In reverse

  By Guest Blogger Sinan Terzioglu
.

Many Canadians preparing for retirement today are house rich but cash poor as they have a significant portion of their net worth tied up in their principal residences.  Those that have been lucky enough to own a home often have a net worth that appears healthy as housing prices have appreciated significantly but as they enter retirement they quickly realize cash flow is challenged.  CPP and OAS cover only a fraction of monthly costs.  As a result more and more people are relying on reverse mortgages as a solution to their cash flow deficits in retirement.

A reverse mortgage allows you to borrow against home equity while continuing to own and live there.  You receive funds tax-free as a lump sum or as regular monthly cash flow.  The loan only becomes due if you sell the home, move or when the last surviving owner dies. On the surface this is a very appealing option to those that would like to stay put and do not have enough cash flow to comfortably cover their expenses. However, relying on a reverse mortgage for cash flow over many years is a risky plan as the total debt continually increases while home equity decreases.  Needless to say this is not a good combination in your retirement years with a few decades to fund.

To qualify for a reverse mortgage in Canada, you must be age 55 or older and live in your home for at least six months of the year. If eligible you can borrow up to 55% of the property’s value.  There are no repayments required until the mortgage is due and you don’t need an income to qualify.  Funds come tax-free and if the house value drops or interest rates rise there is no risk. At first, it sounds too good to be true. And it is.  For example, reverse mortgages are expensive to set up and the interest rate charged on the loan is normally over twice as high as a conventional mortgage rate.

The market for these mortgages reached $4 billion in 2019, up nearly 30% year/year and the growth doesn’t look like it will be slowing down anytime soon as many Canadians discover they have not saved nearly enough in liquid financial assets.  It’s a short term fix, with compounding long-term problems.

For example, assume you and your spouse live in a house valued at $750,000, with no debt and $250,000 in a defined contribution plan. You’re both 60 and recently retired.  On the surface the financial picture appears healthy.  You have a net worth of $1M and no debt.  You’re both eligible to begin collecting CPP now and OAS at 65. You figure, if need be, you can unlock the equity in your home by getting a reverse mortgage at some point. Your monthly fixed and variable expenses during retirement are projected to be $5,500 but you quickly realize CPP doesn’t even cover half of that so you withdraw the difference from savings.  However, withdrawals from your registered savings are taxable and therefore you have to take out a larger amount in order to cover your spending.  Also, costs are continually rising every year with inflation (which has averaged over 2% annually).

Over the next few years you have some unexpected house repairs and require a new car.  By the time you and your wife turn 65 your financial assets have been drained.  OAS kicks in at this point but it barely makes a difference so you trim your fixed and variable expenses down to $5,000 per month.  Your home has appreciated in value to $825,000 so you decide to unlock the equity with a reverse mortgage of $350,000.  You take the money as a monthly deposit of $3,000 tax free so when combined with your government pensions you’re able to cover monthly expenses.  It appears like you have solved the cash flow problem and all will be good.

Ten years later, the cash is gone.  The reverse mortgage debt has grown to $600,000.  You’re not able to trim monthly expenses which are now over $6,000 because of inflation and you cannot borrow against your remaining home equity – so you decide to sell.  Let’s assume you get $1M, so after paying off the loan and transaction costs the net is less than $400,000.  However, what if the house doesn’t appreciate in value much because interest rates have been rising over the years and you are only able to sell your house for $850,000? That would leave around $250,000.

You’re both now 75 and potentially have another two decades of retirement to fund.  Fifteen years ago your financial picture appeared solid but now you run the very real risk of running out of financial security when you need it most.  Had you downsized or rented and invested the equity, the long term picture would have been very different.  We’re living longer and healthcare costs are continually rising and often faster than the rate of inflation.  If you need to go to into an assisted living home in your later years your costs will rise even more.

If you are spending more than 30% of your gross monthly income on housing costs than you are spending too much. You must prepare and plan for your own pension-like income and this begins by saving and investing at least 15% of income.  If most of your net worth is in your principal residence as you prepare for retirement, you’re taking on substantially more risk than you realize and should consider downsizing or renting to ensure enough is invested in liquid financial assets to support you and your loved ones for the rest of your lives.

A reverse mortgage may work for some as a short term solution but it’s not a long term plan and should only be considered as a last resort in most circumstances.

Sinan Terzioglu, CFA, CIM, is a financial advisor with Turner Investments, Private Client Group, Raymond James Ltd.  He served as vice-president of RBC Capital markets in New York City and VP with Credit Suisse in Toronto.

 

129 comments ↓

#1 NSNG on 12.02.20 at 2:11 pm

I really am starting to believe that the government is going to give us all ponies.

After all, I look toward Ottawa and all I see is a mountain of horse manure

#2 TurnerNation on 12.02.20 at 2:33 pm

As this is a Boomer blog:

https://infotel.ca/newsitem/covid-19-has-had-no-impact-on-death-rates-in-bc-long-term-care-homes/it77368

For the first half of this year, until the end of June, there were 34,734 people living in publicly funded long term care beds, according to Ministry of Health statistics.

So far this year, 4,787 have died, a mortality rate of 13.78 per cent. While that’s up a bit from last year (13.48 per cent) and 2018 (13.72 per cent) it’s actually down from the 14.2 per cent rate in 2017.

The numbers suggest COVID-19 may have replaced other causes of death among the 166 residents who died in care facilities from the disease — not added.

“The populations in long term care, most of them are in the last couple of years of their lives,” B.C. Seniors Advocate Isobel Mackenzie told iNFOnews.ca. She said between 21 and 25 per cent of long term care beds “turn over” each year. Most of those are due to people dying.

The B.C. Centre for Disease Control lists 166 of B.C.’s 229 COVID-19 deaths as of Sept. 24, as being in care facilities, which includes long term care as well as acute care and independent living.

#3 Danforth on 12.02.20 at 2:40 pm

Great column.
To live somewhat comfortably, my back of the envolope math has it that a baseline retirement is comprised of 1) a paid-for house plus 2) about 1.5M invested, and perhaps a bit more for two people.

Given how our economic systems distribute access to wealth, that is out of reach for most people.

I don’t have answers here, but we need to build better economic systems to not leave so many people poor after they finish their working years.

#4 KNOW IT ALL on 12.02.20 at 2:52 pm

DRAIN THE SWAMP!!!

#5 SoggyShorts on 12.02.20 at 2:52 pm

#3 Danforth on 12.02.20 at 2:40 pm
Great column.
To live somewhat comfortably, my back of the envolope math has it that a baseline retirement is comprised of 1) a paid-for house plus 2) about 1.5M invested, and perhaps a bit more for two people.
**********************
That would give about 100K in income which seems unnecessarily high to me.
Same with the example in to days post: $5,000 per month with no rental expense?

I get that old people can have health issues which can be expensive, but we live great on 60K including 20K rent and 20K toys/vacations.

I don’t even know how I’d spend $100,000 per year in a paid-off home.

#6 NSNG on 12.02.20 at 2:55 pm

#3 Danforth on 12.02.20 at 2:40 pm

What are your expenses that you need almost $9000 per month to live on in a paid-off house?

#7 SunShowers on 12.02.20 at 3:00 pm

Garth has penned multiple posts chronicling the fact that approximately half of Canadians are a mere $200 per month away from insolvency, or are unable to have funds available to cover a $400 one-time emergency. This is essentially living hand to mouth.

And yet in light of all this, people still have the temerity to come forward and say that these same people would be able to retire happy if they only saved 15% of their incomes! It’s tone-deaf, out of touch, and really just financial advisor speak for “let them eat cake.”

Real median wages and labor productivity used to rise and fall together in relative lockstep, until about 40 years ago. Since then, wages have largely stagnated, while productivity has climbed approximately 50%.

Give me my 50% raise, and then we can talk about saving 15% of my income for retirement.

#8 mike from mtl on 12.02.20 at 3:11 pm

@#3 Danforth

Is right, you need to be closer to seven figures to even have a shot of not working until you die or under a bridge.

Where are these posters getting 5 or 9k a month from? You don’t simply take a total / .06 / 12 and there’s your monthly figure, if it was that simple outfits like Turner Investments would be obsolete.

There’s taxes, fees, real risk (the principal $ amount fluctuates), being smart about withdrawals, “safe” investments pay squat.

RRSP 30% at minimum figure is gone to income taxes. TFSA is still too new for bigger retirement plans.

I’m sure Garth and co can’t get the average boomer to sell their SFD, forget it.

#9 Opee on 12.02.20 at 3:13 pm

Read Turner nation comments once again! No. 2 For some reason statistics regarding deaths are focused on Covid only. Why not share all causes of deaths and show the types statistics from serious sicknesses, say over the last 3 years, by number and percentages year over year. Time to stop scaremongering by suggesting everyone is dying of C19. Showing the age groups of these deaths would also ease the fears as the majority are the elderly with conditions. CHCH is the only channel that shows some statistics, not just how many died today, but also how many recuperated, as an example. Let’s go health canada, give us the numbers.

#10 Freebies on 12.02.20 at 3:17 pm

Along with the free Pharmacare, childcare, CERB, CRB, CEWS, CRSB, CRCB. CERS, CEBA and other freebies, the Government should also spend a few billion tax dollars to provide Cablecare (Free cable and internet), Cell Care (free cell phone), Car Care (free car insurance).

Please note car care will work similar to Health care.

#11 FreeBird on 12.02.20 at 3:22 pm

I just talked to a young friend about this and also said 30% of gross pay for housing (incl rent or mortgage plus tax, insurance, HOA, PMI and I’d add maint.) Some sources say 25% of net. Conservative but frees funds for paying debt off, saving for house DP, kids schooling, trips, obv investing and w/my friend paying cash for some/all schooling. For transportation budget 10-15% of net (incl gas, license, maint and insurance) and for most total value <50% gross pay (incl ALL toys w/motors like boats.) Conservative but may keep many out of money trouble. If you have a good net-worth/no to little debt then up the budget for this. FWIW hopes this helps somebody w/the blog’s advice. Ive been taking a break from commenting here for a few reasons but it’s a good subject and wanted to support our advisor. Hopefully he’s back making clients money. Kidding. Maybe : )

#12 Rook on 12.02.20 at 3:25 pm

Speaking of mortgages, I have a question (or several related ones).

Since the gov announced they’d be increasing the First-Time Home Buyer Incentive to ONLY 4.5 times household income in 2021, does this not create a moral hazard and incentivize the government to not only keep housing prices high, but get them perpetually higher so as to ensure the repayment of their loan?

Or does CMHC act like a creditor class during insolvency (I can’t recall the exact name, for which I apologize), and they’re made whole regardless of whether it’s sold for a gain or a loss?

#13 The Woosh on 12.02.20 at 3:27 pm

Kurt Browning…is that you? That’s right, tax free cash!

#14 Catalyst on 12.02.20 at 3:36 pm

Investing in the stock casino is looking increasingly shaky given the cloud companies trading at 50x sales, most of the russell 2k are story companies that don’t make money, the worlds largest car company with minimal actual cars and never made a profit in their history, and the entire financial markets being effectively driven by 5 companies in the US. There is a big push for ESG investing as long at it only focuses on the ‘E’ and has something to do with renewables or EV. No focus on governance for shareholders.

The government’s have forced retirees out of bonds up the risk curve and this is the result.

#15 S.Bby on 12.02.20 at 3:38 pm

The government will take care of me… right?

#16 UtterlyConfusedCanadian on 12.02.20 at 3:40 pm

#5 SoggyShorts on 12.02.20 at 2:52 pm
#3 Danforth on 12.02.20 at 2:40 pm
Great column.
To live somewhat comfortably, my back of the envolope math has it that a baseline retirement is comprised of 1) a paid-for house plus 2) about 1.5M invested, and perhaps a bit more for two people.
**********************
That would give about 100K in income which seems unnecessarily high to me.
Same with the example in to days post: $5,000 per month with no rental expense?

I get that old people can have health issues which can be expensive, but we live great on 60K including 20K rent and 20K toys/vacations.

I don’t even know how I’d spend $100,000 per year in a paid-off home.

————
Talk to my wife…..she knows how.

#17 Linda on 12.02.20 at 3:42 pm

Sinan, I like how you outlined the perils associated with reverse mortgages. However, this presumes that first, there is no growth in the other financial reserves – presumably this would be essentially cash & no growth as interest rates are so low. Second the presumption is that the couple will live to age 95. A quick check of StatsCan shows that less than 1% of all Canadians lives to age 90+. The vast majority still kick the bucket before age 90. One must balance prudence with practicality. Yes, the argument is that one will require huge sums to pay for health care as one ages. That supposes that first, one will require it. Maybe, maybe not. Second that supposes that spending will continue regardless of circumstances. Thing is, most older folks usually have all the stuff they need. Yes, replacing vehicles or home repairs can be expensive, but normally one is not having to do repairs or replace a vehicle on a monthly basis year in & year out.

One thing the current pandemic has provided is an opportunity to reflect on how we live our lives & what we spend our money on. Lots of households are discovering that their bank balances have grown by a considerable amount. Some of that may be government largesse, but a lot more of it is due to the simple fact that they are simply not spending $ on ‘stuff’. The expectation is that people will go back to their spending habits once the pandemic is over. I expect most will, but I would not be surprised if some folks make permanent changes to how they live their lives & spend their money.

#18 BlogDog123 on 12.02.20 at 3:42 pm

Those CHIP reverse mortgage commercials always have someone famous pitching them… to make the scared old folks feel comfortable trusting Gordon Pape or whoever they put as the “friendly face” in the ad.

Yes kids, your parents wanted to live large and spend beyond their means. They won’t be leaving an inheritance. They need you to be their PSW and they’re moving into your house when the money’s all gone. Get used to washing dad’s bum and getting yelled at for little things…

#19 Popeye the Sailor man on 12.02.20 at 3:46 pm

#3,#5,#6,#8;

With a 4% withdrawal rate that ensure low risk of running out of money 1.5M will give you only 60K/Year

@5% it would be 75K/year can be used if you up the risk of running out of money or retire later so you are funding lest years.

#20 SoggyShorts on 12.02.20 at 3:57 pm

#8 mike from mtl on 12.02.20 at 3:11 pm
@#3 Danforth

Garth’s industry exists for the purpose of making that 0.6/12 a reality.

Of course, there are taxes, inflation etc, that’s why you have to factor them in and be smart (or hire Garth)

Your “30% tax rate on RRSP withdrawals” is not true either if you are smart.

E.G.
An equal blend of 10K each for eligible dividends, capital gains, TFSA, and RRSPs will give a couple $78,000 in after tax income after having paid 7% on the RRSP part and under 3% in taxes on the total.

https://simpletax.ca/calculator

#21 Sheesh on 12.02.20 at 4:01 pm

Sunshowers, have you heard the expression ‘pay yourself first’? You take 10-15% off your pay before any other expenses and invest it. Then you live on what’s left Also known as living within your means. It means making sacrifices when you are younger. Most people live paycheque to paycheque because they spend too much, not because they don’t make enough.

#22 TalkingPie on 12.02.20 at 4:04 pm

#5 SoggyShorts on 12.02.20 at 2:52 pm
That would give about 100K in income which seems unnecessarily high to me.
Same with the example in to days post: $5,000 per month with no rental expense?

I get that old people can have health issues which can be expensive, but we live great on 60K including 20K rent and 20K toys/vacations.

I don’t even know how I’d spend $100,000 per year in a paid-off home.

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

Thanks for the breath of fresh air. Too many on this blog, including our illustrious host, imply that you need to be spending six figures a year in retirement to be happy.

My parents are now in their 70s. Dad (76) still works a few months out of the year at a “retirement job” he’s been doing for more than a decade, and at the end of every season he says, “Meh, I think I’ll do it one more year,” because he enjoys it. That income of maybe $40-50k funds their living expenses and then some. They’re happy.

House was paid off 30+ years ago and from what I gather they have approaching a million in liquid assets that they choose not to touch. Dad still expects their net worth to increase every year even at their age, and it does, even though it really doesn’t need to. When they feel like taking a trip, they do. In the last year or two was Switzerland, Spain, and Costa Rica. They went to dozens of countries (Dad says his count is about 80) when they were younger, so it’s not something they need to get out of their systems.

Living their way in retirement sounds a lot more pleasant than spending money you barely have on luxuries you don’t need.

#23 That hit the spot ... on 12.02.20 at 4:05 pm

good article. I always thought the term “reverse mortgage” was dreamed up by an advertising genius.

#24 Bankish on 12.02.20 at 4:07 pm

In my portfolio account at the present, 1 million dollars of a mixture of Canadian dividend stocks (mostly banks) produces $54,000 in dividends.

#25 Dogman01 on 12.02.20 at 4:11 pm

OMG – Our Finance Minister cannot afford a house in this Country without out help from mom and dad….
https://ipolitics.ca/2013/10/15/chrystia-freeland-defends-1-3-million-home-purchase/

“Pick your parents well” – it is the only way to avoid a life of endless wage toil in what has become the new Canada.
https://www.theguardian.com/commentisfree/2020/nov/09/inheritance-work-middle-class-home-ownership-cost-of-housing-wages

#26 Dogman01 on 12.02.20 at 4:11 pm

If you think Real Estate is interesting in Canada, in New York they buy the airspace above other building to build their building higher….

https://www.theguardian.com/cities/2019/feb/05/super-tall-super-skinny-super-expensive-the-pencil-towers-of-new-yorks-super-rich

#27 truefacts on 12.02.20 at 4:12 pm

#7 Sunshowers

I agree with the idea that many people do not have much “extra” to save. I think there are a few reasons for this…

1. People overspend. I think you example from 40 years ago is apt – back then going out to eat at a fast-food place was a once or twice a month thing. Now people buy coffee from Timmy’s or Starbucks every day. Houses are bigger, we own more cars, we take more expspensive vacations,…the list goes on.

2. The government takes too much through taxation. Income taxes were supposed to be “temporary” and only on the rich – but the government has an endless appetite for money and keeps taking more from the wage slaves. Tax rates keep going up (and will go up more with current spending in Ottawa).

3. The internationalization of production has depressed wages in North America while boosting them in other places. My high school educated Dad could support the whole family when I was a kid (and many moms stayed home). Not possible today. Also many young people take useless degrees that mean nothing – more should take pragmatic courses like trades, imo.

#28 espressobob on 12.02.20 at 4:15 pm

I rent. My landlord carries the burden. More time to engage in the things that matter whatever that endeavor is.. Love it.

Good investing skills allow this lifestyle.

We all have a day on the calendar. Ain’t about wealth or pride of ownership.

No wonder some are so miserable.

#29 suburban coyote and pup on 12.02.20 at 4:20 pm

Turner Nation #2
Great post and link thank you. And Sinan your topic is very timely and well written. My uncle started using reverse mortgage at 55 and now is being supported by his middle aged daughter who lives with a serious cardiac condition. These products are imho predatory.

Onf55

#30 SoggyShorts on 12.02.20 at 4:26 pm

#7 SunShowers on 12.02.20 at 3:00 pm

The minimum wage at $15 per hour. That works out to
$60,000 per couple,
$50,000 after taxes,
$42,500 after saving 15%,
$30,000 after rent (hint: don’t choose to live in the highest cost cities on minimum wage)

If you can’t live on $2,500 per month after rent and taxes you are living too flashy for a minimum wage worker.

#31 Sydneysider on 12.02.20 at 4:34 pm

https://www150.statcan.gc.ca/n1/pub/45-28-0001/2020001/article/00076-eng.htm

“in August and September … an excess of 807 deaths was observed in British Columbia. Males accounted for over two-thirds (69%) of this excess, with men under the age of 65 accounting for about one-third (34%). Over that same period, there were fewer than 40 COVID-19 deaths. However, beyond COVID-19 itself, increases and decreases in mortality could also be due to indirect consequences related to measures put in place to address the pandemic, such as missed or delayed medical interventions, fewer traffic-related incidents and other possible changes in behaviour such as increased substance use.”

This updates the report on BC excess deaths (estimated at 366, of which 104 were due to covid) for March-April:

https://www150.statcan.gc.ca/n1/pub/45-28-0001/2020001/article/00076-eng.htm

The estimates depend on the method used to average the historical dateline, but not strongly. In all, I find 1742 excess deaths in BC coronal data between March-October inclusive, of which a quarter are attributed to covid.

#32 Graphics Girl on 12.02.20 at 4:34 pm

I plan to sell my house before the government takes my gains and rent in N.B. Or a live in a trailer… Haven’t decided yet.

Invest my Toronto house windfall in a B&D portfolio and retire at 60. Live large until 70, then call it a night.

Planning is everything.

#33 Dolce Vita on 12.02.20 at 4:44 pm

#2 TurnerNation

One thing your intrepid numbers article author forgot is this:

You don’t catch cancer, heart. dementia or stroke by not wearing a mask, hand sanitizing and distancing (i.e., preventable).

Someone wanted Cdn mortality stats by disease, here it is for 2017 (12,303 deaths so far in 2020 due to the DAMN VIRUS):

https://i.imgur.com/Wiix1QI.png

-You ‘gotta die of something in the “end”.

Perhaps Mother Nature was bored with the usual cast of human Grim Reapers. She wanted something new to do us humans in. She found it in COVID-19.

Maybe, it’s just that simple. She got bored. Not anymore.

#34 Garth's Son Drake on 12.02.20 at 4:50 pm

I just watched a live speech titled: “This may be the most important speech I’ve ever made….”

Trump has declared mail-in voter fraud has occurred as well as manipulated Dominion systems to steal the 2020 US election by a margin needed.

Trump has declared that he has won the 2020 US Presidential Election.

#35 Dolce Vita on 12.02.20 at 4:50 pm

Came to a similar conclusion as you Sinan and when that coat hanger was used to hang your diapers.

Investigated that Reverse Mortgage deal when it first came out to me way back when out of curiosity (late 80’s ???) – you know, everyone’s looking for a fast way out other than the Lottery or big inheritances, neither of which I knew I would qualify for.

Made me focus on being OK during retirement all that more. Determined not to let that happen to me.

Did OK. NOT swimming in cash but not looking over my shoulder for it either – no worry in other words. No debt. Meet all my financial obligations and travel when I want to. Money left over at the end of the month and I save or invest it.

Nowhere as OK as what I read from some here on this Blog but comfortable (Garth’s Tell Me Your Wealth thingy a few years ago).

I give credit to my quasi-happy ending to that Reverse Mortgage investigation 30 years ago (and the creepy TV ads that came with them). 30 years ago those TV ad Seniors looked evil to young buxom, as with abs, me. Now look who’s evil looking, me.

—————-

Hope your Blog today Sinan has the same effect on a younger person as it did on me 30 or so years ago.

#36 Editrix on 12.02.20 at 4:51 pm

When I bought in 1990, it was 40% of your gross income to pay for housing.

#21 Sheesh on 12.02.20 at 4:01 pm

Getting the youngsters to sacrifice? Good luck with that after all the pandemic partying that they continue to do. This is one of the reasons why we’re in lockdown in the GTA.

#37 SunShowers on 12.02.20 at 4:53 pm

#21 Sheesh on 12.02.20 at 4:01 pm
Most people live paycheque to paycheque because they spend too much, not because they don’t make enough.

#27 truefacts on 12.02.20 at 4:12 pm
Now people buy coffee from Timmy’s or Starbucks every day.

Nobody is broke because they spend a buck fifty a day at Timmies. This is not a thing that happens.

These are all bad, dishonest arguments peddled by people who have a vested interest in protecting the status quo which has worked out well for them at the expense of younger generations and sweatshop workers overseas, and eagerly gobbled up by people who haven’t spoken with anybody born after 1981 in the last 10 years and are unfamiliar with their struggles.

#38 FreeBird on 12.02.20 at 4:57 pm

#17 Linda on 12.02.20 at 3:42 pm
I see your point. From a health care aspect (Sinan touched on) the sudden need for assisted care either in home if possible or assisted living (esp medically staffed) can come up fast/sooner then expected. With some wait lists 1-2 yrs even for private pay, home health care (PSW/RN) can be needed to fill the gap and dependent on what CCAC says you qualify for incl hrs per week. Some pay out of pocket to get the care needed …until. This is also done for those in assisted care centers/seniors homes to fully meet care requirements (usually covered but not always.) Costs for home health care in Ont is ~$50/hr for PSW and for assisted living centers ~$2,500 – $10K per mth (public and private spots depending on level of care and type of center.) Subsidies avail for those who qualify. Search online for more accurate costs if planning ahead and if looking now check w/local CCAC or even hospice can help if needed. Also some chemo drugs can be out of pocket (in Ont.) Of course this all ties into wills, POAs etc. I get we don’t want to think of these things but better to know and be prepared then not. After if you drink have some wine or a beer. Again not sure who this will help but there it is to the best of my knowledge.

#39 SunShowers on 12.02.20 at 5:11 pm

#30 SoggyShorts on 12.02.20 at 4:26 pm

Cool story bro, but I don’t see what that has to do with the fact that real median wages are 50% lower than they should be if they had kept pace with productivity since the 1980s, as they had before.

I also like how your whole calculus implodes for a single person instead of a couple.

#40 -=withwings=- on 12.02.20 at 5:13 pm

@dogman #25

Then she said “I’m never going to apologize for having had a successful international career, and I’m not going to apologize for buying a home for my family in Toronto Centre. I’m proud of those things,” she said.

“For me, concern for middle class Canadians is about being sure that people can have the opportunities that I had — the scholarships I had. I went to Canadian public schools. I had scholarships that supported me at some of the world’s greatest universities…I think those paths are much, much harder for Canadians today.”

and she’s right. the path she took to get to that rather-average-for-toronto 1.3M home is closing for the next gen. More focus on the problem, less whining, please.

#41 Kurt Browning on 12.02.20 at 5:18 pm

Reverse mortgages are great! After all, who wouldn’t trust a retired professional figure skater?

#42 crowdedelevatorfartz on 12.02.20 at 5:51 pm

@#37 Sunshowers
“Nobody is broke because they spend a buck fifty a day at Timmies.”
+++++
$1.5 day x 260 work days/year = $390 coffee
$7.50 day x 260 work days/year = $1950 lunch
$15.00 day x 365 days/year = $5475 1 pack smokes

So…
If you buy a coffee and lunch every work day and smoke a pack a day, every day…… you’re $7515 in the hole every year in after tax dollars……

Dont get me started on lotto tickets…….

#43 Andrew MacNeil on 12.02.20 at 5:54 pm

Thank you for the post on reverse mortgages. I’m getting sick of Tom Selleck advertising them. I get it that this is an emotional decision. Right now, I see the logic in selling and renting. But will my mind change when I’m 65 or 70? I hope my kids can talk sense into me, but I doubt it :)

#44 OlderbutWiser on 12.02.20 at 6:01 pm

Sinan, good post. Readers should be aware though that defined contribution pension funds are generally locked in plans that, when rolled over into LIF’s have maximums on the amounts that can be withdrawn. For example, in Ontario at age 60 the MAXIMUM is 6.85% so for our couple, that is only going to be $1,427 per month. When you combine that with their CPP they are going to have a very rude awakening on just how much they have to spend each month…or have to withdraw under the reverse mortgage.

#45 Bezengy on 12.02.20 at 6:01 pm

I don’t blame homeowners from wanting to cash in on their house equity, and I won’t blame the tax man from cashing in either. If every sfh in Toronto is worth 1.5 m, then according to their own online tax calculator they should all be paying 10k tax per year minimum.

#46 Suburban Bob on 12.02.20 at 6:18 pm

But Tom Selleck and Kurt Browning are SO sexy, Tinan!!

You’re just jealous, right?

Seriously, though, my fear is that reverse mortgages will become ever more addictive for Canadians.

Yet another way to kick financial problems down the road, instead of dealing with them properly now.

Exactly why we’ve had this irrational real estate bubble since about 2003. Individual Canadians and our governments since Harper have done nothing else but find ways to delay reality since the century started when it comes to financial reckonings. The RE bubble keeps getting bigger, along with the debt bubble.

I think this tool for fools will get much bigger before it all crumbles in the next decade or so. Sad but inevitable.

(PS, Sinan, don’t feel underappreciated, you’re not too bad looking yourself, kinda cute like Elvis Stojko)

#47 Joe on 12.02.20 at 6:23 pm

Hello, appreciate the article, however :

“For example, reverse mortgages are expensive to set up and the interest rate charged on the loan is normally over twice as high as a conventional mortgage rate.”

1) how expensive are they to setup?
2) so if someone has a 5% mortgage rate, the interest rate on the reverse mortgage would be 10%?

#48 Drinking on 12.02.20 at 6:25 pm

This is a very good article today Sinan. I will forward it to a few people I know that are looking into this option although I have warned them that it is the biggest scam out there! Thanks!

#49 Ponzius Pilatus on 12.02.20 at 6:36 pm

#41 Kurt Browning on 12.02.20 at 5:18 pm
Reverse mortgages are great! After all, who wouldn’t trust a retired professional figure skater?
———–
And Tom Seleck and his tearjerking story of Nelly who lost her husband and is afread of ending up on the street.
Holywood at its best.

#50 Ponzius Pilatus on 12.02.20 at 6:41 pm

My dream of retiring in Whistler is slowly vanishing.
The virus is driving up demand for rec properties.
An so the price goes uppa and uppa.
I heard sales are up 60%.

#51 Bring back Bill on 12.02.20 at 7:00 pm

A line of credit might be better if you own a house or farm.
Why pay the interest on the whole amount. A LOC just charges interest on the amount borrowed…

#52 macroman on 12.02.20 at 7:00 pm

#2 TurnerNation, yup there is an agenda not just here but most of the western world.

Masks do nothing except provide fines to those who don’t follow the hysteria.

Masks are being worn 10x more than late winter past and cases through the roof.

Masks are the 21 century small pox blanket…

#53 Ronaldo on 12.02.20 at 7:07 pm

#2 TurnerNation on 12.02.20 at 2:33 pm
As this is a Boomer blog:

https://infotel.ca/newsitem/covid-19-has-had-no-impact-on-death-rates-in-bc-long-term-care-homes/it77368
—————————————————————–
Good job. Thanks for the link. Always enjoy your posts over the past 12 years. Keep up the good work.

#54 Ronaldo on 12.02.20 at 7:14 pm

#5 SoggyShorts on 12.02.20 at 2:52 pm

I don’t even know how I’d spend $100,000 per year in a paid-off home.
—————————————————————
You got that right Soggy. Especially at this time and at 75 years of age. People tend to live according to their means. It’s all relative.

#55 TurnerNation on 12.02.20 at 7:22 pm

#9 Opee on 12.02.20 at 3:13 pm
Don’t encourage me ;-)

What if…what if they tested people for CANCER – as they do with CV? Every one of us or our families WILL be touched by cancer in our lifetimes.
An early catch would save many. But no not this NOT about our health as some might gather.
Mass, free cancer testing? Pffft. We’ve donated trillions over the decades, for a ‘cure’ – coming up to a century now. Plus private sector. We get Nothing .
Well maybe in time for an election.

This is about holding 7 billion people hostage…using a needle. Our lives, minds, businesses, way of life, culture.
Big Pharma wins again. If this wasn’t all planned out I gotta hand it to them. Well done.

If the ersatz guest blogger (free lunch guy) tries giving us unsolicited medical advice I in turn will give climate advice: that they get snip snip . For the climate natch.
Become a DNA Do-Do. We thank you in advance.

#56 GanduModi on 12.02.20 at 7:23 pm

“Had you downsized or rented and invested the equity, the long term picture would have been very different.”

….where is the math to support this scenario ?

I am not sure if this will work out any better if you have a major correction or a protracted slump in economy.

When you retire with just $250,000 in invested savings, you are pooched either way. time to start investing is in your early year, be consistent and invest in B&D portfolio like the Oracle of Lunenburg says and let the magic of compounding be your saviour.

#57 Ronaldo on 12.02.20 at 7:23 pm

#17 Linda on 12.02.20 at 3:42 pm

Your right on the money there Linda. Good post.

#58 Mr Canada on 12.02.20 at 7:24 pm

#50 My dream of retiring in Whistler is slowly vanishing.
The virus is driving up demand for rec properties.
An so the price goes uppa and uppa.
I heard sales are up 60%.
+++++++++++++++++++++++++++++++++++
Not only that, with Covid and demographics (% of pop retiring 55-65) all those people planning to cash out of their homes in the big smoke are now finding properties outside of the GTA up 30% this year alone….the biggest question, is where do you really want to live ? (and close to a decent hospital too)….

#59 Suburban Bob on 12.02.20 at 7:28 pm

Geez, Sinan, I spelled your name with a “T” by mistake – sorry!

Guess I was thinking too much of “T”om (Selleck), eh….

His commercials make ‘reverse mortgage’ sound like a sultry position from the Kama Sutra :)

#60 Cow Man on 12.02.20 at 7:31 pm

NSG.
You made my day. I was talking to Justin. Justin said that money is like manure. It only does good when you spread it around. And that is what he is doing

#61 Bill on 12.02.20 at 7:32 pm

If ya need to reverse mortgage you have failed….EOS

#62 Nonplused on 12.02.20 at 7:53 pm

Great post Sinan, and I completely agree.

Unfortunately we have reached a point in Canada where the cost of living is just too darn high, so it has become extremely difficult for many people to save 15% of their income, especially when young and starting their careers. Paying off their house and hoping for sustained housing price appreciation is the only hope, as their $25/hour jobs aren’t going to get it done. Heck $45/hour jobs don’t get it done.

Reverse mortgages are a compound scam. Not only do you pay mortgage interest your whole working life while you pay down the mortgage but then you have to pay mortgage interest out of principle when you retire. They get you coming and going.

It is a Catch-22. Sure, it might be better to have a B&D portfolio and rent if your net worth is “only” $1 million, but the rent is going to be paying off some speculator’s mortgage, so there is no guarantee that rents will stay low. Eventually the landlord faces an equation where the rent + appreciation – taxes – maintenance must equal capital outlay + 6%/year. It is this simple math that turns so many people into a sort of “small business person” renting their own home to themselves. It’s the easiest small business to get into and manage while still working a day job. And you can use huge leverage unlike anything that would be available if you tried to open a Subway franchise.

Anyway we are at a point now where the “Greater Fool” is all we have left as a macroeconomic strategy. If housing were to say go down by 50%, the amount of notional wealth destroyed not only on personal balance sheets but also on the banks’ would be devastating. It would make 1930 look like a walk in the park. It is “inflate or die”.

#63 Linda on 12.02.20 at 8:09 pm

#38 ‘Free’ – funny thing about our current system is, that if you do possess assets you have to pay towards that long term care bed. However, the person who has no assets but who needs a bed occupies that self same bed at government expense. Of course, the game plan is to never need that bed. Long term care is NOT how you want to live out your ‘golden years’. If you do have assets & still have mental acuity better by far – plus much less expensive! – is to age in place at home. I priced things out a few years back. Housecleaning, yard work, nutritious meals delivered, 2 hours daily of qualified nursing (RN) care & it added up to less than what your basic assisted living care facility or long term care facility was charging. BTW, I deliberate picked the most expensive options to ensure I didn’t underestimate costs. Of course that does depend on being mentally fit to be left on one’s own. Sadly those with mental issues may not have the luxury of aging in place & for sure it will cost a lot more to have round the clock care. One thing I will note however – a regulated routine with good nutrition may be all that is required to ensure those experiencing mental issues to be able to function again. Had a coworker whose granny kept going ‘dotty’ – but every time she ended in care & was fed on a schedule & more importantly, given any medications on schedule ended with her checking herself out in jig time, because she suddenly improved to being able to be on her own. Unfortunately she tended to not follow a routine plus skipped meals so would end up in care again within a couple of months. I strongly suspect not a few ‘dementia’ patients are simply people whose routine & medication habits need oversight. Problem is, if they end in care most likely no one will be trying to figure out whether they can be rehabilitated.

#64 Ronaldo on 12.02.20 at 8:34 pm

#42 crowdedelevatorfartz on 12.02.20 at 5:51 pm
@#37 Sunshowers
“Nobody is broke because they spend a buck fifty a day at Timmies.”
+++++
$1.5 day x 260 work days/year = $390 coffee
$7.50 day x 260 work days/year = $1950 lunch
$15.00 day x 365 days/year = $5475 1 pack smokes

So…
If you buy a coffee and lunch every work day and smoke a pack a day, every day…… you’re $7515 in the hole every year in after tax dollars……

Dont get me started on lotto tickets…….
—————————————————————
And don’t forget that bottle of wine and the newspaper at 17.00 per day x 365 = $6205.

#65 Bill on 12.02.20 at 8:40 pm

Well explained BTW.
1990 I bought 2 houses with legal suites in Kelowna I was making $18 hr. $127k ea. and cash positive with 20% down. Can’t do that today. For the most part price appreciation is just your cash purchasing power sliding. Your not as well off as ya think because your house went from 500k to a mil…eggs doubled too but your wages didn’t.
A home is a great forced saving plan and a inflationary hedge for sure but it was important to start years ago. Thank you currency debasement. I never even consider my home as something to eat or care what its worth…Never use it like an ATM.

#66 meslippery on 12.02.20 at 8:50 pm

#42 crowdedelevatorfartz

@#37 Sunshowers
“Nobody is broke because they spend a buck fifty a day at Timmies.”
+++++
$1.5 day x 260 work days/year = $390 coffee
$7.50 day x 260 work days/year = $1950 lunch
$15.00 day x 365 days/year = $5475 1 pack smokes

So…
If you buy a coffee and lunch every work day and smoke a pack a day, every day…… you’re $7515 in the hole every year in after tax dollars……

Dont get me started on lotto tickets…….

—————-
Six pack of beer and pack of smokes small pleasures should cost peanuts yet its $30.00 per day no wonder poverty levels are high.

#67 calgary rip off on 12.02.20 at 9:06 pm

Thanks for this input. Although im not 50 yet time goes quickly. I remember 1988 like yesterday. I do wonder about recently retired coworkers. Car repairs, house repairs, things needing replacement. I hope people on this blog maintain their body through exercise and nutrition as daily i see the result of diabetes and bad heart arteries. And even worse now Covid presents multiple outcomes. Having a working body is priceless. This is why i do 11 flights of stairs twice a day, lift, and use tummo breathing and cold showers daily. I remember once i saw a patient, 80 yrs old zero coronary artery disease but unfortunately bad heart valve. Her secret? 4 grams vit c daily. She looked 50 yrs old. Health is time is money.

I was listening to a circus maximus song from their Isolate album, very applicable to the current Earth status:
https://m.youtube.com/watch?feature=emb_err_woyt&v=YwR-RgiFYWI

Ive decided for myself that once the vaccine comes im doing it. In Alberta gen public may not have access til june. Should be next month according to Jason Kenney for health care workers. Wife is immune compromised. I will protect those around me.

#68 SunShowers on 12.02.20 at 9:26 pm

Great tips everyone! Thank you all for pointing out how easy it is to save money when you cut out all those things like eating at restaurants daily and after a long hard day of work, coming home and downing a six pack of beer 5 days a week.

Yesterday I expressed my fondness of Old Pulteney 12 year old single malt scotch whisky, noting that it is an excellent scotch priced at the same low level as some local Canadian ryes. However, even at the immense value reflected by the $50 price point, I realize now how much money I can save by not buying one every day.

$50 x 365 days = over $18,000 per year in scotch whisky! After cutting back on that, I can finally afford to save for retirement. Thanks blog dogs!

#69 Dutchy on 12.02.20 at 9:40 pm

Is not a “Home equity credit line” far and away preferable
to a reverse mortgage? More flexibility at a much lower cost.
(I know the bank can call it anytime, but never heard of
that happening to anybody)

#70 DON on 12.02.20 at 9:45 pm

#57 Ronaldo on 12.02.20 at 7:23 pm
#17 Linda on 12.02.20 at 3:42 pm

Your right on the money there Linda. Good post.
*****

I agree. A practical perspective.

A lot of people have learned to cook…and spend the downtime relaxing or getting stuff done some have just continued to shop from home.

WW1, WW2, Great Depression all helped shape people’s spending choices. But they never had lots of cheap available credit at their disposal.

Governments are providing free money now in the hopes of stimulating the economic revival. Once jobs come back and the economy is humming expect more taxes/user fees. Feels like a Wile E. Coyote running off a cliff moment.

In BC we have a former news anchor pushing reverse mortgages. Cause people trust him…geezus.

#71 macroman on 12.02.20 at 9:50 pm

Sunshowers should change handle to

Ghost of Smokey

#72 IHCTD9 on 12.02.20 at 10:06 pm

#37 SunShowers on 12.02.20 at 4:53 pm

Nobody is broke because they spend a buck fifty a day at Timmies. This is not a thing that happens.

These are all bad, dishonest arguments peddled by people who have a vested interest in protecting the status quo which has worked out well for them at the expense of younger generations and sweatshop workers overseas, and eagerly gobbled up by people who haven’t spoken with anybody born after 1981 in the last 10 years and are unfamiliar with their struggles.
—- —

My sister was born in 1986. She’s doing great even though her and hubby probably don’t even make a full time minimum wage. Paid for timber frame cottage-y house on the edge of a small lake. No debt. Neither one of them ever made any real money ever.

Now that you mention it, I know quite a few millennials who are doing just fine despite not getting that “50% raise”.

#73 Karlhungus on 12.02.20 at 10:14 pm

Sunshowers
This pandemic should have taught you people can save if they want to, they just choose not to. Canadians savings rate has skyrocketed and they are sitting on a huge amount of cash – a record actually. Based purely on the fact that they are sitting at home doing nothing. No vacations.

#74 Ponzius Pilatus on 12.02.20 at 10:18 pm

Linda,
Seems like you know what you are doing.
Very well researched and documented argument.
I kinda think like you do, but not everyone has the education or mental capacity to look out for themselves.
And those probably should use the services of a reliable Financial advisor.
I agree assuming that everyone who makes it to 65, will live to 95, is quite a stretch.
Stay safe.

#75 Stone on 12.02.20 at 10:20 pm

Good having you back Sinan. Always enjoy your posts.

#76 truefacts on 12.02.20 at 10:21 pm

#37 Sunshowers…

You actually focused on just one point, but I made 3:

1. People overspend
2. Government tax rates have gone up
3. Wages have been reduced by international outsourcing.

You focused on spending, so let’s go there. Most people, even min wage people, have cellphones. I’ve never had one. That saves at LEAST $600/yr. $2/day on coffee would be another $700/yr. So just 2 things yields $1300/yr. Roll it into TFSA, it’s tax-free (didn’t exist for previous generations).

Suppose you start at age 20 and go to 65 and earn the long-term rate of the S&P (10%/yr). Doing these two simple things would yield $930,000!!!

A couple doing this would have $1.8 million doing these two simple things (inflation-adjusted as prices go up, you save more).

I’m sure there are other things, but saving something yields huge returns – but many people are more wired for instant gratification, so they don’t do it…

#77 Ponzius Pilatus on 12.02.20 at 10:34 pm

#66 meslippery on 12.02.20 at 8:50 pm
#42 crowdedelevatorfartz

@#37 Sunshowers
“Nobody is broke because they spend a buck fifty a day at Timmies.”
+++++
$1.5 day x 260 work days/year = $390 coffee
$7.50 day x 260 work days/year = $1950 lunch
$15.00 day x 365 days/year = $5475 1 pack smokes

So…
If you buy a coffee and lunch every work day and smoke a pack a day, every day…… you’re $7515 in the hole every year in after tax dollars……

Dont get me started on lotto tickets…….

—————-
Six pack of beer and pack of smokes small pleasures should cost peanuts yet its $30.00 per day no wonder poverty levels are high.
———–
Did you check the price of peanuts, lately?
I think the best way to save is cutting out that yearly trip to Mexico.
A 10 day vacation for 4 sets you easily back 10 grand aftertax easily.
10 days. And the average family has to work 2 months to pay for it.

#78 Sara on 12.02.20 at 10:45 pm

#68 Sunshowers: “$50 x 365 days = over $18,000 per year in scotch whisky! After cutting back on that, I can finally afford to save for retirement. Thanks blog dogs! ”

Forget that plan. No need to deny your self your daily pleasure. Keep drinking a bottle of scotch daily and retirement won’t be so expensive because it will be much shorter! Problem solved. Carry on as you were.

#79 Doug t on 12.02.20 at 10:53 pm

#66 meslippery

Exactly – the regular working stiff can’t even afford some relief from the daily toll of life

#80 Stoph on 12.02.20 at 10:55 pm

@#7 SunShowers on 12.02.20 at 3:00 pm

So what’s your retirement plan? Be a wage slave till you die?

Sinan gave his expert advice on the amount that people need to save for retirement. Your response of ‘Give me my 50% raise, and then we can talk about saving 15% of my income for retirement’ is rather rude.

I took it that figuring out how to save the 15% for retirement was left as an exercise for the reader. If this means earning more income, then the reader is left to figure out how to increase their income accordingly.

#81 Doug t on 12.02.20 at 11:00 pm

#32 graphics girl

Good call – I like your plan

#82 calgary rip off on 12.02.20 at 11:12 pm

#68 Sun Showers:. Alcohol is a common escape tool. Its good that people can buy it. In Texas in 2000 I remember how cheap vodka was. The real effect from alcohol was for me to make my problems seem laughable. I stopped drinking though long ago as it made me feel weak the next day. Lately ive been saving money using cold showers instead. After a couple of minutes under ice cold water i get the same pushed under feeling as alcohol and start laughing about my minor problems. An added benefit is my joints are less sore and my physical strength is the highest in my life all with a savings on my gas costs and no hung over feeling the next day. My daughter likes to drink occasionally. Alcohol to me is boring and expensive. If i want an escape i just go read the book of Mormon which costs me nothing and im not paying ridiculous taxes on what ultimately is a high priced cleaning agent. This is a very effective way also ive found to forget my problems. Its good that a person has rights to choose. My 18 yr old currently likes vodka coolers legal for 18 in Alberta.

#83 Leichdiener on 12.02.20 at 11:25 pm

Seminal article on reverse mortgages.

#84 Stan Brooks on 12.02.20 at 11:26 pm

The end game is to strip the sheeple of all assets.
Reverse mortgage is exactly that, cumulative increasing debt/not decreasing where you keep piling on more debt vs. paying it with the clear outcome of bankruptcy.

The calculation is pretty clear – you get 350 k for a house of 850 k/present value and the rest is for the bank. At the end you own nothing. Well you get to live there ‘rent free’ except for the ever increasing property taxes, maintenance and repairs, utility, plus enhanced house insurance as it is not your house anymore but owned by the bank.

Why not just sell the house, move to Spain, buy a nice villa or apartment there for 20-30 % of the price of the house, invest the remaining funds and live there relatively well on CPP+ OAS + investment income? No debt.

Cheers,

#85 Phylis on 12.02.20 at 11:37 pm

On top of all that has been said. #68 SunShowers on 12.02.20 at 9:26 pm So you budget well and understand the after tax implications of your daily choices. You will be ok. The people who you speak for do not seem to be with you. Speak to them directly and help them. Thank you for shining your light.

#86 Mad as hell Karen on 12.03.20 at 12:00 am

Best “ Sinan” ever. Great advice . It’s true, the average person has zero understanding of financial mathematics and so many fall for these scams with no knowledge of how deadly compound interest is over the long term.

If you’re in an age position to change direction away from “ house rich cash poor” do it now. A smaller house and a fat investment account is the way to go. Don’t forget that dividend income is taxed at a lower rate.

I see the CBC is full bore on protecting Trudeau on the vaccine screw up. Garth are you going to spark up a conversation on why Canadians will have to wait ten months while US and U.K. will survive and many Canadians won’t survive because of Trudeau . Is this not a viable avenue of conversation instead of letting the CBC steamroll the facts?

#87 Al on 12.03.20 at 12:17 am

Freeland hitting up the BoM/D lol. I guess literally hundreds of thousands of early income (I gather she was pulling in at least $260K as Minister of foreign affairs back in 2017) plus her spouses not so small income isn’t sufficient to guarantee a 1M CMHC backed loan. Now I’m getting concerned if she’s that broke with that kind of family income.

#88 SWL on 12.03.20 at 12:29 am

#27 truefacts

3. The internationalization of production has depressed wages in North America while boosting them in other places. My high school educated Dad could support the whole family when I was a kid (and many moms stayed home). Not possible today. Also many young people take useless degrees that mean nothing – more should take pragmatic courses like trades, imo.

———–

Absolutely agree with you here. Canada used to be a manufacturing power house, but now sadly we no longer know how to build much of anything except over priced real estate. Most university educated people I do business with usually have government positions that make the private sector even less competitive globally. They simply do not know how to build anything, or how things actually get built

Sadly most cannot see the forest for the trees and believe in Jag and JT

Manufacturing used to be our tax base

#89 hedgehog on 12.03.20 at 12:52 am

#17 Linda on 12.02.20 at 3:42 pm

” A quick check of StatsCan shows that less than 1% of all Canadians lives to age 90+”

——-

1% of Canadians alive are over 90. That’s not particularly useful to calculate life expectancy. Only 20% of Canadians are over 65, does that mean only 20% will live to age 65?

The number of Canadians who *will* live that long is much higher. Canada had 240,000 births in 1926, and 64,000 90 year olds in 2016. That’s better than 1/4.

There’s something called a life table- StatCan has just released its 2019 numbers that analyzes this in detail (stats nerds everywhere polluted their britches in excitement). Its’ a less intensive version of the data actuaries use. A very useful metric is the survivors at x, basically how many of a population of 100k are expected to live that long. It’s 32k , 32%, for 90 year olds (and 76k for 75 year olds, meaning a 76 year old is 50/50 on reaching 90)

It’ 14% for 95, 5% for 100, and doesn’t drop below 1000 (1%) until age 103!

May also depend on families. My grandparents lived to 87, 91, 94, 95. Am I going to plan on 80?

Plan accordingly. Basically, don’t count on dying before age 85, unless you have a very specific reason to believe it will happen.

#90 Bloorwestguy on 12.03.20 at 1:21 am

22 minutes had it best with Mark Critch playing Tom Selleck:

“Reverse mortgages are a bad idea? Who told you that? Your kids? They want to take your house before I do!”

#91 SoggyShorts on 12.03.20 at 1:26 am

#39 SunShowers on 12.02.20 at 5:11 pm
#30 SoggyShorts on 12.02.20 at 4:26 pm
I also like how your whole calculus implodes for a single person instead of a couple.
******************
Again, stupid life choices if you are trying to go it alone on minimum wage. Get a roommate FFS.
When I was earning minimum wage I had FOUR roomies in a flophouse. Since then minimum wage has tripled and so has everything else.

Roll with the punches Sunshine, work some overtime and get a portfolio together- it’s not easy (and never actually was despite what you think), but the path has been laid out for you.

M40AB and retired

#92 Steve French on 12.03.20 at 1:30 am

Yo Garth:

Is 16 ETFs too much diversification for a portfolio of about $300K?

thanks,
Steve

#93 Jane24 on 12.03.20 at 3:37 am

Well done. Very brave of you to do this and stick your neck out to meet the challenge. I enjoyed and understood every word.

As an old RE hack of many years I never understood why older folk will not sell homes that are too big for them and downsize. They stay in that family home until the kids take it off them via Power of Attorney. Do they think that the kids are coming back or what? Must be just human nature to hold what you have.

You don’t need money in Canada to stay in a nice nursing home. My parents had the best. My dad was there for 9 years and my mother for 15 years. Private suite too. My parents were grasshoppers and never saved a penny. Turned out to be a smart move as the nursing home fees would have swallowed everything anyway. Ontario paid to give them the lovely nursing home. Thank you Ontario.

The lesson their 5 children took out of this – you either need massive money when you retire or blow the lot.

#94 BillyBob on 12.03.20 at 5:11 am

#37 SunShowers on 12.02.20 at 4:53 pm
#21 Sheesh on 12.02.20 at 4:01 pm
Most people live paycheque to paycheque because they spend too much, not because they don’t make enough.

#27 truefacts on 12.02.20 at 4:12 pm
Now people buy coffee from Timmy’s or Starbucks every day.

Nobody is broke because they spend a buck fifty a day at Timmies. This is not a thing that happens.

These are all bad, dishonest arguments peddled by people who have a vested interest in protecting the status quo which has worked out well for them at the expense of younger generations and sweatshop workers overseas, and eagerly gobbled up by people who haven’t spoken with anybody born after 1981 in the last 10 years and are unfamiliar with their struggles.

===================================

Both my partner, and my nephew/niece-in-law were born in the 80’s – I’m well aware of the struggles they face. But I also see the life decisions made by the latter two, over and over.

It’s not the $1.50 at Timmies. It’s the $4.50 at Starbucks. It’s that plus the cell phone plan that’s more than needed. Same with the internet. The vehicle that’s far more than needed or can can be afforded. Then the second one cause the student beater wasn’t good enough for someone at the ripe old age of 25. The streaming services that can’t be done without. The clothing that has to be of a certain quality. The laptop that just had to be replaced. The education loans to which no thought was given whatsoever as to the possible ROI. On and on and on. And they are actually on the more responsible end of the spectrum in their cohort. But somehow according to you it’s all the fault of Boomers and offshoring and evil corps and whomever else.

Meanwhile, I’m 20 years older than them and live far more modestly than they do now, let alone than I did 20 years ago. Sorry, can’t blame that all on everyone else.

In short, it’s about values, not a specific dollar amount. If you think that previous generations didn’t struggle with lack of jobs and money you’re delusional. I’m just glad that as a Gen X’er I didn’t have access to the credit that folks can now bury themselves in. In my early working days I tracked every cent (I still do) because I had to. If I had $20 left with 3 days until the next payday, that was it, that’s what I was feeding myself with. Figure it out, or go hungry. Now you just order $35 sushi on UberEats and blame being broke on “the wages”. Ok.

Yeah yeah I know, six feet of snow walking uphill each way to school and all that. But the life skills from always being close to the edge financially in the beginning served me well when eventually the money came, and come it did. Make the money first, then the lifestyle. The order is important. That’s got nothing to do with a coffee a day.

You can complain all you want about sweatshop workers and the lack of wage increases and so on but it won’t change a thing. Maybe it’s time you stop complaining about things you can’t change, and instead adapt to reality? There’s a whole world of opportunity.

But, much like my own beloved family, advice from anyone born BEFORE 1981 will no doubt be completely ignored. Far easier to protest against the unfairness of life.

#95 Howard Perkins on 12.03.20 at 5:54 am

CBC spins Covid Crisis in Trudeaus favour. They say ” what does a few extra months matter” in reference to Trudeaus screwing up the vaccine delivery . How many of your friends and loved ones, neighbors and fellow citizens will die in that ” few extra months wait won’t matter”?

Canada deserves better. People will die and Trudeau won’t lift a finger to help.

https://www.facebook.com/346272215464826/posts/3528839870541362/

#96 Diamond Dog on 12.03.20 at 7:13 am

#2 TurnerNation on 12.02.20 at 2:33 pm
#9 Opee on 12.02.20 at 3:13 pm

https://www.worldometers.info/coronavirus/country/canada/

https://www.ctvnews.ca/health/coronavirus/tracking-every-case-of-covid-19-in-canada-1.4852102

https://www.canada.ca/en/public-health/services/diseases/coronavirus-disease-covid-19.html?utm_campaign=not-applicable&utm_medium=vanity-url&utm_source=canada-ca_coronavirus

Lots of current data out there, enjoy. Ok, may as well add some commentary. Close to 40% of the reported cases in BC have yet to have an outcome, so there’s that and as evidenced by the charts, we have yet to see a peak in numbers. There is an obvious lag between reported cases and reported fatalities. Plus, what we will find is that as winter progresses and people are herded indoors from the winter, initial viral loads of infection will go up. As initial viral loads of infection go up, so too, will the severity of those who get sick and as a consequence, so will the number of deaths. This is why masks help, as they reduce the initial loads of infection.

It also takes a while for the demographics of the young to spread it to the old and, there’s a correlation with Vitamin D (the sunshine vitamin) and higher deficiency rates during winter as the hours of daylight are reduced and people wear extra layers of clothes. There are obvious correlations between Vitamin D deficiencies and Covid19. Put it all together and death rates will go up!

Of course, one is quick to realize that Covid19 does it’s worst on the old (don’t like the data below, the real numbers should be given):

https://www.cdc.gov/coronavirus/2019-ncov/covid-data/investigations-discovery/hospitalization-death-by-age.html

Still, it’s easily argued that the evolution of any nation is measured by how a nation treats its young and elderly. What do children and old folks contribute to society, they don’t work right? But life is life at any age. From infancy to elder, we shouldn’t cheapen its value at any point in time. Now, if anyone wishes to debate the $$$ cost to this preservation of life, by all means! This is a blog that is largely based on economics. Money both public and private has been fair game since as long as I can remember.

Are we spending too much money on this virus? F yeah. Of course! Is it enough to replace the federal government responsible? With me, there is no doubt about it. It doesn’t matter how much I dislike the alternative, there are certain lines we don’t cross as a nation. Adding 55% new federal debt in one year, spending 140% more than you take in on tax revenue, adding close to 20% federal debt to GDP (higher than the U.S.), the strength of any nation is in their treasury and Canada’s treasury just took a tremendous hit that will effect our domestic and international policy for decades to come. If we keep taking hits like this, it will effect our ability to remain sovereign.

This T2 government needs to replaced to see where that money went, to account for it (there really is no other way) and to put the brakes on this debacle of spending bloat before bond markets have their way with us for decades to come (as in case anyone hasn’t figured it out yet, they already will). When it comes to money alone, this current federal government has lost it’s right to rule. It doesn’t make me happy to say it, but it still needs to be said.

#97 the Jaguar on 12.03.20 at 7:33 am

Re:#94 BillyBob on 12.03.20 at 5:11 am

True dat. Every word. The the life we learn with and then the life we live. If we play it smart.

#98 the Jaguar on 12.03.20 at 7:37 am

@#141 Dharma Bum on 12.02.20 at 9:50 am
Red Deer isn’t that far away. I could zip up there and execute a kidnap. Or maybe a dognap. You’ll know when you get the ransom note…..

#99 Diamond Dog on 12.03.20 at 7:49 am

#95 Howard Perkins on 12.03.20 at 5:54 am

O’Toole’s PR simply sucks, there are much better targets for attack and its one thing to criticize, what would you do differently? I don’t hear answers, just critique. Criticism alone does not make one a leader. That being said, the timeline rollout for vaccines is not a point of contention.

The efficacy of vaccine manufacturers could be, but it’s too soon yet to criticize. The cost per poke certainly is a major point of contention. Oxford/AstraZeneca is non profit, costing $3 to $5 bucks (U.S. $) a poke but how quickly can Canada get its hands on their vaccine? Moderna is $ 5 to 9x that and Pfizer is similar but the timeline of delivery factors in to a marketplace looking to hype “normal”. There’s more than timelines of delivery to factor in here beside cost such as efficacy & longevity and long term safety (original antigenic sin) but most of this information is still unknown.

Unless O’ Toole wants to argue the use of the Chinese/Taiwan/South Korea/Singapore model implemented for a virus free nation (I would even now), it’s a waste of time to challenge vaccine procurement timelines at least, at this point.

https://www.ctvnews.ca/politics/canada-still-on-track-for-january-2021-vaccine-rollout-despite-domestic-dose-disadvantage-feds-1.5203890

#100 maxx on 12.03.20 at 8:14 am

A perfect snapshot.

Very well explained and hits the nail – so many resort to this scheme at the very point where they are pretty well desperate, or, are clear on the very real limitations of a single asset.

This point of feeling backed into a corner makes it so easy to fall into the trap of overlooking the hopeless fallout you’ve described brilliantly.

#101 Steven Rowlandson on 12.03.20 at 8:27 am

“Many Canadians preparing for retirement today are house rich but cash poor as they have a significant portion of their net worth tied up in their principal residences. ”
Let me guess; they are finding out that the biggest pool of buyers are those whom they priced out of the country….
Look out belowwwwww.

#102 jess on 12.03.20 at 8:44 am

2 TurnerNation on 12.02.20 at 2:33 pm
Think about Martin!

https://www.cbc.ca/news/canada/london/wife-who-lost-44-year-old-husband-says-covid-is-real-and-it-can-happen-to-you-1.5825087

==
Tenant who turned 12 luxury homes into rooming houses ordered to pay $36K or spend time in jail
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Landlord ‘insulted’ by $3,000 in restitution per homeowner given damage done
Nicole Brockbank · CBC News · Posted: Dec 03, 2020 4:00 AM ET | Last Updated: 5 hours ago

https://www.cbc.ca/news/canada/toronto/tenant-luxury-homes-contempt-court-1.5825918

#103 SunShowers on 12.03.20 at 8:45 am

#73 Karlhungus on 12.02.20 at 10:14 pm
This pandemic should have taught you people can save if they want to, they just choose not to. Canadians savings rate has skyrocketed and they are sitting on a huge amount of cash

The savings rate skyrocketed because Canadians were being given $2000 tax free per month, which for some people was actually a RAISE (until tax time when they have to pay some of it back). So yeah…people will save more if you give them more money. That’s what I’ve been saying.

#76 truefacts on 12.02.20 at 10:21 pm
1. People overspend
2. Government tax rates have gone up
3. Wages have been reduced by international outsourcing.

I focused on overspending because your other points don’t hold water. Government tax rates haven’t gone up. You mentioned the ostensibly “temporary” income tax, but income tax existed when our fathers and grandfathers provided their families with a better standard of living on one income than Millennials can on two.

As far as outsourcing goes, it’s definitely a problem, but it’s not one Millennials are responsible for, but we’re the ones suffering. Something needs to be done about that as well.

And I don’t know how many decades it’s been since you’ve had to look for a job, but even McDonald’s expects you to have a cell phone with a data plan now so you can check your schedule.

#80 Stoph on 12.02.20 at 10:55 pm
So what’s your retirement plan? Be a wage slave till you die?

That’s plan B. Plan A is to elect leaders with the courage to leverage political power to right the economic wrongs done to young people.

You think it’s rude for me to ask for my 50% raise? Well, I think it’s rude for people to ignore the real economic misfortunes levied upon young people due to outsourcing, automation, and poor wages, and instead deride them for drinking coffee, eating at restaurants every day (they don’t), having nice cars (2011 Ford Focus lol), going on tropical vacations (I get my vacation time paid out to cover emergency expenses), or drinking enough to make their miserable lives tolerable for a few hours (I spend maybe $200 a year on alcohol, not $18,000…)

I’ve put in 70 hour weeks my entire life (when I wasn’t in university getting 2 STEM degrees that have done precisely nothing for me because boomers crashed the economy when I graduated in 2008 and nobody was hiring) and have nothing to show for it except for major depressive/panic disorders and the blood pressure of a stroke patient twice my age. I’m done.

#104 Dharma Bum on 12.03.20 at 8:50 am

#98 the Jaguar

Red Deer isn’t that far away. I could zip up there and execute a kidnap. Or maybe a dognap. You’ll know when you get the ransom note…..
——————————————————————–

I would wait until spring, at least. It’s a might nippy up there right now. Be careful, though. He used to be a crown prosecutor, so there’s a sophisticated security system, with lights, cameras, and loud sirens securing the ranch perimeter. The dog will be hiding in the washroom.

#105 Dharma Bum on 12.03.20 at 9:05 am

#69 Dutchy

Is not a “Home equity credit line” far and away preferable
to a reverse mortgage?
——————————————————————–

Sure, HELOCs are preferable.

But try getting one when you are old, retired, and sans income.

[email protected] only lends money to those that have a provable, steady, secure, and consistent income stream.

The best advice I was ever given was by one of the earliest financial advisors I had, back in the 80’s.

“Never wait until you need the money to apply for credit.”

So, when I was a young punk working stiff wage slave, I applied for a HELOC. Easy Peasy. Never touched a dime.

Now that I’m an old retired bum, it’s there for me.

If I waited until I was retired to apply, they’d a laughed me right outta the joint!

People are stupid and emotional. Even though they’re essentially dead-ass broke cashflow-wise, they refuse to sell their paid off home. Because they’re “attached to it”.

Boo hoo. Get over it. Sell. Invest the proceeds. Rent. At least the home stretch of existence above ground won’t be such a miserable financial struggle.

“Be aware of the ephemeral nature of material things. Lose your attachment to them.”

― Shui-ch’ing Tzu

#106 the Jaguar on 12.03.20 at 9:15 am

@#104 Dharma Bum on 12.03.20 at 8:50 am
I’m out of my mind now with excitment…

#107 Karlhungus on 12.03.20 at 10:13 am

#94 Billybob
Great rant. Wish you would have won the contest to write a blog post.

#108 millmech on 12.03.20 at 10:23 am

#68 Sunshowers
The question I have is why would you choose a low paying career, people who are poor usually have a pattern of “poor people” choices.
Did you look at your career choice objectively and made sure it was economically rewarding, you know maybe researched your field, did a little bit of critical thinking about the long term implication of your field of study?
We currently have two apprentices who graduated from high school last year and did their first year of work experience with our department while in high school.
These youngsters researched their careers and the opportunities it would offer and saw that they would be well rewarded.
Two under twenty people, fresh out of high school grossing six figures to start, no educational debt(we pay for their books, schooling, tool allowance), EI pays for their wages while their at school.
These youngsters did their due diligence and will be rewarded for it.

#109 Guelph Guru on 12.03.20 at 10:55 am

Mr. T’s solution: UBI.
No one has to worry about money. Atleast till the money printing continues without consequences.
Vote liberal.
God save our future generations.

#110 David Hawke on 12.03.20 at 11:05 am

Oh my Great Turtle, today’s blog covers the facts that any thinking person figured out decades ago has unleashed my silence it’s rant time.

Firstly Garth’s $100,000 or thereabouts minimum investment although the industry is out of reach for the normal person and completely unrealistic as one with the cost of a local property saved can live well during retirement on CPP/OAS if one gets out of Canuckistan moving to the tropics.

TurnerNation thanks for today’s post #2 which separates the wheat from the chaff showing the truth about the garbage statistics being fed to us by the government-controlled media.

#111 Stone on 12.03.20 at 11:12 am

#92 Steve French on 12.03.20 at 1:30 am
Yo Garth:

Is 16 ETFs too much diversification for a portfolio of about $300K?

thanks,
Steve

———

Depends. What’s your return YTD (and longer term) and is it actually balanced and diversified? Then compare it to something like XBAL or XGRO and their YTD returns. If you’re consistently beating the all in one ETFs, all good. If not, rethink your strategy.

#112 Barb on 12.03.20 at 11:33 am

#94 BillyBob

Well said!

#113 SeeB on 12.03.20 at 11:39 am

#5 SoggyShorts on 12.02.20 at 2:52 pm

#3 Danforth on 12.02.20 at 2:40 pm
Great column.
To live somewhat comfortably, my back of the envolope math has it that a baseline retirement is comprised of 1) a paid-for house plus 2) about 1.5M invested, and perhaps a bit more for two people.
**********************
That would give about 100K in income which seems unnecessarily high to me.
Same with the example in to days post: $5,000 per month with no rental expense?

I get that old people can have health issues which can be expensive, but we live great on 60K including 20K rent and 20K toys/vacations.

I don’t even know how I’d spend $100,000 per year in a paid-off home.

————————————————————

I think that’s the point. The people in the example did nothing to curtail their costs and live within their means, nor unlock the value of their home via a sale. They instead chose to kick the can down the road until the road ran out; the Common Coda of Canada.

As for how you could spend $100K in a year? A new roof, a flooded basement, and foundation repairs can add up quickly, and that’s just the house.

#114 SunShowers on 12.03.20 at 11:57 am

#108 millmech on 12.03.20 at 10:23 am
The question I have is why would you choose a low paying career

You must have missed my post where I explained that I got two STEM degrees in highly marketable fields, but couldn’t find any jobs because I graduated in 2008 and nobody was hiring because boomers blew up the economy.

So I did what I had to, worked 70ish hours a week between two low paying jobs (which I still do) to get by, and by the time the recession somewhat blew over, nobody wanted to hire a guy who had been out of the game 5ish years working at Home Depot and as an outside sales rep for an industrial supply company. They wanted greenhorns fresh out of university so they could pay them a dollar above minimum wage to operate million dollar analytical instruments and work with carcinogenic solvents.

#115 Jb on 12.03.20 at 12:19 pm

#94 BillyBob on 12.03.20 at 5:11 am

#37 SunShowers on 12.02.20 at 4:53 pm
#21 Sheesh on 12.02.20 at 4:01 pm
Most people live paycheque to paycheque because they spend too much, not because they don’t make enough.

#27 truefacts on 12.02.20 at 4:12 pm
Now people buy coffee from Timmy’s or Starbucks every day.

Nobody is broke because they spend a buck fifty a day at Timmies. This is not a thing that happens.

These are all bad, dishonest arguments peddled by people who have a vested interest in protecting the status quo which has worked out well for them at the expense of younger generations and sweatshop workers overseas, and eagerly gobbled up by people who haven’t spoken with anybody born after 1981 in the last 10 years and are unfamiliar with their struggles.

===================================

Both my partner, and my nephew/niece-in-law were born in the 80’s – I’m well aware of the struggles they face. But I also see the life decisions made by the latter two, over and over.

It’s not the $1.50 at Timmies. It’s the $4.50 at Starbucks. It’s that plus the cell phone plan that’s more than needed. Same with the internet. The vehicle that’s far more than needed or can can be afforded. Then the second one cause the student beater wasn’t good enough for someone at the ripe old age of 25. The streaming services that can’t be done without. The clothing that has to be of a certain quality. The laptop that just had to be replaced. The education loans to which no thought was given whatsoever as to the possible ROI. On and on and on. And they are actually on the more responsible end of the spectrum in their cohort. But somehow according to you it’s all the fault of Boomers and offshoring and evil corps and whomever else.

Meanwhile, I’m 20 years older than them and live far more modestly than they do now, let alone than I did 20 years ago. Sorry, can’t blame that all on everyone else.

In short, it’s about values, not a specific dollar amount. If you think that previous generations didn’t struggle with lack of jobs and money you’re delusional. I’m just glad that as a Gen X’er I didn’t have access to the credit that folks can now bury themselves in. In my early working days I tracked every cent (I still do) because I had to. If I had $20 left with 3 days until the next payday, that was it, that’s what I was feeding myself with. Figure it out, or go hungry. Now you just order $35 sushi on UberEats and blame being broke on “the wages”. Ok.

Yeah yeah I know, six feet of snow walking uphill each way to school and all that. But the life skills from always being close to the edge financially in the beginning served me well when eventually the money came, and come it did. Make the money first, then the lifestyle. The order is important. That’s got nothing to do with a coffee a day.

You can complain all you want about sweatshop workers and the lack of wage increases and so on but it won’t change a thing. Maybe it’s time you stop complaining about things you can’t change, and instead adapt to reality? There’s a whole world of opportunity.

But, much like my own beloved family, advice from anyone born BEFORE 1981 will no doubt be completely ignored. Far easier to protest against the unfairness of life.
…………………………………………………………………
I dont know what all the bitching is about regarding people born before 1981. I listen to my parents all the time and they were born in the 1950’s came to this country barely speaking English. Lived in a one bedroom apartment over a Chinese food store in the city. Worked two jobs both and six to seven days a week. To which my mother today is still upset about and is still atoning her sins for working on Sundays. My parents said nothing was easy and it was only hard work and determination that got them to where they are today. I was born in this county and worked with the same ethics that I was raised on so I have no pity for some of my peers that constantly complain about older generations messing up their lives. Give me a break. Nothing is free, work hard and if you can’t afford it then don’t purchase it until you can. Two of my co-workers to this day don’t own a home a car or any tangible investment in property. They lived day to day, lattes and expensive dinners at bohemian restaurants all the time. I have never ever seen them actually bring a lunch to work. They always go out. Trips to Europe, the Caribbean, Mexico and then complain they are screwed and can not afford a condo, or home and it is always this generation screwed us. Tired of hearing excuses guys.

#116 Dr V on 12.03.20 at 12:23 pm

103 Sunshine

“I’ve put in 70 hour weeks my entire life (when I wasn’t in university getting 2 STEM degrees that have done precisely nothing for me because boomers crashed the economy when I graduated in 2008 and nobody was hiring) and have nothing to show for it except for major depressive/panic disorders and the blood pressure of a stroke patient twice my age. I’m done.”

Oh my. 2 STEM degrees? 70 hr weeks? I know the problem. It’s you. It’s all you.

There are soooo many opportunities out there as the
boomers retire.

#117 jess on 12.03.20 at 12:38 pm

sunshower: 8 ways here:

https://www.taxfairness.ca/sites/default/files/resource/canadian_for_tax_fairness_-_billionaires_report_2020_final.pdf

#118 Michael Bruce Chase on 12.03.20 at 1:08 pm

Really, $66,000 in retirement expenses and this is after tax. I would think that this couple’s lifestyle needed changing before they decide to get a reverse mortgage. Must be nice to be this well off. Maybe run the numbers for the 40% people who do not pay taxes due to their economic circumstances. I for one have no kids to give my house to when I die. Hell, my plan is to die broke, so eventually a reverse mortgage might make sense, or just sell and rent a smaller place to live. Eventually they may have to stick me into a long term care facility and that will be it. Broke and living out the rest of my days just waiting for some virus to take me away.

#119 Stoph on 12.03.20 at 1:16 pm

@#103 SunShowers on 12.03.20 at 8:45 am

Yikes! No job from two STEM degrees. That’s 7-8 years of post secondary plus 10’s of thousands of debt. I’d be pretty bitter if that was me. The guy who slacked off in high school and then got a construction job is miles ahead.

I see voters upset with their situation voting for either a populist or a leftist government. One promising to bring back offshored jobs, the other promising to improve the social safety net.

Whether it’s the guy working construction or an engineer with a STEM degree, they’ll most likely only get an OK salary unless they themselves get into business – they’re not going to get rich by nailing 2x4s together or producing building plans. Entrepreneurship, which is high risk, seems to be one of the dwindling ways to do well financially.

Asking your boss for a raise, or protesting that wages are too low isn’t rude. However, demanding that you are given raise before you follow the blog author’s advice is – it’s unclear from your demand who should give you the raise. Is it your boss? Society in general? Or the blog author to whom I take it that statement was directed.

Have a good day.

#120 truefacts on 12.03.20 at 1:26 pm

#103 Sunshowers…

Fair point on taxation – but if we collectivley didn’t have to work half the year to pay for taxes, that would be more money in our pockets. I think we can agree that governments are terrible allocators of resources and their take should be limited – but voters keep voting for more taxes…

The outsourcing fact is huge and has affected younger people. Two generations ago, people finished high school and went right to work at reasonable jobs – mostly not possible now (we agree). Universities are mostly social engineering centres now – very few practical skills offered – waste of time, taxpayers money, crushed dreams for young people…

I sucks you were born when the situation wasn’t as rosy as it was for Boomers. I’m Gen-x and felt the same angst, so denied myself for years – now comfortable. In fairness, I’m sure you are better off than the generation that found themselves dodging bullets fired from Nazi guns. Every generation has good/bad points – life isn’t fair – but how you react is within your control.

Ditch the Stem shit if it’s not working – look into trades. The local plumber I use rakes it in. Ditto for the heating/cooling guy, masons, etc. Money can be made if it’s not beneath your dignity…

And my son worked over a year at McDs with no phone – he still doesn’t have one. I’m not willing to pay for it and neither is he…choices – that’s called life.

#121 Karlhungus on 12.03.20 at 2:09 pm

Sunshowers
I can’t quite seem to figure out why noone would hire you….

#122 Wrk.dover on 12.03.20 at 2:55 pm

#103 SunShowers on 12.03.20 at 8:45 am
#73 Karlhungus on 12.02.20 at 10:14 pm
This pandemic should have taught you people can save if they want to, they just choose not to. Canadians savings rate has skyrocketed and they are sitting on a huge amount of cash

The savings rate skyrocketed because

—————————————

I can no longer spend 25% of my net in Jamaica

#123 SoggyShorts on 12.03.20 at 3:03 pm

#103 SunShowers on 12.03.20 at 8:45 am
#73 Karlhungus on 12.02.20 at 10:14 pm
#80 Stoph on 12.02.20 at 10:55 pm
So what’s your retirement plan? Be a wage slave till you die?

That’s plan B. Plan A is to elect leaders with the courage to leverage political power to right the economic wrongs done to young people.

*******************
This is why you are failing.
Plan A needs to be how you can improve your life.
Everything else like hoping & voting for others to change the world for you should be a very distant plan B.

2 STEM degrees and zero jobs in your field for 12 years sucks, but at the very least you should have been climbing the ladder at Home Depot or swinging a hammer on a construction crew. Either way $25/h+ should have been reached after over a decade in any field, and someone with your supposed work ethic willing to do 70 hours a week? $100K in any trade with no education would absolutely be achievable.

I mean aside from practicing your “Who’s really to blame for my woes?” speeches, what have you been doing??

#124 Faron on 12.03.20 at 3:09 pm

An excellent read on MMT and the coming fiscal hell to pay in the US/planet.

https://www.convexitymaven.com/images/Convexity_Maven_Wages_of_Fear.pdf

#125 SeeB on 12.03.20 at 3:23 pm

#25 Dogman01 on 12.02.20 at 4:11 pm

OMG – Our Finance Minister cannot afford a house in this Country without out help from mom and dad….
https://ipolitics.ca/2013/10/15/chrystia-freeland-defends-1-3-million-home-purchase/

“Pick your parents well” – it is the only way to avoid a life of endless wage toil in what has become the new Canada.
https://www.theguardian.com/commentisfree/2020/nov/09/inheritance-work-middle-class-home-ownership-cost-of-housing-wages

——————————————————————

Ewww, yeah it does seem like we are heading back to pre-war economic attitudes with regards to wage work.

Pray your boomer parents aren’t self-absorbed narcissists bent on spending every last penny by 65 for their own entertainment.

#126 Phylis on 12.03.20 at 4:32 pm

#103 SunShowers on 12.03.20 at 8:45 am Maybe you should hookup with SCM. Same plan A.

#127 Where's My Money Going Greedeau? on 12.03.20 at 8:11 pm

BC Cullen Commission into money laundering testimony is showing the dark side of our Legislators and Police:

https://globalnews.ca/news/7493127/fred-pinnock-recordings-tsunami-cullen-commission/

Why aren’t the regular MSM not covering this, namely CBC, CTV……
Trudeau dollars at work maybe???

#128 Where's My Money Going Greedeau? on 12.03.20 at 9:17 pm

Re: #50 Ponzius Pilatus on 12.02.20 at 6:41 pm
My dream of retiring in Whistler is slowly vanishing.
The virus is driving up demand for rec properties.
An so the price goes uppa and uppa.
I heard sales are up 60%.
+++++++++++++++++++++
West coast MSM are spouting that the last 2 months have had the most sales since the 1980’s !!!!! Over 2k per month, I think they said.
Where is Steve Saretsky to give us the real numbers…..
Insolvencies are down, https://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/h_br04387.html#tbl1
So I guess it’s uppa uppa with tax payers footing the bill.
We all know what happened in BC after that in the 80’s…..downa downa….for 10 years in the 90’s….

#129 Caron on 12.04.20 at 3:59 am

Excellent article Sinan.
So many people are blindly barrelling down this road and it’s scary.
The fact is that home ownership is a Lifestyle Asset (i.e. doesn’t create any income and requires constant cash flow to upkeep) but too many people treat it as an Investment asset (i.e. creates income and grows over time).
More people need to understand the severe potential consequences awaiting them in their retirement years if they neglect to prioritize tending to their Investment Assets as much as they do their Lifestyle Assets during their working years.