“A retired musician who we’ll call Helga lives in British Columbia. At the age of 72, she feels poor. She has been able to cover her expenses with pension and investment income and by teaching music. Yet she feels trapped, unable to stop teaching and thus unable to retire completely. Ironically, she has substantial capital, including a house in B.C. and a condo in Austria that together are worth $810,000.
Helga’s income comes from Old Age Security, $540 per month, Canada Pension Plan benefits of $825 per month, Registered Retirement Income Fund distributions of $1,135 per month and teaching violin at $2,500 per month for a total of $5,000. After tax at an average rate of 20%, she has $4,000 to spend.
“I would like to retire from teaching music at the end of this school year,” Helga explains. “But I need the money it provides. I would like to spend more time in my condo in Austria. I don’t know where to turn.”
- from ‘Impoverished millionaire’ needs to face the music’, Andrew Allentuck, Financial Post, 9 Mar 2012
What happened to all the seniors downsizing, or cashing in their RE to fund their retirement? Sounds to me like many of them plan on staying put.
… until they can’t anymore.
Anonymouse -> Perhaps you should follow the link, and see the advisors recommendations.
The point is that, this lady, and 1000s like her, are very over-invested in RE.
I doesn’t matter what the advisors say if the seniors refuse to follow. It seems to be that many see their homes as simply that – a place to live – not something to cash-in. I can’t imagine many 72 year olds choosing to sell and move over staying in their home. I suspect those homes won’t be sold until the kids want to cash in their inheritance.
Anonymouse, and where will all these seniors get the money to fund their retirements, if not by cashing in on their RE? Life expectancy is longer than ever. Savings, pensions, etc. are woefully inadequate.
I think it’s great to keep working past the traditional retirement age if you can make money doing something you enjoy that is not too physically demanding. I don’t plan on ever retiring if I can help it. The thought of hitting 65 and stopping work cold turkey sounds nice but it seems like people live another 7 years or so after they retire and then keel over. I’d rather have somewhere to be and stay active as long as I can. Some of the happiest people I know are in their 70s or 80s and still going strong by working even if they don’t need the money. This lady teaches violin. I hope she enjoys it!
Spend time in Austria? Audacious! BC is the BPOE. Ditch Austria, ma’am. Nothing to see there.
Obviously she has experience of both places yet chooses to live in BC over Austria.
Probably chooses to stay in BC because her income/savings are in CAD, which doesn’t exchange at the best rate…may change if the euro crashes though.
She may have kids/grandkids here, ultimately who knows what her reason are. Austria is pretty amazing and definitely an equal to Canada.
Ach, du lieber Strohsack!
Gordon Pape just blew his wad. egagtrom esrever
ah-ah
In 3 years, her real estate will be worth 500k😱
Wow, you know what? If this is being trapped financially and have nowhere to turn? Sign me up!!! Seriously, this lady is making $60K gross/year in semi-retirement! That’s close to the current average and median average income of a family with 2 wage earners!! Seriously….this is called being trapped financially? Then how do families only making $45K or $50K gross with 1 or 2 kids supposed to live??
“I would like to spend more time in my condo in Austria. I don’t know where to turn.”
Ha ha. This poor disadvantaged woman doesn’t get to spend as much time at her second home in Austria as she would like. What a problem to have.
BooHoo… OMG seriously.