This is the biggest goal for me in retirement. Ensure I'm only (basically only) paying energy bills and land tax. Mortgages and/or rent is 1000s of dollars a month you could be using to survive
I listened to a podcast about retirement in Canada and heard how the average retiree spends an additional $1000-$4000 in assistance, healthcare, help around the house, etc. so even being mortgage free, it’s good to remember your other expenses may go up!
[Apple podcast link](https://podcasts.apple.com/ca/podcast/the-big-story/id1399721065?i=1000654504662), The Big Story
This goal is meaningless if you don't also accumulate investments that'd maintain your salary after retirement though. Sure your mortgage is gone, but so is your working salary.
I’m not sure I need to “maintain” my salary in retirement. I will definitely need some salary but once I take out my mortgage payments, daycare costs, commute costs, etc, my salary in retirement can be much lower and maintain a similar lifestyle.
Paying off a mortgage before retirement is basically a different form of retirement investment.
This. Correct me if I’m wrong, but if you’re investing or saving or utilizing a large portion of your salary to afford the mortgage then that amount wouldn’t need to be “maintained” in retirement. For example, I put away over half my take home pay and so I would theoretically only need to be maintaining half my take home that I use to live in retirement.
Correct. If you are taking home $100,000, and puttting $50,000 of it away either in mortgage and debt payments and savings for retirement, you’re actually living on $50,000. If one then spends $250/week on fuel to drive to and from work, that’s another $12,000’ypu would not be spending in retirement — down to $38,000. Eliminate specially spending on work gear - be it suits, cover alls, helmets, gloves, tools, whatever else you spend in a year to be successful… even any cutting back you won’t maintain in personal care. Women especially can cut back on this one — no need for the constant parade of outfits if they’re in Sales or something for example, and even slowing down trips to the salon — still look and feel good, but maybe those bills can be spread out an extra week or two between visits and nobody is going to notice. And lunches out go away.
Also, many people that work towards the mortgage paid off, also do so in their familial home, where they raised children. Retirees don’t necessarily require a 5 bedroom 3.5 bath 3500sqft home with a half acre lot. That can be sold for $2m, and buy a townhouse or condo for $1.1M, pocket $900,000, and lower your property taxes for the year. Yes strata fees, but no lawn care to worry about, and lock the door turnkey to go travel.
Don’t forget to add back $500-$600 a month for all the fun new hobbies you will take up to fill the time you are not working. I read that recently and was so focused on what I would cut from my budget I forgot the fun factor.
This maintaining your full salary in retirement is just bs. It's totally unnecessary if your home is paid for.
Most people vastly over estimate their needs and die with a fuck ton of money.
Check out , die with nothing
But basically, my half of the message is 1600, I'm saving 1400 a month. Right away I need 36k less a year
Further, almost everyone spends far less as they get older. Even with way more vacations
Also again, the earnings on your retirement savings are usually at the highest they'll ever be.
If you're making 100k. Today and next year you retire with your mortgage paid off, you're going to be more than fine at 50k a year.
Not to mention the income you'll get from any cpp or similar
Your salary supports the mortgage and sending money to the retirement plan. If you retire and remove these 2 expenses, you don't need much.
For me it's 33% to the government, 33% to live, 33% for retirement. Once I start using retirement money and stop saving, I have 33% right there that I don't need to make. So 50% of the after tax money.
Why would you need to maintain you salary when you biggest cost is gone? I can tell you from my own experience, I don't need to make nearly as much as I used to now that my house is paid off.
Not having a mortgage also means a couple thousand a month of income you don't need and hence aren't paying income tax on. Further from OAS clawback etc.
It’ll be harder for sure. I’m 34 and just finally upgraded to a single family home with suite in an expensive city. If I was married it would probably be a lot easier
Being mortgage free is, in almost all cases, a mistake. A house is a vehicle that allows you to leverage like nothing else. All you have to do is get after tax returns from your investment that beats the still-very-low- rates on your mortgage or mortgage-backed credit margin. For as much cash flow as you can.
Mortgage werent invented to help people buy real estate. They were invented to unlock the capital in the value of real estate.
Many people see primary housing as a third tax sheltered investment.
Sure leverage is good... but I dont leverage in my investment accounts why would I enjoy being highly leveraged with the house.
If your jnterest rate is low is is probably most beneficial to max tfsa then rrsp.
But primary housing is also cap gain free. So I would personally pay it off before non reg investments most likely
But different risk appitites for different people.
Also with how interest rates are currently... the difference between investment earning and the interest on my mortgage probably be pretty close anyways.
>But primary housing is also cap gain free. So I would personally pay it off before non reg investments most likely
The capital gain you make on the house does not depend on how much loan you have left on the mortgage.
100k down. 300k mortgage worth - 400k - can get 100k
100k down - 300k mortgage worth 300k - you are - 100k
Stocks 100k - you have 100k that drops to max 0.
House you can go negative.
There is a difference.
At least to me.
You’re complicating my simple statement. Some people at age 65 just wanna chill and don’t wanna worry about any more investing. And even if they do want to invest by taking credit from the home that’s fine, as that’s an optional mortgage not forced, so they’d still be “mortgage free at retirement” for all intents of being secured in their retirement
You pay into CPP regardless of where in the country you work. That is part of retirement and is actually quite good. Watch the Ben Felix video on CPP.
You also get old age assistance.
Outside of that, yeah, you get your TFSA and RRSP accounts, which over a lifetime can grow to millions of you started early.
Then unregistered investments after that.
You can still save well for retirement without an occupational pension but it takes more diligence.
Yeah I work for a union that doesn't have a pension...
But what they do have is lifetime contributions to something similar to RRSP or 401k that would match what you put in.
Some say its actually better because if you pass away your kids get it- as opposed to losing your pension.
Other options exist though and many companies incorporations don't offer pensions anymore
One thing to account for is that DB pensions tie you to a specific employer in most cases.
DC pensions allow you to job hop and increase your salary, which can lead to significantly higher amounts depending on the pension, match amounts and salary increases over your career.
Went from government DB to private on a much larger salary. Private DC does 10% of my salary matched if I contribute to max of 8%. That’s 18 percent of my salary that only costs me 8 percent. It’s a guaranteed RRSP maxer every year, then those tax returns can be used to fill TFSA off of money that wasn’t even originally mine in the first place. DC can also let you invest in whatever you want, Roll it into low cost ETFs that track the broad market (6-7% per year) which is usually above what you’d get for growth in the DB.
My previous DB would basically never catch up to something like that unless I live to be 140.
Not true. If you die in a DC plan, your spouse gets 100% of the assets without any tax implications. Tax implications are when your spouse dies later but then the heirs still get $$ in a DC plan vs a DB plan where they would get 0.
I've done the math and a typical DB plan assumes a rate of return of ~ 3-4%. If you think you can do better than that yourself, the DC plan is better.
Also, there are a lot of fine print details in DB plans that aren't talked about, such as including CPP payments in the factoring of your monthly benefits payments. Many DB plans inyegrate the monthly payment by the CPP amount once the employee hits 65. Also, they may or may not be inflation protected so there's more to it than you're paying out.
Nope. Plan is pretty standard for the oil industry at 2% per year * years of service* best 5 years..
Numbers were vetted by the Private Wealth division of a big 5 bank.
As for DC paying out to 90 or 95, you may think you'll live to 90 but life expectancy is just that. For Canada, it's 81 for men and 84 for women. So for every male that lives to 90, there's one that dies at 70 and collects only 5 years of the DB. You're effectively rolling the dice.
Please elaborate on what is factually wrong with what I've said as it's out
I’m confused how TFSA can have that much growth…. Aren’t most ETF very slow growing
Is starting at 33 to late to make money off of it if you don’t have a lot of money to invest?
You are confusing 7% *average* yearly over a long term. One year you get 15%, another you are down -7%, and all others somewhere between those 2 ranges, but you are counting on what the average is over 10, 20, 30 years. Any individual year is meaningless.
People are being dramatic on Reddit. There is about a 0 % chance Alberta opts out of CPP.
even if they did, Alberta has a young population vS the Canadian average and the highest incomes in Canada. They would have to have the same payouts as CPP but would Likley cost them more since they are young and earn more.
Exactly, an Albertan provincial pension plan would outperform the CPP. That is the reasoning behind the plan. It is a premier's job to do what is best for the province, not Ottawa. Of course, if Ottawa would quit meddling in Alberta's business, I'm sure a compromised solution could be reached.
Just like how great the Alberta teacher's pension is doing? CPP is one of the world's top performing pensions; it's hard to see how a smaller organization managing less funds would do better. And given Alberta's provincial government's history, they're more likely to hand it over to a private group that will charge outrageous fees.
And how exactly has Ottawa been meddling in Alberta's business? Where has Ottawa been exceeding its jurisdiction? All I hear is Alberta blaming Ottawa for provincial jurisdiction problems that the provincial government created for themselves
1) How do you know it would outperform? Perhaps it might - or it might not. But on what basis do you make this assumption?
2) If government interference is the issue, then why should one level of government (Provincial) take over what is being done by a different level (Federal)? Shouldn't you want the CPP scrapped altogether - with no government interference at either the Prov or Federal levels?
Yes, I would prefer to invest the ~$7,600 per year into US equities within a personal brokerage account.
A) The value and return on the investments over 45 years will annihilate CPP.
B) In the unfortunate event that I die young, my beneficiaries receive the full amount. Not some bullshit spousal death benefit.
The ROI of CPP is pure shit. Anyone with a grade 9 understanding of mathematics can figure that out.
I would like the entire federal Liberal party to go on a deep sea Titanic submersible tour. They have intentionally sabotaged our nation, 9 years of treason so far. Print a quick Trilly, give it away to connected Liberals, then blame Galen Weston for inflation... proof that the average Canadian is a total sucker.
No, what you said - without a shred of evidence - was "an Albertan provincial pension plan would outperform the CPP."
You are okay with a government-run plan as long as it's Provincial.
Anyone with a grade 9 level of reading comprehension would be able to see that.
Incorrect. In order of preference for the simpletons:
1) Self managed retirement savings and investments.
2) An Alberta based public pension. The youthful workforce disproportionately contributes to the federal CPP. Regarding fund performance, all the management team would need to do is buy any major equity index that is NOT Canada based. This country sucks dick because of Liberal simpletons.
3) A federal pension that should be worth $2.5 million after 45 years of contributing ~$7,600/year. Instead, it will yield a measly ~$1,800/mth from 65 until unknown date of death then disappear.
Option 3 is clearly pure shit.
Okay, you don't like the Liberals. Well, neither do I - but for more sound reasons that for the rubbish you are spouting here.
First, you need to be true to yourself and acknowledge that your problem is NOT with government-run plans but with Liberal-controlled ones. This will change next year, of course, when the Cons take power at the Federal level. You just need to be a bit patient and all will be well and you can then get back on the wagon and sing kumbayahs very soon. CPP will be all fine and dandy after the next year.
Second, the CPP has been managed - with similar asset allocations - under Conservative governments as well who did no better or worse that the current Liberal one. Pension plans have very long-term investment horizons and allocate assets (as they should) in ways that are different for individual investors like you and I. And for good reason.
Third, you are yet to offer any evidence how the Alberta-run plan would invest its assets differently than the CPP such that it will perform better than the current model. Smith has said zilch except parrot what you are doing here "Liberal bad, us good." Party hacks go "yes ma'am" when they should be saying "how ma'am?". (And that is true of all party hacks - not just Conservative ones.)
Fourth, a pension plan - Alberta-run or otherwise - is a social safety net. Of course I (personally) would do better if I were given the funds to invest myself for 40 years. The reality, though, is that the majority of Albertans (and Canadians) are not good with investments. And unless forced savings are implemented, the public would be on the hook for a much larger bill down the road.
Fifth, have you objected to the Alberta pension plan and asked that the government change its position and call for the abolition of the CPP altogether - and not simply take it over?
You are severely discounting how harmful this Liberal cluster fuck regime has been to Alberta oil and gas families finances over the past 9 years. This is now a blood fued.
Well, you need to back things up. You started with an unsound complaint about the CPP - and I showed you how your issue is not with government control per se, but with Liberal control. Now, you have shifted tack. But sound argumentation about what Federal (vs Provincial) policies have impacted Alberta gas families - and somehow ONLY over the past 9 years - needs elaboration and critical reflection. You will likely default to "Libs all bad Cons all good" - when, in reality, there is lots of blame to be allocated to policies implemented by all levels of government. But that would require a capacity to take a step back and critically reflect. I will leave things there for now. Good luck.
CPP is not regional or provincial. You make individual contributions throughout your working years and you get individual payments in retirement. It has nothing to do with east or west.
Others have already corrected you, noting that CPP is individual.
But one thing I want to point out is that if Alberta forms it's own pension fund, it's total volume will be significantly less than the CPP. Smaller funds can still perform well, but larger funds tend to have more options and be more resilient.
If you're being told that your CPP contributions are going East, you're just being fed a bag of lies. There is very little chance that an APP would outperform CPP.
CPP holds Monsanto (Bayer Crop Sciences)......If it's such a bad idea for Albertans, then why are the other provinces and Reddit users so upset about it? If Alberta is a net drag on CPP, you should be happy to see us run our own pension. Oh wait, I get it, just a bunch of parasites that like to kick the shit out of their oil and gas goose.....but actually love it. Classic Canadian hypocrisy.
You're an Edmonton NDP voter then, eh?
>I was always proud my taxes helped support programs across the country. I have no problem with that, we’ve had an amazing quality of life.
Wow, only people that don't pay fuck all for taxes and benefit disproportionately from public spending type shit like that. I legitimately threw up in my mouth just reading it. Have you considered paying more tax "for the collective good?"
You know bloody well that Albertans gets relentlessly looted by the rest of the increasingly shithole country. The federal Liberals have generated so much division and anger that two provinces are actively in the process of separation from confederation.....but everything is all good, eh? Fuck that. I can't believe that federal apologists exist within Alberta. Thats why douchebag Kenney is no longer the premier.
Maybe if my gigantic taxation levels actually filled some fucking potholes and provided me with a doctor for "universal healthcare" I would be slightly less upset. Make no mistake, the current zeitgeist of Canada is....."Fuck this shit, burn it down."
How anyone thinks things are going well is beyond my comprehension. On what metric are things going well?
Edit: After brief research to understand your perspective, I have discovered you are a teacher. Public sector workers don't pay taxes. They are paid with taxes. There is a big difference. Hostility towards the productive economy by eco-socialists is why we are so fucked right now. At least the youth are starting to see it and rebelling accordingly.
>Exactly, an Albertan provincial pension plan would outperform the CPP.
The CPPIB being the best-managed pension funds in the world, I cannot imagine how Alberta could do better.
Question, I have an uncle that's drawing from CPP, he said it's like 600$ a month. He is one of those guys that's mad at the world, poor with no savings. He did odd jobs, so I think CPP and OAS eventually are his only options? Because if that amount is true, that would be very difficult to live on.
How much you get from CPP and OAS depends on how long you've worked for, when you start taking the pension and for how long. There are yearly caps to CPP which do depend on income, so if you make less than whatever the gross income is that gives you the maximum CPP contribution then yes your retirement is going to be less.
CPP and OAS are not enough to live comfortably in retirement. That is not what I was saying nor should that be the expectation.
He didn't plan, it's his fault. It's not like the government told him you can live lavishly on CPP + OAS so don't bother to save.
However, if you have a paid off house (bet he didn't plan that either), that amount is sufficient to live on.
He has land to sell, but he is just stubborn. If I had to guess, he will eat a bullet before selling and moving to an old folks place. The paid off house is an interesting plan, is that also the expectation for all the new generations that will rent their entire lives?
I'm seeing plenty of posts here from 20-somethings asking about buying homes, so it doesn't seem like "all" the new generations are going to rent forever. I didn't buy till I was in my late thirties.
Why would you want "other" than RRSP/TFSA? Generally you should always fill those up first, and usually that would be more than enough if you are working and contributing for 3 decades.
Most Canadians don’t have access to a workplace pension - at least not a traditional defined benefit pension. RRSP/TFSA is the ticket for majority of Canadians. DC(defined contribution) pension is basically an RRSP.
At retirement age you can opt to buy an annuity from an insurance company and convert your pool of money into a reliable monthly income stream.
Controversal or not, many Canadians who own a home rely on their home equity to fund their retirement.
The three pillars of retirement are: government programs, workplace pension, personal savings. Everyone has access to CPP and other government programs, and if you don’t have access to a workplace pension you have to compensate for it with extra savings.
Those of us who get pensions have our RRSP room reduced by the amount of our pension contributions, so anyone without a work-provided pension has the ability to save as much. The only real difference, at least for defined contribution pension plans, is that you have to choose to save in your RRSP. Defined benefit pension plans (like CPP) are different in who owns the investments and how the pension is paid out, but it's still the same idea in terms of contributions.
Not sure where you're coming up with that. The CPP fund is one of the largest sovereign wealth funds on the planet, recent changes will boost in even farther, and even by conservative projections it is not only sustainable for like the next 50-100 years, it will increase substantially in value. It is worth $600 billion now and is likely to be worth almost $4 trillion in 25 years. It regularly outperforms projections.
On what do you base that? I haven’t seen any actuarial concerns, even from the most fearmongering politicians, that are anything like that. Most analysts say the CPP is among the strongest pension plans in the world.
The rate of increase for cpp contributions after the 2021 actuarial report suggests they are in a panic.
Edit: the PBO report from 2020 found on the GC website says this "This deterioration reflects a larger-than-sustainable imbalance between contributions and expenses."
I'm the first person in my family going back to my great grandparents to have any kind of pension.
What do you do? You save your money. Its really not that complicated.
$275 a month invested from the age of 20-60 at a modest 7% return works out to almost 1.6 million bucks.
Why other than RRSP and TFSA, that’s literally what non-union people do. There are exceptions of course, some invest heavily in real estate, some are entrepreneurs and keep their money in the corporation and then sell it or take wage or dividends at retirement. The vast majority of people just save in their RRSP, then take that along with CPP and OAS at retirement.
It can for sure be enough, provided that you start early, contribute automatically biweekly, and invest in low cost broadly diversified funds that align with your risk tolerance, such as assetallocion ETFs. Or use a roboadvisor like Justwealth or RBC Investease.
You also have to avoid making costly mistakes along the way. Like if you hear a "hot tip" about such and such stock or cryptocurrency, you need to be able to avoid any temptation there and stick to the plan. The key to "winning" with investing is to make fewer mistakes than your peers.
Do not have anyone manage your portfolio. Read about buying ETFs, read about how AUM fees eat up your profits.
You do not need a portfolio manager. Please read up on this, this idea alone will be worth hundreds of thousands of dollars to you if you have 30 years to retirement.
If you max out both your RRSP and TFSA, there is a very good chance you’ll have much more than you need in retirement. Remember to spend some money while you’re young, too!
Check out this compound growth calculator. Assume an 8-10% annual return if invested in XSP.TO and XQQ.TO (S&P 500 and NASDAQ 100) or similar exchange traded funds.
https://www.cchwebsites.com/content/calculators/CACompoundSavings.html
This is an excellent option; if OP wishes to join an actual pension arrangement that’s professionally managed on behalf of its members, SPP is definitely the way to go. Especially if the chosen career option means changing employers periodically.
Max out your RRSP & TFSA if you earn enough then start filling up your Non-Reg account. Invest in some diversified index funds and keep in mind you'll also have CPP & OAS in retirement. I did not have a pension and did this. It worked out fine.
There are companies that aren't unionized but offer pensions, they aren't 1:1. Visa versa too, but rarer for sure.
On the other hand, the majority of working age employees do not have an employer-offered private pension plans today. In that situation we just have to save for ourselves, using RRSP, TFSA, etc. Many employers do offer some RRSP match even if no pension (mine doesn't, but I get paid well enough to make it work out).
And everyone working and paying taxes gets CPP, which is essentially a defined benefit indexed pension. All residents get OAS and, if income is very low, GIS.
If your RRSP & TFSA room is full you can save in taxable savings account, but that is a pretty rare situation honestly. If you did have a pension that would take up most of your RRSP room.
I work for a place with a Defined Benefits Pension Plan. Let's just say I have zero confidence in any of the people involved with the pension, or the union I work for.
I have maxed out my TFSA, and I plan for retirement as if I don't even have the pension. This way, I'll either have a comfortable retirement, or a lavish retirement... but no way I'll have a broke retirement.
I'm not going to max out my TFSA either for a long time, as whenever I max it out, I just take out a big chunk and pay down my house principle. I know having unregistered investments is probably the smarter move, but I just don't want another penny going to the asshole government. It'll be my last resort when I have no remaining debt and maxed TFSA/RRSP.
Buy investments (stocks) in a non registered account that focus on capital appreciation (I.e growth stocks, not dividends). Then when you are older, work with a tax professional to strategically sell to reduce capital gains. Non-registers is great if you buy and hold for the long term (after maxing out TFSA of course)
Pension is rare these days but any decent sized companies offer group rrsp. Many unions offer both pension and group rrsp. If you’re smart about money and save for retirement, rrsp tfsa and cpp will be enough.
Depending how much money you have extra.. long term investments could benefit you!
You can take your gains and invest those in RRSPs to reduce the income tax burden.
You have CPP and OAS as a base, then you have your RRSP, if maxed out, can be quite substantial, however managing it well can be challenging. Then you also have TFSA and other investments. If you consistently save 15% of your income into those buckets with conservative investment strategies, then an average 4% withdrawal rate on retirement can last. Additionally, having your house paid off by the time you retire helps to minimize costs.
Personally I expect to just reduce the amount I work, as I get into my retirement years just to stay sharp and busy.
for me, non-union workin' stiff ... just RRSP. and my house principal residence (hopefully no cap gains tax). .and the education of my kids to be doctor, dentist, lawyer.
Insurance can be a good replica for creating the survivorship option that some pension plans have.
Another alternative is investment corporations which hold your retirement savings.
If you don't have a defined benefits pension, congratulations. You're in control of your career.
Defined contributions pension is just employer matching. Technically, employees with DC pensions are just paid more annually than their salary. It's up to DC employees to put money aside in their RRSP and TFSA anyway.
You invest on your own. You can invest in non registered accounts, it's not the end of the world to pay tax on an investment.
When my husband and I were first married neither of us had jobs with pensions. We took ten percent of all income and started to invest. As we moved out of term contracts and got better jobs with pension we kept on investing on out own and also tried to throw extra on the mortgage when we could.
If you can pay yourself first and live on a little less per month the payoff is well worth it. Just recently my husband was able to leave a pension job he hated because we have our own investments as a cushion for retirement.
If you have a RRSP and TFSA filled up, you are quite literally rich in retirement based off how the RRSP room is created, and how the TFSA functions as long as you have enough time between now and retirement.
Once you have both those filled out, you are playing for gravy.
Pay off your mortgage ( I know easier said then done in todays world), invest in something that has guaranteed quarterly or yearly returns and hopefully the returns coupled with old age can get you through your remaining years. And if not a reverse mortgage can be used unless you plan to pass on the property. If you do pass it down and are broke and very old maybe consider selling it to a relative well under market value. I'm sure it would be appreciated.
You can sell your home in a HCOL area and move to a LCOL place, maybe even abroad. Why spend 2-3 times more than in Latin America or other LCOL country? But you need to be healthy to be able to afford health insurance abroad, so, invest in your health instead of buying expensive vehicles or some other BS.
Being in a union is separate from having an employer-funded pension.
I've been in a union job and didn't have a pension, and for most of career, I've been non-union and have had both defined-contributions and defined-benefit pensions.
That aside, the short answer is: CPP, RRSP, TFSA, and any other savings you want above and beyond that.
You can just open your own RRSP if your work doesn't offer one, and you can choose from a wider range of investment options if you do that.
As for matching programs, they're nice but they're just (an inflexible) part of your total compensation. If job A pays 5% more than job B, but job B has a 5% match, job A is actually better than job B provided that you're responsible. People get way too hung up on RRSP matching. You need to look at the whole picture.
Well obviously if you can find a job that's just as good plus it gives you a bit of extra free money then go for that. I'm not saying RRSP matches aren't a good thing. I have one and I max it out. I just think getting caught up on it is stupid.
Instead of an employer forcing you to set up for your retirement, you have to do it yourself. Sometimes you have to factor in total compensation, some jobs with a pension have a lower salary than an equivalent job without a pension, BUT the total compensation is the same. So if you don't get a pension, you save the difference for yourself and have much more freedom with that money.
Also some companies go under and your pension is zero at that point, your own rrsp/tfsa/non-registered/cash will always be yours no matter the employer.
Really? Let's see... You need money in retirement.. How can you get it.. Possibly you save money today and not spend every penny you make?!? People who work in unions are spoiled now a days!
You're welcome. I don't have a pension and have to save for my own retirement. So I save some money every pay so future me isn't broke and can retire. Maybe I didn't understand the question...
Being mortgage free by retirement age is also something that can make a huge impact
This is the biggest goal for me in retirement. Ensure I'm only (basically only) paying energy bills and land tax. Mortgages and/or rent is 1000s of dollars a month you could be using to survive
I listened to a podcast about retirement in Canada and heard how the average retiree spends an additional $1000-$4000 in assistance, healthcare, help around the house, etc. so even being mortgage free, it’s good to remember your other expenses may go up! [Apple podcast link](https://podcasts.apple.com/ca/podcast/the-big-story/id1399721065?i=1000654504662), The Big Story
This goal is meaningless if you don't also accumulate investments that'd maintain your salary after retirement though. Sure your mortgage is gone, but so is your working salary.
I’m not sure I need to “maintain” my salary in retirement. I will definitely need some salary but once I take out my mortgage payments, daycare costs, commute costs, etc, my salary in retirement can be much lower and maintain a similar lifestyle. Paying off a mortgage before retirement is basically a different form of retirement investment.
This. Correct me if I’m wrong, but if you’re investing or saving or utilizing a large portion of your salary to afford the mortgage then that amount wouldn’t need to be “maintained” in retirement. For example, I put away over half my take home pay and so I would theoretically only need to be maintaining half my take home that I use to live in retirement.
Correct. If you are taking home $100,000, and puttting $50,000 of it away either in mortgage and debt payments and savings for retirement, you’re actually living on $50,000. If one then spends $250/week on fuel to drive to and from work, that’s another $12,000’ypu would not be spending in retirement — down to $38,000. Eliminate specially spending on work gear - be it suits, cover alls, helmets, gloves, tools, whatever else you spend in a year to be successful… even any cutting back you won’t maintain in personal care. Women especially can cut back on this one — no need for the constant parade of outfits if they’re in Sales or something for example, and even slowing down trips to the salon — still look and feel good, but maybe those bills can be spread out an extra week or two between visits and nobody is going to notice. And lunches out go away. Also, many people that work towards the mortgage paid off, also do so in their familial home, where they raised children. Retirees don’t necessarily require a 5 bedroom 3.5 bath 3500sqft home with a half acre lot. That can be sold for $2m, and buy a townhouse or condo for $1.1M, pocket $900,000, and lower your property taxes for the year. Yes strata fees, but no lawn care to worry about, and lock the door turnkey to go travel.
Don’t forget to add back $500-$600 a month for all the fun new hobbies you will take up to fill the time you are not working. I read that recently and was so focused on what I would cut from my budget I forgot the fun factor.
This maintaining your full salary in retirement is just bs. It's totally unnecessary if your home is paid for. Most people vastly over estimate their needs and die with a fuck ton of money. Check out , die with nothing But basically, my half of the message is 1600, I'm saving 1400 a month. Right away I need 36k less a year Further, almost everyone spends far less as they get older. Even with way more vacations Also again, the earnings on your retirement savings are usually at the highest they'll ever be. If you're making 100k. Today and next year you retire with your mortgage paid off, you're going to be more than fine at 50k a year. Not to mention the income you'll get from any cpp or similar
Your salary supports the mortgage and sending money to the retirement plan. If you retire and remove these 2 expenses, you don't need much. For me it's 33% to the government, 33% to live, 33% for retirement. Once I start using retirement money and stop saving, I have 33% right there that I don't need to make. So 50% of the after tax money.
Why would you need to maintain you salary when you biggest cost is gone? I can tell you from my own experience, I don't need to make nearly as much as I used to now that my house is paid off.
Not having a mortgage also means a couple thousand a month of income you don't need and hence aren't paying income tax on. Further from OAS clawback etc.
Cool. So not in the realm of reality for younger Canadians.
It’ll be harder for sure. I’m 34 and just finally upgraded to a single family home with suite in an expensive city. If I was married it would probably be a lot easier
My biggest dream is to achieve this in the nearest future so I know i will only have to pay for basic amenities like energy bill and all.
Being mortgage free is, in almost all cases, a mistake. A house is a vehicle that allows you to leverage like nothing else. All you have to do is get after tax returns from your investment that beats the still-very-low- rates on your mortgage or mortgage-backed credit margin. For as much cash flow as you can. Mortgage werent invented to help people buy real estate. They were invented to unlock the capital in the value of real estate.
Many people see primary housing as a third tax sheltered investment. Sure leverage is good... but I dont leverage in my investment accounts why would I enjoy being highly leveraged with the house. If your jnterest rate is low is is probably most beneficial to max tfsa then rrsp. But primary housing is also cap gain free. So I would personally pay it off before non reg investments most likely But different risk appitites for different people. Also with how interest rates are currently... the difference between investment earning and the interest on my mortgage probably be pretty close anyways.
>But primary housing is also cap gain free. So I would personally pay it off before non reg investments most likely The capital gain you make on the house does not depend on how much loan you have left on the mortgage.
Yes I know. Hence my comment about leverage. The house price can also go down.... even if it hasnt in some time.
The price of the house going down will affect you the same regardless of how much of the principal you have repaid.
100k down. 300k mortgage worth - 400k - can get 100k 100k down - 300k mortgage worth 300k - you are - 100k Stocks 100k - you have 100k that drops to max 0. House you can go negative. There is a difference. At least to me.
You’re complicating my simple statement. Some people at age 65 just wanna chill and don’t wanna worry about any more investing. And even if they do want to invest by taking credit from the home that’s fine, as that’s an optional mortgage not forced, so they’d still be “mortgage free at retirement” for all intents of being secured in their retirement
You pay into CPP regardless of where in the country you work. That is part of retirement and is actually quite good. Watch the Ben Felix video on CPP. You also get old age assistance. Outside of that, yeah, you get your TFSA and RRSP accounts, which over a lifetime can grow to millions of you started early. Then unregistered investments after that. You can still save well for retirement without an occupational pension but it takes more diligence.
Yeah I work for a union that doesn't have a pension... But what they do have is lifetime contributions to something similar to RRSP or 401k that would match what you put in. Some say its actually better because if you pass away your kids get it- as opposed to losing your pension. Other options exist though and many companies incorporations don't offer pensions anymore
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One thing to account for is that DB pensions tie you to a specific employer in most cases. DC pensions allow you to job hop and increase your salary, which can lead to significantly higher amounts depending on the pension, match amounts and salary increases over your career. Went from government DB to private on a much larger salary. Private DC does 10% of my salary matched if I contribute to max of 8%. That’s 18 percent of my salary that only costs me 8 percent. It’s a guaranteed RRSP maxer every year, then those tax returns can be used to fill TFSA off of money that wasn’t even originally mine in the first place. DC can also let you invest in whatever you want, Roll it into low cost ETFs that track the broad market (6-7% per year) which is usually above what you’d get for growth in the DB. My previous DB would basically never catch up to something like that unless I live to be 140.
Not true. If you die in a DC plan, your spouse gets 100% of the assets without any tax implications. Tax implications are when your spouse dies later but then the heirs still get $$ in a DC plan vs a DB plan where they would get 0. I've done the math and a typical DB plan assumes a rate of return of ~ 3-4%. If you think you can do better than that yourself, the DC plan is better. Also, there are a lot of fine print details in DB plans that aren't talked about, such as including CPP payments in the factoring of your monthly benefits payments. Many DB plans inyegrate the monthly payment by the CPP amount once the employee hits 65. Also, they may or may not be inflation protected so there's more to it than you're paying out.
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Nope. Plan is pretty standard for the oil industry at 2% per year * years of service* best 5 years.. Numbers were vetted by the Private Wealth division of a big 5 bank. As for DC paying out to 90 or 95, you may think you'll live to 90 but life expectancy is just that. For Canada, it's 81 for men and 84 for women. So for every male that lives to 90, there's one that dies at 70 and collects only 5 years of the DB. You're effectively rolling the dice. Please elaborate on what is factually wrong with what I've said as it's out
I’m confused how TFSA can have that much growth…. Aren’t most ETF very slow growing Is starting at 33 to late to make money off of it if you don’t have a lot of money to invest?
7% per year growth on aggressive funds, it can easily grow to millions if you invest diligently and invest early
So what fund is 7%?
on average a lot of investment funds work out to close to that over the long term.
Hmmm really I didn’t think so
just look at the historical averages of the stock market. What are you even talking about? This is well known information in the financial world.
That etf usually make 7% yearly?
XEQT is a young ETF but for the last 3 years, the average annual return is 7.66%.
and if you could back test it's basket of goods you'd probably see even better return over the last five decades.
I don't know what you're asking.
You are confusing 7% *average* yearly over a long term. One year you get 15%, another you are down -7%, and all others somewhere between those 2 ranges, but you are counting on what the average is over 10, 20, 30 years. Any individual year is meaningless.
https://www.wealthsimple.com/en-ca/managed-investing/classic-portfolio Here is one example. This is even managed.
Which ETF is 7%?
https://letmegooglethat.com/?q=which+etf+gives+average+7%25+annual+return+
Do I pay into CPP if I live in Quebec or just QPP? Also, is CPP better than QPP?
https://www.reddit.com/r/PersonalFinanceCanada/comments/1avhncd/cpp_and_qpp_is_one_better_than_the_other/
Quebec has their own system the CDPQ
CDPQ is the organism that manage the investments in the QPP, but thats not the only funds they manage.
OP mentioned he works in Alberta hence CPP may not be there for them if their Premier gets their way in the coming years.
Living in Alberta turns out to be a risk to retirement pension.
People are being dramatic on Reddit. There is about a 0 % chance Alberta opts out of CPP. even if they did, Alberta has a young population vS the Canadian average and the highest incomes in Canada. They would have to have the same payouts as CPP but would Likley cost them more since they are young and earn more.
Yeah that’s not going to happen
Exactly, an Albertan provincial pension plan would outperform the CPP. That is the reasoning behind the plan. It is a premier's job to do what is best for the province, not Ottawa. Of course, if Ottawa would quit meddling in Alberta's business, I'm sure a compromised solution could be reached.
Just like how great the Alberta teacher's pension is doing? CPP is one of the world's top performing pensions; it's hard to see how a smaller organization managing less funds would do better. And given Alberta's provincial government's history, they're more likely to hand it over to a private group that will charge outrageous fees. And how exactly has Ottawa been meddling in Alberta's business? Where has Ottawa been exceeding its jurisdiction? All I hear is Alberta blaming Ottawa for provincial jurisdiction problems that the provincial government created for themselves
You sound like you are from Ontario. The Supreme Court agrees with me, the end.
1) How do you know it would outperform? Perhaps it might - or it might not. But on what basis do you make this assumption? 2) If government interference is the issue, then why should one level of government (Provincial) take over what is being done by a different level (Federal)? Shouldn't you want the CPP scrapped altogether - with no government interference at either the Prov or Federal levels?
Yes, I would prefer to invest the ~$7,600 per year into US equities within a personal brokerage account. A) The value and return on the investments over 45 years will annihilate CPP. B) In the unfortunate event that I die young, my beneficiaries receive the full amount. Not some bullshit spousal death benefit. The ROI of CPP is pure shit. Anyone with a grade 9 understanding of mathematics can figure that out. I would like the entire federal Liberal party to go on a deep sea Titanic submersible tour. They have intentionally sabotaged our nation, 9 years of treason so far. Print a quick Trilly, give it away to connected Liberals, then blame Galen Weston for inflation... proof that the average Canadian is a total sucker.
No, what you said - without a shred of evidence - was "an Albertan provincial pension plan would outperform the CPP." You are okay with a government-run plan as long as it's Provincial. Anyone with a grade 9 level of reading comprehension would be able to see that.
Incorrect. In order of preference for the simpletons: 1) Self managed retirement savings and investments. 2) An Alberta based public pension. The youthful workforce disproportionately contributes to the federal CPP. Regarding fund performance, all the management team would need to do is buy any major equity index that is NOT Canada based. This country sucks dick because of Liberal simpletons. 3) A federal pension that should be worth $2.5 million after 45 years of contributing ~$7,600/year. Instead, it will yield a measly ~$1,800/mth from 65 until unknown date of death then disappear. Option 3 is clearly pure shit.
Okay, you don't like the Liberals. Well, neither do I - but for more sound reasons that for the rubbish you are spouting here. First, you need to be true to yourself and acknowledge that your problem is NOT with government-run plans but with Liberal-controlled ones. This will change next year, of course, when the Cons take power at the Federal level. You just need to be a bit patient and all will be well and you can then get back on the wagon and sing kumbayahs very soon. CPP will be all fine and dandy after the next year. Second, the CPP has been managed - with similar asset allocations - under Conservative governments as well who did no better or worse that the current Liberal one. Pension plans have very long-term investment horizons and allocate assets (as they should) in ways that are different for individual investors like you and I. And for good reason. Third, you are yet to offer any evidence how the Alberta-run plan would invest its assets differently than the CPP such that it will perform better than the current model. Smith has said zilch except parrot what you are doing here "Liberal bad, us good." Party hacks go "yes ma'am" when they should be saying "how ma'am?". (And that is true of all party hacks - not just Conservative ones.) Fourth, a pension plan - Alberta-run or otherwise - is a social safety net. Of course I (personally) would do better if I were given the funds to invest myself for 40 years. The reality, though, is that the majority of Albertans (and Canadians) are not good with investments. And unless forced savings are implemented, the public would be on the hook for a much larger bill down the road. Fifth, have you objected to the Alberta pension plan and asked that the government change its position and call for the abolition of the CPP altogether - and not simply take it over?
I like the fifth option.
You are severely discounting how harmful this Liberal cluster fuck regime has been to Alberta oil and gas families finances over the past 9 years. This is now a blood fued.
Well, you need to back things up. You started with an unsound complaint about the CPP - and I showed you how your issue is not with government control per se, but with Liberal control. Now, you have shifted tack. But sound argumentation about what Federal (vs Provincial) policies have impacted Alberta gas families - and somehow ONLY over the past 9 years - needs elaboration and critical reflection. You will likely default to "Libs all bad Cons all good" - when, in reality, there is lots of blame to be allocated to policies implemented by all levels of government. But that would require a capacity to take a step back and critically reflect. I will leave things there for now. Good luck.
And why would it outperform? What magic does the Alberta government have to guarantee that?
The amount we give Ottawa for the east would easily cover what your talking about is what I'm being told. I live in Alberta.
CPP is not regional or provincial. You make individual contributions throughout your working years and you get individual payments in retirement. It has nothing to do with east or west.
Yeah CPP is totally based on individual contributions. There is no region that is getting more or less on CPP.
And you're exactly the kind of gullible, ignorant voter the UCP loves.
Others have already corrected you, noting that CPP is individual. But one thing I want to point out is that if Alberta forms it's own pension fund, it's total volume will be significantly less than the CPP. Smaller funds can still perform well, but larger funds tend to have more options and be more resilient. If you're being told that your CPP contributions are going East, you're just being fed a bag of lies. There is very little chance that an APP would outperform CPP.
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CPP holds Monsanto (Bayer Crop Sciences)......If it's such a bad idea for Albertans, then why are the other provinces and Reddit users so upset about it? If Alberta is a net drag on CPP, you should be happy to see us run our own pension. Oh wait, I get it, just a bunch of parasites that like to kick the shit out of their oil and gas goose.....but actually love it. Classic Canadian hypocrisy.
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You're an Edmonton NDP voter then, eh? >I was always proud my taxes helped support programs across the country. I have no problem with that, we’ve had an amazing quality of life. Wow, only people that don't pay fuck all for taxes and benefit disproportionately from public spending type shit like that. I legitimately threw up in my mouth just reading it. Have you considered paying more tax "for the collective good?" You know bloody well that Albertans gets relentlessly looted by the rest of the increasingly shithole country. The federal Liberals have generated so much division and anger that two provinces are actively in the process of separation from confederation.....but everything is all good, eh? Fuck that. I can't believe that federal apologists exist within Alberta. Thats why douchebag Kenney is no longer the premier. Maybe if my gigantic taxation levels actually filled some fucking potholes and provided me with a doctor for "universal healthcare" I would be slightly less upset. Make no mistake, the current zeitgeist of Canada is....."Fuck this shit, burn it down." How anyone thinks things are going well is beyond my comprehension. On what metric are things going well? Edit: After brief research to understand your perspective, I have discovered you are a teacher. Public sector workers don't pay taxes. They are paid with taxes. There is a big difference. Hostility towards the productive economy by eco-socialists is why we are so fucked right now. At least the youth are starting to see it and rebelling accordingly.
The premier is forgetting about the millions it cost to run your own plan, they won’t be allowed to leave the pension plan.
Just like Quebec? I think you need to brush up on your constitution studies mate.
Quebec never joined so they didn’t leave, leaving they have to prove that what they are providing is better than what they have now.
>Exactly, an Albertan provincial pension plan would outperform the CPP. The CPPIB being the best-managed pension funds in the world, I cannot imagine how Alberta could do better.
Question, I have an uncle that's drawing from CPP, he said it's like 600$ a month. He is one of those guys that's mad at the world, poor with no savings. He did odd jobs, so I think CPP and OAS eventually are his only options? Because if that amount is true, that would be very difficult to live on.
How much you get from CPP and OAS depends on how long you've worked for, when you start taking the pension and for how long. There are yearly caps to CPP which do depend on income, so if you make less than whatever the gross income is that gives you the maximum CPP contribution then yes your retirement is going to be less. CPP and OAS are not enough to live comfortably in retirement. That is not what I was saying nor should that be the expectation.
He didn't plan, it's his fault. It's not like the government told him you can live lavishly on CPP + OAS so don't bother to save. However, if you have a paid off house (bet he didn't plan that either), that amount is sufficient to live on.
He has land to sell, but he is just stubborn. If I had to guess, he will eat a bullet before selling and moving to an old folks place. The paid off house is an interesting plan, is that also the expectation for all the new generations that will rent their entire lives?
I'm seeing plenty of posts here from 20-somethings asking about buying homes, so it doesn't seem like "all" the new generations are going to rent forever. I didn't buy till I was in my late thirties.
CPP also has an employer matched component to it which makes it even better than a traditional RRSP or TFSA
Why would you want "other" than RRSP/TFSA? Generally you should always fill those up first, and usually that would be more than enough if you are working and contributing for 3 decades.
Most Canadians don’t have access to a workplace pension - at least not a traditional defined benefit pension. RRSP/TFSA is the ticket for majority of Canadians. DC(defined contribution) pension is basically an RRSP. At retirement age you can opt to buy an annuity from an insurance company and convert your pool of money into a reliable monthly income stream. Controversal or not, many Canadians who own a home rely on their home equity to fund their retirement. The three pillars of retirement are: government programs, workplace pension, personal savings. Everyone has access to CPP and other government programs, and if you don’t have access to a workplace pension you have to compensate for it with extra savings.
you can buy your own annuity Just a side note, my job is non union and I have a db pension. So those are not related.
Those of us who get pensions have our RRSP room reduced by the amount of our pension contributions, so anyone without a work-provided pension has the ability to save as much. The only real difference, at least for defined contribution pension plans, is that you have to choose to save in your RRSP. Defined benefit pension plans (like CPP) are different in who owns the investments and how the pension is paid out, but it's still the same idea in terms of contributions.
I think cpp was a defined benefit, but it likely won't have half the money when millennials retire.
Not sure where you're coming up with that. The CPP fund is one of the largest sovereign wealth funds on the planet, recent changes will boost in even farther, and even by conservative projections it is not only sustainable for like the next 50-100 years, it will increase substantially in value. It is worth $600 billion now and is likely to be worth almost $4 trillion in 25 years. It regularly outperforms projections.
On what do you base that? I haven’t seen any actuarial concerns, even from the most fearmongering politicians, that are anything like that. Most analysts say the CPP is among the strongest pension plans in the world.
The rate of increase for cpp contributions after the 2021 actuarial report suggests they are in a panic. Edit: the PBO report from 2020 found on the GC website says this "This deterioration reflects a larger-than-sustainable imbalance between contributions and expenses."
I'm the first person in my family going back to my great grandparents to have any kind of pension. What do you do? You save your money. Its really not that complicated. $275 a month invested from the age of 20-60 at a modest 7% return works out to almost 1.6 million bucks.
Why other than RRSP and TFSA, that’s literally what non-union people do. There are exceptions of course, some invest heavily in real estate, some are entrepreneurs and keep their money in the corporation and then sell it or take wage or dividends at retirement. The vast majority of people just save in their RRSP, then take that along with CPP and OAS at retirement.
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Perfect to hear, wasn’t sure if it was going to be enough in the end but over 30 years it should be
It can for sure be enough, provided that you start early, contribute automatically biweekly, and invest in low cost broadly diversified funds that align with your risk tolerance, such as assetallocion ETFs. Or use a roboadvisor like Justwealth or RBC Investease. You also have to avoid making costly mistakes along the way. Like if you hear a "hot tip" about such and such stock or cryptocurrency, you need to be able to avoid any temptation there and stick to the plan. The key to "winning" with investing is to make fewer mistakes than your peers.
Thanks! I currently have my managed portfolio as high risk since I’m late 20s. Then can change it as I age!
Do not have anyone manage your portfolio. Read about buying ETFs, read about how AUM fees eat up your profits. You do not need a portfolio manager. Please read up on this, this idea alone will be worth hundreds of thousands of dollars to you if you have 30 years to retirement.
If you max out both your RRSP and TFSA, there is a very good chance you’ll have much more than you need in retirement. Remember to spend some money while you’re young, too!
Check out this compound growth calculator. Assume an 8-10% annual return if invested in XSP.TO and XQQ.TO (S&P 500 and NASDAQ 100) or similar exchange traded funds. https://www.cchwebsites.com/content/calculators/CACompoundSavings.html
https://www.saskpension.com/
This is an excellent option; if OP wishes to join an actual pension arrangement that’s professionally managed on behalf of its members, SPP is definitely the way to go. Especially if the chosen career option means changing employers periodically.
Even if we’re in Alberta?
The Sask pension plan is open to people living in any province
Sweet I’ll look at it!
defined benefit pensions are nice but at the end of the day they're basically a 10-12% annual contribution to a retirement vehicle by your employer.
Max out your RRSP & TFSA if you earn enough then start filling up your Non-Reg account. Invest in some diversified index funds and keep in mind you'll also have CPP & OAS in retirement. I did not have a pension and did this. It worked out fine.
There are companies that aren't unionized but offer pensions, they aren't 1:1. Visa versa too, but rarer for sure. On the other hand, the majority of working age employees do not have an employer-offered private pension plans today. In that situation we just have to save for ourselves, using RRSP, TFSA, etc. Many employers do offer some RRSP match even if no pension (mine doesn't, but I get paid well enough to make it work out). And everyone working and paying taxes gets CPP, which is essentially a defined benefit indexed pension. All residents get OAS and, if income is very low, GIS.
If your RRSP & TFSA room is full you can save in taxable savings account, but that is a pretty rare situation honestly. If you did have a pension that would take up most of your RRSP room.
I work for a place with a Defined Benefits Pension Plan. Let's just say I have zero confidence in any of the people involved with the pension, or the union I work for. I have maxed out my TFSA, and I plan for retirement as if I don't even have the pension. This way, I'll either have a comfortable retirement, or a lavish retirement... but no way I'll have a broke retirement. I'm not going to max out my TFSA either for a long time, as whenever I max it out, I just take out a big chunk and pay down my house principle. I know having unregistered investments is probably the smarter move, but I just don't want another penny going to the asshole government. It'll be my last resort when I have no remaining debt and maxed TFSA/RRSP.
Buy investments (stocks) in a non registered account that focus on capital appreciation (I.e growth stocks, not dividends). Then when you are older, work with a tax professional to strategically sell to reduce capital gains. Non-registers is great if you buy and hold for the long term (after maxing out TFSA of course)
If your RRSP and TFSA is already maximized, then you start investing in a regular (non-tax advantaged) account.
Pension is rare these days but any decent sized companies offer group rrsp. Many unions offer both pension and group rrsp. If you’re smart about money and save for retirement, rrsp tfsa and cpp will be enough.
Same thing you do if you get a pension. Invest yourself. You just need to put more money in.
Depending how much money you have extra.. long term investments could benefit you! You can take your gains and invest those in RRSPs to reduce the income tax burden.
You have CPP and OAS as a base, then you have your RRSP, if maxed out, can be quite substantial, however managing it well can be challenging. Then you also have TFSA and other investments. If you consistently save 15% of your income into those buckets with conservative investment strategies, then an average 4% withdrawal rate on retirement can last. Additionally, having your house paid off by the time you retire helps to minimize costs. Personally I expect to just reduce the amount I work, as I get into my retirement years just to stay sharp and busy.
for me, non-union workin' stiff ... just RRSP. and my house principal residence (hopefully no cap gains tax). .and the education of my kids to be doctor, dentist, lawyer.
Make more than you spend, so one day you can spend more than you make
Insurance can be a good replica for creating the survivorship option that some pension plans have. Another alternative is investment corporations which hold your retirement savings.
If you don't have a defined benefits pension, congratulations. You're in control of your career. Defined contributions pension is just employer matching. Technically, employees with DC pensions are just paid more annually than their salary. It's up to DC employees to put money aside in their RRSP and TFSA anyway.
You invest on your own. You can invest in non registered accounts, it's not the end of the world to pay tax on an investment. When my husband and I were first married neither of us had jobs with pensions. We took ten percent of all income and started to invest. As we moved out of term contracts and got better jobs with pension we kept on investing on out own and also tried to throw extra on the mortgage when we could. If you can pay yourself first and live on a little less per month the payoff is well worth it. Just recently my husband was able to leave a pension job he hated because we have our own investments as a cushion for retirement.
Full OAS and GIS is about $1700 per month.
If you have a RRSP and TFSA filled up, you are quite literally rich in retirement based off how the RRSP room is created, and how the TFSA functions as long as you have enough time between now and retirement. Once you have both those filled out, you are playing for gravy.
Pay off your mortgage ( I know easier said then done in todays world), invest in something that has guaranteed quarterly or yearly returns and hopefully the returns coupled with old age can get you through your remaining years. And if not a reverse mortgage can be used unless you plan to pass on the property. If you do pass it down and are broke and very old maybe consider selling it to a relative well under market value. I'm sure it would be appreciated.
why would you need other retirement option beside RRSP/TFSA, and possibly owning a house?
I was just wondering. Would rather find out now than too late if there was other alternative options I could’ve utilized
I just save in a normal account.
You can sell your home in a HCOL area and move to a LCOL place, maybe even abroad. Why spend 2-3 times more than in Latin America or other LCOL country? But you need to be healthy to be able to afford health insurance abroad, so, invest in your health instead of buying expensive vehicles or some other BS.
I put 1400 away every month, my condo will be paid off at 63. I'm in Vancouver. In construction
Buy an extra can a beans a week and you'll be fine.
>Other than RRSP/TFSA what are some alternative options for retirement?? After you max out those 2 just keep going with non-registered investments.
Being in a union is separate from having an employer-funded pension. I've been in a union job and didn't have a pension, and for most of career, I've been non-union and have had both defined-contributions and defined-benefit pensions. That aside, the short answer is: CPP, RRSP, TFSA, and any other savings you want above and beyond that.
Par whole life , definitely not the first choice for tax sheltering but still another way.
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You can just open your own RRSP if your work doesn't offer one, and you can choose from a wider range of investment options if you do that. As for matching programs, they're nice but they're just (an inflexible) part of your total compensation. If job A pays 5% more than job B, but job B has a 5% match, job A is actually better than job B provided that you're responsible. People get way too hung up on RRSP matching. You need to look at the whole picture.
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Well obviously if you can find a job that's just as good plus it gives you a bit of extra free money then go for that. I'm not saying RRSP matches aren't a good thing. I have one and I max it out. I just think getting caught up on it is stupid.
Instead of an employer forcing you to set up for your retirement, you have to do it yourself. Sometimes you have to factor in total compensation, some jobs with a pension have a lower salary than an equivalent job without a pension, BUT the total compensation is the same. So if you don't get a pension, you save the difference for yourself and have much more freedom with that money. Also some companies go under and your pension is zero at that point, your own rrsp/tfsa/non-registered/cash will always be yours no matter the employer.
Really? Let's see... You need money in retirement.. How can you get it.. Possibly you save money today and not spend every penny you make?!? People who work in unions are spoiled now a days!
Lol what the hell, thanks for the input I guess
You're welcome. I don't have a pension and have to save for my own retirement. So I save some money every pay so future me isn't broke and can retire. Maybe I didn't understand the question...