CBC CPP Discussion – Panelist: “By the time somebody retires, they should have no debt”; Moderator: “But how realistic is that?”

From today’s panel discussion on CBC Radio’s The Current, regarding Canadian Pension Plan reform [23 Nov 2010] –
Panelist: “By the time somebody retires, they should have no debt”.
Moderator: “But how realistic is that?”

12 responses to “CBC CPP Discussion – Panelist: “By the time somebody retires, they should have no debt”; Moderator: “But how realistic is that?”

  1. pricedoutfornow

    I’m not sure why this shouldn’t be realistic, at least for our current retirees (or near-retirees). They bought houses when prices were a lot lower and they should be paid off by now (you would think). So…unless it’s useless consumer debt, why not have all debt paid off by retirement? My parents don’t have any debt, they paid off their house years ago (they live pretty frugally) and their family income has never exceeded $90k per year.

  2. pricedoutfornow

    Sad but true…baby boomers are in for a real surprise when they expect to sell their house for a fortune and retire on it….

  3. If you’re retired, you’re not drawing regular income. If you’re not making money how can you service – let alone pay – debt? Retiring with debt is an option for people with assets and no suitable heirs. It’s also a good way to stiff idiot banks, although that may just end up being the taxpayer… But I have to know, will they give a 35 year mortgage to a person who is 60?

  4. Not sure if this is related or not, but I was at the food-court in downtown today, waiting to buy a slice of pizza. The 40ish guy before me (looked like he was a construction worker or something) got his credit card rejected for… $6! He didn’t seem too surprised nor embarrassed, he just told the pizza guy “I’ll be right back”. Of course, he never came back…

    Not being able to afford a slice of pizza, how worse can it get?

  5. What i don’t understand is why people seem to think retirement is a given. To me, if you don’t have the money you don’t get to retire. Simple. You shouldn’t just get to retire because you are X years old. WTF is wrong with people!?!?!?

    • The idea behind it is that as you retire a position becomes vacant and a younger person can enter the workforce.

      The idea of “forced retirement is centered around the idea that a.) you have done your share for society. b.) there are newer generations coming after that need a job too.

      The thing is sort of amusing if you think about it. On the one hand they tell us that GDP must grow, as such new jobs should be created anyway. But because they know that the entire premise of eternal growth (GDP or otherwise) is not obtainable they “chop” people off at the top in order to make room for more.

      The whole thing got thrown into a whack in a big part because the life expectancy has been raised quite substantially over the last 50 or so years when these plans were first put into place. At the same time though they haven’t really adjusted the amount of money you get from the CPP etc. (if you adjust for inflation you’ll notice the pensioner today gets a lot less out in “real money” than someone who would have retired in the 50s say) nor have they increased the contributions by any realistic factor. I always found it curious why they went with absolute numbers instead of percentages of income earned, the latter would have not required any kind of adjustment as the contributions would have increased as inflation and income would have come up. The only explanation I have for this is that they wanted to give people a concrete number instead of a “random” one.

  6. When I advise a 40 year old couple that if they take a 35 year mortgage that means that just making the payments means they will have a mortgage until they are 75. Half of their eyes still just glass over and mumble that they still want to retire before 60.
    “but my parents said they paid theirs off faster and rates were as high as 11%.” Sure, and the am was 25 years at most. They were paying the equivalent of you paying $6500/month. Problem is, you are paying $2300 and you save nothing.”

    Of course they did, rates went from 11 down to 4. How does that accelerated payment strategy work if rates go from 4 to 7?

  7. Pingback: “But my parents said they paid their mortgage off faster and rates were as high as 11%.” … “They were paying the equivalent of you paying $6500/month. Problem is, you are paying $2300, and you save nothing.” (rf's comment headlined)

  8. Retirement- you need to research why it came into being. Some think mandatory retirement was created to make room for all the young men returning from WW2. Get the old out of jobs and provide them to 20-somethings who all know how to handle automatic weapons.

    Nothing makes a government more nervous than idle young men. Look at China- they built all those cities for no one just to keep the young men occupied.

    Now we have a generational war brewing- young people can’t find work, old people can’t afford to retire. This is the stuff of which revolutions are made.

  9. NVD: You took the words right out of my mouth. I am living this very senario right now. I have my education complete and would love a full time permanent job. I was hire by an organization on a casual basis. I am waiting for someone to retire. Everyone I work with is either already at or quickly approaching retirement age(65). Despite this fact, none of them have plans to retire. I have brought up the subject a couple of times only to discover that they don’t see themselves retiring for a couple of years at best. Most of them simply cannot afford to retire. Here is the kicker…I have a government job. If people with good pensions can’t afford to retire, then who can? If these people don’t retire, then like you say, we will have a generation of underemployed people who are not able to enter the real estate market. But maybe there is a solution to the real estate problem that we have not concidered…the old folks will keep working because they can’t afford to retire, the young floks will continue to live at home with their boomer parents because the can’t afford to move out untill their parents retire and vacate the jobs, eventually, their parents die at work…and overnight, we inherit both the jobs and the homes!

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