46% of Canadians on the brink of insolvency

[JLives]

I'll bet I saved half my retirement money by not having all the fancy electronics for most of my young life. I was quite old before I even paid for TV let alone computers and cell phones which cost a fortune. As I remember it we had just as good a life and entertainment, just different and probably a lot healthier on the average.

I think they're might be a generation gap here. Did you not own electronics because you were saving and bootstraps and all that or did the technology not exist?

[Hurtlander]

I'll bet I saved half my retirement money by not having all the fancy electronics for most of my young life. I was quite old before I even paid for TV let alone computers and cell phones which cost a fortune. As I remember it we had just as good a life and entertainment, just different and probably a lot healthier on the average.

I think they're might be a generation gap here. Did you not own electronics because you were saving and bootstraps and all that or did the technology not exist?

The gramophone was probably invented when Smurf was still young..

[Smurf]

None of it existed when I was young. I am saying I was very lucky because it saved me a fortune not having to keep up with the Jones. In today's world a fortune is spent if you want to keep up and everyone even most students seem to feel they have to keep up. Luckily I, in fact we, have never felt that way. Still only have one pay as you go cell phone and do just fine. Don't have high speed internet and use a dish which we can take everywhere in the motorhome also. Basic service as we have lots to do with hobbies, travel etc. We live a good life on actually very little. No financing, pay everything off monthly. Anyone can do it if they want to and get along just fine.

[hobbyguy]

I count among my friends a few millionaires who came from modest homes who worked their arses off to better their lives. Most did not sleep more than 5-6 hours per nite, often rising at 4 a.m, to get to the businesses they created.

Over the years all paid staggering sums in personal, property, investment and business taxes. Now in their old age they get out and play which they held off doing when younger, preferring to pay down mortgages, business loans and educate their children. Unfortunately one just passed away before he could really reap the rewards from years of labour and yes, paying taxes.

The generosity of these folks is also amazing as I occasionally am privy to their volunteer hours, charities they donate to and support of the arts. Their kids behaviour was closely monitored during formative years and now they are pleasant, responsible and productive (you guessed it) tax payers.

To suggest a tax of 80% is silly. Why would anyone bother busting their backs to create businesses that you are employed by?

The context is what matters. You will note that I separate passive and active capital. The folks you are speaking of are in the active capital category.

It is a conundrum as to how to separate them from the predatory hedge fund types that do nothing but leach off the economy.

[d0nb]

^^ the government already income tests for OAS and GIS.

Uh-huh, but there is no asset test. That makes it possible for an asset-rich individual (with a healthy TFSA to fall back on) to pay no taxes and nothing for health care while receiving a full OAS and maxing out on the GIS.

It’s enough to send a good socialist into cardiac arrest.

They don't need banking info. Plus for most of what most folks have in retirement savings it goes into registered accounts, RRSP, RIF, LIF, TFSA etc. and so they have the figures already if needed.

Right, that’s why we don’t have to supply the same information to them over and over and over again. They do such a good job of making use of the information they already have on file.

The argument you make about CPP investments going futz just when needed has been made for 60 or more years - and it hasn't happened yet. Doesn't mean it couldn't, but because CPP is structured payout over time, the risk is almost zero. Most CPP is drawn out over a period of about 17-20 years - IF there was a major "futz" that lasted that long, we would all be freezing and starving in the dark. Yup, you could have 1-3 years of down time within that 17-20 years, but the resulting "up" would make up for it. After 08-09 investments made at that time just rocketed. So that tends to smooth CPP investments.

Aside from the “almost zero” risk assessment, that is the conventional thinking on the subject. Investments made over the decades into large retirement funds have played a role in giving investors confidence that markets will bounce back from selloffs, but that paradigm is not written in stone.

The global stability we have experienced for decades is being endangered by (among other things) a ruthlessly mercantilist and increasingly bellicose Chinese dictatorship and by widespread economic mismanagement. How countries will fare as interest on debt becomes their single largest expense (with no end in sight) or the Chinese house of cards falters, is unknown.

That puts all of our best laid plans at risk, including the CPP.

[hobbyguy]

^^ There was no asset test in what StatsCan tried to over reach for. There is no asset test in any of the government programs that I am aware of.

The closest we are getting to that is the BC NDP with their ignoramus "speculation" tax nonsense. Rightly, that ignoramus move is going to cost them dearly at the polls next go 'round - especially as their anti-democratic so called PR referendum failed miserably.

Asset testing for GIS and OAS are not really needed, an there are far too many complications. You could easily have Granny living in a little dump house like the one I used to own in North Vancouver - assessed at $1.3 million but with the house itself valued at just $27,000 - and with little income or other assets.

I agree that no economic paradigm is written in stone. I am less pessimistic on the front regarding China and economic stability. China has done well by liberalizing, and we are seeing a reactionary element in terms of Xi and his supporters making an attempt to return to the old Maoist days, but I think that will only proceed as far as they perceive it to be in their own best interests. China's new strength is also its greatest weakness. The unrest that would result from engineered economic decline would be devastating. I have to think that the Communist party knows that.

So I believe China will do what they can to resolve their mess with the US. I actually think that US government deficits are a more serious issue - and one that the world economy has less capacity to absorb. It is still manageable in terms of debt to GDP, but is getting into a situation where warning lights are flashing.

IF CPP were have to be restructured because of such a "black swan" event, the first question to ponder - would it have been a result in inflation? Or would it have been because of a result in deflation? One would assume a massive deflation in asset prices...which would inevitably lead to a shortage of liquid funds... tough questions.

It would take a major "stuff hitting the fan" of dirty 30s proportion before CPP needed to be restructured. If that happened, we are all "done for" anyway. Can't see that happening.