No matter what age you are you should be aware of your retirement future. You really can't plan for retirement if you have no idea how much money you will have coming in. Ever wondered how much the Canadian government is going to give you back? You can look forward to:
Canadian Pension Plan
Old Age Pension
Canadian Pension Plan:
Each person may collect a different amount from Canada Pension depending on how much you have contributed.You can calculate this amount by using approximately 25% of lifetime earnings, or much easier you can go online to Service Canada and use see your Canada Pension Plan Statement of Contributions or use the online retirement calculator.
The average monthly CPP payment at age 65 as of January 2010 was $502.57 ($6030.84 per year)
The maximum CPP payment is $934.17 per month($11,210.04 per year).
Start taking your pension as early as age 60 or wait until age 65 to receive the maximum. Your CPP is reduced by 0.5 percent for each month before age 65, starting from when you begin receiving your pension to a maximum reduction 30 percent (if you started at age 60). The amount you receive is permanently fixed based on age start date, and does not increase at age 65. The choice is yours.
Old Age Pension
This benefit begins at age 65 and the maximum monthly benefit payable is $521.62 ($6259.44). The average Old Age Pension benefit in Canada is $490.30 ($5883.60).
Of course, there are rules, exclusions and exceptions that go along with each plan (please refer to Service Canada website for clarification) but based on the above figures the average Canadian can look forward to CPP and Old Age Pension benefits (if not taken early) of:
$992.87 /month ($11,914.44 per year)
As that income is way below the poverty level one should ask themselves: How do people survive without saving for retirement? Most don't and have to apply for additional programs such as low income housing, Guaranteed income supplement (if low income and qualify), and special qualifications for widowers and veterans. Or, save your own retirement money to supplement the tiny bit the government gives (or rather returns) to you.
Of course there are options to assist in getting you by:
investment income (dividends)
interest income
rental income
Annuities
Company pension plans
Part-time job
Flea Market/small business
I don't know about you, but I would rather save now so that I can retire in peace when I may not be able to generate an income.
Sunday, September 19, 2010
Sunday, September 12, 2010
USA VS CANADA, Financially Speaking
Just some random thoughts after returning from vacation to Colorado for a family wedding. The following are personal observations, not attacks. Please note, I am one of the few fortunate people with dual American and Canadian citizenship. My parents moved to Canada when I was six months old. At 19 I decided I wanted to become a Canadian citizen which I was granted but if you are born in the States you are always still a US citizen. I spent the last week driving around Colorado visiting family (I have a large one) and vacationing. Here are just a few differences hubby and I observed:
The average Canadian has no idea of the devastation of the recession on the average American citizen. We, frankly, have barely been touched compared to our neighbors to the South:
Canadian real estate prices dipped slightly, US real estate dropped like a rocket.
Canadian banking laws protected most from being upside down in their mortgages, many US banks went out of business with savings and were little to no help when homeowners were struggling to pay their bills. Granting zero down mortgages to people who don't understand they cannot afford home ownership = foreclosure and upside down equity. In Canada foreclosure is fairly rare, even during the recession. Most Canadian foreclosures result from divorce, death of a spouse, or business failure. Nevada posted the highest foreclosure rate in July, with one in every 82 households receiving a foreclosure notice. Pretty scary, and my family is not immune. My American Aunt and Uncle lost their landscaping business in 2008 which resulted in their home being foreclosed on. No one pays for landscaping when they can't pay for groceries. Imagine being 58 years old with zero net worth. Fortunately, both my Aunt and Uncle were able to get good jobs. They currently rent, as many of the foreclosed on do, trying to rebuild their life.
The average Canadian senior citizen with no income except CPP and old age pension has a much better standard of living if compared to their US counterparts. Low income housing is a way of life for most seniors in the USA. Unfortunately there is a very large number of US seniors still carrying mortgages. I saw an article in the local newspaper where two seniors age 69 and 71 were bragging about their credit score which allowed them to refinance their home last year at a lower rate. Good for them, but frankly, what the heck are you doing with a mortgage in your 70's? If you need a mortgage that late in life, perhaps you should be renting and bank whatever equity you have to maintain your lifestyle (in my opinion).
Most US citizens have no idea what free or cheap health care feels like. Canadians don't avoid going to the doctor to prevent large bills, which means earlier diagnosis and saves more lives. Cousins were amazed to hear of our free health care (Alberta) or very cheap health care in other Provinces.
So, all in all although the US is a great place to visit, with the option to choose where I live, I choose Canada. We pay extremely high taxes, but, get what we pay for (and no, I am not a Liberal!). Here is hoping we are seeing the end of this crappy recession and things will start to get better in both countries.
The average Canadian has no idea of the devastation of the recession on the average American citizen. We, frankly, have barely been touched compared to our neighbors to the South:
Canadian real estate prices dipped slightly, US real estate dropped like a rocket.
Canadian banking laws protected most from being upside down in their mortgages, many US banks went out of business with savings and were little to no help when homeowners were struggling to pay their bills. Granting zero down mortgages to people who don't understand they cannot afford home ownership = foreclosure and upside down equity. In Canada foreclosure is fairly rare, even during the recession. Most Canadian foreclosures result from divorce, death of a spouse, or business failure. Nevada posted the highest foreclosure rate in July, with one in every 82 households receiving a foreclosure notice. Pretty scary, and my family is not immune. My American Aunt and Uncle lost their landscaping business in 2008 which resulted in their home being foreclosed on. No one pays for landscaping when they can't pay for groceries. Imagine being 58 years old with zero net worth. Fortunately, both my Aunt and Uncle were able to get good jobs. They currently rent, as many of the foreclosed on do, trying to rebuild their life.
The average Canadian senior citizen with no income except CPP and old age pension has a much better standard of living if compared to their US counterparts. Low income housing is a way of life for most seniors in the USA. Unfortunately there is a very large number of US seniors still carrying mortgages. I saw an article in the local newspaper where two seniors age 69 and 71 were bragging about their credit score which allowed them to refinance their home last year at a lower rate. Good for them, but frankly, what the heck are you doing with a mortgage in your 70's? If you need a mortgage that late in life, perhaps you should be renting and bank whatever equity you have to maintain your lifestyle (in my opinion).
Most US citizens have no idea what free or cheap health care feels like. Canadians don't avoid going to the doctor to prevent large bills, which means earlier diagnosis and saves more lives. Cousins were amazed to hear of our free health care (Alberta) or very cheap health care in other Provinces.
So, all in all although the US is a great place to visit, with the option to choose where I live, I choose Canada. We pay extremely high taxes, but, get what we pay for (and no, I am not a Liberal!). Here is hoping we are seeing the end of this crappy recession and things will start to get better in both countries.
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