Expanded CPP - new strategies needed for rearly retirement?

[findingoptimal]

Hello, this one is for Cannucks out there.

There's been quite a few articles about expanding the CPP, including this one:

http://business.financialpost.com/2013/11/09/an-early-look-at-what-big-cpp-will-look-like/

There's also talk that if the Federal government refuses to do this, then provincial governments (at least Ontario) may do it on their own:

http://business.financialpost.com/2013/11/12/canada-pensions-kathleen-wynne/

If they do change the CPP to provide a pension for earnings above the current $51,000, that's going to mean less money available to a Mustachian to save for an early retirement. All the money diverted for CPP is unavailable for an emergency, to start a business, or to retire early. The money is locked up until at least age 60.

I'd love to hear your opinions, but it looks like there are two options:

#1- Try to lobby politicians to not do this.

#2- If this does happen, then with this mandatory pension, you will have a government pension when 65 that will cover all of your mustachian living expenses. If that's true, then you could retire at 40, or 45 as long as you have enough capital to meet your expenses until your government pension comes in. You could even exhaust your capital as long as you make it to when you pension kicks in, and the pension is enough to live off of.

Would it be crazy to have a home paid off, and be nearly broke when your pension kicks in? Is there any other way to retire early, without having too much money (and therefore having worked longer than necessary) when this government pension kicks in at 65 or 60?

Everything I read makes it sound like this is coming, and there's a consensus among politicians about this. If it is coming, I'd rather make strategy changes sooner than later.

Thoughts?

[blue mutant]

The potential problem with option 2 is that, if you retire too early, the CPP benefit, based on limited years of contribution, may not be enough to cover expenses, even mustachian ones. OAS might cover that gap but it kind of goes against a self sufficiency mindset to count on that. Of course, this may not be a problem as that people most likely to have been in the workforce for very short periods of time (ie. retirement at 30) are probably so disciplined that they have large staches, excellent planning and low expenses.

[daverobev]

My opinion is that the government exists to ensure people are able to live independent, dignified lives in retirement - but only that.

IMHO the current $16k (I think?) for people who have paid into CPP all their working lives (that's including CPP and OAS - ie it is what a person will get, in total, if they have NOTHING else) is plenty as a minimum guarantee. Anything more, people should save for themselves. If you are too ignorant to do that - fine - you get the base amount, which means you get a roof, heat, food, but not cruises etc.

Ensure everyone has a decent amount, but no more. The rest is personal responsibility.

[blue mutant]

My understanding is that Canada has a very low rate of senior poverty, mostly because of GIS/OAS and that the real "problem" is in the middle class who are only replacing 40-60 percent of their income (no mention of spending) and therefore cannot live the same lifestyle (ie. Spending >> 40-60 percent of their income) they're accustomed to.

[daverobev]

My understanding is that Canada has a very low rate of senior poverty, mostly because of GIS/OAS and that the real "problem" is in the middle class who are only replacing 40-60 percent of their income (no mention of spending) and therefore cannot live the same lifestyle (ie. Spending >> 40-60 percent of their income) they're accustomed to.

Sure - Canada is very generous already, and that "problem" is therefore (to me) a personal one - not something the govt needs to get involved in further.

[daverobev]

Looks like ON (or, Liberal ON?) is going to try to implement something itself.

It'll be interesting to hear what they say. I just wish they would implement some kind of opt out, in the vein of "I don't need to pay in because I won't need to take out" - I've nothing against government pensions, but jesus the current rate is already 10% (combined; about $2k from a person's pay), and they are talking about $450 or 'less than a cup of coffee a day' - well, I spend less than a dollar twenty on a coffee, more like a tenth of that :P

http://www.cbc.ca/news/business/canada-pension-plan-reform-stalls-without-ottawa-s-support-1.2465619

It's funny. I was pretty anti-Conservative when I got here, and there is plenty about them I don't like, but my goodness the Ontario govt... man.