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As I said before, I totally believe you and know there are millions of Canadians who think like you. But I also believe that if you take Quebec out of the equation, there is a virtually equal number of Canadians who have the opposite view, for a variety of reasons.
I've tried looking to find some hard numbers that breakdown support by province...still can't find it.
I'll keep at it...later...I've had a long day.
Pardon me for interrupting briefly, but a question came up on another forum here, that needs some clarification.
Someone said that Canada provides retirees with less "Social Security" payment than the US. The overall gist was that pensioners have it much better in the US. But what about employer-based pensions? Is life really that sparse for retired Canadians? Obviously, it depends on an individual's earned income; a lot of people in the US don't get much from SS or from their employer. Hard to imagine it's less in Canada.
If there's not much coming in retirement payments, and earnings are taxed relatively highly during the working years, how do people manage to save for retirement?
Pardon me for interrupting briefly, but a question came up on another forum here, that needs some clarification.
Someone said that Canada provides retirees with less "Social Security" payment than the US. The overall gist was that pensioners have it much better in the US. But what about employer-based pensions? Is life really that sparse for retired Canadians? Obviously, it depends on an individual's earned income; a lot of people in the US don't get much from SS or from their employer. Hard to imagine it's less in Canada.
If there's not much coming in retirement payments, and earnings are taxed relatively highly during the working years, how do people manage to save for retirement?
Thanks for any info you could provide.
Just do some research. It isn't like anybody here now has retired in Canada and then moved to the US and retired there with their government benefits! Duh!
Just do some research. It isn't like anybody here now has retired in Canada and then moved to the US and retired there with their government benefits! Duh!
Americans who have lived in Canada somehow manage to learn how the system works, though. But...whatever. OK.
Any one who has lived and worked in Canada will have contributed to the Canada Pension Plan, through their pay cheque deductions ( it is mandatory, and based on how much you earn per pay period ) . The longer you have contributed to the CPP ( since 1964 in my case ) and the higher your annual contributions, the greater the monthly payment, when you begin to draw on it.
In addition, many people have a pension from their past employment. It is not unusual for an individual to have two employment pensions ( My Wife has two and so do I ) , plus CPP, and also have a sizeable Registered Retirement Savings Plan, that they have used as a tax shelter for their savings. The concept of the RRSP is to make maximum contributions while you are in your full employment years and making the most money. Invest it in a RRSP which means that you don't pay tax on that amount at that time, let it grow by having a financial management company manage it for you, and when you retire, and have a much lower annual income, start to with draw from the RRSP.
Retirement planning is a individual decision that some people don't take advantage of, for a number of reasons. A lack of basic financial knowledge, an attitude that "things will work out all right " and putting it off "till next year " all add up to a poor retirement life, for some people.
Canadians can also have a Tax Free Savings Account, that can have up to $5000 a year in deposits. The TFSA is a recent development, and I have maxed mine every year since it was introduced a few years ago. Mine is managed by an investment company, and their results have been great, with a year to year return of about 18 percent on the account. My RRSP account is a little more conservative, but still makes me around 11 to 13 percent interest per year. Beats the heck out of a bank account, or savings bonds.
As Jim has explained, there are two government provided pensions. The CPP or Canada Pension Plan and the OAS Old Age Security. The Province of Quebec opted out of the CPP and provides instead it's own guaranteed fund; QPP or Quebec Pension Plan.
There are options available for people to exercise as there are for Social Security in the U.S. in that if you intend to retire early, you can commence receiving an early reduced CPP payment according to a formula based upon the number of years you have been a contributor and how much you have contributed in your lifetime.
I will say that in most of the cases I've known of for people who have exercised even minimal retirement planning and utilized the RRSP features over a few years will quite probably be eligible for enough of a retirement income that the amount awarded by OAS is effectively taxed back.
There are any number of recipients of Defined Benefit Private Pensions in Canada from employers who offered those in the heydays of manufacturing might. Those are going the way of the dodo bird with very few of them offered now except for government employees whose retirement formula and risks associated with investment losses are offset by the rest of us taxpayers...... GRRRRR!
We also suffered a similar conundrum in that those funds deducted from our pay at source to go into the CPP that were SUPPOSED t be subject to the same rules that any private fund would be required to fulfill, in that those funds would not be allowed to "float" or be used for other purposes, ended up being grabbed by various governments in times of surplus and melded into general revenues so those azzhats could spend them to fund crap to buy votes.
Sound familiar?
Nowadays companies are risk averse and very few will offer a Defined Benefit Plan where employee and employer generally match funding but the corporation assumes full risk in investment and funding of the plan so as to guarantee payout of agreed benefit at time of retirement as per RevCan rules. Now the common arrangement is that if a company offers any kind of retirement funding it will usually take the form of an agreed-upon percentage of payroll matching to be self administered by the employee who will assume investment strategy risk. The funds will be tax exempt so long as they remain tied or locked into a long term government approved vehicle and will remain so if you change employers but transfer the funds to another locked investment plan.
I also commenced contributing to CPP at it's inauguration and paid the max every year after until retirement in 04 at age 57. I opted to collect early CPP at age 60 upon the advice of counsellors, who suggested it was better if maximum was not required to maintain lifestyle, collecting 70% for five years longer would be a winning formula in my case.
You will be among the minimum pension recipients if reliant solely upon CPP and OAS to maintain any kind of lifestyle upon retirement in Canada and not enough is being done to encourage people at younger ages to start saving for retirement using any one of the vehicles available.
Governments seem loath to encourage consumers to take their money out of the economy and lock it into tax exempt status as ALL of RevCan's rules regarding pensions seem to be geared towards limiting the amount of money you can harbour in tax exempt vehicles. They also limit the tax reduction available at time of retirement and collecting your RRSP contributions based upon your retirement income. All those tax exempt years are great but at time of retirement and collecting your RRSP's, if you have been anywhere near efficient planning and saving for the day you'll find your RRSP's income taxed up the ying-yang when you commence collecting them.
It is what it is. Pay me now or pay me later as the Fram man famously quipped.
Thanks for these detailed explanations, guys. CPP sounds like Social Security, I guess, but what is OAS, then? Do people get both? In the US for gov't jobs (state or federal), there's a pension plan that's deducted from the payroll (with employer contributions), but there's also Social Security, which is deducted from the payroll as well. In the private sector, there was a similar set-up, with a payroll deduction for the employer-based retirement plan, and federal SS deduction. Now, as in Canada, the employer deduction for retirement works differently than before.
I'm not sure how someone was able to judge whether the US Social Security or Canadian CPP provided better payments. There were several Canadians on another thread who laughed at people who thought Canada might appeal more to Europeans than the US would, or that it might have a better safety net than the US. Maybe they're just cranks or trolls.
Thanks for these detailed explanations, guys. CPP sounds like Social Security, I guess, but what is OAS, then? Do people get both?.
CPP is a pension fund that all workers pay into during their careers. You don't have a choice but in order to get payments in retirement you have to have paid into it. A stay-at-home mom will not get CPP payments.
OAS is old age security. Everyone gets this. Even if you've never worked for a salary - like a stay-at-home mom.
There is a clawback from one relative to the other though, to avoid double-dipping. Not sure of the exact details.
CPP is a pension fund that all workers pay into during their careers. You don't have a choice but in order to get payments in retirement you have to have paid into it. A stay-at-home mom will not get CPP payments.
OAS is old age security. Everyone gets this. Even if you've never worked for a salary - like a stay-at-home mom.
There is a clawback from one relative to the other though, to avoid double-dipping. Not sure of the exact details.
Thank you. That's very interesting. Someone who has never worked in the US doesn't get Social Security. If they're married, they can collect their spouse's SS upon his/her death. Otherwise--no SS.
However, I think completely destitute people can get housing assistance from SS, and I'm not sure what else, as long as they've paid into the system at some point in their lives. In some ways, Social Security is more than just a little extra support in retirement (it was never designed to be a retirement plan, but merely a supplement to retirement savings and employer pension plans). It fulfills other functions, as well. For example, it provides benefits to widows, i.e. homemakers whose husband has passed away while in his working years, and benefits to the children. Before SS was set up, widows and their dependent children didn't get anything at all. They'd have to go to work cleaning houses or doing people's laundry, which wasn't enough to support a family. I'm not clear on all the details of how SS works. It functions as support for the disabled, too.
What about this claim some Canadians make, that housing costs twice as much as in the US? Twice as much as where in the US? That statement doesn't mean anything without knowing what they're comparing it to. More on average, than the US on average? More than housing in Manhattan or San Francisco? Twice as much as housing in rural Kansas or Mississippi? Or Alaska? Rents cost double (are Vancouver rents double what Seattle rents are?? Doubtful), or purchasing a home costs double?
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