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

[Enoch Root]

Originally Posted by PepsiFree

That suggesting "$200k is squarely middle-class" is ridiculous.

It's not. Let's not pretend it is. "Ah jeeze $4M really ain't much money guys" is such a privileged, insane statement.

Make whatever you want to make. Shoot for $200k if that's your jam, but people making that and thinking "I'm just like everyone else! Life is a slog, isn't it? Having this income is nice I guess but it could be a lot more!" is just profoundly ignorant of how the vast majority of people, and the actual middle class, lives.

That's all. Get back in touch with reality a bit.

I never said that. I am fully aware that $200k is above average, thanks. But for all of you that are outraged about the $200k number, I ask again: is that more than we want to allow in our society? Is that too much?

Again, 2 nurses, with 10 years of tenure, would make that. Yes, it is well above average, but it is not crazy. It is not uber-wealthy and in need of changing the system, or requiring luxury taxes.

[PepsiFree]

Originally Posted by Enoch Root

the problem however, is that you don't know how long you are going to live. Once the principal starts to erode, it continues to turn downward and erodes more quickly. If you run out of money, you're screwed. So you need to be able to live off of the income alone, in order to be secure.

As for needing less when older, yes, people tend to spend less as they get into their 80s and beyond. However, there is such a hing as inflation, and $200k, 30 years from now, will not be all that much money.

Also, health costs can increase dramatically.

Based on the change in the last 30 years, 200k would be equivalent to about 120k, which, yes and again, is a lot of money.

[iggy_oi]

Originally Posted by Enoch Root

You clearly have not followed the conversation along to this point.

I’ve followed enough to see you were using the example of a $200k pre-tax income and then tried to argue that taxing the #### out of that income would somehow reduce the pre-tax income. Carry on.

[PsYcNeT]

I get that people talk about wealth relative to assets, but in a Province that has the highest median household income in the country, saying that double the median income is "above average" is frankly, so dispassionate and tone-deaf I would laugh if it wasn't so sad.

[Locke]

Originally Posted by Scroopy Noopers

Maybe this is the answer to wealth redistribution and job creation?

The NDP were ousted before they could amend the free Lightbulb program to include complimentary Yachts.

Thanks for nothing Notley! If she really cared about people she would have been distributing Yachts!

Everyone knows this is the true path to both Economic and Ecological Enlightenment.

[Enoch Root]

Originally Posted by opendoor

He is though:

What I am saying is that, unless you are fortunate enough to have a DB pension that will never run out, the only way that you can be sure that you won't outlive your money is to be able to live off of the income.

Sure, if you are in your 90s and are sure that you are not going to be around for too many more years, and also that your medical expenses aren't going to skyrocket, then sure, you can start to erode the principal.

But that doesn't change the point about what is required in order to secure your future.

[PepsiFree]

Originally Posted by Enoch Root

I never said that. I am fully aware that $200k is above average, thanks. But for all of you that are outraged about the $200k number, I ask again: is that more than we want to allow in our society? Is that too much?

Again, 2 nurses, with 10 years of tenure, would make that. Yes, it is well above average, but it is not crazy. It is not uber-wealthy and in need of changing the system, or requiring luxury taxes.

Dude, you said it was squarely middle class, which it is not.

And yes, there is a big difference between a family income of $200k and an individual income of $200k, so clarifying that makes more sense.

Why are you getting so defensive about "changing the system" and such? The point was just simply that it's a LOT of money, we don't need to pretend it's not. Who is outraged about it? Nobody, we're just correctly pointing out that it's a lot of money for the vast majority of the population.

[CroFlames]

It is a lot of money, and the crux of this thread.

People should probably be focusing more on saving for retirement more than ever. Millennials and other working demographics are likely going to live into their 90s.

If you want to live comfortably 30-35 years after you retire, you probably are going to require an income of $150-$200k/year (remember, inflation).

To have that income, you should have amassed about $4-5million in savings.

That's the hard truth for most people who aren't inheriting anything.

[Enoch Root]

Originally Posted by PepsiFree

Based on the change in the last 30 years, 200k would be equivalent to about 120k, which, yes and again, is a lot of money.

I am curious if you feel that saving enough, in order to have a retirement income stream of the same size and the same security as two teachers with 2 DB pensions, is reasonable, or completely out of touch?

Two teachers, who worked for 30 years, would likely have somewhere between $75k and $100k in defined benefit pension income. Possibly more.

In order for a couple without a DB pension to be in the same boat, they would need $3 - $4M in savings, to generate the same income with similar security.

Is it okay for your teachers, but way out of whack with reality if it is done privately through savings?

[The Fonz]

Originally Posted by PepsiFree

$200k pre-tax puts you in the top 2% of the income-generating population (on the cusp of the 1%).

https://www150.statcan.gc.ca/t1/tbl1...pid=1110000801

It's scary how warped people's ideas of middle-class has become.

I think he means $200k household, not individual.

I don't have the numbers, but I'd guess that a $200k household income would put you somewhere in the upper half of 'middle class', so not far out of line with what Enoch Root was suggesting. Like I said though, that's just my guess.

[sa226]

Presumably if you've saved that amount of money and were financially prudent, then your house would be paid off and you wouldn't have any debt to speak of.

Also if you've saved that amount of money, you wouldn't need to "save" more. Your saving days are over, now is time for your spending days.

Having said all that, what retiree needs 150K a year? The after tax income on that is roughly 100k. So when retired, you're going to be spending 8300$ a month? With no mortgage, no pension or savings deductions, no car payments. Just blowing 8300 buckaroos a month?

Yes inflation, and yes oversimplifiying, but I think we're overestimating retirement income needs.

[Slava]

Originally Posted by sa226

Presumably if you've saved that amount of money and were financially prudent, then your house would be paid off and you wouldn't have any debt to speak of.

Also if you've saved that amount of money, you wouldn't need to "save" more. Your saving days are over, now is time for your spending days.

Having said all that, what retiree needs 150K a year? The after tax income on that is roughly 100k. So when retired, you're going to be spending 8300$ a month? With no mortgage, no pension or savings deductions, no car payments. Just blowing 8300 buckaroos a month?

Yes inflation, and yes oversimplifiying, but I think we're overestimating retirement income needs.

It's not completely out of line to suggest that people want that first 10-12 years of retirement to have an income that is about equal to where they are in the workforce though. I generally plan for that first decade to have a lot of spending because people are retired and want to do things they've put off (whether they should put everything off until retirement is a different discussion). But for the first years, they're more active and doing more things which invariably cost money.

As they age, they might spend less on these activities and we plan for that as well. But a key consideration is that we're never planning for people to spend their last dollar and then die. It's completely irresponsible to even consider that. I've clients say "95! I'll never live that long!" and they might be right. But I'm also not planing to call them at 85 and explain that I thought they'd be dead by now and they've run out of money.

[PsYcNeT]

Originally Posted by The Fonz

I think he means $200k household, not individual.

I don't have the numbers, but I'd guess that a $200k household income would put you somewhere in the upper half of 'middle class', so not far out of line with what Enoch Root was suggesting. Like I said though, that's just my guess.

https://www.compareyourincome.org/in...lity_in_canada

According to this tool, 160,000k+ household before tax has you in the top 10% of earners in Canada.

I believe their dataset is based on Statscan and Pew Research.

There is a pretty large income disparity, not as large as say, Brazil, but definitely not small. And it's growing.

[PepsiFree]

Originally Posted by CroFlames

It is a lot of money, and the crux of this thread.

People should probably be focusing more on saving for retirement more than ever. Millennials and other working demographics are likely going to live into their 90s.

If you want to live comfortably 30-35 years after you retire, you probably are going to require an income of $150-$200k/year (remember, inflation).

To have that income, you should have amassed about $4-5million in savings.

That's the hard truth for most people who aren't inheriting anything.

My only point is that you do not, actually, need that amount of money to live "comfortably" in retirement.

It's this prevalent idea of greed, and "more" that I think is a bit distressing and why people are, overall, very bad with their money. That much money ($150k-$200k, household) is enough to live comfortably with a mortgage, two car payments, and two kids, unless you have a spending problem. If you bought too big a house, or your cars are too expensive, or whatever, it's not a lot, but if you're in that situation you're not saving $4M anyways.

I struggle to understand people who think you need $150k+ for two people to get by comfortably with bare minimum expenses. What are you spending your money on? Break it down for me, and help me understand.

[stone hands]

some of these figures are insane for retirement

read up on the 4% safe withdrawl rate and reign in your spending a little bit

[rubecube]

Originally Posted by Enoch Root

Are you arguing that $200k per year is too much and the system should not encourage it? It's too much, is that what you're saying?

We should tax the #### out of people so they never make that much? What point are you trying to make here?

Literally no one in this thread is making any of these arguments towards households making a combined $200k

[PepsiFree]

Another stat, this one a little older, but it gives you an idea of how crazy "$150-200k" for retirement is:

https://www150.statcan.gc.ca/t1/tbl1...pid=1310036401

This suggests that of people making a retirement income, only 3% take in over $60k (so that'd be $120k household).

Are people really suggesting only 3% of all retirees are "comfortable"?

What is comfort to some people?

[Slava]

Originally Posted by PepsiFree

My only point is that you do not, actually, need that amount of money to live "comfortably" in retirement.

It's this prevalent idea of greed, and "more" that I think is a bit distressing and why people are, overall, very bad with their money. That much money ($150k-$200k, household) is enough to live comfortably with a mortgage, two car payments, and two kids, unless you have a spending problem. If you bought too big a house, or your cars are too expensive, or whatever, it's not a lot, but if you're in that situation you're not saving $4M anyways.

I struggle to understand people who think you need $150k+ for two people to get by comfortably with bare minimum expenses. What are you spending your money on? Break it down for me, and help me understand.

OK, so how much do you figure that you need to live comfortably in retirement on a monthly or annual basis?

[stone hands]

Originally Posted by Slava

OK, so how much do you figure that you need to live comfortably in retirement on a monthly or annual basis?

not who you asked, but my retirement income requirement is going to be about 45k a year until my house is paid off, at which point it drops to 24k

[CroFlames]

Originally Posted by PepsiFree

My only point is that you do not, actually, need that amount of money to live "comfortably" in retirement.

It's this prevalent idea of greed, and "more" that I think is a bit distressing and why people are, overall, very bad with their money. That much money ($150k-$200k, household) is enough to live comfortably with a mortgage, two car payments, and two kids, unless you have a spending problem. If you bought too big a house, or your cars are too expensive, or whatever, it's not a lot, but if you're in that situation you're not saving $4M anyways.

I struggle to understand people who think you need $150k+ for two people to get by comfortably with bare minimum expenses. What are you spending your money on? Break it down for me, and help me understand.

My thought process is that $150k right now is a decent salary and enough to live comfortably.

I think 35 years from now when some of us gear up to retire, $150k won't be that much. 60 years from now when we are 90, $150k may not be dick all for all we know. Maybe the world economy undergoes high inflation? Climate change causes economic hardships? Who knows.

I think reigning in your spending early on to save for later on is prudent and aiming for a $150k incoming is a decent goal. I'd like to travel in retirement and golf. I don't plan on being a boring ass old guy.