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

[Igster]

Originally Posted by rd_aaron

What's your retirement plan, if you don't mind me asking? Does "living paycheque to paycheque" include some sort of savings? Do you have a pension? I get the feeling if you continue your current lifestyle you'll be forced to eat KD & hot dogs through your 70s, 80s, 90s..

lol...retirement, that's funny. As I mentioned in the retirement thread, my retirement will be clutching my chest and hitting the floor. I'll be working most likely until I can't anymore. Then it will be KD and hot dogs. I know what's coming. I'm just trying to enjoy life as much as I can now.

[GP_Matt]

Once you retire you can collect maximum OAS and CPP and possibly GIS ( I am not really sure how that one works)
That gives you ~$40000 to a year and no taxes for the most part.
Income - $3333 a month (taxes should be negligible)
Rent a cheap apartment - $1000/month
One older vehicle - $400/month (all in)
Food for two - $800 (I don't actually know how much food costs are)
That leaves you $1133 a month for everything else including going to the pub on occasion.

There won't be any international vacations or fancy cars but you should be able to afford the good ketchup to flavour your KD.

[Igster]

Woot! Top shelf ketchup!

[FlamesAddiction]

Originally Posted by blankall

Housing prices will always outpace pay rates in a growing population. If you have twice as many people living in North America, demand will increase, and prices will rise disproportionally.

Unfortunately, we are seeing a shift that occurs whenever population density increases. After you reach a certain point, it no longer becomes economical to own. It's not an entirely bad thing, as other equally good investments to property exist. If you look at places like NYC, Berlin, London, etc... few people own. It's actually the norm for housing to be unaffordable in major cities. The idea of owning a house with a yard and fence is a very North American concept.

As housing prices go up, so do rent prices. Either way, living is getting more expensive compared to what people actually make.

I'm not sure that it isn't just the market correcting itself after a the past few generations were able to take advantage of buying power that wasn't sustainable; but either way, the cost of living relative to salaries is changing fairly drastically.

I'm also not sure that I agree completely that owning a house is a North American concept, but it's just that they (Europe) are ahead of us. We can see where we are going by looking at where they are now. None of the young people I know in Europe are happy either about the thought that they will never have the independence of owning a home or paying rent that doesn't leave them broke every month.

I believe a lot of it is by design too. In cities like Toronto and Vancouver, developers saturated the market with single dwelling condos, thereby making family homes more of a rarity which has increased the demand. It's not uncommon to see houses in "middle class" neighbourhoods go for $100k to $200k above asking price. Half the time they end up back on the market as rental properties.

[bubbsy]

it is scary what's going on, in my opinion.

living here in toronto, your average house is about 550k in the GTA, though you can't really get much decent until your in the 650k range...

i look around, and am so curious as to how people can afford housing. What scares me is if the interest rates ever do go up, there will be a major, major economic shock for the majority of canadian middle class families who have a home.

[Igster]

Originally Posted by FlamesAddiction

As housing prices go up, so do rent prices. Either way, living is getting more expensive compared to what people actually make.

Yeah...my wife and I pay $1400 a month for an "ok" place. Nothing special. Basically one of our 4 pays (we both get paid twice a month) goes to rent alone. Boom...gone. And that covers rent. Nothing else included with it.

[darklord700]

http://www.calgaryherald.com/busines...231/story.html

AB's median net worth rose 71.5% between 1999 and 2012. I think a lot of it came from the doubling of housing prices.

[GP_Matt]

Originally Posted by fotze

You get $40k per year if you have nothing saved for retirement?

I think so. That is if you are a couple with no other sources of income. I think the guaranteed income supplement gets clawed back pretty fast if you have any income to show.

[nik-]

Originally Posted by Igster

Woot! Top shelf ketchup!

Dijon ketchup.

[crazy_eoj]

What a bunch of claptrap! Here's some data from Stats Can:

The median net worth of Canadian family units was $243,800 in 2012, up 44.5% from 2005 and almost 80% more than the 1999 median of $137,000, adjusted for inflation.

Huge increases in value of Pension Assets along with people owning their homes.

http://www.statcan.gc.ca/daily-quoti...5b-eng.htm?HPA

[darklord700]

Originally Posted by fotze

You get $40k per year if you have nothing saved for retirement?

Not really. If you have no other income from CPP or RRSP for example. Your maximum OAS+GIS is about 1300 per month or 15600 per year for a single person or widower.

For couples it is about $1050 per person per month or just over $24000 per year for both.

Once you start getting CPP, it starts crawling back about about 16,000 so it is unlikely you'll get $40K free money regardless. Also, you have to contribute to get CPP which maxed out at 1,000 per person per month right now.

But 90% of the people won't get full CPP even if you work the majority of your working life. If both persons work a lot in their working life and earning close to maximum CPP salary, both of you probably will get about 75% of max. CPP or about $1500 per month. Tact that onto max OAS+GIS might get you $40K per year but you have to account for clawback.

[Peanut]

Originally Posted by fotze

You get $40k per year if you have nothing saved for retirement?

Maybe now, but nothing will be left by the time we retire.

[FlamesAddiction]

Originally Posted by bubbsy

it is scary what's going on, in my opinion.

living here in toronto, your average house is about 550k in the GTA, though you can't really get much decent until your in the 650k range...

i look around, and am so curious as to how people can afford housing. What scares me is if the interest rates ever do go up, there will be a major, major economic shock for the majority of canadian middle class families who have a home.

Not to mention that it is getting more and more common in the GTA to have to give a 20% down payment as a minimum.

My wife and I just bought a house in a rural community about 50km east of Scarborough, and even there some houses were going for $50k above asking price. And having a reliable vehicle isn't just a luxury when you are that far out.

I'm actually not too worried about affording it. I think we got lucky compared to a lot of other people I know.

[nik-]

Originally Posted by Peanut

Maybe now, but nothing will be left by the time we retire.

Yes it will.

[chemgear]

Originally Posted by fotze

I wish you could check how much you have paid in taxes and CPP over the years, would be cool numbers to see.

I'm a numbers person, but when you say "cool" I assume you mean "crushingly depressing".

[V]

Huh, I thought CPP and OAS was closer to a max of $26,000 per year, not 40k. If you get $26k and have a house paid off you shouldn't need much more.

[Peanut]

Originally Posted by nik-

Yes it will.

Well ok then, I stand corrected.

[V]

If I go to the calculator on the service Canada website it confirms that I'll start collecting just under 18k for CPP at the age of 70 and about 9k for OAS when I turn 72. I suppose if your wife works full time as well she'll get that as well?

[nik-]

Originally Posted by Peanut

Well ok then, I stand corrected.

Well you can google it too.

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

In fact, current CPP contributions exceed payouts ($35.86 billion vs. $31.9 billion) — a situation that's likely to continue for another 10 years. Only then, as more Canadians draw benefits and comparatively fewer working Canadians are contributing, will the CPP have to start drawing on investment income to help pay pensions.

The bottom line from the chief actuary: the CPP will be there for you, your kids and your grandkids. For most private pension plans and RRSPs, there are no similar guarantees.

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

In 2010, the government’s chief actuary confirmed that the CPP is sustainable for the next 75 years, despite bumpy investment returns and millions of baby-boomers retiring.

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

 With the legislated contribution rate of 9.9%, contributions are projected to be more than
sufficient to cover the expenditures over the period 2013 to 2022. Thereafter, a proportion
of investment income is required to make up the difference between contributions and
expenditures. In 2050, 27% of investment income is required to pay for expenditures.

[Devils'Advocate]

Originally Posted by crazy_eoj

What a bunch of claptrap! Here's some data from Stats Can:

The median net worth of Canadian family units was $243,800 in 2012, up 44.5% from 2005 and almost 80% more than the 1999 median of $137,000, adjusted for inflation.

Huge increases in value of Pension Assets along with people owning their homes.

http://www.statcan.gc.ca/daily-quoti...5b-eng.htm?HPA

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:

While Canadian’s net worth has increased significantly since 2005, mostly due to increases in housing prices, the real story is one of persistent economic inequality and rising debt.

The top twenty percent of Canaidans have over 67% of the net wealth.
The bottom 60%, in contrast, have only 11.1% percent of net wealth.
The top 40 percent have 88.9 percent while the lowest quintile doesn’t even register. This poorest 20% have a median net worth of $1,100 compared to $1.4 million for the highest quintile. Overall, the distribution is slightly better than in 2005, but remains very unequal.

Increasing family debt levels should cause concern as well. 25% of families now have a line of credit with a median value of $15,000, up from 15% in 1999 and with a median value of $6,600. And the squeeze on Canada’s young people continues: family units with the major income recipient under 35 years old had the highest debt load in 2012. This may be partly due to the fact that money owed on student loans was up 44.1% since 1999, totaling $28.3 billion.

Finally, there is also more evidence that Canadians are relying on housing for their retirement security with the median value of RRSPs at an inadequate $48, 000. All in all, further disturbing evidence that economic inequality remains a serious concern.

(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".