Author Topic: Canadians approaching retirement with totally inadequate savings...  (Read 4158 times)

kfire20

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Broadbent Study Synopsis: http://goo.gl/3P4l6p
Full Report: There's a link to the full report at the bottom of the synopsis
CBC audio interview with researcher: http://www.cbc.ca/player/AudioMobile/Maritime%2BNoon/ID/2683749042/  [at 10:14 mark]

Researcher: "Only 20% of Canadians who do not have an employer pension have more than 5 yrs. of savings for retirement"
                  "median income for those without employer pension is $18,000"

Zikoris

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Re: Canadians approaching retirement with totally inadequate savings...
« Reply #1 on: February 17, 2016, 10:35:11 AM »
I'd believe it, but Canadians are not in that bad a situation, even without savings. Health care is totally free for low income people, and outside of the big cities, cost of living can be quite low. A lot of the people in the age group they're talking about also own houses that have appreciated a ton, and intend to sell and move to cheaper places with the proceeds in retirement. Not to mention, a lot of them have no intention of retiring for several more years.

kfire20

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Re: Canadians approaching retirement with totally inadequate savings...
« Reply #2 on: February 17, 2016, 10:43:51 AM »
...Canadians are not in that bad a situation....

Good point of view for discussion. Here are the basics for a Canadian income according to the researcher. It would be interesting to break down real-life monthly costs for someone at age 65 with the following numbers.

Old Age Security: At age 65 < $7,000
Canada Pension Plan: < $12,000

Median estimate: $18,000

Zikoris

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Re: Canadians approaching retirement with totally inadequate savings...
« Reply #3 on: February 17, 2016, 12:33:12 PM »
...Canadians are not in that bad a situation....

Good point of view for discussion. Here are the basics for a Canadian income according to the researcher. It would be interesting to break down real-life monthly costs for someone at age 65 with the following numbers.

Old Age Security: At age 65 < $7,000
Canada Pension Plan: < $12,000

Median estimate: $18,000

A lot of those people own their homes outright, and either intend to sell and use the proceeds for retirement, or just live with low expenses. In small towns that 18K goes a long way with a paid off house and minor frugality, especially if it's a couple and they have that 18K X 2.

hunniebun

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Re: Canadians approaching retirement with totally inadequate savings...
« Reply #4 on: February 17, 2016, 12:41:12 PM »
Makes me grateful for my pension plan...

daverobev

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Re: Canadians approaching retirement with totally inadequate savings...
« Reply #5 on: February 17, 2016, 12:43:44 PM »
Ya the discussion on Reddit was pretty telling... It's nowhere near as bad as it seems (though perhaps the press is helping the govt in their plan to expand the CPP?).

I don't know. The only thing that worries me is the cost of full care when you're 85+ or whatever, when you need looking after. That aside, OAS/GIS/CPP seems pretty good to me - albeit stupidly skewed for the middle class. It's the people who've been min wage earners through most of their life that need most help, and CPP is arse-backwards for them (based on a limited number of years, but you don't stop paying in when you've hit that number of years - so if you work 10 years at max, you get the same as those working 40 years at 1/4 that.. or whatever the numbers are).

I absolutely feel people *should* take care of themselves, with a government backstop to keep them off the streets. Cost of living in much of Canada is insanely low (compared to... well, I don't know. Not compared to the UK I suppose - in some ways things are cheaper, in others not. Compared to the average, or the expectation, anyway!!). $1k a month AFTER housing costs is a LOT of money IMHO.

Now, the study does say that it is single people, especially women, that are most likely to be impoverished. And that I have some sympathy with - property tax, AFAIK, has no discount for those living alone (IIRC in the UK, you get a 20 or 25% discount if you live alone). Most things people choose to spend money on are discretionary. Groceries can be had for perhaps $100 a month, heating the same, electricity the same. Water - assuming you live in town - should be $50 or less. If you live in a town where you can walk to the supermarket and bank... you're golden.

I reckon I could do $800 on my own, more like $500 for my half with my wife - while I'm able to walk etc. So yeah, $12k seems like enough-but-not-rich. Which is exactly what it SHOULD be.

And as someone on Reddit pointed out - working-age and child poverty are MUCH worse than senior poverty in Canada. And, most likely, fixing working-age poverty would allow old age poverty to fix itself...

Al1961

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Re: Canadians approaching retirement with totally inadequate savings...
« Reply #6 on: February 17, 2016, 01:13:50 PM »
...Canadians are not in that bad a situation....

Good point of view for discussion. Here are the basics for a Canadian income according to the researcher. It would be interesting to break down real-life monthly costs for someone at age 65 with the following numbers.

Old Age Security: At age 65 < $7,000
Canada Pension Plan: < $12,000

Median estimate: $18,000

Probably shouldn't use the max amount for discussion. The average CPP benefit that is actually paid, per Service Canada, is: 655/mo, or $7860/yr.

There is gender diversity too. Women average about $200/mo less than men (there are a couple of reasons for this), so you can't just double the estimates for a couple.

Al

Heckler

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Re: Canadians approaching retirement with totally inadequate savings...
« Reply #7 on: February 24, 2016, 12:22:43 AM »
http://www.cbc.ca/news/business/rrsp/retirement-savings-goal-1.3406502


Read these comments if you want to feel good about your self.  Man, some people just have no plan and can't wait to blame anyone but themselves ( but mostly the PM, who hasn't really had time to affect much yet)

kfire20

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Re: Canadians approaching retirement with totally inadequate savings...
« Reply #8 on: February 24, 2016, 11:37:12 AM »
Update: Yesterday, Feb., 23rd CBC's Maritime Noon did a followup phone in for almost 40 minutes asking the question:
Do you have enough money saved for retirement?

Here's the audio link:
http://www.cbc.ca/player/AudioMobile/Maritime%2BNoon/ID/2684240267/

[Starts at 8:39 and finishes at 45:19]


RetiredAt63

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Re: Canadians approaching retirement with totally inadequate savings...
« Reply #9 on: February 24, 2016, 11:55:24 AM »
People (1) don't do their own arithmetic/analysis, and (2) they believe the bank ads.

Re (1). if you don't know how much of your spending is temporary (i.e. children, paying off a mortgage) and how much is spending that will still happen in retirement (food, house maintenance and municipal taxes, clothes, vacations, etc.) then you don't have a clue as to how much retirement income you will need.  And other costs - for example, if you have group health insurance at work, can you continue to get group health insurance when you retire?  I do, my union has a group plan for retirees.  If it didn't, I could have decent health insurance through my alumni associations or through Costco.

Re (2), anyone with a pension coming needs to know projected pension income - I don't need $1.5 million in investments (like the banks say I do) because I have a defined benefit pension (main income), a defined contribution pension (much smaller becasue of many fewer years of contribution), my CPP and my OAS, plus RRIF income (not huge, never had a lot of RRSP room because of the work pensions) and other investments (small).  If we look at the cost of annuities that would give the same income as my pensions and CPP, I probably do have the equivalent of $1 million, but I sure don't have anything even close to $1 in investments.

Of course if you retire and continue to give your children huge amounts of money (house down payments?!?) or massively overspend, or never bothered to take advantage of company pensions or RRSPs or TFSAs, and you had the income to do so, then your retirement planning definitely is in trouble.  I am not talking low-income earners here, they will probably have as much coming in through CPP and OAS and GIS as they did when working, and there are all sorts of low-income credits for them as well.  They won't be rich, but they won't be destitute either.

The above is like preaching to the choir here, but let's face it, most people think their personal finances are too complicated to cope with, and leave it to others.  I'm a retired biologist, not a financial planner, but when I go in to visit my financial contact at my bank, I know as much about my goals and possible methods to reach them as he does, and I always go with a list of topics to be discussed (which tend to match his).   He is always surprised at my level of preparation, so I gather most of his clients are not doing their homework.

Kaspian

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Re: Canadians approaching retirement with totally inadequate savings...
« Reply #10 on: February 24, 2016, 12:06:01 PM »
That report scared the pants off of me when I read it last week!  The average person, in the average job, who's approaching retirement age has a big fuckin' $2000 saved.  Whoo-ha!  What'd you do with *a whole lifetime* of earnings, stupid?!  You might actually convince me that the "middle-class" was just scraping by if you gouged my eyes out and I couldn't see the massive crowds with overflowing carts full of completely useless crap at Wal-Mart every time it's absolutely necessary for me to go there.  Canada banks meanwhile:  "You have more than you think."  Yeah, more crap, no money.
« Last Edit: February 24, 2016, 12:08:13 PM by Kaspian »

sleepyguy

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Re: Canadians approaching retirement with totally inadequate savings...
« Reply #11 on: February 26, 2016, 09:31:19 AM »
It's not all doom and gloom.  If you worked a quite few yrs... you get avg CPP, then OAS at (65-67) and GIS.  (Assuming Ontario, i think Quebec get more).  Basic healthcare is of course covered and Sr. drug coverage isn't too expensive.

My parents both have been retired now for over 15yrs.  They retired and had combined less than $50k to their name.  They are fine in retirement and actually have a surplus money, they regret not retiring earlier.  Obviously they relocated to a LCOL area (Hamilton, ON) and it worked out for them.

That report scared the pants off of me when I read it last week!  The average person, in the average job, who's approaching retirement age has a big fuckin' $2000 saved.  Whoo-ha!  What'd you do with *a whole lifetime* of earnings, stupid?!  You might actually convince me that the "middle-class" was just scraping by if you gouged my eyes out and I couldn't see the massive crowds with overflowing carts full of completely useless crap at Wal-Mart every time it's absolutely necessary for me to go there.  Canada banks meanwhile:  "You have more than you think."  Yeah, more crap, no money.

Kaspian

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Re: Canadians approaching retirement with totally inadequate savings...
« Reply #12 on: February 26, 2016, 01:16:43 PM »
  Obviously they relocated to a LCOL area (Hamilton, ON) and it worked out for them.


Ooo...  I like Hamilton!  That's where they secretly keep all the good bands.