Canadians 'drowning in debt': 47% will borrow to cover costs, survey says

[rubecube]

Originally Posted by Shazam

Can you offer an alternate system where meritocracy is the ruling criteria for wealth? And luck and your family aren't?

I don't think you can ever get rid of those factors entirely, but you can certainly do a better job of lessening them as factors than what most capitalist systems do.

[pseudoreality]

Originally Posted by blankall

It's not just about inheriting money. The cost of housing and schooling is so outrageous that the vast majority of the people getting ahead are doing so heavily subsidized. Renting a slummy apartment and buckling down for a few years in school really isn't an option for many anymore, or at the very least it's significantly harder to do without accumulating large amounts of debt. Then post graduation job options don't pay as well as they used to relative to cost of living.

Personally, I think so estate tax could actually make that worse, as it would encourage parents to give their children more advantages at a younger age.


The solution is to decrease the cost of living.

See I think rich old people should be spending money and putting it back into the economy versus hoarding it. It is hard for people to find a happy medium. People seem to either not save at all, or spend their entire life saving and do not know how to draw it down later in life.

I don't know how governments can effectively lower the cost of living outside of lowering taxes. However, with a progressive tax rate low income people barely pay any taxes already.

[flamesfever]

Originally Posted by pseudoreality

See I think rich old people should be spending money and putting it back into the economy versus hoarding it. It is hard for people to find a happy medium. People seem to either not save at all, or spend their entire life saving and do not know how to draw it down later in life.

I believe that most of the so called rich old people, you are referring to, are part of the middle class. In general, they spend their money hiring people to do various tasks that they are unable to do for themselves, like cutting their grass, cleaning and painting their house, etc. They also invest in various companies that provide the services we need like banks, telcos etc. In addition they contribute money to churches that do charitable work. They hope, at the time they die, that they have enough left over to help members of their family that may need a leg up in order to have a decent life.

For those that manage to become super rich, history has shown that the money usually only stays in the family for 3 generations. The first generation sacrifices to gain the wealth, the second generation works hard to keep it, and the third generation squanders it.

[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.

[PepsiFree]

Originally Posted by Enoch Root

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.

$200k pre-tax puts you in the top 2% of the income-generating population (on the cusp of the 1%).

https://www150.statcan.gc.ca/t1/tbl1...pid=1110000801

It's scary how warped people's ideas of middle-class has become.

[Scroopy Noopers]

Originally Posted by PepsiFree

$200k pre-tax puts you in the top 2% of the income-generating population (on the cusp of the 1%).

https://www150.statcan.gc.ca/t1/tbl1...pid=1110000801

It's scary how warped people's ideas of middle-class has become.

Stuck in the middle class until I get that yacht.

[TheIronMaiden]

Originally Posted by Weitz

I mean Canada was built on transferring wealth from one region to another.

You're not wrong, even after confederation the primary objective of politicians was funnelling money back to the U.K.

[Enoch Root]

Originally Posted by PepsiFree

$200k pre-tax puts you in the top 2% of the income-generating population (on the cusp of the 1%).

https://www150.statcan.gc.ca/t1/tbl1...pid=1110000801

It's scary how warped people's ideas of middle-class has become.

Are you arguing that $200k per year is too much and the system should not encourage it? It's too much, is that what you're saying?

We should tax the #### out of people so they never make that much? What point are you trying to make here?

[Enoch Root]

Two teachers (since that is the profession you chose) with tenure would have a combined family income of roughly $200k.

####ing bourgeois pigs

[iggy_oi]

Originally Posted by Enoch Root

Are you arguing that $200k per year is too much and the system should not encourage it? It's too much, is that what you're saying?

We should tax the #### out of people so they never make that much? What point are you trying to make here?

How is taxing the #### out of people going to reduce their pre-tax income?

[pseudoreality]

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.

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.

[Enoch Root]

Originally Posted by iggy_oi

How is taxing the #### out of people going to reduce their pre-tax income?

You clearly have not followed the conversation along to this point.

[Sliver]

Originally Posted by Enoch Root

Two teachers (since that is the profession you chose) with tenure would have a combined family income of roughly $200k.

####ing bourgeois pigs

Yeah, but they work three quarters of a day, two-thirds of a year, with a 20% shorter career than average while getting a government-backed pension. If you adjusted that pay for full-time hours they'd be making more like $130k/year. You literally picked the gold-standard of careers and pretended you found some average. No, in Alberta teachers do incredibly well.

[opendoor]

LMAO at calling a senior earning $200K a year in retirement "solidly middle class". The median income for seniors in Canada is about $29K.

[PepsiFree]

Originally Posted by Enoch Root

Are you arguing that $200k per year is too much and the system should not encourage it? It's too much, is that what you're saying?

We should tax the #### out of people so they never make that much? What point are you trying to make here?

That suggesting "$200k is squarely middle-class" is ridiculous.

It's not. Let's not pretend it is. "Ah jeeze $4M really ain't much money guys" is such a privileged, insane statement.

Make whatever you want to make. Shoot for $200k if that's your jam, but people making that and thinking "I'm just like everyone else! Life is a slog, isn't it? Having this income is nice I guess but it could be a lot more!" is just profoundly ignorant of how the vast majority of people, and the actual middle class, lives.

That's all. Get back in touch with reality a bit.

[Locke]

Originally Posted by Scroopy Noopers

Stuck in the middle class until I get that yacht.

Its something of a Conundrum.

You're stuck in the middle class until you get that Yacht but then when the initiate you into the 1%er Club they actually give you a Yacht.

But then you have 2 Yachts and with insurance, maintenance, mooring fees and operating expenses now you're poor again!

Sick sense of humour those bastards have.

[Slava]

Originally Posted by pseudoreality

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.

He's not suggesting that you $5m at 90. He's saying that if you want $200k/yr you need $5m to have that steady income through 90.

There's a serious disconnect here. Professionals tell people that to do this, you need $X.XX and have some surety that you will have that money. For some reason people just don't want to believe it. They just think that the numbers sound insane, so the guy doesn't know what he's talking about?

[Scroopy Noopers]

Originally Posted by Locke

Its something of a Conundrum.

You're stuck in the middle class until you get that Yacht but then when the initiate you into the 1%er Club they actually give you a Yacht.

But then you have 2 Yachts and with insurance, maintenance, mooring fees and operating expenses now you're poor again!

Sick sense of humour those bastards have.

Maybe this is the answer to wealth redistribution and job creation?

[Enoch Root]

Originally Posted by pseudoreality

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.

the problem however, is that you don't know how long you are going to live. Once the principal starts to erode, it continues to turn downward and erodes more quickly. If you run out of money, you're screwed. So you need to be able to live off of the income alone, in order to be secure.

As for needing less when older, yes, people tend to spend less as they get into their 80s and beyond. However, there is such a hing as inflation, and $200k, 30 years from now, will not be all that much money.

Also, health costs can increase dramatically.

[opendoor]

Originally Posted by Slava

He's not suggesting that you $5m at 90.

He is though:

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.