The inescapable

The average Millennial is 36. Geriatric Mills are approaching 45. Apparently this gen is now worrying about getting old, and a bit freaked out since they’re no longer setting the agenda. Look at TikTok or Instagram. The dreaded Zs are taking over.

Getting old. Sucks. Fact of life. But the ageing process seems to surprise almost everyone. A shockingly small number of people actually prepare for something which they cannot hold back and is universal.

“I have friends that have had great incomes over the years,” Michel, a lawyer in Southern Ontario, tells me. “Zippo savings, in their sixties and still taking expensive cruises, buying new not needed ‘toys’ ect. It must be some type of Ostrich Complex. They seem unconcerned (the old adage not what you earn, but what you save, seems to have been lost). And zero thought as to what would happen if they suddenly become disabled/seriously ill.”

Procrastination. Ignorance. Denial. Hedonism. What is it that would turn Boomers – a favoured generation growing up during expansion, peace and bubbling asset values – into financial victims?

The Mills (and GenXers, sort of) have some good excuses for their sad state. Real estate values are ridiculous. Inflation and higher rates came as an unwelcome surprise. The pandemic destroyed workplace culture and social cohesion. And the replacement of edited, professional MSM news by social media crap has bred breathtaking financial illiteracy.

But struggling Boomers are more victims of their own bad decisions. That’s been cemented by a new study showing a quarter of the 50+ crowd don’t earn enough to cover expenses and save nothing for the future. Four in ten say they can’t afford to retire. Only 35% figure they can.

Now, this stuff affects everyone. Canada has become one of the wrinkliest places on the planet. The fastest-growing cohort are geezers between 75 and 79. Within seven years one in four in this nation will be over 65. We’ll join Germany and Japan as ‘super-aged’ societies. Two-thirds of us have no workplace pension. Fifty years ago half the workforce did. About 32% of all Canadians with jobs – and a fifth of people on the cusp of retirement – have never saved anything. Like Michael says, zippo.

Source: National Institute on Ageing, Toronto Metropolitan University

So what?

Well, just look at OAS – the public pogey Canada pays to people who hit 65. Currently the stipend is just over $700 a month. That’s hardly enough to live on, even when combined with CPP (the average benefit is $758 monthly). But this inadequate amount for many still costs taxpayers $68.3 billion annually (OAS alone – CPP is funded independently, paid for by employers and employees).

The cost of OAS ten years – when the average Millennial is approaching fifty – will almost double, to $123.4 billion. Then it gets worse, since Mills outnumbered Boomers. Given that the federal government today cannot balance its books and secure enough revenue to pay for expenditures, how will we ever afford this amount? You can’t hold back the aging process. Politicians will not take back essential income support once it’s been granted. The only solution seems to be a meaningful increase in taxation to support this seniors juggernaut – regardless of what party controls the country in 2035.

Meanwhile, consider health care. Over 80% of all the health dollars spent on a person are consumed in the last five years of life. With a super-aged society, how can the public system function without a massive increase in funding? But, from where?

So, as stated, this is a warning. A flag.

If you have an adequate income, expect to lose more of it. If you need government to support you, the time has come to change that. It’s simply not assured Canada will be able to keep up with what we already have. Demographics are relentless. There is no turning back time. Public finances and taxation when today’s 40-year-olds are fifty, then sixty, could be forever changed.

Are we debating this in Parliament now?

Nah, of course not. The Libs tell us we can afford to fix everyone’s teeth as well as look after your kid for ten bucks a day and pay people handsomely to have children. The Cons are running for office based on eliminating tax revenue, and have never suggested reducing social program spending. The Dippers want more, including pharmacare and a universal basic income.

So, figure it out. It’s unsustainable. Top tax rates will go up. No longer will 40% if Canadians be left exempt from paying any net tax. Levies on real estate – the greatest repository of wealth for most families – will rise dramatically. Federal deficits, borrowing and debt service charges will be crippling. And people will still lie to you in order to secure your vote.

What to do?

First, understand this reality. You control your destiny. Not the government. It’s heading for intense poochedness.

Make a point to invest all you can, whenever you are able, in tax-sheltered accounts. There are a slew of them, and we’ve told you how. If married, income-split – spousal accounts and loans, for example. Do not stuff all your net worth on one asset, like a house. It’s a sitting duck. Invest instead in a diversified way, ensuring you have securities that will create an income stream and also giving broad exposure beyond Canada. Look at what you earn, set aside 10-25% in viable investments for the future, and live within the remainder. If you can’t, make changes. If you cannot change, accept.

About the picture: “In the interest of keeping the dog culture motif for you blog, a nice segue from feline to canine is a pic of our dog Willow,” writes Ben. “She is an Italian Greyhound. A breed that as I have found out is almost cat like in their temperament.  A total lapdog and sun worshiper!  Keep up the fantastic work with you blog.”

To be in touch or send a picture of your beast, email to ‘[email protected]’.