The bubble finally deflating. not bursting.............

[stampsx2]

Originally Posted by GGG

When you begin paying into this plan you have an equal probability of being on the long end or the short end. Therefore you pay in for the expected value of your payout. Since you pay in for your expected value you aren't subsidizing anyone.

If we pay into an rrsp and could opt out of cpp, we would have a guaranteed investment weather we go long or short. Million times better than the huge investment risk of cpp I never asked for.

[stampsx2]

Originally Posted by Jason14h

Do you look at insurance the same way? That's all CPP is, an insurance of income if you live a long time

Best argument I've heard. Seriously. Never thought of it that way. My only argument is insurance is an option but cpp isn't. But thanks.

[d00little]

Originally Posted by stampsx2

Best argument I've heard. Seriously. Never thought of it that way. My only argument is insurance is an option but cpp isn't. But thanks.

You mean I don't need to get automobile insurance?

[GGG]

Originally Posted by stampsx2

If we pay into an rrsp and could opt out of cpp, we would have a guaranteed investment weather we go long or short. Million times better than the huge investment risk of cpp I never asked for.

Now you have moved the goalposts. Whether or not CPP is a good investment is a different debate I was merely saying the government is stealing from you and you are subsidizing anyone if you die early are not valid criticisms of the CPP.

I would argue though that you are underestimating the risk in an RRSP and significantly overestimating the risk of a solvent defined benefit plan.

[stampsx2]

Originally Posted by d00little

You mean I don't need to get automobile insurance?

Automobile insurance is a little different. An accident you cause affects others. if you don't get life insurance that's your problem.

[Jason14h]

Originally Posted by stampsx2

Automobile insurance is a little different. An accident you cause affects others. if you don't get life insurance that's your problem.

If a person doesn't have any income at 95 years old they are either on the street or someone is paying for them/it is having an effect

Personally I hate CPP, but when I see so many people who have no savings or under 10$k savings in their 30s I get why we need it

[Bend it like Bourgeois]

Originally Posted by Jason14h

If a person doesn't have any income at 95 years old they are either on the street or someone is paying for them/it is having an effect

Personally I hate CPP, but when I see so many people who have no savings or under 10$k savings in their 30s I get why we need it

Thing is, it's pretty crap at its job of being a social program.

If your 95yr old had never saved a nickel he'd get 1-2k monthly in social funding from various programs. Maxed out CPP could add 1k per month, but chances are it'd create some claw backs and most people don't max out. So it helps, but doesn't change a sparse living.

On the flip side for the right to that little top up a fairly avg Canadian could pay 25-50% higher taxes every year for 40 years. If you make more than 50k the impact gets smaller, but if you make less the impact is bigger. Imagine being a lower income CDN who's tax rate is effectively doubled so they can maybe someday get a couple hundred bucks a month in older years. To a value less than they paid in, unless they live to 90 or so. It's a steep bill.

[CliffFletcher]

And at the same time, part of what sparked the Estate Tax debate is the fact that CPP and OAS are not magic, they are pension funds and the current generation drawing from those funds are drawing significantly more than they contributed, this is what makes most modern pension funds a Ponzi scheme, they constantly have to find new suckers to contribute to pay the old suckers who are collecting.

Few things tick me off more than hearing crabby old Boomers calling for immigration to be cut. They get infuriated when I point out to them that people my age need more immigrants to help us pay for the social programs that Boomers are going to suck dry. As a generation, they're in complete denial about how important favourable demographics have been to their own security and affluence, and how younger generations are getting shafted by an ageing population.

[bizaro86]

Originally Posted by GGG

When you begin paying into this plan you have an equal probability of being on the long end or the short end. Therefore you pay in for the expected value of your payout. Since you pay in for your expected value you aren't subsidizing anyone.

Except for the decades and decades of undercontributions by the boomers and previous generations that those currently working are catching up for.

We're definitely subsidizing them.

Edited to add: t least the younger boomers are playing catch up now. The folks who retired in the 90s got an unbelievable deal on CPP, paid for by currently working generations. I can sort of see the ponzi scheme characterization, because those generations left the tank empty and require future suckers to pay the bill. It would have collapsed except participation is mandatory so people couldn't quit when it became a terrible deal.

[stampsx2]

Originally Posted by CliffFletcher

Few things tick me off more than hearing crabby old Boomers calling for immigration to be cut. They get infuriated when I point out to them that people my age need more immigrants to help us pay for the social programs that Boomers are going to suck dry. As a generation, they're in complete denial about how important favourable demographics have been to their own security and affluence, and how younger generations are getting shafted by an ageing population.

Well that's weird. That's not my post in your quote.

[stampsx2]

Originally Posted by Jason14h

If a person doesn't have any income at 95 years old they are either on the street or someone is paying for them/it is having an effect

Personally I hate CPP, but when I see so many people who have no savings or under 10$k savings in their 30s I get why we need it

The government could say that 10% of your monthly income must go into an approved government retirement savings account. As cpp stands right now, the government is getting an exceptional deal, an interest free loan for 20-40 years.

For anyone that doesn't know cpp will be going up in 2019. The max contribution will go from $54,000 to $83,000. That little extra many people get at the end of year will disappear.

https://beta.theglobeandmail.com/glo...service=mobile

It means an extra $9 a month to start then $43 extra a month when fully phased in. A nickel here, a dime there.

[CliffFletcher]

Originally Posted by stampsx2

Well that's weird. That's not my post in your quote.

Sorry, I must have edited an embedded post. Fixed.

[Locke]

Originally Posted by stampsx2

The government could say that 10% of your monthly income must go into an approved government retirement savings account. As cpp stands right now, the government is getting an exceptional deal, an interest free loan for 20-40 years.

For anyone that doesn't know cpp will be going up in 2019. The max contribution will go from $54,000 to $83,000. That little extra many people get at the end of year will disappear.

https://beta.theglobeandmail.com/glo...service=mobile

It means an extra $9 a month to start then $43 extra a month when fully phased in. A nickel here, a dime there.

Oh....and thats just the start.

They're just gradually turning up the heat on the frog in the jar.

[CliffFletcher]

Originally Posted by stampsx2

The government could say that 10% of your monthly income must go into an approved government retirement savings account. As cpp stands right now, the government is getting an exceptional deal, an interest free loan for 20-40 years.

Okay, but what would the admin costs be on those accounts, compared to the CPP admin costs? Frankly, I'd rather the government make money off my money than the banks.

[stampsx2]

Originally Posted by CliffFletcher

Okay, but what would the admin costs be on those accounts, compared to the CPP admin costs? Frankly, I'd rather the government make money off my money than the banks.

I see more of my own money when i invest it with the banks. At least I get some interest out of it and I'm almost guaranteed to get my investment back. Neither is the case when the government gets your money. Banks are competitive and have to be efficient. The government's a monopoly - the definition of monopoly is wasteful spending.

[puckedoff]

I get why we need CPP, but I wish I could opt out. I am fully capable of saving/investing that money on my own, and when my love of cheeseburgers inevitably clogs my arteries that money should go to my spouse and kids. To me it seems like it is a tax on sensible people and a boon for the irresponsible.

[Sylvanfan]

Originally Posted by CliffFletcher

Okay, but what would the admin costs be on those accounts, compared to the CPP admin costs? Frankly, I'd rather the government make money off my money than the banks.

I guess that might be the fundamental difference in how Capitalists think.

I'm okay with a publically traded bank that I can buy shares in making money, or some other professional in the financial sector whom I have appointed.

I'd much prefer that to the government trying to do so.

In both cases, the people can get screwed. Crooked financier, or mismanagement by the government. But I guess I trust the governments laws to throw the crooked financier in the klink moreso than the government to be accountable with the money.

[puckedoff]

Originally Posted by CliffFletcher

Okay, but what would the admin costs be on those accounts, compared to the CPP admin costs? Frankly, I'd rather the government make money off my money than the banks.

The banks still make money on the funds invested with CPP. Its not like those funds have exited the market, they are trading shares and engaging in M&A.

[CliffFletcher]

Originally Posted by puckedoff

The banks still make money on the funds invested with CPP. Its not like those funds have exited the market, they are trading shares and engaging in M&A.

Sure. But my company RRSP plan has lower admin fees than I would get investing that money in a managed RRSP by my lonesome, because my company can negotiate a better rate for a group plan. I would think the CPP has even greater leverage to secure low management fees.

[GGG]

The question of whether CPP is a good deal should be what is the equivalent cost of a lifetime gurenteed defined benefit plan cost on the private market. Are there any similar products out there right now and if so what do they cost?

I do think one issue with the CPP now though is that the liabilities from underfunding for years are being born by the CPP and rather than by the government. So one portion of the CPP is an investment the other portion is tax recovery. If you got rid of the tax recovery portion you could make a much better assessment on the value the CPP brings and be much more transparent on the boomer tax.