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

[stone hands]

Originally Posted by CroFlames

I'm ever on the lookout to get leaner and leaner on the budget where I can.

I am curious if you have children?

I have two little financial burdens of joy running around now, I just don't see how I can make 24k work, even with zero debts.

unfortunately my wife can't get pregnant right now due to a pretty rare condition, but we hope to have 1 child some day

the lifestyle we lead definitely is not for everyone, nor would i expect most people to be able to get by on what we do. we make all of our own meals(we eat out maybe once a month?) we carry 0 debt outside of our mortgage, we bike commute/take transit instead of drive when possible and our hobbies are all either paid for or free once you have the equipment for it(hiking/cycling/music, video games)

we have a few perks that help that some people might not have, for example we both have company phones, so we just cancelled our phone plan recently. we dont have much of a bug for travel, though we do occasionally. 2 years ago we went to hawaii and this january we are going to mexico

it all depends on what you want to do, right? for me there is no singular thing i dislike more in the world than being at an office all day instead of being outside riding my bike or playing guitar or hanging out with my friends or reading a book or...pretty much anything. i'm perfectly content with saving my money vs buying a new car or eating at a restaurant or whatever because what i'm really spending my money on is buying freedom many many years sooner than I would otherwise. i was laid off from an o&g company for 3 months a few years ago and the clarity of just living life on my own terms was such a powerful motivator it changed my life

anyway sorry for my

[Oling_Roachinen]

Originally Posted by MoneyGuy

Advised by whom?

Here's a blog using a similar rule.

https://www.savvynewcanadians.com/mo...in-retirement/

RULE 4: PRE-RETIREMENT INCOME X MULTIPLES OF 10 TO 14
This rule suggests that you can calculate how much you need to save for retirement by multiplying your income just before retirement by a number between 10 and 14.

For example, say your income before retirement was $100,000/year. Following this rule, you should accumulate at least (depending on which multiple you’re working with):

Multiple of 10: $100,000 x 10 = $1 million
Multiple of 11: $100,000 x 11 = $1.1 million
Multiple of 12: $100,000 x 12 = $1.2 million
Multiple of 13: $100,000 x 13 = $1.3 million
Multiple of 14: $100,000 x 14 = $1.4 million … during your working years.
Rules 3 and 4 implicitly assume that you are using the income earned during your highest income-earning years as the basis of your calculation. This means that if you are a younger person in an entry-level position (i.e. low starting salary) who is looking at retiring early, calculations using these approaches will not work for you in the longer term.

[GGG]

Originally Posted by Oling_Roachinen

Following this logic, and correct me if I'm wrong GGG, this will result in no impact on the initial 1 million as well. Just working off the 40,000 passive income and 24,000 subsidies minus taxes.

Increase your spending by another 20k annually, and your nest egg will start dropping but it's going to last you another 28 years before it's gone.

EDIT: Oh, 0.04 is your SWR, gotcha. Will depend on circumstances when you retire but really 0.04 is an extremely safe number for typical retirees (read: old folks) and likely results in a higher principal. Of course some emergency spending or poor investments and the numbers change quickly but I'm not sold you need more than 1,000,000 to retire like nik- suggests, at least if you plan on retiring 'soon'.

Yes I was using no loss of Capital for retirement which I agree is overly conservative if you are retiring at 65 and own your own home as a buffer.

The general idea was that you can have a reasonable retirement with around 1 million of today’s dollars but I think as others have said it really defines how you define reasonable.

[chemgear]

Originally Posted by GGG

Yes I was using no loss of Capital for retirement which I agree is overly conservative if you are retiring at 65 and own your own home as a buffet.

[troutman]

Originally Posted by chemgear

Looks like Seafood Night at the Grey Eagle. How many crab legs can you fit on one plate?

[chemgear]

Originally Posted by troutman

Looks like Seafood Night at the Grey Eagle. How many crab legs can you fit on one plate?

There has to be some kind of joke comboing off of Asian people and their relatively high rates of savings, the misspelling of financial buffers, and that one old lady eschewing the decency of using utensils to just grab seafood with her bare hands. AND then saying "#### it, I'm using a whole other plate as a scoop! FU you, got mine!"

[Weitz]

My retirement is going to consist of golf and cocaine till I die. If I make it past 70 I will be very disappointed. Maybe kids will change my outlook - 65 ish sounds good too.

[Sliver]

Originally Posted by CroFlames

No, but property taxes and utilities eat up a good $6-7k a year. Add $3000 in insurance and gas for one vehicle you are eating up almost half of that $24k.

I imagine these costs will be a good 25% higher at least when I'm set to retire.

I'd like my children to come visit me when I'm retired (hopefully with their children) and we get to do some cool things like maybe go to the zoo or drive to West Edmonton Mall. I imagine a good chunk of money will go to entertainment when I'm retired.

If I didn't have kids, I suppose I could do more with less, but I want them to be involved in my life in the future.

$24k seems unrealistically low. Even if your house is paid for, it's still going to need maintenance. I've read about 5% of the value of your home per year should be budgeted as your maintenance expense. Not sure what the exact number is, but they don't maintain themselves and there are plenty of home repair and maintenance items that are far from free and aren't optional. A furnace replacement is going to be 20% of your yearly budget? What if the roof goes the same year? I mean, $24k just isn't enough. I can't see it.

And that doesn't even touch on any of the other expenses you could face in a year. You need to go to the dentist. You need to repair your car/bike/replace your shoes. Clothes, furniture, carpet, linoleum all wear out. What if you have a house fire? You have insurance, but there are still going to be costs and deductibles. Car accident? Speeding ticket? Need glasses? What if you get sued and need a lawyer? What if you need a wheelchair?

[Slava]

Originally Posted by Sliver

$24k seems unrealistically low. Even if your house is paid for, it's still going to need maintenance. I've read about 5% of the value of your home per year should be budgeted as your maintenance expense. Not sure what the exact number is, but they don't maintain themselves and there are plenty of home repair and maintenance items that are far from free and aren't optional. A furnace replacement is going to be 20% of your yearly budget? What if the roof goes the same year? I mean, $24k just isn't enough. I can't see it.

And that doesn't even touch on any of the other expenses you could face in a year. You need to go to the dentist. You need to repair your car/bike/replace your shoes. Clothes, furniture, carpet, linoleum all wear out. What if you have a house fire? You have insurance, but there are still going to be costs and deductibles. Car accident? Speeding ticket? Need glasses? What if you get sued and need a lawyer? What if you need a wheelchair?

All I can say is that I don't think in my years of asking people what kind of income they're after for retirement that anyone has said $24k. I've heard a lot of variety, mainly depending on how they live at that time, but that strikes me as subsistence living. I know some people do that, and whatever makes you happy, but personally it doesn't do it for me.

That's one of the issues I have with the FIRE plans though. It seems like it would be incredibly demanding in terms of lifestyle and austerity. I don't know that I could just willingly accept 50-60 years of that.

I guess the bonus is that government programs and CPP will meet the goals though.

[GGG]

Originally Posted by Sliver

$24k seems unrealistically low. Even if your house is paid for, it's still going to need maintenance. I've read about 5% of the value of your home per year should be budgeted as your maintenance expense. Not sure what the exact number is, but they don't maintain themselves and there are plenty of home repair and maintenance items that are far from free and aren't optional. A furnace replacement is going to be 20% of your yearly budget? What if the roof goes the same year? I mean, $24k just isn't enough. I can't see it.

And that doesn't even touch on any of the other expenses you could face in a year. You need to go to the dentist. You need to repair your car/bike/replace your shoes. Clothes, furniture, carpet, linoleum all wear out. What if you have a house fire? You have insurance, but there are still going to be costs and deductibles. Car accident? Speeding ticket? Need glasses? What if you get sued and need a lawyer? What if you need a wheelchair?

I think 5% is very high. .5% for day to day plus another .5% for major seems sufficient if you aren’t doing major renovations. That’s still 5k per year on the average Calgary house though.

I don’t think you need to be concerned about concurrent failures because statistically the costs average out overtime and you are sitting on a large sum generating a passive income. So if the furnace goes and the roof goes that year is a little larger but the next 5 are less. The mistake the average person makes is not Saving the money in the good years.

[troutman]

https://www.comfortlife.ca/retiremen...-costs-alberta

According to the CMHC’s Senior Housing Report for 2018, the average cost of renting a seniors’ housing space in Alberta was $2,780 per month. Actual costs you will pay will vary widely based on needs and other factors (see more below).

[redforever]

Originally Posted by GGG

I think 5% is very high. .5% for day to day plus another .5% for major seems sufficient if you aren’t doing major renovations. That’s still 5k per year on the average Calgary house though.

I don’t think you need to be concerned about concurrent failures because statistically the costs average out overtime and you are sitting on a large sum generating a passive income. So if the furnace goes and the roof goes that year is a little larger but the next 5 are less. The mistake the average person makes is not Saving the money in the good years.

$5000 will not get you very much for any type of house maintenance, especially for a senior who will not be doing the work by themselves.

[Enoch Root]

Originally Posted by Oling_Roachinen

Here's a blog using a similar rule.

https://www.savvynewcanadians.com/mo...in-retirement/

That rule would have been more than adequate when life expectancy was lower. Even if you're looking at low to mid 80s, it's probably fine. But it is asking for trouble for people that cruise into their 90s.

[blankall]

$24 per year plus CPP per year with no rent is doable, but you'd be happier with $50k plus CPP.

Assuming you are willing to downsize to a condo, it's not that far off from the initial estimate of $1 million.

[Enoch Root]

Here's the thing when you're talking about how much you need:

If you under-estimate it, you outlive your money and spend your twilight years pinching pennies.

If you over-estimate it, you leave some to your kids or your favourite cause.

It's a rather asymmetrical risk/reward trade-off.

Also, if you have bad timing as to when you retire, it can significantly change the math. experiencing a significant market correction in the early years of retirement can put you back far enough that you never recover. Many people that retired in 1999 and in 2007/08 ended up going back to work - or at least trying to.

[rubecube]

Originally Posted by Weitz

My retirement is going to consist of golf and cocaine till I die. If I make it past 70 I will be very disappointed. Maybe kids will change my outlook - 65 ish sounds good too.

I have a friend who sort of does this. Retired at like 45 (now 50), works the odd job here and there, spends most of his time doing blow, drinking, and shooting guns. Also has a pretty attractive 27 year-old girlfriend, and he's not really a looker himself.

Can't imagine he'll make it to 70 but I don't think he has any complaints.

[rubecube]

Originally Posted by Oling_Roachinen

Here's a blog using a similar rule.



https://www.savvynewcanadians.com/mo...in-retirement/

Haha, I'd have to save like $2800/month from now until retirement age to hit that. That said, I have a pension, so I should be alright.

[Weitz]

Originally Posted by rubecube

I have a friend who sort of does this. Retired at like 45 (now 50), works the odd job here and there, spends most of his time doing blow, drinking, and shooting guns. Also has a pretty attractive 27 year-old girlfriend, and he's not really a looker himself.

Can't imagine he'll make it to 70 but I don't think he has any complaints.

Ah. Living the dream.

[Mr.Coffee]

Originally Posted by redforever

$5000 will not get you very much for any type of house maintenance, especially for a senior who will not be doing the work by themselves.

Sorry, what?! $5,000/annum “will not get you very much for any type of house maintenance”???

I’m legitimately asking if you are for real here?

What are you doing to your house every year?

[Mr.Coffee]

Originally Posted by Weitz

Ah. Living the dream.

Is it?