
*************************
This is a concern, but you can get international insurance for less than the flights back and forth would cost. Plus the cost of living in Canada for those 6 months is so much higher that it doesn’t make sense.
You can find quotes for about $4k/year for a couple with pretty decent coverage keeping in mind that you don’t need extras like dental when a 1st world-class cleaning costs $15 and major stuff is 75% cheaper too.
Other levels of care like in-home nursing is a totally different world over there too.

#94 Smoking Man on 08.30.19 at 12:48 am

Hey newly schooled PROGESIVES, don’t watch this clip, your UN masters are watching itching to put you on a shit list of some kind.. You should know better than looking at another respective. Remember you conditioning..

You step out of the box we willed on you will and our other loyal idiots will take care of you.

You no right to a free mind….its our way or the high way..

Now bow……..

https://youtu.be/gWAgIVNzHKs

#95 Ponzius Pilatus on 08.30.19 at 12:50 am

Staying with the same chick for 48 years is kinda romantic.
But some of us wanna try the merchandise before committing.
Just saying.

#96 mousey on 08.30.19 at 12:56 am

The Pic: Hey, that is me looking at the bag of chips on my secretary’s desk at 3:00pm in the afternoon. Lucky for me, she lets me have chips every couple of weeks to keep me cool. About the 2 million for retirement: seriously, I just feel like giving up. Wasn’t it just 1 million last year?

#97 MF on 08.30.19 at 1:04 am

#37 marcus on 08.29.19 at 5:44 pm
#31 Yukon Elvis on 08.29.19 at 5:21 pm

Pay attention to our ex pat community spew their weird nonsense here everyone.

You can spot their out of place cynicism from a mile away. They are usually the biggest hypocrits, of course. Basically a case study in irony.

Beaches, babes and cash. Sure.

Ponder this: for Canada to truly be “screwed”, the US, and therefore the world would have to be “screwed” too. If that were to happen, this little fantasy lifestyle will evaporate instantly as spending power diminishes, and becomes more in line with the spending power of the actual inhabitants of these third world countries.

Beaches don’t matter when you are hungry and desperate. The babes weren’t really interested anyways. Only in manipulation for self gain. That will also evaporate if we are actually as “screwed” as you say (or hope?).

MF

#98 Al on 08.30.19 at 1:12 am

“Those FIRE weirdos who seek to stop working at age 40 (to do what?) ”

If you have to ask, it’s not for you!

#99 Smoking Man on 08.30.19 at 1:19 am

Secret to happiness. Betray you progressive teacher. Find a life long partner when you are young.

Screw protesting. Figure out how to make loot.

A million ways to make millions..

Just go for it. Life is short. Only death bed confession should be. What a ride..

https://youtu.be/MjUqfRrWwcM

#100 DON on 08.30.19 at 1:20 am

More global economic cracks.

India laying off auto workers as industry experiences downturn.

#101 PHMIKE on 08.30.19 at 1:26 am

#14 360 degrees
#31 Yukon Elvis
#37 marcus
My name is PHMIKE for a reason im by no means rich and im younger than many here at 34 however i dont know who is living for under 2k rich by any standards anywhere in SE Asia… maybe your reading too many backpacker blogs… My rent for a 2 bedroom condo is $1300 a month i spend roughly another $1200 on everything else, could i do it cheaper ya for sure but do i want to ? definitely not… You don’t come to a third world country to live like your in jail… 5 dollars a day for food.. what are you eating? Even in makati yes its possible to air bnb it for fairly cheap but your talking the most expensive city in the PH where are you getting food and beer for $5… Rich people here are richer than in Canada in terms of quality of life however that swings way off on the lower end of the spectrum, don’t go to a third world country to scrape by its not fun i see many expats who are broke and miserable…
Garth great post this is another one ill send to the friends and family who have the FOMO still… maybe they will understand.

#102 Smoking Man on 08.30.19 at 1:29 am

If you libtards ever think your going to shut me up..

Alien DNA kids.

https://youtu.be/JRfuAukYTKg

#103 Al on 08.30.19 at 1:29 am

At 72 130K$ Per couple is only a middle class lifestyle where I live.

Which planet is that? Rent for a nice sfh ( where the upper middle class live) in a hcol Canadian city will run you 40k/year. What are they spending the other 90k on??

#104 Ferdinand McMillan on 08.30.19 at 5:12 am

Congrats in the long marriage, it ain’t easy. On the “$2,000,000 retirement” thingy. I think you have to up that to at least $3,000,000. Because you’ll need a roof over your head that kicks off no income, in fact with taxes increases every year you have to account for that drag on your investment income plans . You have to figure in at least a few nasty surprises along the way.

You don’t want to be paying rent or carrying a mortgage in retirement. Reverse mortgages are a mugs game, I agree. How do you know Trudeau won’t initiate a confiscation on ‘ decadent square footage’ , the way Horgan has done to second homes in BC.

Germany, Italy and the UK have programs where several areas can decide where you can stay in your home if extra bedrooms in your home can be better allocated to whatever the flavour if the month happens to be. Trudeau is in lockstep with Europe’s flakier agenda. Don’t count the socialist savages as your friends. I know the comment here, but, keep some diverse currencies such as gold BTC or strips just in case. Not a bad idea to buy a foreign bolthole in the tropics where insane confiscation ideas like Trudeau’s and George Soros fall on deaf ears. I’ve got mine.

Stupid, and boyo boy you’d better read the fine print in those reverse mortages, ust in case it has a spousal death clause or such hidden maintenance clause underneath the blanket of flowers. You don’t want them triggering a ” paint” clause. Plus, they give you a portion of value not Anywhere near what it might have been worth at the time you signed. Look carefully for landmines and snakes in the grass. Use a sober lawyer.

Two million is just a good beginning. The real inflation is hidden where your mouth is. They’re already taking meat away from seniors. Too expensive? What’s next? Soylent Green? I’d sew a few diamonds in my underwear if Trudeau gets another mandate. And who wants a farty bean diet in your senior years.

Re: Bali, and running for your life, c’mon. Seriously. Mt Agung is no where near populated communities. At worst the air travel has been inconvenienced by occasionsal dust. From my place it’s little more than sunset conversation. I grew up on the side of a volcano which last erupted in 1794.

I’m buying this dip, you should be too. Re:RRSP , be concious of the tax trap waiting at the end. I spent 10 years pulling back to lower the grab. TFSA is best and Non Reg accounts will never be forced to be crystallized under the ‘Stupid at 71″ legislation. With a non reg you still don’t have to sell, ever, and pay only after the dividend tax credit on income. Finally , create a trust for the kids, screw the man.

.

#105 Stan Brooks on 08.30.19 at 6:15 am

This sheeple is saving 20 bucks a month?

I don’t believe it. It probably piles 2 k in additional debt monthly to compensate for that ‘huge’ saving.

#106 Bytor the Snow Dog on 08.30.19 at 7:48 am

#47 Dogman01 on 08.29.19 at 6:24 pm sez:

“It is morally difficult for me to ask the rest of the world to live at a lower standard of living then I have. But my western standard is far too impactful to be a mass model . But Nope, I am not willing to go backwards; Bicycle to work in -30 c weather, live in a 600sq foot box in the sky and becoming a vegan.”
================================================

They’ll have to pry my HEMI, my house with a yard, burgers, and bacon from my cold dead hands.

#107 Fortune500 on 08.30.19 at 7:54 am

In defense of the FIRE movement, most of them are not as interested in the ‘Retire Early’ part, but the Financial Independence aspect. Once you have covered your basic living costs, it allows flexibility and a chance to pivot.

At the very least, these folks have sat down and done some hard calculations. I wish the rest of Canadian society would take the time to do that.

I have been involved with these forums and groups for a decade and very very few have ever espoused stopping all work or money making when they hit there ‘number’. It is much more common to shift to less well paying work you love, or spend time traveling and supplement income at less regular times of the year.

#108 Tater on 08.30.19 at 8:06 am

Sunshine on 08.29.19 at 6:47 pm
You never write what you read or what has influenced you. Being old, beardy do some favour on millennials who come to your blog. Give us some of your fav book recommendations.
Pls.

‘Old and beardy’, and then you expect advice? Fuggedaboutit. – Garth

———————

How to Win Friends and Influence People is probably a good start.

#109 NoName on 08.30.19 at 8:35 am

#106 Bytor the Snow Dog on 08.30.19 at 7:48 am

They’ll have to pry my HEMI, my house with a yard, burgers, and bacon from my cold dead hands.

—-

This is funny, there is a twitter handle “Own The Libs Bot” that i follow, dude or desuetude does similar snippets some are funny.

What you should do is to pull an empty trailer with truck, thru Starbucks drive thru, that would send clear and loud msg, and it would be funny.

When i show at uhaul to pick trailer they know time for grande caramel macchiato.

#110 dharma bum on 08.30.19 at 8:43 am

#82 Bill Puffle

You can eat every meal at restaurants for cheap (and the food can be relatively healthy too), you can get cheap maids, you can get a massage every day, swim in the best oceans, lots of cool places to travel and explore, etc.
——————————————————————–

You forgot to mention the ubiquitous cheap sex available around every street corner…….

#111 dharma bum on 08.30.19 at 8:51 am

A generation ago people routinely saved 10-15% of what they earned. The average over the previous decade was 7%. Now it’s collapsed. It’s dead. After inflation our national savings rate is negative. – Garth
——————————————————————–
Starbucks and eating out are modern day addictions.
They are also viewed by many as entitlements.
Most see them as “rewards”.

The food industry has done a superb marketing job, and has succeeded in brainwashing the mentally vulnerable masses into habitually consuming their swill and poison.

It’s the ultimate con..

Ironically, the most harmful aspect of perpetually indulging in their products is that they are financially toxic.

Eschewing Starbucks and other daily restaurant meals is one of the single most important disciplines required in order to foster the necessary habit of saving money for the purpose of investing it.

This one change – quitting Starbucks and restaurants in general – will easily save the average person approximately $500 per month.

There’s your annual $6000 TFSA contribution. Easy peasy.

If you are a smoker, quit. The best result will be your financial health (not to mention the other obvious benefits). That’ll save you at least another $6000 yearly.

Drinker (aren’t we all?)?
Buy your booze at the liquor store (LCBO, or others), or if you ever have the opportunity to travel to the U.S., bring back as much as you can at a fraction of the cost, and enjoy quaffing it at home with friends.
Staying away from ridiculously overpriced bars, clubs, and other licensed establishments will cut your booze bill down by two thirds. That’s a savings of another few grand a year. Get hammered at home with your pals.

We didn’t even scratch the surface of other areas where thousands of dollars can still be saved. Shopping addictions, anyone? Shoes, clothes, cars, electronics, jewelry, cosmetics, household trinkets, furniture, etc.?

If you are serious about saving and investing, you can be selective, smart, and disciplined in your consumption habits, and still acquire all the material goods you’ll ever need.

In other words, by not indulging in stupidly overpriced conveniences, and giving up a totally harmful habit, you can find about $15,000.00 a year in savings. If you’re 30 years old, that’ll look like about $1.1M by the time you’re 65. And trust me, by that age, you’re gonna need it.

If you add up all the cash you will save by not being a shopaholic (in addition what you’ll save by giving up habitual Starbucks and restaurant meals), you’ll be in an even better financial position at 65 years old.

It’s like having your cake, and eating it too.

No real sacrifice.

#112 How? on 08.30.19 at 9:13 am

If people really want to have enough to retire, the first thing they need to do is figure out how to make the money. Such an obvious statement but it is so often the last thing people think about. As early as possible, get into business for yourself. Previous generations would rely upon the social contract that provided a lot of support from employers in the form of relatively good salaries, stable employment, and generous pensions.

That contract has been broken. It isn’t coming back. In its stead is the cold, hard fact that if you work for someone else, in most cases, you will never have enough money to save adequately. And compounding this deficit are the twin demons of material consumption and ignorance. Simply put, people spend too much in the short term and they have no clue how to put available cash to work (hint: hire a professional, preferably an experienced and bearded one).

My wife and I are comfortably retired, and we are in that 0.7 percent that Garth has referenced. We are living comfortably, pursuing our interests, and enjoying ourselves. None of this would have been possible if we did not set out a plan decades ago, commit to savings targets, and focus on skills development that enabled me to work for myself and to make more money while doing it.

Indispensable in that calculus was hiring good people (tax preparers, legal advisors, and financial advisors). The hardest to find was a good financial advisor. I figure that the struggle to get a good person cost me a lot of money over the years and frankly, I regret not finding someone as capable as GT earlier. It frankly makes me wince to see some of the disrespectful comments directed at the Bearded One and also I laugh out loud at some of the financial advice that some pundits here give freely and generously (and be assured it is worth every penny).

#113 milly on 08.30.19 at 9:19 am

“#107 Fortune500 ”

THIS! We are also on track to FIRE. I am an electrical engineer by trade. Although I love the work (interesting, problem-solving, always learning etc.) the office politics are gruelling and soul-crushing. As a hobby, I love painting and would love to get more into the art world, but of course, this does not pay the bills! With FIRE I could decide to drop a toxic office environment and do something I find more fulfilling.

The plan isn’t to retire, but do what you love without worrying about how to come up with the money for a $2k rental in Toronto.

#114 Smoking Man on 08.30.19 at 9:24 am

Stats Canada officially meddling in the Canadian Election.

They Reported today annualized GDP 3.7 % while Canada lost 60k private sector jobs last month with serious outflows of Capital.

Guess if your going to tell a lie, Say it loud, say it often and the minions will totally believe you…

This ain’t right…

#115 Shawn Allen on 08.30.19 at 9:38 am

Negative rate mortgage puzzle?

Why would a Denmark bank that charges say 3% for deposits (negative deposit interest) loan that money at say negative 1%?

Yes that is a 2% net interest margin profit.

Alternative might be to keep the deposit at Denmark central bank. But if the central bank charges minus 2% then yes better to lend on an insured mortgage house at negative 1%.

BUT, why would the Denmark bank not put the deposits to the central bank and then ask for it to be sent back in paper cash and they could store that in the vault at no interest cost?

Is it because paper cash no longer exists in sufficient quantity?

Or because it is too risky for even a bank to have hundreds of millions in paper cash in a vault?

I can see why a corporation would accept a negative rate on deposits rather than risk millions in the office safe. But you would think a bank would be well positioned to simply hold many millions of dollars of paper cash in the vault.

The Danish bank does not pay 2% on deposits and makes loans at negative rates with the same money. The bank pays a negative rate (-0.6%) on all large deposits of over $1 million. – Garth

#116 David Hawke on 08.30.19 at 9:38 am

Naive Garth, you’ve never heard about expats in Thailand, Vietnam, Cambodia, Indonesia, etc.
You need 1k/month to have moderate life there, 2k/month will make you crazy rich.

I’ve spend 5 months in Asia.
For example, in Bali:
$300/month for room, breakfast included
$100/month for scooter
$150/month for food, even if you eat at the restaurant

Do the math, if you can.

Yeah, that’s my dream. Live in a room in a Second World country and ride a scooter. Paradise. – Garth

Yes, it sure is plus expat has it nailed in post #59.

BTW, living in the tropics sure has existing, in Canuckistan beat 6-ways to Sunday!

#117 Tannhäuser Gatekeeper on 08.30.19 at 9:43 am

“A generation ago people routinely saved 10-15% of what they earned. The average over the previous decade was 7%. Now it’s collapsed. It’s dead. After inflation our national savings rate is negative. Hard to overstate this – we have the worst rate in 60 years at just 0.7% of income …”

A generation ago, Boomers were in their peak saving years and hadn’t started to retire, the peak spending generation (X) was relatively small, and the other big generation (Millennials) were still riding around in the backs of their parents’ minivans.

Now Millennials are buying real estate (dis-saving, bigly), a lot of Boomers are retired (ditto) and the generation in its peak saving years is comparatively small. Sucks to be an asset gatherer right now, but demographics is destiny.

#118 Greg from the industry on 08.30.19 at 9:44 am

Great post, Garth! Can I move my biz from the bank over to you guys? The bank has way too much overhead to compete in this quant easing environment

#119 Ferdinand McMillan on 08.30.19 at 9:59 am

Live in a room and drive a scooter? Fun, if you’re twenty. The naked Swedish models are every where. Posing naked for Instagram is all rage, they clutter up the beach some days.

Who knows what’s gotten into these kids? Those who are passed the hippie stage of travel have nice homes, nice cars and service. Building custom is easy. Tropical style with all the mod cons.

In fact you need to create at minimum one job if you want a retirement visa in Indonesia. We have a maid and a driver/gopher. Landscaping and pool maintenance comes with closed community, beachfront of course. Golf course and tennis club membership is a given. This is a few grand a month.

In fact most upscale expat international comunres are like this. Panama, Ecuador, Belize, Thailand etc have evolved like this. No different from the Caribbean. But, at a big discount. So, you don’t live like a backpacker. If you want to hang out with kids ,go surfing, it’s an ageless brotherhood.

Canadian health care? Forgetaboutit. You’ll pay more for your premium than a colonoscopy here. Hospitals are first rate. Mine is like a five star hotel. You see a specialist in Twenty minutes not four months.

Garth, you could do with a bit of sun. BTW, you can’t lose Canadian healthcare if you don’t spend six months, all you need to do is keep paying your bill. Get the hell out and live.

#120 expat on 08.30.19 at 10:01 am

DELETED

#121 expat on 08.30.19 at 10:09 am

You are sure living the high life. – Garth
______________________________
Actually we are.

Your Ontario big city bias is showing.
You are selling a high life is living like a khardashian…

Small town folks see the world much different. We enjoy friends, walks, barbecues and travel.

One can travel and live very very cheaply if they chooose to.

Every couple or person has a lifestyle wish…

Most will never reach 2 million so what do they do?

Die?

Give me a break

#122 crowdedelevatorfartz on 08.30.19 at 10:18 am

@#95 Ponzie Prattle
“Staying with the same chick for 48 years is kinda romantic.
But some of us wanna try the merchandise before committing.”

*******
“chick”?

Classy.

And yes….. this is coming from a person called Crowdedelevatorfartz.

#123 Hawk on 08.30.19 at 10:47 am

#51 Dolce Vita on 08.29.19 at 6:45 pm

========

Having been over Canada, Italia, Thailand and many more, I’d like to throw in my two cents as it seems some have quite a few misconceptions.

An average citizen in Canada or Italia, is likely indeed better of than an average Thai citizen in terms of earnings and quality of life, the emphasis being on “earnings”.

But a person having an “X” amount of passive income, say $2,000 a month, will be way better off in Thailand than in Canada or Italia.

It also seems that quite a few people appear to believe Thailand’s infrastructure is far poorer than it actually is. If you lived in Bangkok, you’d find everything you wanted from public transport to taxis to high speed internet and telecommunications, to shopping malls, to restaurants to nightlife etc. The only thing you won’t get is Italy’s art and architecture, but Canada does not have that anyway. Everything else, will be likely as good and a lot cheaper.

As for the “scooter” joke, the guy who can afford a scooter in Thailand, is the guy who’ll ….with difficulty ……will afford a bicycle in Canada—- (which will be useless for 7 months + of the year).

#124 Shawn Allen on 08.30.19 at 10:57 am

Danish negative rate loans

The Danish bank does not pay 2% on deposits and makes loans at negative rates with the same money. The bank pays a negative rate (-0.6%) on all large deposits of over $1 million. – Garth

*****************
Right as I asked why lend at negative rates rather than keep in vault at zero %. My question assumed they are charging for deposits as you confirm here.

A negative rate of 0.6% on deposits really leaves no room to lend at a negative rate so I assumed the negative deposit rate might be more like 3%.

But the question is why lend at negative 1% even if you fund at negative 3% when you can keep in the vault as paper cash rather than pay someone to borrow.

What barriers prevent the danish bank keeping the deposits in the vault rather than paying someone to borrow?

#125 Sideshow Rob on 08.30.19 at 11:05 am

“Alberta oil industry vastly over-invested. Now they need government mandated production cuts. Self-inflicted wounds. Additional investment needs to fall to zero for several years until pipes come.

Alberta economy has remained surprisingly strong so far.”

The Alberta oil patch only needed the government mandated production cuts because of the government mandated pipeline cancellations. The oil patch invested based on a certain set of circumstances and promises already in place and when the libs got elected the conditions changed. If Mr Sox gets reelected the oil patch will go into bare bones survival mode for at least 4 years. No one wins from this. Least of all Canada. Many people will lose their jobs, families will break up, drug and alcohol use will skyrocket, and many will be forced to relocate. Some are cheering. It takes a special kind of sociopath to gloat over this.

#126 Another Deckchair on 08.30.19 at 11:09 am

Our buddy Dharma and Coffee Shops.

One reason why they are so expensive:

I rarely go in to these places, but sometimes do. Two times at one close to home, on the big “working” table that seats 6-8 people, they have:

Time 1) A bunch of university types going through study notes for spring exams. Loudly. Eating out of Tupperware containers, sipping water out of their own water bottles. Using the washrooms and the table, with $0.00 towards the establishment.

Time 2) A guy’s putting on a course to two students – accounting 101. Loud, grating voice. Sitting in the opposite corner of the place, it still drove me to distraction. Think the teacher gave the place a cut of his $$? Doubt it…

What happened to real schools, or even studying with friends at one of their houses??

Have not been back in a while, and don’t intend to.

#127 n1tro on 08.30.19 at 11:29 am

#101 PHMIKE on 08.30.19 at 1:26 am
#14 360 degrees
#31 Yukon Elvis
#37 marcus
My name is PHMIKE for a reason im by no means rich and im younger than many here at 34 however i dont know who is living for under 2k rich by any standards anywhere in SE Asia… maybe your reading too many backpacker blogs… My rent for a 2 bedroom condo is $1300 a month i spend roughly another $1200 on everything else, could i do it cheaper ya for sure but do i want to ? definitely not… You don’t come to a third world country to live like your in jail… 5 dollars a day for food.. what are you eating? Even in makati yes its possible to air bnb it for fairly cheap but your talking the most expensive city in the PH where are you getting food and beer for $5… Rich people here are richer than in Canada in terms of quality of life however that swings way off on the lower end of the spectrum, don’t go to a third world country to scrape by its not fun i see many expats who are broke and miserable…
————–
Does the PH in your name refer to PentHouse by chance? You spend in 2 months worth of rent what the average income for people in asia make in a year.

https://www.worlddata.info/average-income.php

I think when people say they go to asia to live “rich”, it is referring to the value they get from the same dollar where they came from and to some extent relative to the majority of the locals. Exclude uber rich people in any country you live in and you’ll see how much value your money has or doesn’t have.

$5 a day for per meal is realistic btw. Broke expats are mostly likely the ones that blew their money on cheap women or trying to keep up with the Joneses (or Lees, Nguyens, DeMarcos) of the region. Someone with a decent portfolio that is churning out 6-7% is living large(r) in Asia than Canada.

#128 Blog Bunny on 08.30.19 at 11:36 am

Garth,

Happy 48th anniversary. Dorothy looks awesome.

About FIRE, according to you, how many millions one needs to retire at 40 ? Or at 50 ?

#129 yvr_lurker on 08.30.19 at 11:42 am

#111 Dharma

In other words, by not indulging in stupidly overpriced conveniences, and giving up a totally harmful habit, you can find about $15,000.00 a year in savings. If you’re 30 years old, that’ll look like about $1.1M by the time you’re 65. And trust me, by that age, you’re gonna need it.
——

Exactly. I have been careful on the expeditures for most of my adult life (having grown up just above the poverty line). No need for Starbucks, no need for $12–15 cocktails at bars, poke-bowls brought over by Skip the dishes, upgrading to fancier phones or re-newing the car every few years. We keep it simple. My only addiction is Mountain Equipment Co-op. Keeping fit and staying in shape, out hiking and running, (which takes discipline) provides enough fun…. and no need for expensive personal trainers to tell you what you should be doing… do it yourself…

#130 Yukon Elvis on 08.30.19 at 12:07 pm

#101 PHMIKE on 08.30.19 at 1:26 am
#14 360 degrees
#31 Yukon Elvis
#37 marcus
My name is PHMIKE for a reason im by no means rich and im younger than many here at 34 however i dont know who is living for under 2k rich by any standards anywhere in SE Asia… maybe your reading too many backpacker blogs… My rent for a 2 bedroom condo is $1300 a month i spend roughly another $1200 on everything else, could i do it cheaper ya for sure but do i want to ? definitely not… You don’t come to a third world country to live like your in jail… 5 dollars a day for food.. what are you eating? Even in makati yes its possible to air bnb it for fairly cheap but your talking the most expensive city in the PH where are you getting food and beer for $5… Rich people here are richer than in Canada in terms of quality of life however that swings way off on the lower end of the spectrum, don’t go to a third world country to scrape by its not fun i see many expats who are broke and miserable…
Garth great post this is another one ill send to the friends and family who have the FOMO still… maybe they will understand.
…………………………….

Not everyone needs a 2 bedroom apartment. If you are paying 1300 a month you are paying the “long nose price”. I negotiate a monthly rate at the hotels I like with gym and pool and I pay around 800. Includes cable, wifi, and daily maid service. My PH govt issued ACR card gets me a seniors discount at most restaurants. My favorite dinner at Casa Verde Ayala is steak, mashed potatos, gravy, bacon and mushrooms, and a green salad and a San Mig beer for about 9 bucks. Or a whopper JR with fries and a coke at Burger King for about a buck and a half. Dont tell my cardiologist. I could eat well for a lot less but I hate cooking.

#131 oh bouy on 08.30.19 at 12:13 pm

@#116 David Hawke on 08.30.19 at 9:38 am
Naive Garth, you’ve never heard about expats in Thailand, Vietnam, Cambodia, Indonesia, etc.
You need 1k/month to have moderate life there, 2k/month will make you crazy rich.

I’ve spend 5 months in Asia.
For example, in Bali:
$300/month for room, breakfast included
$100/month for scooter
$150/month for food, even if you eat at the restaurant

Do the math, if you can.

Yeah, that’s my dream. Live in a room in a Second World country and ride a scooter. Paradise. – Garth

Yes, it sure is plus expat has it nailed in post #59.

BTW, living in the tropics sure has existing, in Canuckistan beat 6-ways to Sunday!
_____________________________________

Only problem with spending time in these places is that the locals absolutely despise you. round eyes are perceived as predators. Its all sunshine and rainbows til’ it isn’t.

#132 Jesse on 08.30.19 at 12:17 pm

#51 Dolce Vita on 08.29.19 at 6:45 pm
“Yeah, that’s my dream. Live in a room in a Second World country and ride a scooter. Paradise. – Garth”

THAT was hilarious and I agree. Still loving 1st World Italia, crazy politics and all.

You know, I told my fellow Boomers in the early 80’s that this day, as you have described it, would come and here we are.

A lot of it was about EGO.

Buy the big house, drive the big car, spend on the big vacations on borrowed money – Hyacinth in BBC’s “Keeping Up Appearances”.

WHAT a mess. A sad verification today.

————————————

Buonanotte e Ciao d’Italia.

PS:

GDP tomorrow, we’ll see if the numbers live up to the media hype.

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

Dolce – how does one realistically make the move to Italy to take advantage of the cheap real estate? I’ve seen the cheap real estate offers but they all look like scams to me. How does one go about researching this? Are there legit companies you can use in Italia to that can help you avoid the scams? I know you are required to spend 20-30k EUR in renovations and upgrades, but I’m also worried about being ripped off by contractors. Any help? I want out of Maple Land.

#133 oh bouy on 08.30.19 at 12:19 pm

@#129 yvr_lurker on 08.30.19 at 11:42 am
#111 Dharma

In other words, by not indulging in stupidly overpriced conveniences, and giving up a totally harmful habit, you can find about $15,000.00 a year in savings. If you’re 30 years old, that’ll look like about $1.1M by the time you’re 65. And trust me, by that age, you’re gonna need it.
——

Exactly. I have been careful on the expeditures for most of my adult life (having grown up just above the poverty line). No need for Starbucks, no need for $12–15 cocktails at bars, poke-bowls brought over by Skip the dishes, upgrading to fancier phones or re-newing the car every few years. We keep it simple. My only addiction is Mountain Equipment Co-op. Keeping fit and staying in shape, out hiking and running, (which takes discipline) provides enough fun…. and no need for expensive personal trainers to tell you what you should be doing… do it yourself…
___________________________

you know you could run and hike just as well without buying overpriced garments from mec. :)

Maybe its different where you are but here in TO that place is borderline absurd with their pricing. Usually find whatever they have or similar online for substantially less.

#134 marcus on 08.30.19 at 12:26 pm

#101 PHMIKE

I was merely pointing out a type of lefestyle that is possible. If you are young and willing to be the backpacker you can explore with about 500-700 per month. What I do occasionally is stay at the Air B&B units in the newly build sky scrapers that the investors are needing to rent our for cash flow. A studio for $17 a night. 24 hour concierge service, infinity pool etc. If I want nice western food it is there, if I want cheaper food that is excellent I go to Bario Fiesta. If I want a quick bite to eat there is a great bar just 2 minutes away with the best pork Sisig you could ever want. Most Canadians and Americans NEVER contemplate spending a lot of their time in Asia. Retirement seems impossible. they know nothing about currency arbitrage and even less about precious metal arbitrage. Paid for my flights that way a few times. When I want the high end living I take it. Yes you can spend Western dollar amounts in makati for sure. A friend of mine owns a bar near the top of one of those sky scrapers and a bottle of nice Vodka is $500 US. Yes you are paying for the experience and the rich in the Philippines are VERY rich. Much like the Chinese in Vancouver. I used to live in the RP 27 years ago but decided to build my nest egg and plan for my retirement. I married a Filipina from Vancouver had 3 kids and we now are enjoying the fruits of our labor. It can be done and done successfully. Mabuhay!

#135 yvr_lurker on 08.30.19 at 12:29 pm

Yes, MEC is not cheap for sure, and it the only clothing store where I have spent full price. However, some of the stuff that I bought 20 years ago there I still am using… super good quality….

#136 The Wet One on 08.30.19 at 12:53 pm

Lord thunderin’ Jaysus!

I just read about half of the posts in here.

I don’t think I’m ever going to be the same again.

What can I say, you warned me Garth, and I didn’t listen.

WHY DIDN’T I LISTEN!?!?!?!?!?!

God help us all!!!!

#137 Yukon Elvis on 08.30.19 at 12:57 pm

# 131 oh buoy
Only problem with spending time in these places is that the locals absolutely despise you. round eyes are perceived as predators. Its all sunshine and rainbows til’ it isn’t.
………………………………….

The trick is to leave a small foot print. Don’t throw money around or be loud and obnoxious and act like a big shot.You are a guest in their country, be polite and friendly and smile, learn a few words and phrases. Most people will like you just fine.

#138 Old Dog on 08.30.19 at 1:04 pm

Garth’s right. I wouldn’t count on living cheaper in retirement. I spend over three and a half times my take home pay when I retired eighteen years ago. Between inflation and just enjoying life before the rides over costs money. So save and invest as much as you can.

#139 theoryAndPractice on 08.30.19 at 1:09 pm

“Third, our culture of savings has been shot. It’s astonishing how we’ve changed. A generation ago people routinely saved 10-15% of what they earned. The average over the previous decade was 7%. Now it’s collapsed. It’s dead. After inflation our national savings rate is negative…- GT”

That tells me people does not have money left after basic expenses, therefore they can’t save any. The cost of living increased in Canada, while income is not. It may not be just they don’t want to save.


“Canada’s Cost Of Living Rises At Fastest Pace In More Than 6 Years, Statistics Canada Says”

https://www.huffingtonpost.ca/2018/07/20/inflation-canada-interest-rates_a_23486227/

#140 crowdedelevatorfartz on 08.30.19 at 1:10 pm

@#132 oh bouy
“you know you could run and hike just as well without buying overpriced garments from mec. :)”

++++
It may be expensive but it’s quality.

I have an MEC gore-tex jacket that I bought in the mid 1980’s and its still in excellent condition.

Its been on BC mountain tops, Haida Gwaii, Yukon, east coast Canada, countless camping trips, Vancouver monsoon seasons…. for decades….
When it gets dirty I toss it in the washing machine and hang dry.
And it still looks like new.

#141 SoggyShorts on 08.30.19 at 1:21 pm

#131 oh bouy on 08.30.19 at 12:13 pm
Only problem with spending time in these places is that the locals absolutely despise you. round eyes are perceived as predators. Its all sunshine and rainbows til’ it isn’t.
**********************
Nonsense. They may “hate” tourists as much as everyone everywhere in the world “hates” tourists, but more often it’s like how some people “hate” the customers at their job. Also, expats are totally different. If you actually put in the effort to learn some of the language and culture you can become part of the community.
Saying that locals “absolutely despise” round eyes” is the same as saying all North Americans despise all immigrants– of course some people hate some people, but a sweeping generalization like yours is way off.

#142 Yacht on 08.30.19 at 1:22 pm

#132 Jesse – buy yourself a yacht and sail the world. No problem with food, just bring your fishing pole, and for water catch the rain.

#143 Sunshine on 08.30.19 at 2:19 pm

Old and beardy’, and then you expect advice? Fuggedaboutit. – Garth

Thanks for replying. Much appreciated.
And yeah congrats on your anniversary.
God bless you both.

#144 Marco on 08.30.19 at 2:33 pm

Well, Jim Rogers lives in Singapore and says that their health care is a paramount and US health care cannot compare

#145 miketheengineer on 08.30.19 at 2:40 pm

I am sooooo stretched out, now that if my employer sacks me and I am out of work for too long, well, lets say it won’t be so nice when I go to the dealer and hand him the keys to my car and to the bank and hand them the keys to my home…..I will have no cash flow….retirement is now GONE….living on credit sucks.

And I can not sleep right now, and the big bridge over hamilton bay looks mighty tempting.

Tell the PM, is doing a wonderful job, please lets all vote to give the MP’s and MPP’s and every other government worker a big fat raise for all the good work they are doing…..oh they work soooo hard.

#146 James on 08.30.19 at 2:46 pm

#212 Smoking Man on 08.29.19 at 2:26 am
It’s a shit hole now. .. Except for orange country.
https://youtu.be/N-aK6JnyFmk
___________________________________________
Sure, sure………….don’t forget Old Man I lived there for many years. You can not bullshit us. Have a great drunken weekend old man. The Santa Anna’s are coming get ready

By Sean Emery | [email protected] | Orange County Register
PUBLISHED: September 26, 2018 at 4:28 pm | UPDATED: September 26, 2018 at 4:29 pm
Violent and property crimes ticked upward in many Orange County cities last year, according to the FBI’s annual report released this week, but overall remained near the historic lows of recent years.
Local crime rates among Orange County communities in 2017 were slightly out of step with the national trend – which saw modest drops in both violent and property crimes – but were largely in line with statewide crime rates.
Most local cities last year saw a slight uptick in crime compared to 2016, or remained flat. But those crime rates are still a far cry from peaks in the late 1980s and early 1990s, experts noted.
“Violent crime rates are essentially flat, property crime rates have declined a little bit, crime is still low in the United States overall,” said Emily Owens, an associate professor of criminology, law & society at UC Irvine. “We are still in a historic low in terms of violent crime and property crime.”
Among the four largest cities in the county, the number of violent crimes rose slightly in Santa Ana, Anaheim and Irvine, and jumped higher in Huntington Beach. The number of property crimes decreased slightly in Anaheim, Irvine and Huntington Beach, while rising slightly in Santa Ana.
For the 13th year in a row, Irvine touted itself as the safest city of its size – more than 250,000 residents or more – in the country. The FBI itself cautions against using the annual statistics for ranking purposes.
Over a five-year span between 2012 and 2017, the number of violent crimes rose in about two-thirds of Orange County cities, while property crimes dropped in more than half. The picture was more mixed going back 10 years, with about half the cities showing increases in both categories and half showing drops.
Comparing violent crime rates is complicated by the FBI in 2013 revising the definition of rapes included in their statistics, leading to a significant jump in the number of incidents included in the annual reports, pushing up significantly the number of violent crimes reported by some communities.
Some communities have seen a steady drop in violent crime.

#147 TorontoBull on 08.30.19 at 2:57 pm

@114
SM you used to have some great posts. not any more i am afraid…
GDP is for q2..
and regarding outlfows, its the opposite
https://business.financialpost.com/news/economy/foreign-direct-investment-in-canada-hits-its-highest-in-four-years
get your sh*t together. stop blaming the teachers for everything as you sound like a pinko who blames eveyone else…
I thought being in california would make one happy with all the chicks and sun. Enjoy life and get your mojo back because now you sound like a whiner (loser)

#148 TorontoBull on 08.30.19 at 2:58 pm

@114
SM you used to have some great posts. Not any more I am afraid…
GDP is for q2.. old news
And regarding outlfows, its the opposite
https://business.financialpost.com/news/economy/foreign-direct-investment-in-canada-hits-its-highest-in-four-years
Get your sh*t together and stop blaming the teachers for everything as you sound like a pinko who blames everyone else…
I thought being in california would make one happy with all the chicks and sun. Enjoy life and get your mojo back because now you sound like a whiner (loser)

#149 Sail Away on 08.30.19 at 3:34 pm

Smoking Man, we get it: liberals are idealistic wimps, Trump is god, and living risky is the only way to live.

What if your ideas turn out to be wrong? Would you defend disproven ideas to the end or would you change your mind? What would you do if presented with different facts? Will you be the turkey before Thanksgiving? Too many questions?

#150 Teachers on 08.30.19 at 3:52 pm

The Smoker must be excused, because he has an inferior complex of not getting educated. Instead of blaming himself, he projects the blame on the teachers which becomes a defensive mechanism, for becoming a loser in the employment market of today.

#151 Stan Brooks on 08.30.19 at 4:05 pm

#147 TorontoBull on 08.30.19 at 2:57 pm

Did you read that article that you pointed to?
A US gold producer/Newmount, the biggest in the world/bought Goldcorp and that is a capital investment? It is becoming a US company, i.e all future profits go south. This is the reason for that ‘direct investment’.
Toronto Bull Shit should be the name.

#152 Scott on 08.30.19 at 4:10 pm

Pretty cool to find your blog through a colleague and agree with just about everything you say about investing.

However, being the contrarian I am I’ll just point out that there are many FI (maybe RE) people out there like myself. Financial independence is the goal and retire early is an open end option. I look forward to having the option to retire early although I can’t imagine not wanting to cash in on my highest income earning years. A big part of the drive for me is potentially unlocking a new school of thought that is not available to 98% of the population. I spent the first decade of my adult life in student debt so there was no choice but to work long enough to make enough to cover minimum payments as well as feed myself. I’m a big fan of holding off on the house as that would tie me to an illiquid asset that takes money out of my pocket every month. I see a house as a liability, not an asset.

What would I do if money was not an issue in my life? Who knows? Volunteer, be a full time parent? Talk is cheap… I hope to get there and see what I actually want to do when the time comes.

Bonus is that I believe my profession (along with most others) is on its way to being “optimized” (aka automated away) so I’m trying to make hay while the sun shines. Nice to know I could retire now at 32 and go live in Thailand off 20k a year. Not that I want to but it’s nice to have options. I figure once I get to 2 mil that will offer me many more options. Trouble is from everything I’ve read once you reach your goal of 2 you’ll want to get to four then ten. There’s always a bigger house and a nicer car. Next thing you know you’re too old to do anything fun, you neglected your kids and forgot all along that you ever wanted a dog. Hmm maybe I should move to Thailand right now and go coach basketball and offer free English classes. Dog treats cheap over there lol

#153 oh bouy on 08.30.19 at 4:44 pm

@#141 SoggyShorts on 08.30.19 at 1:21 pm
#131 oh bouy on 08.30.19 at 12:13 pm
Only problem with spending time in these places is that the locals absolutely despise you. round eyes are perceived as predators. Its all sunshine and rainbows til’ it isn’t.
**********************
Nonsense. They may “hate” tourists as much as everyone everywhere in the world “hates” tourists, but more often it’s like how some people “hate” the customers at their job. Also, expats are totally different. If you actually put in the effort to learn some of the language and culture you can become part of the community.
Saying that locals “absolutely despise” round eyes” is the same as saying all North Americans despise all immigrants– of course some people hate some people, but a sweeping generalization like yours is way off.
________________________________

nope. its the truth.
expats are worse than the tourists.

#154 Gravy Train on 08.30.19 at 6:11 pm

#149 Sail Away on 08.30.19 at 3:34 pm
“[…] What would you do if presented with different facts?[…]”

Facts are facts. (‘Alternative facts’ are falsehoods.)
https://www.merriam-webster.com/news-trend-watch/conway-alternative-facts-20170122

#155 Sail Away on 08.30.19 at 11:18 pm

#154 Gravy Train on 08.30.19 at 6:11 pm
#149 Sail Away on 08.30.19 at 3:34 pm
“[…] What would you do if presented with different facts?[…]”

Facts are facts. (‘Alternative facts’ are falsehoods.)
https://www.merriam-webster.com/news-trend-watch/conway-alternative-facts-20170122

—————————–

Hey Gravy, don’t conflate different with alternative. They’re entirely different things. Different facts are also truths but ones that show another aspect.

#156 David Hawke on 08.31.19 at 10:21 am

#123 hawk – once again spot on plus Bangkok has a standalone Lamborgini dealership, something I have never seen in a Canadian city.

#141 soggy shorts – Spot on!

#131/141 oh bouy – A typical post by a 1%er who has never travelled nor lived like a local so has NO clue about the real world! FYI I am an expat living in a CA-4 country, married to a local lady, am conversant in Spanish thanks to my Quebec upbringing thus I can truthfully say, from personal experience that your posts are ‘out to lunch, EH!

#157 RMFGT on 09.01.19 at 11:30 pm

Those FIRE weirdos who seek to stop working at age 40 (to do what?)” – I have trouble listening to advice from people who can’t imagine what they would do with their life if they weren’t chained to a desk.