# Most workers living �close to the line�: survey



## the-royal-mail (Dec 11, 2009)

*Most workers living ‘close to the line’: survey*

Interesting article that confirms what most of us here already know:

_A majority of Canadian employees are living paycheque to paycheque and report they would be in financial difficulty if their pay were delayed by even a week, according to a new survey on the financial health of the country’s workers..._

http://www.theglobeandmail.com/glob...ving-close-to-the-line-survey/article2157089/

I couldn't imagine living so close to the line that a delay of one week would cause the whole thing to crumble. That's much too worrisome. I try to keep a minimum float of $2000 in my bank account at all times, to alleviate this type of problem.

The world needs more education for people to MANAGE what they have. It's not a question of shortage of money, it's a question of shortage of education.


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## brad (May 22, 2009)

the-royal-mail said:


> I try to keep a minimum float of $2000 in my bank account at all times, to alleviate this type of problem.


If you're truly living close to the line, saving $2,000 can take many years. My first job out of university paid $9,000 per year gross and my rent was $350/month. That left $4,200 to cover taxes, food, and all other expenses for the year.

Some people truly live on the line, and all the personal-finance education in the world isn't going to help in that situation.


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## dogcom (May 23, 2009)

I also, even in the worst of days have had at least $2000 to fall back on.

No surprise here however since at least one person in a marriage or common law relationship would fight tooth and nail to be able to spend money. This makes it very difficult for a saver to deal with this other unreasonable person and thus would throw in the towel eventually and let the credit cards debt rack up.

What I think we need is a scared straight on debt program. So what happens is you can sign up and go meet people that have it all but have spent all their money and are in the usual debt crisis. This way the spender can see that the Jones are not getting what they want and will have to pay dearly for it. In exchange for doing the program the Jones type will get some kind of compensation or whatever so they will do it.


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## the-royal-mail (Dec 11, 2009)

Don't forget there have been a few money mgmt shows like 'debt do us part' and the like, always an interesting watch. There are more than just this one but I can't remember their names at the moment. Anyway, the result of these shows, based on what I am seeing (hardly scientific) is the best we can hope for is to teach people they need to mop up the water ("pay off debt") without also giving them the tools they need to prevent a recurrence of problem. Yes, mop up the water but ALSO turn off the tap.

Can any lurkers jump in and offer their 2 cents?


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## Four Pillars (Apr 5, 2009)

These surveys can be quite misleading. 57% is a majority, but there are a large number of people who aren't paycheque to paycheque.

Plus the questions are always vague - what exactly does "financial difficulty" mean?

If someone's paycheque is delayed by 1 week, I find it hard to believe that most of the 57% couldn't borrow or get by until the delayed paycheque shows up, which would have little financial consequence.


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## andrewf (Mar 1, 2010)

I work for a retailer. It was an odd idea to me that our periodic calendars have government benefits and government employee payout dates marked, because there are noticable increases in consumer spending on these dates. The idea of spending money because you just got paid is pretty foreign to me. I almost forget about when I get paid, except for my pay stub arriving and checking my online chequing account periodically. But my pay days and my spending patterns are completely independent.


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## jnorman5 (Aug 21, 2011)

Working as a lender at a financial institution, I do beleive that this report is fairly accurate. When we have external funds transfers go through late for our customers, it is not unusual to see more people become overdrawn than average. It is sometimes difficult for us on this forum to understand as we are already above average in terms of reading about better ways to manage our money and the like. 

I agree with dogcom though... a Beyond Scared Straight for credit addicts could do some good . I love watching Til Debt Do Us Part and am thankful every time I watch it that I am not in that type of situation.


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## sags (May 15, 2010)

When the reasons why people are living from paycheque to paycheque are explored.........it usually resolves more around stagnant wages than a lack of financial knowledge.


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## jnorman5 (Aug 21, 2011)

Agreed sags, especially for hourly workers and whatnot where although minimum wage is increased for inflation by the gov't, people higher on the scale than the basic rate rarely see an increase at the same time. I did some number crunching for a friend a few years back and they were on a pay scale that ranged from minimum wage to about $5.00 above minimum wage based on proficiency. Although minimum wage increased around $3.00 over a four year period, the top rate of pay increased only $1.50... talk about a squeeze...


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## andrewf (Mar 1, 2010)

I was a student. I know how to live inexpensively. I used to work at a low wage job. I suspect it's partly a matter of people with low incomes thinking too many 'nice to haves' are essentials. Cell phones, for one. I didn't have one until I needed one for job searches. I knew many people with less financial resources that had cell phones, or even a blackberry (back then, equivalent now would be an iPhone). Buying a phone with a 3 year cost of like $3000 is just nuts, when that amount represents 20% of your annual net income.


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## Plugging Along (Jan 3, 2011)

sags said:


> When the reasons why people are living from paycheque to paycheque are explored.........it usually resolves more around stagnant wages than a lack of financial knowledge.


I know this is a complicated issue. I tend to think it's a combination of knowledge/motivation, and less that people aren't making enough.

Here's my logic, there are many people/families that have similar means and situations, yet there are some that are able to live below their means, save, and manage with what ever they have. If it was simply a matter of the income not being enough, then neither of the families would be able to save at all. There are people who make very little and are not in debt, so this just proves that it can be done.

This then leads me to think that people either do not know how to live below their means, or they are choosing not too. I am not saying that the choices are easy ones to make, but perhaps they have choosen a place they cannot afford and will need to down grade, or perhaps they need to pick less expensive choices. To me its about willingness to make the sacrifices earlier in order to be more secure later.

I realize this is coming from a forum where most of us are not in the mindset. I have just observed that many of those people who seem to categorized at in the study, I would be making much different choices if I were in their situation.


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## Cal (Jun 17, 2009)

^ +1

I was thinking the same thing....


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## Mensa (Oct 19, 2010)

Last year at this time, the number was 59% according to this:
http://www.theglobeandmail.com/report-on-business/economy/six-in-10-live-pay-to-pay/article1705096/

Seems as though 57% is an improvement, no? 

Maybe Gail Vaz-Oxlade _is_ making a difference!


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## Dmoney (Apr 28, 2011)

sags said:


> When the reasons why people are living from paycheque to paycheque are explored.........it usually resolves more around stagnant wages than a lack of financial knowledge.


This is a cop-out. Minimum wage pays roughly $20,800 a year gross, and no one is stopping an individual from working part time for another $5K, $10K etc. 

Depending on living situation (individual, couple, children etc.) rent could be as low as $450/month and up. Food, while increasingly expensive can be had for under $200/month per person. Clothes can be had dirt cheap second hand or anywhere that doesn't sell brand names. 

The rest is just wants.

Ya, it's not a great life, but generations before us did it, why can't we? Cable, TV, internet, lattes, etc. are just wants. If you can't afford it and don't need it, don't buy it.


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## crazyjackcsa (Aug 8, 2010)

That's rather simplistic as well Dmoney. First you're assuming the minimum wage job is full time, with a set schedule to allow for another 10k in earnings. (keep in mind you now have this person working 3000 hrs a year or 60 hr work weeks.)

But here's where the stagnant wage problem comes into play.

I've lived in the same house for 5 years. In the past 5 years, my family income has gone up about 3% a year. That's 16% 

Our electricity usage hasn't changed, but has gone from about a $1 a day to $1.50
The distance we drive hasn't changed, but has gone from $14 to $21 a day. (same vehicles)
We eat the same, and we've gone from $300 a month in food to $400.
Our insurance has stayed the same, but we now have less coverage.
Our property taxes (thank the gods!) have gone from $2k to about $2300
Our heating bill has gone up about 20%
Other costs (cable, TV, internet, lattes, etc are minor and have little effect on the overall budget)

We get by on a gross family income of 60k a year. There is no debt outside our mortgage. We rent nothing. 

We are by no means "living close to the edge" We bought a house well within our budget( 2.8 times our income), and we live below our means. 

But each year gets a little harder... with a little less savings... a little less economy stimulating spending. Eventually, we will be living close to the edge.


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## donald (Apr 18, 2011)

I dont know if its always lack of education or not being able to delay gratification.Lets face it,it can be tough out there on wage earners or for that matter "middle class" sometimes the best laid out plans can and will get derailed.

You can deligently save and plan for mths or put alittle aside every year and you catch a "rough patch" in a calander yr,maybe march your rad goes on your vechile,springtime you have to get your roof repaired/or your furance goes,you have a out of town wedding to attend,your kid needs new hockey equipnment...the list can go on.Life has a knack sometimes of doing that.Sometimes that 8 ball can get big and its not always from lattes and trips to spas and that kind of ****.

There is a element of luck sometimes,there was a thread on here about trying to save....and it doesnt matter totally all the time if your a high income individual or not.Saving money is plain hard,ive built the habit in my life,full of obstacles.


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## ddkay (Nov 20, 2010)

Those that have money to spend are spending as usual. Those that don't have money to spend are likely sitting on massive debt because they weren't careful and/or lost their jobs or taking a lesson from those people and thus are spending less or not at all.

Until the masses return to the same level of income they were used to, with some sense of security (a 16% U-6 unemployment rate is not encouraging), they won't spend like they used to.

It doesn't matter if CB's keep interest rates at 0% forever. If you're a person or a business and you're actually bankrupt, you aren't going to borrow money at any interest rate, and no one is going to lend you money either. Your only objective should be to pay down old debt, and that can take anywhere from a few years to a few decades.


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## sags (May 15, 2010)

What I got from the results of the survey, was not that people lacked in knowledge or information on handling their finances, but that they were unable to save because inflation has eaten away at the purchasing power of their income for decades. They are struggling to pay the day to day bills, and there is nothing left over to save. The article doesn't say that people never saved in their lifetime.........rather that they have nothing left over to save today.

Surely with Suze Orman, Dave Ramsey, CNN Money, Til Debt Do Us Part, and a zillion blogs and websites dedicated to personal finances........enough education is already out there in the world.

When your real wages have declined year after year, savings is the first place to cut from the budget.

And it will only get worse, until the job situation reverses and there are more jobs available than workers. Once the baby boomers retire, there will be upward pressure on wages, but until then it is going to be a struggle for a lot of people to survive. The longer the baby boomers delay, the more lost years for the next generation of workers.

What the government needs to do, in my humble and unprofessional opinion, is to ease baby boomers into retirement with incentives to leave their jobs. The notion that people want to work longer is a fabrication of some people's minds and is not supported by any statistics anywhere.

Increasing CPP benefits immediately for retiring boomers would have an immediate impact. The government would have to fund the extra costs with lump sum payments into the CPP fund. The CPPIB actuaries can figure out the amount needed.......but it would be many billions of dollars.

So it is costly now........but it is temporary and there is already a cost to unemployment.

Increased EI benefits and social transfer payments, for example.

We can pay some people to retire......so others can work.........or we can pay them to do nothing.

http://www.vancouversun.com/busines...tor+than+growth+economists/5212244/story.html


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## dubmac (Jan 9, 2011)

Dmoney said:


> The rest is just wants.
> 
> Ya, it's not a great life, but generations before us did it, why can't we? Cable, TV, internet, lattes, etc. are just wants. If you can't afford it and don't need it, don't buy it.


well put. 
my 2 cents - sacrifice doesn't seem to figure into many folks thinking as it did during previous recessions. I remember in 1993 - things were still quite dire economically - I deilvered fast food for between 25-140 per night becuase I couldn't get work. I think some folks simply wouldn;t do that today.


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## donald (Apr 18, 2011)

The rich get richer and the poor get poorer and middle class is vanishing,there are more millionaires after 2008 than there was before 2008 if you can believe in the us(read it in forbes,the other day)

Its become either your a "have" or a "have not" and the gap is expanding.
The us is struggling,obviously yet the "rich" arent,i have trouble beliving the sitistics look @ some of the recents earnings of "high end,wealthy segements""

Wynn,Tiffanys,whole foods,Aint it ironic in times like these those that cater to the wealthy consumer are having record earnings in this environment,and it aint from china,it comes from inside the us.The united states is begining to look more and more like mexico with the gap,likely canada divide isnt as bad in comparision,and its only going to get worse.


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## ddkay (Nov 20, 2010)

I'm all for living with your means but that type of lifestyle isn't good for the economy and it isn't good for lenders because long-term and short-term thinking don't mix.

Why do credit card companies target students with zero or next to zero income the first chance they get? They do it because given the chance (free money!) young people mindlessly spend money on anything they see other people doing. Those same people never break the habit and continue spending credit on credit until credit runs out. Lenders don't care as long as they get minimum payments, and minimum payments don't usually come from consumers with financial discipline.

Mortgage backed securities? A whole new market - the pinnacle of financial innovation! We enabled people to get loans who couldn't get loans before. Let's give people that are scraping by a chance to own their dream home for less than 20% downpayment and variable teaser rates that make monthly payments with 30-year amortization periods the same price or less than renting!

Scotiabank(R) - you're richer than you think(tm).

Americans are learning the true definition of "live within your means". Canadians won't understand until housing prices implode and arrogance wears off.

If the housing bubble here doesn't pop, I'm just going to start flipping real estate for a living. As much as I hate pushing for a living (sales/marketing), I probably wouldn't say no to $200K+ income, and working the bare minimum number of days a year, from a few condo deals in and around Greektown.


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## ddkay (Nov 20, 2010)

How many celebrity millionaires/billionaires head to bankruptcy court in 2009? Even former employees of Goldman Suchs? Donald Trump? He's in so much debt the banks use his brand to squeeze whatever value is left in it. It's not always about how much you earn, it's about how much you overextend yourself; but no matter how you slice it, stagnant wages combined with rising costs of living that cut away at savings is a serious blow to low income earners and the middle class.


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## Dmoney (Apr 28, 2011)

crazyjackcsa said:


> That's rather simplistic as well Dmoney. First you're assuming the minimum wage job is full time, with a set schedule to allow for another 10k in earnings. (keep in mind you now have this person working 3000 hrs a year or 60 hr work weeks.)
> 
> But each year gets a little harder... with a little less savings... a little less economy stimulating spending. Eventually, we will be living close to the edge.


If it takes working 60 hours a week to get by, then that's what it takes. My average week is probably close to 60 hours. When work is busy, it can be upwards of 80 if I'm really unlucky. I don't get paid any overtime, just my same constant salary. But, with this hard work comes reward. I make enough that I don't have to worry about day to day expenses or saving. However, if I was in a position where it was difficult to make ends meet, I would cut costs religiously and do anything to boost my income. Before I got my current job, I was considering delivering newspapers at 3am 7 days a week for an extra 10-15K a year, on top of already working 40 hours/week and doing painting, mowing lawns, shovelling driveways etc. You do what you have to do to get by, and I don't understand the mentality of waiting for the government to step in or for wages to magically increase.

As for you, if you keep saving, you'll never end up close to the edge because by the time costs creep up, you'll have a house paid in full and savings to back you up. It's the other 57% that we have to be worried about.


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## the-royal-mail (Dec 11, 2009)

hi sags, just to respond to a couple of points from your post:

>_When your real wages have declined year after year, savings is the first place to cut from the budget._

The is the wrong approach. It does not matter where you are at financially, savings should always be a priority item after your bills and debts are paid. To blame inflationary pressures for lack of savings is a cop-out IMO. Like everyone else, I wasn't always making the $ I do today. Even when I was 16 and jobless I had $42 in the bank. My friends had nothing. At 17 I had $2500 in the bank, right before I hit the college and student loan circuit.

_>The notion that people want to work longer is a fabrication of some people's minds and is not supported by any statistics anywhere._

100% agreed. This whole thing is nothing but buzz started by the gov't to get people talking about it. Follow the money. It's in their interes for us to work longer. It means they can collect more taxes and fees from us while at the same time paying less in retirement benefits. This is a cash cow for them but when I look around, I don't see anyone, not a single person around here, who WANTS to stay at work a day longer than necessary. Everyone is waiting for retirement. For some people that happens in their 50s. These people want to start living their lives at the lake, leave the rat race, spend more time with their kids, take up hobbies etc.


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## the-royal-mail (Dec 11, 2009)

ddkay said:


> If the housing bubble here doesn't pop, I'm just going to start flipping real estate for a living. As much as I hate pushing for a living (sales/marketing), I probably wouldn't say no to $200K+ income, and working the bare minimum number of days a year, from a few condo deals in and around Greektown.


Nice try. You make it sound so easy and guaranteed. There are so many things wrong with this whole argument, where do I start?

1. RE, legal and tax fees will gobble up any sense of profit. Most people agree that you need TIME and investment in repairs and upkeep to have a house realize value increases

2. you need a lot of free money to play around with to do this and you have to be prepared for large chunks of this money to be tied up in the house for years at a time.

3. you must pay for upgrades and maintenance while you own the house.

4. there is a LOT of competition in the RE agent market. everyone wants to be a RE agent and get the commission on 1-2 expensive houses per year. when I lived in the GTA I was getting frequent calls from RE agents who wanted the listing for my condo. I never even hinted that it was for sale. These people are hungry for their 2.5%.

5. $200K income? Yeah good luck with that. If it was that easy, don't you think everybody would be doing it?

6. condo deals? Uh huh. Just try selling a condo in some parts of the GTA. The market is saturated with them.


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## sags (May 15, 2010)

You're right TRM.....I meant to say that savings are the first place "usually" cut, not that it was a good idea.

But, given the option of food or savings, I think people buy the food.

There is no debate that people waste money. Perhaps because we had good times, credit was easy, refinancing was easy, robbing Peter to pay Paul was easy.........but now it isn't so easy. 

It's payback time.

People have to adjust their spending, because the credit is getting harder to get.

They have to make hard decisions on what to keep and what has to go. 

A little wage inflation would be helpful though.


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## the-royal-mail (Dec 11, 2009)

Hi sags, yes, that was basically my point although I didn't make it clear. The problem is that people kill their savings and rack up debt rather than to lower their standard of living. Why is it necessary for everyone to keep "upgrading" all their mobile electronic devices, TVs and such? That stuff is costing people a fortune in debt servicing payments. And it's not the only example. Housing is way too expensive, people seem way too happy to overextend themselves on high-priced mortgages and other stuff. Basically if they're not able to save, they have a spending problem, not a revenue problem. People have to live within their means and save no matter what. Remember our tax discussion?


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## Plugging Along (Jan 3, 2011)

I've seen a couple mentions of living within your means. I think this term it self can be a problem. Really living within your means is that your not going into further debt, but does not mean that you are saving anything. We all know that living beyond your means (going into debt) is not good and should be avoided. However, I hear people that they they are living within their means (they are paying their monthly bills), but they aren't saving anything. The kicker is, these people think because they are not in the first group of going into further debt, they are fine. Really, people need to view living within your means, as not something to be proud of, but as 'living paycheck to paycheck'. 

People should be striving to live BELOW their means (saving some money each month). Just a different way to look at it. 

For us, we have treat our savings like any other bill. Our RRSP, and RESPs are just automatic things that we need to 'pay' every month. When we did have our income cut by over 80%, we went through all our other expenditures first to cut, then we went through our bills and that included RRSPs and RESP, and cut as secondary. 

Right now, I actually feel like we're in debt because we have not been contributing to a TFSA.


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## Dmoney (Apr 28, 2011)

the-royal-mail said:


> 100% agreed. This whole thing is nothing but buzz started by the gov't to get people talking about it. Follow the money. It's in their interes for us to work longer. It means they can collect more taxes and fees from us while at the same time paying less in retirement benefits. This is a cash cow for them but when I look around, I don't see anyone, not a single person around here, who WANTS to stay at work a day longer than necessary. Everyone is waiting for retirement. For some people that happens in their 50s. These people want to start living their lives at the lake, leave the rat race, spend more time with their kids, take up hobbies etc.


No one wants to keep working well into their 60s... well that's a lie, some people do but not the vast majority... unfortunately pensions and retirement ages were implemented at a time when life expectancy was substantially lower and workers were unable to work beyond retirement age due to poor health. 

Pensions are unsustainable if they are granted at 55 and drawn on for an average of 30 years. Generations ago, one might retire and life for an average of 5, 10, 15 years. Work for 30-35, draw down for 10. That's sustainable. Benefits never adjusted to the increase in life expectancy and that is a huge problem with all the social programs that were at one time very sustainable.


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## Guigz (Oct 28, 2010)

Dmoney said:


> Pensions are unsustainable if they are granted at 55 and drawn on for an average of 30 years. Generations ago, one might retire and life for an average of 5, 10, 15 years. Work for 30-35, draw down for 10. That's sustainable. Benefits never adjusted to the increase in life expectancy and that is a huge problem with all the social programs that were at one time very sustainable.


I may be going off topic a bit here. I apologize in advance.

I do not understand why everybody wants to eliminate DB pensions. DB pensions are not the problem, it is the current implementation of the DB pension that should be revised. 

I, for one, would welcome the opportunity for contributing more to my DB plan if it allowed me to retire younger instead of them increasing the retirement age. 

Another option would be DB that have a defined payout period based on the total percentage wirhtdrawn. For example; let's say you work 30 years, that could give you 30 years of 70% salary (after which you get OAS and CPP only) OR 60 years at 35% .. etc

Basically one can control how much they get based on when they want to retire and for how long. 

I assume the actuarial calculations would be fairly easier to frame since payout would be a defined period instead of until you perish.


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## Dmoney (Apr 28, 2011)

Guigz said:


> I do not understand why everybody wants to eliminate DB pensions. DB pensions are not the problem, it is the current implementation of the DB pension that should be revised.


I'm not advocating eliminating DB pensions, but the current structure is unsustainable. If your wage has been increasing 3% annually over a 35 year career, it will have more than tripled by the end of your career. At 70% of the average of your 5 best years, you're getting a DB pension of more than double your initial salary. Your pension is also approximately the same as your average salary for your full career. 

Essentially, by contributing 5-10% of your salary for 35 years, you get 100% of your salary for 30 years. That structure cannot be sustained. Either people have to accept less or work longer.


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## HaroldCrump (Jun 10, 2009)

Guigz said:


> I do not understand why everybody wants to eliminate DB pensions. DB pensions are not the problem, it is the current implementation of the DB pension that should be revised.
> 
> I, for one, would welcome the opportunity for contributing more to my DB plan if it allowed me to retire younger instead of them increasing the retirement age.


I won't speak for Dmoney, but my issue is that most true DB pension plans are left only in the public sector such as the federal and provincial govt. and the quasi-public sector, such as teachers, health care and city/municipal workers.
The employer portion of those plans (and the backstopping guarantees) are funded by the rest of the taxpayers, i.e. private sector workers and businesses.
The cost to the tax payer for funding those contributions as well as guarantees is _huge_.

I see no reason why the private sector must break its back to fund and carry the public sector's comfy and cushy retirements.
We have workers in the private sector and small business owners working well into their 60s and even 70s because they do not have guaranteed pension plans that provide 70% of their peak income.

To truly level the playing field, the public sector DBPs should either be converted to DCPs or the new RPPPs, or the employer contribution must be eliminated.
This will reduce the pension adjustment for the employees, giving them more RRSP room, which they are then free to utilize - just like the rest of the working population.



> Another option would be DB that have a defined payout period based on the total percentage wirhtdrawn. For example; let's say you work 30 years, that could give you 30 years of 70% salary (after which you get OAS and CPP only) OR 60 years at 35% .. etc
> I assume the actuarial calculations would be fairly easier to frame since payout would be a defined period instead of until you perish.


I like that idea!
I think as a sub-optimal, compromise option this will be fair and reasonable.
Long-term, I believe we need to completely de-commission the DBPs for the sake of fiscal sanity and fairness.


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## ChrisR (Jul 13, 2009)

I don't believe the problem is because of poor wages. The numbers just don't support it. According to Statscan, both minimum wage and average family income have increased far faster than inflation over the last 20 years.

The problem is more temptation in the marketplace, and a sense of entitlement among consumers. I was told that my generation would be the first to live with less than their parents, but looking around, its clear that the rest of my generation didn't get that memo. Every single person I know lives better than the generation before them.

Compared to their parents at the same age, everyone I know:

Has a bigger, newer house (most with granite!) 
Has a newer, fancier car
Has more toys (motorcycles, boats, riding lawnmowers, expensive mountain bikes etc)
Has an iPhone, Blackberry or equivalent
Spends way more on food, both eating out and more luxury items at the grocery store
Takes more frequent and lavish vacations
But the question is... do we really want people to stop over-spending? If you believe the newspapers, then it seems that our modern service based economy is absolutely dependent on people mindlessly blowing their money on junk they don't need. Do we really want to educate them against this behavior?


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## Guigz (Oct 28, 2010)

HaroldCrump said:


> I see no reason why the private sector must break its back to fund and carry the public sector's comfy and cushy retirements.
> We have workers in the private sector and small business owners working well into their 60s and even 70s because they do not have guaranteed pension plans that provide 70% of their peak income.



I agree with this however, I don't think the solution is the elimination of DB completely. A DB is nothing else but an annuity that is protected from inflation (either partially or completely). Since this is offered by the private sector (insurance company) the fundamentals are working.


What I would propose (if I were elected  ) to reform the pension is a three pronged approach:

1) Impose a ceiling on the DB payout in terms of $ per years. There is no reason that tax payers should pay the lavish pension of a top level executive. I would propose a cap around the median or 3rd quartile income. This would come out to a max payout of about 43,500$ per year.

2) Create an hybrid system for those that would be over the previous amount. I am thinking something along the line of part DB and part DCP.

3)Make it so the DB part of the plan is self funded. That probably means more employee and employer contributions and no government pilfering the pot when it gets bigger (i.e., the plan should allow money to build up in the pot during the good years).


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## sags (May 15, 2010)

Guigz......those are some interesting ideas that I haven't hurt discussed much.

All we hear from the anti pension side is to eliminate them completely.

There is no reason why the plans can't be altered in an intelligent way.

When you consider that most people spend the most in retirement during the first 10-15 years and then spending dwindles off.........perhaps pension benefits should be front end loaded.......with higher payouts at the beginning and lower payouts at the end.

I would rather see more DB pensions assisting people in retirement, than less......even if it means making some changes.

Great idea........but do politicians ever think creatively?


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## KaeJS (Sep 28, 2010)

Dmoney said:


> If it takes working 60 hours a week to get by, then that's what it takes.


Dmoney,

Everything you said in that post was excellent.

And you're right - if that's what it takes, then that's what it takes. I worked 95-105 hours a week for 6 months in the summer while my friends were out goofing off. Now they are wondering how I'm so much further ahead, as if it all appeared magically in my bank account 

It called working hard to get what you want/need and doing what you need to do outside of work to accomplish your goals that you set for yourself.

The one thing I want out of life is that I do not ever want to be poor, and I have worked hard to make that come true (for now). There was no free car, or free cell phone, or secondary driver insurance, none of that. I worked.

If you don't have enough money - you need to do something about it. Just like those Americans that "stop looking" for work. Is that a joke? Who "stops looking" for work?

I mean, ****, if you're going to stop looking for work, at least make a sign and sell Hand Car Washes for $2.00 and a cold can of Coke for $1.00 while they wait 5 minutes. Be creative. Be proactive. Do something.

If you're poor; 95% of the time, it's because you do it to yourself.


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## Abha (Jun 26, 2011)

KaeJS said:


> I worked 95-105 hours a week for 6 months in the summer while my friends were out goofing off.


BMO let you work that much? You might have the next class action on your hands.


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## ghostryder (Apr 5, 2009)

HaroldCrump said:


> I see no reason why the private sector must break its back to fund and carry the public sector's comfy and cushy retirements.
> 
> We have workers in the private sector and small business owners working well into their 60s and even 70s because they do not have guaranteed pension plans that provide 70% of their peak income.



I don't know a single small business owner who is actually working in their 60's or 70's because they HAVE to. They do it because they WANT to. Most of them may be officially "working" but if they want to take off to Florida for three months, or "work" 3-4 hours a day 3 days a week spending the rest of their time golfing, fishing etc. they do it.

And every single one of them is incorporated. So for the entire existence of their business they paid only a fraction of the income tax that their employees did, because the dividends they pay themselves get preferential tax treatment. And now that they are retired, that continues.

And the ones I know who don't work into their 60's are living in large part off the dividends the businesses they started and ran for their working lives continue to pay them and the other investments they made along the way.


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## Dmoney (Apr 28, 2011)

ghostryder said:


> I don't know a single small business owner who is actually working in their 60's or 70's because they HAVE to. They do it because they WANT to. Most of them may be officially "working" but if they want to take off to Florida for three months, or "work" 3-4 hours a day 3 days a week spending the rest of their time golfing, fishing etc. they do it.
> 
> And every single one of them is incorporated. So for the entire existence of their business they paid only a fraction of the income tax that their employees did, because the dividends they pay themselves get preferential tax treatment. And now that they are retired, that continues.
> 
> And the ones I know who don't work into their 60's are living in large part off the dividends the businesses they started and ran for their working lives continue to pay them and the other investments they made along the way.


I don't know how universal incorporation for small business is. I can't see every convenience store, Tim Hortons, shawarma store etc. all being incorporated. I know my mom is incorporated for all the reasons you mentioned. Her corporation pays herself and her secretary a salary and the rest either remains in her corporation or is paid out as dividends. 

Also, I'm not sure if it's unique to her corporate structure, but when she stops working, the corporation has to close within a very short period of time. It may or may not be the same for other corporations, when business ceases, the corporation must cease.


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## KaeJS (Sep 28, 2010)

Abha said:


> BMO let you work that much? You might have the next class action on your hands.


Haha.

This was last summer when I was not at BMO. 

I was on an hourly wage last summer. One job was $14/hr, the other was $11.50/hr. Horrible jobs.

I'm on Salary at BMO and I think they would physically remove me from the building if I was trying to work that much.  

And as I am still a fairly new employee, I have to wait about another month before I can start applying for overtime.  There's been so many overtime/holiday opportunities to work, and I can't work any of them. It's really frustrating. As soon as I am able to do so, I will be working every ounce of overtime or holidays that I can.


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## Jon_Snow (May 20, 2009)

I honestly believe that it is largely a choice as to whether or not to "live close to the line". Despite having a good income between us, my wife and I could easily be in this group. We have simply chosen not to "live up to" our income. Could we have a big house instead of our small condo? Yes. Can I technically afford to buy the Audi coupe that I lust for? You bet. But we have made the CHOICE not to live this lifestyle.

We have decided to loathe debt in all its forms. We have decided that we like money in the bank. Since meeting my wife, we have saved on average 4k per month... so ten years of living beneath our means has netted us close to half a million dollars in savings... I sometimes think we have take the "live below your means" mantra a little far, and I think at some point we should let loose a bit more... but our frugal habits are strongly ingrained. It has become natural for us.

I readily admit that our choice not to have kids has helped to accelerate our savings rate, and allowed us to stay in our condo for the last ten years - we really have to reason to "upsize".

If a complete stranger were to look at our net worth breakdown, they might suggest we are "well off" - but there isn't a single aspect of our lifestyle that would suggest it.


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## Dmoney (Apr 28, 2011)

KaeJS said:


> I'm on Salary at BMO and I think they would physically remove me from the building if I was trying to work that much.


Are you a teller or doing the account openings, mutual funds etc?

When I was at CIBC they would only let tellers do overtime if it was absolutely necessary (at the end of the day say your cash didn't balance and you had to stay to recount) and would aim not to pay if at all possible. Also, I think if you were doing account openings, MFs, mortgages etc., you were on salary and didn't get paid overtime for working extra, it was just expected.

I wish I was getting overtime for my hours, I'd be well into six figures, but unfortunately it's just expected and we suck it up and work until the working is done.


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## KaeJS (Sep 28, 2010)

I'm part of the Online Banking department for Direct Banking.

I respond to emails that clients write to us through our Online Banking Message Centre.

So, if there are a lot of emails/messages, overtime is available.

And people have a lot of questions


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## Dmoney (Apr 28, 2011)

That's good. Overtime is where you can make a ton of money if it's available.


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## R.O.V. (May 16, 2010)

Dmoney said:


> If it takes working 60 hours a week to get by, then that's what it takes. My average week is probably close to 60 hours. When work is busy, it can be upwards of 80 if I'm really unlucky. I don't get paid any overtime, just my same constant salary. But, with this hard work comes reward.


Dmoney, I agree with what you said. My business partner and I started a small business over 20 years ago. The business we were in required us and our 3-4 employees to be gone away from our families 30 out of 52 weeks every year with no or very little contact...so I missed alot of important events i.e. kids birthdays, weddings, funerals etc. However I did it because I was making $80-100K per year and I felt the sacrifice was necessary to provide for my family. In the early years I had no way to make as much money anywhere else. We built that business to the point where we sold it just a few weeks ago and walked away with almost $500K each...so hard work does pay off!



HaroldCrump said:


> m...most true DB pension plans are left only in the public sector such as the federal and provincial govt. and the quasi-public sector, such as teachers, health care and city/municipal workers.
> The employer portion of those plans (and the backstopping guarantees) are funded by the rest of the taxpayers, i.e. private sector workers and businesses.
> The cost to the tax payer for funding those contributions as well as guarantees is _huge_.


I hope the DB pensions for stay intact so I can take advantage...I am now an instructor at the local college teaching my trade to the next generation of skilled workers!


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## HaroldCrump (Jun 10, 2009)

ghostryder said:


> I don't know a single small business owner who is actually working in their 60's or 70's because they HAVE to. They do it because they WANT to. Most of them may be officially "working" but if they want to take off to Florida for three months, or "work" 3-4 hours a day 3 days a week spending the rest of their time golfing, fishing etc. they do it.


I think you have painted a rather rosy picture.
Whether they are running the business, someone mentioned a TH outlet or a "shawarma" store, doesn't matter.
The owners can hire a manager to run the store and/or run it themselves part time/full time.
That doesn't make it a pension.
They still require that store/business to be operated profitably in order to build retirement savings.
Even if they manage to sell the business for a handsome profit, it is still not a pension.

And what about the millions of private sector workers that don't have access to a true DBP, yet they ritually pay taxes every year that funds such pensions for others.


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## DanFo (Apr 9, 2011)

working OT can be a dbl edged sword.... I work with so many people that rely on it just to get by... and we all do comparitively well with our regular wages. I think they just get used to spending what they were capable of earning when the ot was plentiful...but when they cut back on it people will groan if you take it ahead of them (lowest hours has first choice). We also have a bunch of rules on how much and when we can actually work it....it gets so bad people plan their vacation time just to get more OT hours in to pay the bills (take the days off then come in on nights to work OT)

Also there still is some private companies that offer DBP's and we all pay pretty good tax rates on top of the pension deductable.. I'm hoping mine holds out for another 22 yrs yet..it's a little underfunded at the moment but the company is pretty stable and has committed to making up the difference (markets are not helping the short fall) ..I'd pay a little more into it if it guarenteed the security of it but I'm planning my retirement as if the DBP does not even exist...better safe than sorry..and remember our RRSP contribution room is hacked down to a low value due to the pension adjustments.

..as for horrible jobs I chicken picked for a bit in HS start @5pm end at 1-3am..... 3 or 4 chickens in each hand run to the truck jam em in a crate run back for another load..Chicken barns are not pleasent....but it paid 14/hr and helped pay some bills for college and was an experience...like you said you got to do what it takes


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