How much do you put into RRSP's?

[Ryan Coke]

I could be paying down my mortgage more aggressively but since my rate is only 2% or so then I just figure it is cheap money, and I should be able to beat that with my investments. When interest rates go up ill get more aggressive paying my mortgage down, and ill have more money to do it with since I've been making more than 2% with that money in the meantime.

[MoneyGuy]

Originally Posted by Ryan Coke

I could be paying down my mortgage more aggressively but since my rate is only 2% or so then I just figure it is cheap money, and I should be able to beat that with my investments. When interest rates go up ill get more aggressive paying my mortgage down, and ill have more money to do it with since I've been making more than 2% with that money in the meantime.

Good job. You've figured it out.

[chemgear]

Speaking of which, these came out today. Always rather skeptical of polls/surveys but the second point seems rather nuts.

http://business.financialpost.com/20...irement-years/

The poll, conducted from Nov. 29 to Dec. 6 by Ipsos Reid among 3017 Canadians 30 to 65, found just 27% expect to be fully retired at 66. That’s down from 51% in 2008 — a big drop for just five years.

Incredibly, the HSBC survey suggests that 47% of Canadians age 55-64 have never saved at all for retirement.

[Slava]

Originally Posted by chemgear

Speaking of which, these came out today. Always rather skeptical of polls/surveys but the second point seems rather nuts.

http://business.financialpost.com/20...irement-years/

The poll, conducted from Nov. 29 to Dec. 6 by Ipsos Reid among 3017 Canadians 30 to 65, found just 27% expect to be fully retired at 66. That’s down from 51% in 2008 — a big drop for just five years.

Incredibly, the HSBC survey suggests that 47% of Canadians age 55-64 have never saved at all for retirement.

The only reason I would be skeptical is if I didn't work in this industry. There is an astounding number of baby boomers (in particular) who haven't put away near enough to retire. The plan is always the same: "I'll take it out of my house. We'll downsize, etc. etc."

That's exactly why above I say people should just set something, anything up sooner rather than later so that you can avoid being one of those people who hope to retire with $15k in the bank.

[GP_Matt]

I have always struggled with saving as aggressively as I would like. To get around this I have started borrowing money to invest on my HELOC. I borrow a manageable amount of money and invest it then begin paying down the HELOC. It is purely psychological but I don't like owing money so I pay the debt off a lot faster than I could ever save the money. Through rinse and repeat I have managed to put away more than I could have through monthly contributions alone.
The downsides are definitely paying interest and the loss of dollar cost averaging. The upsides are that the money is in sooner and the interest can be written off.

For me, it helps that my pay isn't really consistent and I get a large portion of it in lump sum payments at random times throughout the year.

[Red]

Originally Posted by Ryan Coke

I could be paying down my mortgage more aggressively but since my rate is only 2% or so then I just figure it is cheap money, and I should be able to beat that with my investments. When interest rates go up ill get more aggressive paying my mortgage down, and ill have more money to do it with since I've been making more than 2% with that money in the meantime.

The downside is that you will have less extra money to put aside because higher interest rates will result in higher mortgage payments. That can then snowball to you having an extra few years mortgage payments.
Kind of a raw deal?

Damn if you do, damn if you don't.

[Cowboy89]

Originally Posted by Slava

The only reason I would be skeptical is if I didn't work in this industry. There is an astounding number of baby boomers (in particular) who haven't put away near enough to retire. The plan is always the same: "I'll take it out of my house. We'll downsize, etc. etc."

That's exactly why above I say people should just set something, anything up sooner rather than later so that you can avoid being one of those people who hope to retire with $15k in the bank.

That's what worries me about baby boomers. I've heard too many stories of people overextending themselves on expenses and using the increasing value of their real estate to paper over their overconsumption back into their mortgage. I imagine there's good money to be made in the coming years unethically hosing boomers on reverse mortgages.

[Cowperson]

Originally Posted by Cowboy89

That's what worries me about baby boomers. I've heard too many stories of people overextending themselves on expenses and using the increasing value of their real estate to paper over their overconsumption back into their mortgage. I imagine there's good money to be made in the coming years unethically hosing boomers on reverse mortgages.

Boomers are also on the receiving end of the largest inter-generational transfer of wealth in history. Inheritances.

Secondly, people aren't really black/white retiring anymore . . . . . they are gradually fading away through time, spending less hours working as they age and then, eventually, stopping altogether. But most are much healthier and simply get bored with black/white retirement. So working longer suits them to some extent. If you retire at 55, you could still have 25-30 more years of active life ahead of you. Quite a bit different than their parents who retired at 65 and died at 72. They can enjoy a quasi-retirement into their early 70's because they still have employment income and then their income needs fade a bit after that as their activities start to decline.

And there's the old standby of having your rat fink kids look after you just like you would if you were in Uganda.

It's a different environment than our traditional views of retirement.

Cowperson

[Red]

Top up CPP?

I think it would work for the people that don't trust the markets and banks.A guaranteed and timed pension.

http://business.financialpost.com/20...es-cibc-chief/

[bizaro86]

Interesting article. This quote from the article:

According to new research conducted by CIBC, almost 6 million Canadians will face a drop in living standards of more than 20% if current savings rate trends continue. “When we look at those 5.8 million people — we see that most of them are young.

Doesn't really mesh with this quote from Chemgear's article above:

Incredibly, the HSBC survey suggests that 47% of Canadians age 55-64 have never saved at all for retirement.

Because I've got to think that most people who get to 64 without saving anything are going to experience a drop in standard of living.

Maybe all generations are the same when it comes to savings, and don't want to do it.

[darklord700]

Originally Posted by Red

Top up CPP?
I think it would work for the people that don't trust the markets and banks.A guaranteed and timed pension.

Most people in my generation think CPP and OAS won't be there when we retire. No way I will contribute more into CPP.

[nik-]

Isn't a drop in living standards pretty much a sure thing anyway? Retirement income is nowhere near employed income, and there are still bills to pay.

[Red]

Originally Posted by darklord700

Most people in my generation think CPP and OAS won't be there when we retire. No way I will contribute more into CPP.

I read somewhere that the CPP is extremely well managed and unlikely to dry up.

Not sure who to believe though.

[bizaro86]

Originally Posted by nik-

Isn't a drop in living standards pretty much a sure thing anyway? Retirement income is nowhere near employed income, and there are still bills to pay.

Not sure, the quote was a 20% drop in standard of living, which seems like a lot.

Also, there are usually expenses associated with working (work clothes, commuting, lunch out) that you may not need when retired, so less income could end up with the same standard of living.

I know personally I could live on way less money with the same standard of living once my house was paid off, since the mortgage is my biggest expense.

[darklord700]

Originally Posted by nik-

Isn't a drop in living standards pretty much a sure thing anyway? Retirement income is nowhere near employed income, and there are still bills to pay.

Not usually. The expenses go down as well. No kids to support, no need to save for retirement, probably smaller and cheaper house, and just stay home and stare at walls all day doesn't cost as much as buying the latest big screen TV, cell phones, laptops or cars.

[Rathji]

Originally Posted by bizaro86

Not sure, the quote was a 20% drop in standard of living, which seems like a lot.

Also, there are usually expenses associated with working (work clothes, commuting, lunch out) that you may not need when retired, so less income could end up with the same standard of living.

I know personally I could live on way less money with the same standard of living once my house was paid off, since the mortgage is my biggest expense.

This pretty much is the crux of my retirement strategy right now.

That and never retiring.

[bizaro86]

Originally Posted by Red

I read somewhere that the CPP is extremely well managed and unlikely to dry up.

Not sure who to believe though.

The amended financing policy moved the CPP away from pay-as-you-go financing (with a small reserve) toward fuller funding. According to the Twenty-Fifth Actuarial Report, the CPP was 14.5 percent funded (with an unfunded liability of $748 billion as at December 31, 2009) and is projected to be 20 percent funded by 2020 (i.e. CPP assets are expected to cover about 20 percent of obligations), compared to about 7 percent funded at the time of the 1997 agreement.

http://www.hrsdc.gc.ca/eng/oas-cpp/r...0/page06.shtml

Basically, in the past the contributions were too low, so there is a huge underfunded liability. However, since they've increased the contribution rate, the underfunding is slowly getting paid up.

Essentially, those with most of their working years pre-1997 are getting a better pension than they paid for, and those with most of their working years post 1997 are getting a worse pension than they paid for.

But because current worker's are overpaying, the system should be sustainable now.

[Sylvanfan]

Well I'm one of those who'll be working till about the age of 70. I put money away when I was 20, still put it away today, but no way it's enough, or at least will be enough to scratch out a lifestyle that's worth living. I'll pay for my poor income earning job,, and lavish life choices I made in my youth, other things that were poor work choices too. Although in my own defence...I think I realize the consequences of my awful decisions and have for some time. So when you're in your 30's and see your failed future, it's depressing, but something you can at least come to grips with.

I tried to avoid being a financial failure, I really did. Just didn't work out for me. Like the judge says in Caddyshack...the world needs ditch diggers too. I somehow found a job that pays worse than ditch digger though.

[chemgear]

Originally Posted by Sylvanfan

Well I'm one of those who'll be working till about the age of 70. I put money away when I was 20, still put it away today, but no way it's enough, or at least will be enough to scratch out a lifestyle that's worth living. I'll pay for my poor income earning job,, and lavish life choices I made in my youth, other things that were poor work choices too. Although in my own defence...I think I realize the consequences of my awful decisions and have for some time. So when you're in your 30's and see your failed future, it's depressing, but something you can at least come to grips with.

I tried to avoid being a financial failure, I really did. Just didn't work out for me. Like the judge says in Caddyshack...the world needs ditch diggers too. I somehow found a job that pays worse than ditch digger though.

I sorta recall you moving a while back as part of some major changes. But you are (sound) fairly young. Can you be sure that things cannot change/be changed?

[firebug]

Originally Posted by Red

Top up CPP?

I think it would work for the people that don't trust the markets and banks.A guaranteed and timed pension.

http://business.financialpost.com/20...es-cibc-chief/

Couldn't one get the same benefit by purchasing an inflation protected annuity?

Or are there tax benefits provided via CPP?