“The Accountant was advising people to retire without any debt. The Radio Host says in an incredulous tone “But is that REALLY possible???”

“This was the topic on this morning’s financial tips spot on CBC radio. A CA was advising people to reconsider if they are liquidating their RRSPs in order to fund a bad real estate investment (or something like that, was half-listening for part of it). One thing that caught my attention, the CA was advising people to retire without any debt. The radio host says in an incredulous tone “But is that REALLY possible???” WTF? I for one, don’t understand how someone who is in their 50 or 60s, bought their house in the 1970s or 80 for at least 50% less than what prices are today, can have an enormous amount of debt going into retirement. But I guess people have been taking money out of their houses in the form of HELOCs so it shouldn’t be so surprising. But it really shouldn’t be this way. People are counting on their houses being worth so much when they retire, but maybe they shouldn’t.”
pricedoutfornow at VCI October 23rd, 2012 at 10:03 am

A significant number of Vancouverites close to retirement are overly in debt and overdependent on the market value of their homes for their future financial health.
A significant number of radio show hosts, and other commentators, are unable to imagine how this could be any different.
– vreaa

37 responses to ““The Accountant was advising people to retire without any debt. The Radio Host says in an incredulous tone “But is that REALLY possible???”

  1. Things might be different if everyone had to wear their net worth on their forehead. From what I’ve read about the old days, it wasn’t always about renting the maximum lifestyle you could get, given your income.

    Mortgage burning parties, savings… tales from a bygone era.

    • You could argue that at some level people do have to ‘wear’ their ‘net worth’, or, rather, their sense of their own future financial health. Meaning that they have to live with the knowledge of their financial circumstances, and all that that implies for the future.
      But then, one could argue back, so many appear to be in absolute denial about the possibility of bad things happening in this regard, that they live oblivious to the risk, and don’t ‘wear’ it at all. They go about their lives ‘king for a day’. This is emotionally primitive behaviour, and almost always ends in a gruesome reconciliation with the truth.

      Barring some form of bizarre debt-forgiveness scheme, and/or hyperinflation, (both of which would lead to profound internal divisiveness in Canada), those in debt will have to face it.

    • I so badly wanted to have a mortgage burning party but knew that it would just be rubbing salt into the wounds of my friends.

  2. There are some of us who still view life realistically, myself and my partner are alike when it comes to finances. Vancouver is a lonely place for financially responsible people.

    Our friends have been buying houses, condos, cars, boats, and all the toys in the world on incomes we know are similar or smaller than ours. Often we get lessons on how easy it is, “just put $10000 down and you’ll have $700 payments, its so cheap these days.” That would be a fine statement if we were talking about housing, unfortunately many of our peers talk in such a way of car payments. I get nightmares imagining what it must feel like to spend $1000 +gas on a car with my income. Dreadful thought, but I know first hand of people who do this without a second thought.

    With housing its no different. We purchased a condo in 09, at a small monthly discount to renting. Our mortgage is just barely 2 times our annual income. We feel the need to get rid of this debt as soon as possible. Yet, we have friends who have bought both houses and condos in the past year valued 4 times that of our condo! These people earn the same money!

    I would venture to say people are so conditioned to debt these days, they feel naked not having obscene monthly payments. When a car if finally close to paid off, they trade in for the newest model with biggest possible payment, or newest cruiser, or newest Bowrider.

    The irony of it all? It makes us feel poor! We look at our friends, over extended, loaded on debt, enjoying all the spoils of life. The appearance of the wealthy elite.
    Us? No consumer debt, used cars, and a big savings accounts, even bigger investment accounts.

    This is partly why Vancouver is such a hard place to live, if not for us both being grounded and reminding ourselves that by 40 we will have enough cash-flow to retire or work part time, we would likely go insane and cave to the temptations. Its hard not to feel vindictive, and wish financial reckoning upon the indebted masses who get to enjoy the spoils without the work.

    Lets hope there comes a day when people have to pay back what they borrowed. Literally and figuratively.

    • “Vancouver is a lonely place for financially responsible people.”

      I think that almost says it all – – you are in small company. At this point, the few of us who are responsible are best to keep quiet and just move along. In 5 years, it will be amazing to see what the outcome of our financial prudence was.

      • Rusty's Ghost

        there are financially responsible people

        but they’re not named Burt and they’re living 20 to a McMansion

    • “Vancouver is a lonely place for financially responsible people.”

      Amen to that.

    • You know I like to think of myself like you. Except I have a huge income as I am a young doctor (400k a year). Yet I live a lifestyle considered to be modest. Yes I have one luxury car that I bought for 70k with cash. I had to buy a car as my old 15 year old Acura was starting to die on me. I have a small townhouse on the west side which I can easily afford. But yet I still am cheap. I don’t tak many vacations. I bike or bus everywhere. The only time I drive is for shopping. But yet I see my cousins who make way less than me drive the same type of car live in bigger and more expensive homes, take more expensive vacations etc.

      Remember that the smartest and most successful people in the world are those that practice delayed gratification. My rule of thumb is (other than your mortgage) if you can’t pay for it in cash you can’t afford it.

      • Funky monkey

        I totally agree if you can’t pay cash for it you can’t afford it. Except for a mortgage. I learnt that by having 500 doller a month car payments for 4 years painfull when I think about it. Never again I don’t care what people think about the car I drive

      • Or you could be dead before you get to enjoy the delayed gratification. Maybe that’s why people wants everything now….just in case. What’s the fun of delayed gratification if you are dead, injured, hurt, or sick and can’t enjoy the fruits of your labour?

      • I can’t speak for everyone but I’m not happier driving my luxury vehicle, certainly not happier than when I had my beat up 15 year old car from my days in school. I am happier when I ride my 700 dollar bike to work and actually get exercise. Yes, you have to live a little but you really should be able to afford it before buying it on credit. I know people who are teachers, and other middle class folks who drive 80-120k cars, more expensive cars than mine! Nobody “needs” luxury cars and luxury goods. To me, that’s not enjoying life. That’s throwing your later years away.

      • Just between the two of us, Dr. Ben… and, ‘strictly speaking’… isn’t ‘DelayedGratification’ a TadRisky?… From a ProstatePerspective?…

      • @space889 – just consider that you might be up to your neck in credits and mortgages chasing all instant gratification you can get NOW and all of the sudden you are injured, hurt, or sick and not only can’t enjoy the fruits of your credits but you also have to continue yo pay them out…wishing you’d be dead instead.

      • That’s what bankruptcy is for Olga…..most people will likely deplete all their assets in a vain attempt to avoid bk and end up with bk anyways and no asset. But hey at least they did get to enjoy the fruits of the credit which relatively speaking is better than hard working and scrimping and saving and not getting that enjoyment ever, especially after so much hard work and sacrifice.

        What that saying? Better to have loved and lost than never to have loved at at all?

  3. “People are counting on their houses being worth so much when they retire, but maybe they shouldn’t.” – PricedOutForNow

    Indubitably. All the more so if they have inadvertantly purchased a suite adjacent to YaleTown’s Mr. PartayBoy… [NoteToEd: #”CouldBeWorse”]

    Your Quote ‘O TheDay, DearReaders…

    “Yaletown living does not give Mr. Newell an excuse for ignoring the bylaws of his strata corporation.” – B.C. Supreme Court Justice Elaine Adair

    [CBC] – Yaletown Penthouse LoudAllNighters ShutDown

    …“Mr. Newell’s attitude seems to be that his closest neighbours – Mr. [Stanley] Yu and Mr. [David] Beilhartz – are killjoys and do not belong in Yaletown,” B.C. Supreme Court Justice Elaine Adair noted in her written decision. …The judge ruled that Newell is banned from using his entertainment system, speakers or musical instruments on his deck and balcony or using his hot tub between 11 p.m. and 8 a.m.”…


    [NoteToEd: No HotTub!? TheHorror… TheHorror… Oh, TheHumanity]

  4. priedoutfornow said: “I for one, don’t understand how someone who is in their 50 or 60s, bought their house in the 1970s or 80 for at least 50% less than what prices are today..”

    You don’t have to go back to the Seventies or Eighties, people were paying 50% of today’s prices just 7-8 years ago!

  5. Washington state poised to legalize marijuana, with implications for B.C.:


    Potentially major implications for the BC housing market too, depending on what you think about the impact of organized crime on the cost of housing in the lower mainland.

  6. Increasingly Bitter

    I am going to ruffle feathers. Boomers had their cake and want more. I resent that Boomers are going to leave this generation and the future generations in poverty. They will had good wages without a lot of education, reasonable house prices, CPP, pensions, job security, health care etc. What will be left for the future? This includes all the people in high places (politicians) that make decisions that directly impact this and future generations. Young people are slaves to the older generation. Or am I just ungrateful for what the older generation has done for us? Or am I just ruffled by the growing gap between the rich and poor where the politicians and uber rich fall into the rich class.

  7. “Something like that will never happen in Canada” –> My co-worker’s response to this:


  8. We should invite boomers to share their plans for successfully capturing their lower mainland home value to fund their retirement. The run up of housing prices in Vancouver has created an opportunity and it is up to each person to decide how to exploit that opportunity. If I was sitting on a million dollar unrealized real estate gain, I would not be downsizing to a condo for 60% of the cost and 40% of the room. I would be leaving the lower mainland.

  9. If local CBC morning radio was the source of the incredulous remark, that’s no real surprise. Cluff is usually in a near catatonic state -except when it comes to food and BC Lions stats.

  10. More Seattle real estate. @ 200-225$ / sq foot. In a city with head offices and great jobs. A place where you can golf in the morning and ski in the afternoon… blah blah blah… oh and english is THE first language

  11. Interesting topic……….I am in the car business.

    Saw a credit application last year from a guy who was in his early 60’s……..had an income of $165K……..25 years on the job with a professional designation (no, he was NOT a realtor…..LOL !!)………he had lived at his home for 30 years here in YYC……..house worth $600K………mortgage debt stated as $575K………minimal assets <$50K.

    He needed to borrow $35K to buy an SUV with ZERO DOWN over an 84 month term, in order to meet GDSR % requirements……..and was declined by 3 banks, even with good credit.

    He must have been partying "like it was 1999"………since 1999…………….

    Seeing alot of that lately.

    • Alternative scenario #1, Carioca… Mr. 84Month needs an SUV for his Second[& probably unIntended]Family’s kiddieAccoutrements…

      Ergo, CreditCurrentlyMaxedOut owing to the X’s superior LegalTeam (or PrivateInvestigations yielding a particularly Naughty/Incriminating Pictorial a la “AssNailer”)… Just a theory mind you.

      • ‘X’-RatedSundayNightFun… Well… truth be told… and even though it be AncientHistory… Nem’s worked out rather better than the illustrated example featuring Catherine Zeta-Jones…


        [NoteToEd: PreNup? You’re ‘having a laugh’, right?… Nope. It were me SuperiorFamily’Practioner’WotDoneIt. Never go cheap on the ‘legal’. Just kidding, ED… I went with DannyDevito’s WarOfTheRoses concluding monologue…]

    • That just sounds impossible. Nobody will believe that.

  12. I think some blame need to be placed on the pathetic school system as well. When high school grads have trouble doing basic arithmetics or have trouble knowing how to calculate a grade average, we are in deep trouble. Add in the fact that we teach basically no financial basics in school or any really any life planning/budget/etc at all, is it really any wonder why the average person is so bad at their finance?

    Yes, I know people will say that this stuff is not the school’s responsibility and parents should be teaching their kids. But one we know parents aren’t doing it. Two, is it really not school’s responsibility? We can use the same argument for arguing against school teaching basic read and write since parents should teach their kids that too.

  13. Just got a call from CIBC, with whom I have a credit card. Calling to ask me if I want another mortgage (I have my mortgage with another bank) to buy another house as rates are low. Man, is this how they sucker people in?

  14. I think some of you are overestimating how much some of the “old timers” paid for homes on the westside. I had many friends parents’ on the westside whose parents bought in the 70’s for anywhere from 70,000 to 130,000. Seems dirt cheap now but that was a big chunk of money back then. Most of them sold out a few years ago. I have noticed the max allowable mortgage based on income is always posted in the Calgary Herald on the weekend – pretty ridiculous that one with a 200K income can get a mortgage for 1.2 million with 10% down

    • OMFG! Could you imagine getting a $1.2 million mortgage making 200k in income? I remember buying my house for $470,000 back in the day, I still thought it was a RIDICULOUS amount of money even though I could easily afford it. I didn’t look at it as an income to price thing at all, just the bottom line total price. People just DON’T do this anymore. They don’t think about how friggin much time it would take them to save $1.2 million in AFTER tax dollars! Even on $200k a year, assuming you save $50k a year, that would take 24 years! And once you have a family and have to increase the single and (cheap) standard of living, saving $50k a year for most becomes pretty difficult.

    • Yes, this. Two friends with family homes in Kits, each who bought in the late 70s for less than $100K. They were professional families but not wealthy families. Clearly the place has gentrified, but it’s interesting because when talking to current long-term homeowners it sometimes all sounds totally reasonable to them (you should just get in the market!), until they realize what their price to income ratios were when they bought, compared to what’s offered today.

  15. something has happened with the real estate in vancouver
    really confused for homes for sale in vancouver “http://www.thevancouverrealestate.ca/”

  16. Pingback: “Vancouver is a lonely place for financially responsible people.” | Vancouver Real Estate Anecdote Archive

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