'Canadian dream' is a myth more than a reality"

[Peanut]

Originally Posted by nik-

Well you can google it too.

http://www.cbc.ca/news/business/taxe...-cpp-1.1041107



http://www.thestar.com/business/pers...d_to_know.html



http://www.osfi-bsif.gc.ca/Eng/Docs/cpp26.pdf

I'm still 30+ years out from retirement. It's reassuring that the actuary says CPP will be there for me, but I guess what I'm saying is, I'm not banking on it. A lot can change in 30 years.

[1stLand]

Originally Posted by Devils'Advocate

Funny how two people can read the same data and come to opposite conclusions. I am quite troubled by the data in the study.

Broadbent Institute:


(emphasis mine)
If we ever had a housing bubble burst, we'd be in real trouble. Especially given just how many people have a retirement plan of "sell my house, move to cheaper area, live off proceeds for rest of life".

If we ever had a housing bubble burst, I would simply wait the 5-10 years for the real estate cycle to repeat itself - wait for values to recover. Then sell. Those who sell during a burst bubble are desperate. Simply rent out your property until the market recovers. People have been doing this since 2007 values came crashing down. Now that prices are bezerk again, they are selling and cashing in.

[darklord700]

Originally Posted by Devils'Advocate

If we ever had a housing bubble burst, we'd be in real trouble. Especially given just how many people have a retirement plan of "sell my house, move to cheaper area, live off proceeds for rest of life".

That's hardly a viable option. Say the average price of a Calgary house is $500K, you can buy a cheaper apartment in Saskatoon for $300K so you pocket $200K. How long will that $200K last you if you have no other savings?

And moving to a cheaper city if you don't know anybody there is just no feasible.

A better approach is to invest in rental properties. Hopefully by the time you retire, the rental mortgage is paid off and you can eat the rent or the rental property's capital gain.

[MarchHare]

Originally Posted by darklord700

That's hardly a viable option. Say the average price of a Calgary house is $500K, you can buy a cheaper apartment in Saskatoon for $300K so you pocket $200K. How long will that $200K last you if you have no other savings?

And moving to a cheaper city if you don't know anybody there is just no feasible.

DA's post wasn't intended to describe a viable retirement strategy, but it's nonetheless one that too many Canadians (baby boomers in particular) are depending on. See also the "I'm counting on a large inheritance from my parents" strategy.

[OldDutch]

Originally Posted by MarchHare

DA's post wasn't intended to describe a viable retirement strategy, but it's nonetheless one that too many Canadians (baby boomers in particular) are depending on. See also the "I'm counting on a large inheritance from my parents" strategy.

This is a very real issue, and one that will have most people set to retire in the next 10 years not retiring. Laziness of working all day, coming home sitting on the couch and watching TV, getting up the next day and doing it again will catch up to a lot of people.

Too many people for too long haven't thought about how to invest properly to save for retirement. So now they are running out of track, and need to figure something out. The stock market is a mess, and has burnt lots of people twice in the last 14 years. Mutual Funds and Bonds grow too slow, if at all. So what is left that is easy for everyone to understand...yup housing.

They see that house they bough for $125K in the 80's and it is worth $600K now. Just need to sell the house and I am mint, but what about Realtor fees and capital gain tax? Ok, now you have to live somewhere, buy that 1 bedroom for $200K. Now you have nothing left, good luck on the next 30 years because medicine will probably have you alive for that long.

Too many people shrugged of retirement and bought cars or boats instead. Taking the time to learn how to invest was more work than watching TV. Now they figure the one thing they did right was their home. Well even if that pays off, they are not a rich as they think, and will end up having to make CPP work, or more likely try and get what will soon be a the toughest gig to get, the Wall Mart greeter.

[Hockeyguy15]

Originally Posted by OldDutch

This is a very real issue, and one that will have most people set to retire in the next 10 years not retiring. Laziness of working all day, coming home sitting on the couch and watching TV, getting up the next day and doing it again will catch up to a lot of people.

Too many people for too long haven't thought about how to invest properly to save for retirement. So now they are running out of track, and need to figure something out. The stock market is a mess, and has burnt lots of people twice in the last 14 years. Mutual Funds and Bonds grow too slow, if at all. So what is left that is easy for everyone to understand...yup housing.

They see that house they bough for $125K in the 80's and it is worth $600K now. Just need to sell the house and I am mint, but what about Realtor fees and capital gain tax? Ok, now you have to live somewhere, buy that 1 bedroom for $200K. Now you have nothing left, good luck on the next 30 years because medicine will probably have you alive for that long.

Too many people shrugged of retirement and bought cars or boats instead. Taking the time to learn how to invest was more work than watching TV. Now they figure the one thing they did right was their home. Well even if that pays off, they are not a rich as they think, and will end up having to make CPP work, or more likely try and get what will soon be a the toughest gig to get, the Wall Mart greeter.

You only pay capital gains on property that isn't your primary residence. If they only own 1 house this would not apply to them as it would be exempt from any capital gains.

[crazy_eoj]

Originally Posted by Devils'Advocate

Funny how two people can read the same data and come to opposite conclusions. I am quite troubled by the data in the study.

Broadbent Institute:


(emphasis mine)
If we ever had a housing bubble burst, we'd be in real trouble. Especially given just how many people have a retirement plan of "sell my house, move to cheaper area, live off proceeds for rest of life".

So according to your own source the average Canadian's wealth has gone up, the distribution of wealth has improved since 2005 (at least according to their own metrics) and people have made huge personal gains in real estate while also increasing their pension holdings.

Yup, certainly VERY concerning!

[Devils'Advocate]

Originally Posted by crazy_eoj

So according to your own source the average Canadian's wealth has gone up

Again, primarily due to house values, which, as people have noted, is not the greatest of investment for the future since you actually probably want to continue LIVING IN IT.

the distribution of wealth has improved since 2005

Barely. It is still attrocious. And the bottom 20% are WORSE off than before, which is hard to believe since in 2005 their total net worth was a median value of $1,300.

also increasing their pension holdings

People are going to need to increase it significantly more unless, like I suggested, people are planning on selling their million dollar home in Calgary and move to Yarmouth. (http://www.lakesiderealty.ca/property.php?ID=1172)

[Johnny199r]

My strategy is to limit "death by a thousand needles". Many people go out for lunch everyday at work instead of brown bagging it. They get a Tim Horton's coffee everyday. They go to the bar once or twice a week or eat out/order out twice a week etc. Paying for monthly parking at work. They have expensive cable packages. All of those types of costs really add up over time.

I'm a frugalist. My spouse and I each make 100K plus, we have DB pensions, but we sure as hell don't live like it. I'm certainly not counting on any pension to be there. I save with the mindset that it wont be.
We have one paid off vehicle but walk/take transit to work. We rent a condo, but when we buy a house, we both prefer a cheaper townhouse next to an LRT line.(no, you don't need 2000+ sq house, even with kids)

Not commuting with a car everyday, especially 2 cars, goes a long way. If we get married it will be at city hall. We fly on vacations only using airmiles. We like to go tent camping and mountain biking in the mountains. We go to a movie once or twice a year, only on cheap nights. We have netflix instead of cable etc. We love to be active and just ride our bikes around in the nice weather.

I definitely don't see many of my peers showing much restraint when it comes to spending. Everyone is entitled to choose to live how they like, but I prefer peace of mind in the future. Many of my peers have big expensive houses, two cars, go on vacation down south every year etc.

My father was frugal and saved, which meant he didn't get pushed into the poorhouse the 2nd time his cancer came back. He was able to enroll in a clinical trial in the U.S for a drug that extended his life for two years. If he was one of those "I might as well spend it today because I could die tomorrow) my mother would have been ruined and the end of his life would have had no quality.

A big part of the middle class hallowing out is that everyone feels deserving or accustomed to living a 1st class life these days, whether they have the money or not. There has been a dramatic shift in "needs" and "wants" between the last generation and this one. I believe it has shifted much to far too "wants"

[nik-]

that sounds miserable.

[troutman]

I see so many people that sacrificed, and by the time they are ready to enjoy the fruits of their labour, they are in poor health.

I think there is something to be said for living hard while you are young. You can't know what your future years will look like.

[The Yen Man]

Originally Posted by Johnny199r

My strategy is to limit "death by a thousand needles". Many people go out for lunch everyday at work instead of brown bagging it. They get a Tim Horton's coffee everyday. They go to the bar once or twice a week or eat out/order out twice a week etc. Paying for monthly parking at work. They have expensive cable packages. All of those types of costs really add up over time.

I'm a frugalist. My spouse and I each make 100K plus, we have DB pensions, but we sure as hell don't live like it. I'm certainly not counting on any pension to be there. I save with the mindset that it wont be.
We have one paid off vehicle but walk/take transit to work. We rent a condo, but when we buy a house, we both prefer a cheaper townhouse next to an LRT line.(no, you don't need 2000+ sq house, even with kids)

Not commuting with a car everyday, especially 2 cars, goes a long way. If we get married it will be at city hall. We fly on vacations only using airmiles. We like to go tent camping and mountain biking in the mountains. We go to a movie once or twice a year, only on cheap nights. We have netflix instead of cable etc. We love to be active and just ride our bikes around in the nice weather.

I definitely don't see many of my peers showing much restraint when it comes to spending. Everyone is entitled to choose to live how they like, but I prefer peace of mind in the future. Many of my peers have big expensive houses, two cars, go on vacation down south every year etc.

My father was frugal and saved, which meant he didn't get pushed into the poorhouse the 2nd time his cancer came back. He was able to enroll in a clinical trial in the U.S for a drug that extended his life for two years. If he was one of those "I might as well spend it today because I could die tomorrow) my mother would have been ruined and the end of his life would have had no quality.

A big part of the middle class hallowing out is that everyone feels deserving or accustumed to living a 1st class life these days, whether they have the money or not. There has been a dramatic shift in "needs" and "wants" between the last generation and this one. I believe it has shifted much to far to "wants"

If you're pulling in over 200K combined as you suggest, I think you can afford to live a little less frugal than how you've described.

[GP_Matt]

I think it is possible to have it both ways as long as you have priorities.
We really like taking international vacations so that is a priority for us. We are always putting away money for the next trip and don't feel bad about it. We do save money on other fronts and have a solid portion of our income go towards investments/retirement.
The house we live in is worth half of what the bank qualified us for when purchasing but we decided that that was a bad use of our money. The same goes with vehicles, I paid cash for mine and my wife has a month of payments left. When that is up we have no intention of replacing her car. The money saved on car payments will easily cover the vacation and the reduced mortgage payments cover our retirement savings.

[Johnny199r]

Originally Posted by GP_Matt

I think it is possible to have it both ways as long as you have priorities.
We really like taking international vacations so that is a priority for us. We are always putting away money for the next trip and don't feel bad about it. We do save money on other fronts and have a solid portion of our income go towards investments/retirement.
The house we live in is worth half of what the bank qualified us for when purchasing but we decided that that was a bad use of our money. The same goes with vehicles, I paid cash for mine and my wife has a month of payments left. When that is up we have no intention of replacing her car. The money saved on car payments will easily cover the vacation and the reduced mortgage payments cover our retirement savings.

I agree. I plan on taking a few 6 month to 1 year sabbaticals from work over the course of my career to travel, in addition to the 6-8 weeks of vacation a year I get. Saving money and cutting back on spending will allow that to happen with ease.

[AMG_G]

Originally Posted by Johnny199r

My strategy is to limit "death by a thousand needles". Many people go out for lunch everyday at work instead of brown bagging it. They get a Tim Horton's coffee everyday. They go to the bar once or twice a week or eat out/order out twice a week etc. Paying for monthly parking at work. They have expensive cable packages. All of those types of costs really add up over time.

I'm a frugalist. My spouse and I each make 100K plus, we have DB pensions, but we sure as hell don't live like it. I'm certainly not counting on any pension to be there. I save with the mindset that it wont be.
We have one paid off vehicle but walk/take transit to work. We rent a condo, but when we buy a house, we both prefer a cheaper townhouse next to an LRT line.(no, you don't need 2000+ sq house, even with kids)

Not commuting with a car everyday, especially 2 cars, goes a long way. If we get married it will be at city hall. We fly on vacations only using airmiles. We like to go tent camping and mountain biking in the mountains. We go to a movie once or twice a year, only on cheap nights. We have netflix instead of cable etc. We love to be active and just ride our bikes around in the nice weather.

I definitely don't see many of my peers showing much restraint when it comes to spending. Everyone is entitled to choose to live how they like, but I prefer peace of mind in the future. Many of my peers have big expensive houses, two cars, go on vacation down south every year etc.

My father was frugal and saved, which meant he didn't get pushed into the poorhouse the 2nd time his cancer came back. He was able to enroll in a clinical trial in the U.S for a drug that extended his life for two years. If he was one of those "I might as well spend it today because I could die tomorrow) my mother would have been ruined and the end of his life would have had no quality.

A big part of the middle class hallowing out is that everyone feels deserving or accustomed to living a 1st class life these days, whether they have the money or not. There has been a dramatic shift in "needs" and "wants" between the last generation and this one. I believe it has shifted much to far too "wants"

I vote to kick you out of the CP 1% club....that's not living that's surviving.

[chemgear]

Originally Posted by AMG_G

I vote to kick you out of the CP 1% club....that's not living that's surviving.

CP IS the 1%!

[darklord700]

I do applaud you penchant for frugality, Johnny199r. I actually know one couple spend exactly like you do. What I learned from that couple is you only live once and you might be saving money but are you wasting life as well? I think the finality of that frugal couple is that they'll not live much but their kids will inherit a lot and probably blow it away too.

Managing finance is an art. Most people either value the value of a dollar too much or too little. And it is important to balance to pain of saving now with the joy of spending in the future.

[burn_baby_burn]

Originally Posted by Johnny199r

My strategy is to limit "death by a thousand needles". Many people go out for lunch everyday at work instead of brown bagging it. They get a Tim Horton's coffee everyday. They go to the bar once or twice a week or eat out/order out twice a week etc. Paying for monthly parking at work. They have expensive cable packages. All of those types of costs really add up over time.

I'm a frugalist. My spouse and I each make 100K plus, we have DB pensions, but we sure as hell don't live like it. I'm certainly not counting on any pension to be there. I save with the mindset that it wont be.
We have one paid off vehicle but walk/take transit to work. We rent a condo, but when we buy a house, we both prefer a cheaper townhouse next to an LRT line.(no, you don't need 2000+ sq house, even with kids)

Not commuting with a car everyday, especially 2 cars, goes a long way. If we get married it will be at city hall. We fly on vacations only using airmiles. We like to go tent camping and mountain biking in the mountains. We go to a movie once or twice a year, only on cheap nights. We have netflix instead of cable etc. We love to be active and just ride our bikes around in the nice weather.

I definitely don't see many of my peers showing much restraint when it comes to spending. Everyone is entitled to choose to live how they like, but I prefer peace of mind in the future. Many of my peers have big expensive houses, two cars, go on vacation down south every year etc.

My father was frugal and saved, which meant he didn't get pushed into the poorhouse the 2nd time his cancer came back. He was able to enroll in a clinical trial in the U.S for a drug that extended his life for two years. If he was one of those "I might as well spend it today because I could die tomorrow) my mother would have been ruined and the end of his life would have had no quality.

A big part of the middle class hallowing out is that everyone feels deserving or accustomed to living a 1st class life these days, whether they have the money or not. There has been a dramatic shift in "needs" and "wants" between the last generation and this one. I believe it has shifted much to far too "wants"

I used to work for a guy that lived a lot like this. He was so frugal it was embarrassing. People would always ask me why he was so cheap and what was the point of it. I told them that he lived for it. He wasn't scraping by saving for a glorious retirement. He thrived on spending as little money as possible, it gave him great joy. That is just the way some people are.

[GirlySports]

how much money was spent at 5am on Sunday?

[nik-]

Originally Posted by GirlySports

how much money was spent at 5am on Sunday?

I don't remember paying for anything on Sunday, but all my money was gone.