Quote:
Originally Posted by Enoch Root
Posted in another thread already, but it is pertinent here as well.
Life expectancy continues to climb. Living into your 90s is now very common, and it likely won't be long before people are routinely living beyond 100. This has a profound impact on savings. If someone wants to retire at 60 or 65, and is likely to live 30 or 40 years in retirement, it becomes impossible to budget how much they will need to save, and the only solution is that they save enough so that they can live off of the income of their portfolio and never touch the principal.
Working this backwards generates some staggering numbers. For quick and dirty examples, here are some numbers (desired income (pre-tax) / required savings):
$50k / $1M
$75K / $1.5M
$100k / $2M
$200k / $4M
So, while $4M sounds like a ####load of money to most people, it really isn't. A $200k pre-tax salary is - while nice - squarely middle-class.
And that doesn't factor any other goals for the savings. Nor a buffer. Nor inflation risk. If a person has a goal of $200k pre-tax, they should really be thinking at least $5M in savings.
Bringing this back to estate taxes, the retiree here is not hoarding, they are simply managing their savings as required. Once that money transfers to the next generation, it often gets spent at a much more rapid rate.
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That's a little extreme. You are not going to need $5MM in savings when you are 100. So there can be a reasonable drawdown. Also, younger old people are generally more active and wish travel and such versus older old people (see go, slow, and no-go years). Not that I think you are saying this, but I want to point out that I don't think anyone is entitled to retire at 60. If you save money, fill your boots, but I don't think it is a basic right or anything.
$200k individual pre-tax income is not squarely middle class. According to this CBC article
https://www.cbc.ca/news/politics/can...tion-1.5317206
$120 household post-tax is the very top end of what could be considered middle class at 200% average household income, which would be the equivalent of a single-income household at $200 pre-tax.