Author Topic: The Canadian retirement age is too low!  (Read 3101 times)

scottish

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The Canadian retirement age is too low!
« on: February 05, 2019, 04:15:21 PM »
Canadians are apparently too mustachian.   

Quote
“Many countries are increasing their retirement age,” the OECD observes in a recent pension report. Australia, Britain, Finland, Iceland, Ireland, Israel, Norway, Portugal and the United States are all either gradually hiking their retirement age to 67, or have already completed the change. Three countries: Denmark, Italy and the Netherlands are in the process of making 68 their normal age of retirement.

Canada is falling behind competitively because our nominal retirement age is still 65.   Without much evidence, the Fraser Institute, a republican conservative independent think tank, claims that we won't be able to support all of these retirees.

https://www.macleans.ca/opinion/the-retirement-age-in-canada-is-too-low-and-thats-a-growing-problem/

Bloop Bloop

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Re: The Canadian retirement age is too low!
« Reply #1 on: February 06, 2019, 02:05:48 AM »
I think it is laughable that the state supports retirees anyway. I think if you want to retire, like we all do, you should earn it yourself and save it yourself.

I would prefer we all have lower taxes and be more self-sufficient in terms of our saving mechanisms.

I am retiring a few years later than I otherwise could, because my taxes are paying for those over 67 to retire off the state dime, whereas when I retire I will never get a cent because of my investment assets exceeding the cap.

As someone whose income tax paid each year is more than the sum of all my other expenses (not including investments), I find it really strange. Sure, some people due to physical or mental incapacity need state support...but in my country about 2/3 of retirees draw some form of state pension. You can't tell me that 2/3 of people are too mentally or physically feeble to save up for retirement by the age of 67.
« Last Edit: February 06, 2019, 02:07:33 AM by MikeBT »

nereo

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Re: The Canadian retirement age is too low!
« Reply #2 on: February 06, 2019, 04:56:33 AM »

I am retiring a few years later than I otherwise could, because my taxes are paying for those over 67 to retire off the state dime, whereas when I retire I will never get a cent because of my investment assets exceeding the cap.

Interesting system.  What is the investment cap and what percentage of your income do you pay into your state-sponsored pension plan each year?
Here everyone that contributes to the social security (SS) system gets distributions upon reaching retirement age, and those that have contributed more get more, though the proportion of money paid in to disbursements paid out favors lower-wage workers.

Bloop Bloop

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Re: The Canadian retirement age is too low!
« Reply #3 on: February 06, 2019, 08:14:33 AM »

I am retiring a few years later than I otherwise could, because my taxes are paying for those over 67 to retire off the state dime, whereas when I retire I will never get a cent because of my investment assets exceeding the cap.

Interesting system.  What is the investment cap and what percentage of your income do you pay into your state-sponsored pension plan each year?
Here everyone that contributes to the social security (SS) system gets distributions upon reaching retirement age, and those that have contributed more get more, though the proportion of money paid in to disbursements paid out favors lower-wage workers.

Investment cap is roughly $800k in assets for a couple...excluding the family home. Ridiculously generous if you ask me. Why someone with a $1m home + $800k in assets needs a pension is beyond me.

We don't have a system of 'social security distributions.' In other words, everyone is eligible for the pension (subject to assets cap), and it has nothing to do with how much (if anything at all) you have contributed in the past. We do have superannuation, where employees get 9.5% of their gross pay paid into a pension fund by their employer. The pension fund can be withdrawn as a tax-free annuity when you retire. However the government pension operates in conjunction with that.

nereo

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Re: The Canadian retirement age is too low!
« Reply #4 on: February 06, 2019, 08:31:22 AM »

I am retiring a few years later than I otherwise could, because my taxes are paying for those over 67 to retire off the state dime, whereas when I retire I will never get a cent because of my investment assets exceeding the cap.

Interesting system.  What is the investment cap and what percentage of your income do you pay into your state-sponsored pension plan each year?
Here everyone that contributes to the social security (SS) system gets distributions upon reaching retirement age, and those that have contributed more get more, though the proportion of money paid in to disbursements paid out favors lower-wage workers.

Investment cap is roughly $800k in assets for a couple...excluding the family home. Ridiculously generous if you ask me. Why someone with a $1m home + $800k in assets needs a pension is beyond me.

We don't have a system of 'social security distributions.' In other words, everyone is eligible for the pension (subject to assets cap), and it has nothing to do with how much (if anything at all) you have contributed in the past. We do have superannuation, where employees get 9.5% of their gross pay paid into a pension fund by their employer. The pension fund can be withdrawn as a tax-free annuity when you retire. However the government pension operates in conjunction with that.

So everyone gets the same amount for their"government pension" regardless of their lifetime earnings, but subject to an assets cap, is that correct?  Is there a phase-out for the assets cap, or is it all or nothing?

We seem to use the term 'pension' differently, which seems to be adding to my confusion

Sun Hat

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Re: The Canadian retirement age is too low!
« Reply #5 on: February 06, 2019, 09:01:01 AM »

I am retiring a few years later than I otherwise could, because my taxes are paying for those over 67 to retire off the state dime, whereas when I retire I will never get a cent because of my investment assets exceeding the cap.

Interesting system.  What is the investment cap and what percentage of your income do you pay into your state-sponsored pension plan each year?
Here everyone that contributes to the social security (SS) system gets distributions upon reaching retirement age, and those that have contributed more get more, though the proportion of money paid in to disbursements paid out favors lower-wage workers.

Investment cap is roughly $800k in assets for a couple...excluding the family home. Ridiculously generous if you ask me. Why someone with a $1m home + $800k in assets needs a pension is beyond me.

We don't have a system of 'social security distributions.' In other words, everyone is eligible for the pension (subject to assets cap), and it has nothing to do with how much (if anything at all) you have contributed in the past. We do have superannuation, where employees get 9.5% of their gross pay paid into a pension fund by their employer. The pension fund can be withdrawn as a tax-free annuity when you retire. However the government pension operates in conjunction with that.

So everyone gets the same amount for their"government pension" regardless of their lifetime earnings, but subject to an assets cap, is that correct?  Is there a phase-out for the assets cap, or is it all or nothing?

We seem to use the term 'pension' differently, which seems to be adding to my confusion

The OP needs to do some research. Canada's CPP, OAS and GIS systems are not the same as US social security.  At all. Because Canada is a whole different country.
https://www.canada.ca/en/services/benefits/publicpensions/cpp.html

nereo

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Re: The Canadian retirement age is too low!
« Reply #6 on: February 06, 2019, 10:59:30 AM »

The OP needs to do some research. Canada's CPP, OAS and GIS systems are not the same as US social security.  At all. Because Canada is a whole different country.
https://www.canada.ca/en/services/benefits/publicpensions/cpp.html
I don't understand what this has to do with the OP's post, or about the government pension system in Australia, which is what I've been discussing with MikeBT, and you are quoting here.

Bloop Bloop

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Re: The Canadian retirement age is too low!
« Reply #7 on: February 06, 2019, 05:19:50 PM »

I am retiring a few years later than I otherwise could, because my taxes are paying for those over 67 to retire off the state dime, whereas when I retire I will never get a cent because of my investment assets exceeding the cap.

Interesting system.  What is the investment cap and what percentage of your income do you pay into your state-sponsored pension plan each year?
Here everyone that contributes to the social security (SS) system gets distributions upon reaching retirement age, and those that have contributed more get more, though the proportion of money paid in to disbursements paid out favors lower-wage workers.

Investment cap is roughly $800k in assets for a couple...excluding the family home. Ridiculously generous if you ask me. Why someone with a $1m home + $800k in assets needs a pension is beyond me.

We don't have a system of 'social security distributions.' In other words, everyone is eligible for the pension (subject to assets cap), and it has nothing to do with how much (if anything at all) you have contributed in the past. We do have superannuation, where employees get 9.5% of their gross pay paid into a pension fund by their employer. The pension fund can be withdrawn as a tax-free annuity when you retire. However the government pension operates in conjunction with that.

So everyone gets the same amount for their"government pension" regardless of their lifetime earnings, but subject to an assets cap, is that correct?  Is there a phase-out for the assets cap, or is it all or nothing?

We seem to use the term 'pension' differently, which seems to be adding to my confusion

Yes, everyone gets the same amount for their government pension, regardless of their lifetime earnings (if any), subject to an income cap (I can't remember what this is) and an assets cap. Their lifetime "superannuation" (which is the sum of the 9.5% employer contributions over time) is also paid out as a tax-free annuity. However, the superannuation annuity counts towards the income cap I believe. There is a partial phase-out for the assets cap; the $800k figure (approximation) I listed is the upper limit for receiving anything at all as a couple.

scottish

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Re: The Canadian retirement age is too low!
« Reply #8 on: February 06, 2019, 05:27:29 PM »
I think Sun Hat means MikeBT's post, not mine.

When I was younger, I used to think that everyone should be responsible for their own retirement.   As I've grown older, I don't feel that way anymore.   If everyone was responsible for their own retirement, they would mostly be living in poverty.    The responsible among us would wind up paying to support them anyway.   It would be much harder to plan for this though.

So I happily pay my taxes and CPP contributions as I think this leads to a much more predictable scenario.   Most people will manage to get by on their 18K a year (or whatever OAS + CPP adds up to) while we can retire happily with our carefully amassed investments, feeling secure that the government won't impose a wealth tax or some other confiscatory measure.

BTW Canada doesn't have a wealth cap.   There's an income cap on OAS, but not on CPP.   At least not yet.

RetiredAt63

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Re: The Canadian retirement age is too low!
« Reply #9 on: February 14, 2019, 04:55:18 PM »
BTW Canada doesn't have a wealth cap.   There's an income cap on OAS, but not on CPP.   At least not yet.

Well, there sort of is - once you hit a certain level of income you have maximized your contribution to the CPP, and that means you have maximized what you will get from it when you retire.

Also, when you hit a particular level of retirement income the OAS clawback starts.  When you hit a much higher level they claw back all the OAS.  And they are serious about it, CRA tells you that you made so much the previous year that they are doing direct tax withdrawal on your OAS payments.  It is a really strong argument for using a TFSA over an RRSP/RRIF once you think your retirement income will hit a certain level.

scottish

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Re: The Canadian retirement age is too low!
« Reply #10 on: February 14, 2019, 05:15:44 PM »
That's correct.   The OAS clawback is what I meant by an income cap on OAS.   But there's no clawback on CPP based on your income.

RetiredAt63

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Re: The Canadian retirement age is too low!
« Reply #11 on: February 14, 2019, 06:56:17 PM »
That's correct.   The OAS clawback is what I meant by an income cap on OAS.   But there's no clawback on CPP based on your income.

You are right there is no clawback on the CPP because of other income, it is a true pension.  The only thing is your contributions are capped, so the resulting income is capped.  If you want more than CPP/OAS will provide,  you need to be getting it from some place else - private pension, RRSP/RRIF, other investment income.

Hula Hoop

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Re: The Canadian retirement age is too low!
« Reply #12 on: February 15, 2019, 03:14:12 AM »
The whole retirement age thing is quite different in many Western European countries than in the US.  It's like comparing apples to oranges.  I'm not exactly sure how things work in the rest of Western Europe but I think it's similar to the Italian system.  Here in Italy, workers pay out a large percentage of earnings to INPS, which is the state sponsored pension system.  I think it's currently around 18% of one's income depending on various factors.  The money that these workers pay in goes to support CURRENT retirees.  This is the big problem as 1)benefits were WAY too generous in the past and people retired too young with big pensions and b) there are tons of old people here and very few young ones paying for their pensions.  This means that us younger working people will get smaller pensions than our parents and will retire later than them because we are paying for their larger and earlier pensions.  As you can imagine, this makes younger people, who won't retire until they are 68 whereas their parents retired at 60 - really angry.  However, there are so many older retirees here that they are a huge voting bloc.

Here in Italy, like in many other European countries, there is no tax deferred retirement vehicle - no 401(k) or IRAs.  Saving for retirement is not part of the culture and something which almost no one does as the pension is meant to be enough. The culture here is that you put away your 18% (or whatever) percent but then at the mandated retirement age you get your pension.  However, as you can see from the above - this system is fraying around the edges so various governments have been forced to raise the mandated retirement age.


It is actually really difficult to save for retirement here as the system does not support it, taxes are extremely high and salaries low.  I manage to save but that has a lot to do with the fact that I'm a US citizen so I contribute to social security rather than INPS so I pay a much lower percentage of my salary.  Also I earned a large salary and saved a lot when I was younger and lived in the US. My husband, for example, hardly saves anything as he contributes to INPS and also has a much lower salary - but his salary is more typical of Italian workers.

nereo

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Re: The Canadian retirement age is too low!
« Reply #13 on: February 15, 2019, 05:18:10 AM »
From what you described of the Italian pension system, it sounds very similar to the US's Social Security program. The only difference that I can see is that the US *also* offers tax-advantaged retirement accounts like the IRA and 401(k).  Like in Italy the most powerful voting block are those over 65 who vote frequently and don't want to see SS benefits reduced in any form.

Interesting to note that these programs were implemented in part as a promise to put more control in the hands of the individual, and take the 'strain' off the governmental system (and allow it to eventually be phased back).  It's been a boon for people like us that prioritize our retirement and LBYM, but roughly half of all Americans aren't contributing anything at all.

Saskatchewstachian

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Re: The Canadian retirement age is too low!
« Reply #14 on: February 15, 2019, 08:51:27 AM »
The whole retirement age thing is quite different in many Western European countries than in the US.  It's like comparing apples to oranges.  I'm not exactly sure how things work in the rest of Western Europe but I think it's similar to the Italian system.  Here in Italy, workers pay out a large percentage of earnings to INPS, which is the state sponsored pension system.  I think it's currently around 18% of one's income depending on various factors.  The money that these workers pay in goes to support CURRENT retirees.

....


I heave heard this as one of the major problems to a number of 1st world country pension plans including US Social Security. The largest difference for the Canadian system is that your contributions are used for your payout in the future and not someone elses right now. For that reason it doesn't need the ever revolving door of a larger and larger young class to support the retiring workers.

For clarity I should mention I am talking about CPP not Old Age Security (OAS) or GIS.

The downside here is that for MMM type people who prefer to control their own investments they are obligated to contribute and can't control allocation. But for the other 99%+ it is a great source of forced savings. Even if people complain to no end about it coming out of their paycheque.

Hula Hoop

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Re: The Canadian retirement age is too low!
« Reply #15 on: February 15, 2019, 09:49:54 AM »
From what you described of the Italian pension system, it sounds very similar to the US's Social Security program. The only difference that I can see is that the US *also* offers tax-advantaged retirement accounts like the IRA and 401(k).  Like in Italy the most powerful voting block are those over 65 who vote frequently and don't want to see SS benefits reduced in any form.

Interesting to note that these programs were implemented in part as a promise to put more control in the hands of the individual, and take the 'strain' off the governmental system (and allow it to eventually be phased back).  It's been a boon for people like us that prioritize our retirement and LBYM, but roughly half of all Americans aren't contributing anything at all.

The other difference is that Italy has one of the lowest birthrates in the world, much lower immigration than the US and the economy is in recession.  The low birth rate here is particularly problematic. 


Saskatchewstachian - the Canadian system actually sounds pretty well designed.

Prairie Stash

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Re: The Canadian retirement age is too low!
« Reply #16 on: February 15, 2019, 10:34:13 AM »
The whole retirement age thing is quite different in many Western European countries than in the US.  It's like comparing apples to oranges.  I'm not exactly sure how things work in the rest of Western Europe but I think it's similar to the Italian system.  Here in Italy, workers pay out a large percentage of earnings to INPS, which is the state sponsored pension system.  I think it's currently around 18% of one's income depending on various factors.  The money that these workers pay in goes to support CURRENT retirees.

....


I heave heard this as one of the major problems to a number of 1st world country pension plans including US Social Security. The largest difference for the Canadian system is that your contributions are used for your payout in the future and not someone elses right now. For that reason it doesn't need the ever revolving door of a larger and larger young class to support the retiring workers.

For clarity I should mention I am talking about CPP not Old Age Security (OAS) or GIS.

The downside here is that for MMM type people who prefer to control their own investments they are obligated to contribute and can't control allocation. But for the other 99%+ it is a great source of forced savings. Even if people complain to no end about it coming out of their paycheque.
A little goes to current retirees, its being fixed to be what you describe in the future. That's what started the pension crisis in the late 90's, it was going to be bankrupt, just like most systems. They also hiked CPP contributions to get here; in 1990 it was 2.20% (it started at 1.80% in 1966), last year it was 4.95%, they hiked rates to grow the fund and compensate for decades of underfunding. The boomer generation didn't fund their own CPP fully. The other way of looking at it is if you max out CPP for 40 years and get max CPP, what rate of return was made on that money? You'll find it a smaller return than your own RRSP or TFSA.

The CPP is soon to be expanded...cause you can't be trusted to invest your money yourself. MER of 1% is better than trusting you. I'm of mixed feelings about forced savings plans, I agree there should be something but I disagree with making it over large.

Prairie Stash

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Re: The Canadian retirement age is too low!
« Reply #17 on: February 15, 2019, 10:38:12 AM »
Canadians are apparently too mustachian.   

Quote
“Many countries are increasing their retirement age,” the OECD observes in a recent pension report. Australia, Britain, Finland, Iceland, Ireland, Israel, Norway, Portugal and the United States are all either gradually hiking their retirement age to 67, or have already completed the change. Three countries: Denmark, Italy and the Netherlands are in the process of making 68 their normal age of retirement.

Canada is falling behind competitively because our nominal retirement age is still 65.   Without much evidence, the Fraser Institute, a republican conservative independent think tank, claims that we won't be able to support all of these retirees.

https://www.macleans.ca/opinion/the-retirement-age-in-canada-is-too-low-and-thats-a-growing-problem/
We will if we transfer income, in the form of CPP, to boomers. Is it fair? that's the question, should young people have higher CPP rates to fund older people or not?

It was decided a few years ago that Older people should fund their own CPP. THat was deemed unfair, so they shifted the funding and moved the age back down. Now we have rising CPP rates and a happy electorate.

snacky

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Re: The Canadian retirement age is too low!
« Reply #18 on: February 15, 2019, 10:53:19 AM »
CPP was supposed to be a government-managed savings plan, just like EI was supposed to be a government-managed insurance plan. The money paid into them was supposed to be kept separate from general government revenues, and they weren't supposed to be social programs. (OAS and welfare were supposed to be the corresponding social programs)

CPP funds are still kept separate, governed by the CPP Investment Board, a crown corp. EI dues are paid into general government revenues. Both programs have taken on elements of social programs; CPP disability pays people below retirement age and their children and EI tops up the benefits of low wage earners.

It's pretty normal for institutional programs to veer away from their original raison d'etre, as these have done. Expanding existing, popular programs is a politically expedient way to address social problems. Right wing think tanks have a fit and predict doom, but most Canadians are ok with our government's mandate to make sure everyone is taken care of to some degree.

Replication of services and overly complicated programs are some of the reasons that people like the idea of a universal basic income; instead of having welfare, EI, OAS, CPP, and the other programs that create income security for Canadians there could be a single program that provides a modest income to everyone. The issue is more complicated than this, but one factor is that redundant bureaucracies could be eliminated.

Anyways, I just like having the chance to blather on about the stuff I studied in grad school. Carry on.

nereo

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Re: The Canadian retirement age is too low!
« Reply #19 on: February 15, 2019, 10:56:19 AM »

Anyways, I just like having the chance to blather on about the stuff I studied in grad school. Carry on.

This is why I <3 this forum.

RetiredAt63

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Re: The Canadian retirement age is too low!
« Reply #20 on: February 15, 2019, 02:37:27 PM »
It is not the boomers who will be the biggest beneficiaries of the CPP, it was the generation before them.  My Dad used to say he paid in relatively little and benefited a lot from CPP.  The earliest boomers also probably get more than they put in (plus of course it is supposed to be self-financing from investment returns, just like my CARRA pension and any other functional pension).  I know my CPP contributions went up and up as % of pay, and my pension at work contributions also went up and up as % of pay, and my RRSP room shrank and shrank.  Really the RRSP/RRIF and TFSA are of definite benefit to retirement planning.  As a retiree who evened out her RRIF income by starting it early, I just get my RRIF income and shove it into my TFSA, so when I really need it there will be no tax.  I am not going to get a huge tax bump at 71 because of it.
« Last Edit: February 17, 2019, 11:40:45 AM by RetiredAt63 »

scottish

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Re: The Canadian retirement age is too low!
« Reply #21 on: February 15, 2019, 05:42:32 PM »
Looking back, I'm amazed at how responsible the government was in the 90's.   Fixing the CPP and eliminating the deficit were major accomplishments for the country.   The last 12 years or so haven't been so good.

I think this is a cycle.   After the years of stagflation, everyone was highly aware of how things could go wrong.   We have a new generation now, and they didn't experience the turmoil from the early 80's.   Imagine paying 15% interest or higher on a mortgage?    Today people complain about 3 or 4%.

This is similar to how the US forgot about the S&L problems in the late 80's and early 90's and had to relive them with mortgage backed assets in 2008.

Prairie Stash

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Re: The Canadian retirement age is too low!
« Reply #22 on: March 13, 2019, 09:34:07 AM »
Looking back, I'm amazed at how responsible the government was in the 90's.   Fixing the CPP and eliminating the deficit were major accomplishments for the country.   The last 12 years or so haven't been so good.
https://www.fraserinstitute.org/sites/default/files/cost-of-government-debt-in-canada-2017.pdf

Speaking of eliminating the deficit, the link is a breakdown of debt servicing coss for 2017. The weidest comparison is that the combine interest charges across all layers of governement  ($62.8 billion- 2017 is close to the total spent on public primary and secondary schools ($63.9 billion in 2013/14). Debt across the country is $1.4 Trillion (fed and provincial)

Fixing CPP and the deficit was an amazing gift to the future. I feel bad we're squandering it.


GuitarStv

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Re: The Canadian retirement age is too low!
« Reply #23 on: March 13, 2019, 10:12:48 AM »
This is similar to how the US forgot about the S&L problems in the late 80's and early 90's and had to relive them with mortgage backed assets in 2008.

Did the US put any safeguards in place after 2008 to prevent the same sort of thing from happening again, or are they continuing to roll the dice?

scottish

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Re: The Canadian retirement age is too low!
« Reply #24 on: March 15, 2019, 05:18:19 PM »
I believe they did, but they are now starting to remove the safeguards.    Here's a CNN linky:

https://money.cnn.com/2018/09/13/news/economy/financial-crisis-10-years-later-lehman/index.html

This is exactly what you'd expect as the memory of the 2009 recession begins to fade, is it not?
« Last Edit: March 16, 2019, 10:19:05 AM by scottish »

GuitarStv

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Re: The Canadian retirement age is too low!
« Reply #25 on: March 15, 2019, 06:54:47 PM »
I feel like you may have pasted a link from the wrong browser tab.  Either that or CNN has changed their website somewhat from the last time I visited.

scottish

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Re: The Canadian retirement age is too low!
« Reply #26 on: March 16, 2019, 10:19:36 AM »
Oh dear.    Well I've fixed that.   Do I have to change my user id now?

GuitarStv

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Re: The Canadian retirement age is too low!
« Reply #27 on: March 16, 2019, 01:37:18 PM »
Oh dear.    Well I've fixed that.   Do I have to change my user id now?

Thank God I didn't click that first link at work.

:P

WhiteTrashCash

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Re: The Canadian retirement age is too low!
« Reply #28 on: March 16, 2019, 01:46:17 PM »
The main issue with pretty much any government-provided pension is that they are never really designed to be for retirement. They are meant to provide a little bit right before someone dies. People are living longer because we are now in the 21st century so we have medical technology that used to only be found in episodes of Star Trek. So in the past, people died at the age of 62, but now they live to be 85.

The US has an advantage in that we have actual retirement accounts available to people, but they are self-funded and self-managed for the most part; That means that a lot of Americans don't actually prepare for retirement because there are so many shiny gazingus pins to buy out there and Madison Avenue ad execs bombard us with commercials 24/7 telling us why we are losers whom nobody is going to sex up unless we buy them.

nereo

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Re: The Canadian retirement age is too low!
« Reply #29 on: March 17, 2019, 10:15:30 AM »
The main issue with pretty much any government-provided pension is that they are never really designed to be for retirement. They are meant to provide a little bit right before someone dies. People are living longer because we are now in the 21st century so we have medical technology that used to only be found in episodes of Star Trek. So in the past, people died at the age of 62, but now they live to be 85.

The US has an advantage in that we have actual retirement accounts available to people, but they are self-funded and self-managed for the most part; That means that a lot of Americans don't actually prepare for retirement because there are so many shiny gazingus pins to buy out there and Madison Avenue ad execs bombard us with commercials 24/7 telling us why we are losers whom nobody is going to sex up unless we buy them.

Curious what you think a good solution might be.  As you noted, in the US we have self-managed and tax-advantaged retirement funds, which were strongly supported by the GOP as a solution - the idea being that if people were given more control and incentives to save for their own retriement (vs the automatic contributions and 'poor' returns of SS) people's self interests would largely solve the problem.  Clearly that hasn't happened.

Also important to note:  In Canada they also similar options (eg RRSP & TFSA accounts) in addition to OAS (similar to our SS) - and they, too, have an enormous retirement shortfall.

I'm obviously skeptical of any plan to privatize SS, as people in general already fail to sign up for things like 401(k)s even when there's an employer match.  System's like Norway's government pension fund seem to be doing better, but they are more receptive to more taxes than we are here in NA.

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Re: The Canadian retirement age is too low!
« Reply #30 on: March 19, 2019, 12:22:13 PM »
The main issue with pretty much any government-provided pension is that they are never really designed to be for retirement. They are meant to provide a little bit right before someone dies. People are living longer because we are now in the 21st century so we have medical technology that used to only be found in episodes of Star Trek. So in the past, people died at the age of 62, but now they live to be 85.

The US has an advantage in that we have actual retirement accounts available to people, but they are self-funded and self-managed for the most part; That means that a lot of Americans don't actually prepare for retirement because there are so many shiny gazingus pins to buy out there and Madison Avenue ad execs bombard us with commercials 24/7 telling us why we are losers whom nobody is going to sex up unless we buy them.

Curious what you think a good solution might be.  As you noted, in the US we have self-managed and tax-advantaged retirement funds, which were strongly supported by the GOP as a solution - the idea being that if people were given more control and incentives to save for their own retriement (vs the automatic contributions and 'poor' returns of SS) people's self interests would largely solve the problem.  Clearly that hasn't happened.

Also important to note:  In Canada they also similar options (eg RRSP & TFSA accounts) in addition to OAS (similar to our SS) - and they, too, have an enormous retirement shortfall.

I'm obviously skeptical of any plan to privatize SS, as people in general already fail to sign up for things like 401(k)s even when there's an employer match.  System's like Norway's government pension fund seem to be doing better, but they are more receptive to more taxes than we are here in NA.

With the exception of the bottom 10% or so of earners, I have zero sympathy for anyone that chooses not to fund their retirement accounts, and I find it crazy that people are forced to pay into a system that provides returns that are slightly better than inflation. However, as the 2004 election showed, nothing is going to change in that sector. It's a shame, since nearly half of my total tax expense goes to fund something that provides me with a benefit so small and uncertain that I don't even include it in my retirement planning. That money could be used to expand Medicare or reduce the rate of growth of our national debt instead.

The best idea I can think of is to allow people to voluntarily opt out of Social Security. They would forfeit everything that they paid into it in the past, as well as any future benefits. It wouldn't be able to fund itself at all if everyone under 30 suddenly stopped paying into it as they would be wise to do, so an alternative funding source would be required until the system stabilized. Maybe we could couple it with a substantial cut in defense spending. It's all fantasy though, because a certain lobby group will spend millions to ensure that nothing regarding SS ever changes.

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Re: The Canadian retirement age is too low!
« Reply #31 on: March 20, 2019, 01:18:36 AM »
Yeah, I find it incredibly strange that we pay people during their retirement at all. It just seems to encourage being a spendthrift.

I would agree that there should be a safety payment that prevents people from starving, but you have people with sizeable assets/real estate who still get a government allowance. How does that work?

What happened to saving up for your own retirement?

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Re: The Canadian retirement age is too low!
« Reply #32 on: March 20, 2019, 04:29:52 AM »

What happened to saving up for your own retirement?

Has this ever really been a thing in the US?  the 50 year savings average is about 7%, and except for some years during the 1970s when rates went bananas we've struggled to ever break 10%

The last 20 years we've averaged under 4%


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Re: The Canadian retirement age is too low!
« Reply #33 on: March 20, 2019, 05:24:15 AM »
I think if people realise the government is going to pay a nice pension, many will not feel any imperative to save. We should probably give them an imperative.

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Re: The Canadian retirement age is too low!
« Reply #34 on: March 20, 2019, 11:24:00 AM »
The main issue with pretty much any government-provided pension is that they are never really designed to be for retirement. They are meant to provide a little bit right before someone dies. People are living longer because we are now in the 21st century so we have medical technology that used to only be found in episodes of Star Trek. So in the past, people died at the age of 62, but now they live to be 85.

The US has an advantage in that we have actual retirement accounts available to people, but they are self-funded and self-managed for the most part; That means that a lot of Americans don't actually prepare for retirement because there are so many shiny gazingus pins to buy out there and Madison Avenue ad execs bombard us with commercials 24/7 telling us why we are losers whom nobody is going to sex up unless we buy them.
There's a misconception there. In Canada its a governmnent managed pension, not government provided.

In the 90's and before it was government provided, but that was unsustainable (no secret there). So they raised rates and canadians pay 9.9% (half off my cheque, half covered by my employer) of their first $52000 in earnings (indexed) into CPP. The CPP board then manages the money and invests it, current assets are over $350 billion which is larger than the Federal budget of Canada.

I agree the US and Australia system is behind the times. Canada had this debate 20 years ago, as a result our CPP (similiar to SS) is funded by the people and paid to the people. Rich People don't pay extra into CPP, they pay extra into the regular coffers.

GIS and OAS are for the people who have nothing, thats the social safety net.

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Re: The Canadian retirement age is too low!
« Reply #35 on: March 21, 2019, 08:32:58 AM »
I think if people realise the government is going to pay a nice pension, many will not feel any imperative to save. We should probably give them an imperative.

CPP isn't a nice pension.  I'm a cheap bastard, and it would be very tough for me to live retired on just CPP.  It's a bare minimum to keep the elderly from starving in the streets, not a 'nice pension'.

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Re: The Canadian retirement age is too low!
« Reply #36 on: March 21, 2019, 09:32:29 AM »
I think if people realise the government is going to pay a nice pension, many will not feel any imperative to save. We should probably give them an imperative.

CPP isn't a nice pension.  I'm a cheap bastard, and it would be very tough for me to live retired on just CPP.  It's a bare minimum to keep the elderly from starving in the streets, not a 'nice pension'.

I have similar thoughts about the US's social security.  The median benefit for people who have worked at least 35 years is around $17k, assuming you take it at full retirement age (currently 65, shifting to 67).  Hardly a 'nice pension.'  FWIW the highest earners (those who's annual salary exceeds the SS cap, currently set at $139k) the maximum payout from SS just shy of $35k, and you would need to be hitting the cap every year for 35 years to get that.  Those people will pay far more into the system than they get out.