The Real Truth About The Sustainability of CPP
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- เผยแพร่เมื่อ 21 ก.ย. 2024
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Is CPP running out of money? In this video we'll go through some recent reports that will give us a good idea if that's the case. Check out these reports here:
➡️Article from Advisor.ca: www.advisor.ca...
➡️PBO website: www.pbo-dpb.ca...
➡️CPP Actuarial Report: www.osfi-bsif....
➡️Summary of the CPP Actuarial Report: www.cppinvestm...
➡️Other Actuarial Reports: www.osfi-bsif....
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One of the best things that Canada did was to move CPP to an investment fund, and not just restrict it to government fixed income. Unlike SS in the US, CPP has no concerns about having to cut benefits to pensioners. I actually read the report a few weeks ago and it's just amazing to see how much it makes. It's also interesting to see how they are even getting into private equity, which can provide even better returns in the future.
it is the worst pension plan ever you can pay into it for 50 years retire the next day and die and you get 2000 dollars for burial, no funds go to your spouse or family it should be transferred over to a rsp like plan where the funds go to your estate
Private equity does have a couple of additional issues though.
1. Cost. It's a lot more expensive to do the kind of research to be in private equity investing.
2. Questionable valuation. Unlike publicly-traded companies, you don't have oft-updated, accurate actual values for these companies because they are in a stock market and traded constantly. So your valuation of a company you own a piece of could be really off.
Anyway you'll see Andrew Coyne write a rant about once a year about the CPP and why can't they just go back to having cheaper and effective index funds instead of spending millions and millions on all the CPP salaries and administration.
@@petert834 - Yes, you don't get anything for free. It's all about weighting the cost-benefit equation. There are also going to be winners and losers - such as the shuttering of 99 Cent Only. However, this is standard for all PE funds. Soft Bank has eaten some huge losses with companies such as We Work, but has also made huge gains on companies such as Alibaba and ARM.
Coyne has a lot of opinions about things, but I've successfully avoided them for the most part.
Thank you Adam. I will be gone in 75 years. So good to know that CCP/QQP will be still available. With the details you gave, l am going to wait till 70. Even for OAS.
@brucebanner2222 why? I'm planning on enjoying life while able and healthy in my Go Go years
I took my CPP early as I had serious health concerns. Unfortunately it looks like I’m going to live longer lol! So I could have waited and received more per month but oh well, I’m alive.
You did the correct thing and put your money in your hands and not the Gov.
@@kellyinPH but I will get less of the money I would otherwise be entitled to so I don’t see how you think I now have more of my money in my hands. Had I waited I now would be getting more of my money back. Your argument makes no sense.
@@Quince828 ok
@@Quince828How long do you think you’re going to live? If you had health concerns, taking CPP early is a, no brainer!
Always better for you to invest than rely on feudalism system
Thanks to the great FREE education I received from Adam & Rhys on their TH-cam channels I elected to wait until age 70 to receive my CPP. As of Jan 2024 I am enjoying an extra $1,754 in Guaranteed (w/ COLA) monthly income from my CPP. My plan is to live to 100 so with my Non-COLA DB Pension I will be quite comfortable unless the economy goes into hyper Inflation. I drew down my small RRSP (Low Room due to DB Pen) from 60 to 65 while collecting my Bridge benefit from my DB Pension for my Go Go years to pay for traveling to and motorcycle all around NZ each winter. Then Covid put the brakes on travel. I am so glad I retired early and got to do that.
Thanks Adam & Rhys for giving me the confidence to go off and fulfill my dreams. Now at 70, I can stay @ home to babysit my Grandkids with no resentment and to enjoy watching them grow. And with the higher CPP $$ I have the cash to spoil them. ❤❤💰💰
I wish you luck making it to 100.
I recall an elderly person telling me about twenty years ago that she felt sorry for me because there wouldn’t be anything left in the CPP by the time I was eligible for it. I’ve been collecting for over a year now.
If CPP is not running out of money, why gov intriduce CPP2 and taking hundreds more away from us every year?
They want to increase the benefits since fewer people have company pension plans these days than in years past. The more you pay in the higher your benefit when you retire.
Age 63 is the best age statistically. You want the money during the Go Go years. Age 63 To 73 for most. After 73, most people slow down. Dont travel as much.
@DavidCartwright-ih6ds I'm taking mine at 61. For exactly the reason you said. More money during my Go Go years. I'll slow burn my RRSPs ( started at 60) which will last until 85. Probably won't ever touch my TFSA unless it's a financial emergency.
The reality is most people don't realize that CPP is YOUR MONEY, it's not government money (OAS is) . If you choose to burn through your RRSPs early to be dependent on YOUR MONEY in the form of CPP later, that's crazy.
Diversification is key.
Like to see those stats as I turn 63 in a couple of weeks.
if you retire at 50 and live off of your RRSP as the only income do you have to pay your CPP payments from your RRSP income like a small business paying both the employer and employee contribution?
If my contributions are earning well then how about a kickback on my money to me as an investor. I took at 65, as per normal, and I receive the top rate but my brother who hardly contributed (worked) and is topped up by GIS and falls within 20 percent of what I get. To me the message is that it does not pay to work hard for those 48 years.
@saskagopher7319 some people think they are owed a living
What do you think about special purpose mortgages through MICs as a tax reduction strategy? I don’t believe you’ve ever touched in this.
So far, I have not heard anything good about private equity as a matter fact, private equity might be destroying the American economy
If u took Trudeaus Mandated Tea take it while u can.Cheers
I agree... 60 it is!
Probably most kids dont want to work and foreigners that are working arent paying cpp
I will be getting max CPP and plan on delaying 1 year to 66, along with OAS (12 years from now). I'll be bringing home 85% at that time compared to my last year of working. Taking it at 60 doesn't make any sense unless you have debt, don't budget or "think" it won't be there later. To each their own.
Waiting until 70 doesn't make any sense if you have a Defined Benefit Pension with a bridge to 65. Why give all that money you worked hard for back in taxes in your go go years.
@@garth217the OP didn't say to wait to 70, that person is waiting to 66. The decision when to take CPP is situational and specific to each individual needs, wants and goals therefore no blanket statement is true, your statement as well. I have a DB pension with bridge but no guaranteed COLA and in our situation we have determined waiting to 65 is good enough. We were a take at 60, then 63 and now given our financial position and assets have determined 65 is very doable. At that point all our foundational income will cover all our annual expense needs/wants till our death. Our savings will fund extras without costing an arm and a leg in taxes between now and 78-80.
@DoneByD no blanket statement is true, neither is yours
@@garth217😂 I didn't make a blanket statement I said --- "The decision when to take CPP is situational and specific to each individual needs, wants and goals" --- in other words to each their own, take it when you want.
@@garth217 Because you aren't giving them all that money. The math continually shows that the average person will get more money by delaying. Pretty well the only people that should not wait are those that know they have a shortened lifespan.
great info again Adam; thanks... canadians s/b more concerned about getting oas at 65, esp after jt bribed the 75++ w/ an extra 10%
Five, seven, nine and eleven!! Wow. Thanks for the video.
Take your CPP at 60. You don’t know when you’re six feet under.
I get my first payment next month at 61. I don't need the money so it will go into my TFSA. I figured that I'll get over $40,000 before I turn 65. That will go a long way to pay for my next vehicle
And you also don't know if you're one of the average and live to 85ish or above average and live into your 90s.
Your comment is based on fear and should be based on facts and specific situational inputs to come to a rational decision rather than one based on fear of being one of the minority of people that die early.
@@garth217 "I figured that I'll get over $40,000 before I turn 65. That will go a long way to pay for my next vehicle" - A long way? You're going to spend over 40K on a vehicle?? LOL!!!
@@sjames304 maybe correct wording should have been "a nice down payment addition". 😉
Nope.
Not!! Just keep upping the contribution amounts. There will probably be a universal basic income in the next few decades.
Albertans should be worried if they actually pull out. Look what Alberta did to The Heritage Fund.
We will donate it to big oil😂
CPP needs to be made into a proper defined benefit pension plan rather than a pseudo one that the recipient is required to pay into but never truly owns. If people know they own their cpp as an asset that they can pass on to a beneficiary and never be taken away or reduced, that would allay most of the fear of missing out. And, it would be a lot fairer.
The thing is most people will have received they contributions back in about 4 or 5 years. Look at your statement of contributions to see what you actually paid into it. Now if you consider compounding interest it would be a lot more.
there is a beneficiary component with cpp in that spouse will receive up to 60% (can't remember % amt)... people pay into db pensions; they're not a gift from employer... the main issue w/ cpp is that singles don't have beneficiary... i previously mentioned in one of Adam's cpp vids, many db pensions have a guarantee of five yrs in event of death of single person so if cpp had something like that, whereby if you die w/ no spouse, your estate is guaranteed five yrs of payments. but if you live past five yr mark, too bad, so sad; you've already received your guaranteed five yrs; that's how most db pensions work for singles
I have a DB plan. If I die before my wife she will get 70% of my monthly payment. But once both of us have passed all payments stop and there is no provision to make any payments to our children.
@Dom.Perignon123 I am well aware that a DPB is something you pay into. I have one, AND I have named beneficiaries who would benefit if I die before taking the pension. Not so with CPP, where also have to pay into but cannot name beneficiaries .
I am glad we have cpp, but it needs to be improved by treating it as something we own rather than a glorified tax fund.
That's not how most DB pensions work.
What about OAS which is not funded by contributions?
The Cons want to push back the retirement age, they've done it before and the Liberals reinstated the age of eligibility back to 65.
@@Roof_Pizza - Whatever anyone thinks of the current government, it's one thing that nobody can deny was the right move.
The government will pull the plug on OAS in the future. Why do you think The bank and government are pushing for TFSA?
And it WILL be cut by the Conservatives. I am 66 and cannot afford PP’s stated tax cutting. That is Common Sense because at this age we have experienced a few Conservative governments. If reading this you get angry, before you shout at me, do a bit of research. If you still don’t agree then your income is much much higher than mine.
@@ght33OAS clawback is a tax on people who were successful in life.
I was hoping thay you would mention the "unfunded liabilities" that naysayers keep referring to. I guess I'll double check the websites again. 😊
I am 31 and I ran the numbers based on what I have paid and my employer, the cpp reported returns, if my contributions stayed the same and their returns stayed the same on average it would be worth 3 million. Based on their projections I would get 700,000 by 85. What happened to the other 2.3 million
That’s the beauty of this Ponzi scheme. The early deaths fund the longer lived people.
I suspect your calculations are flawed. I’ve paid the max CPP for almost my entire working life and there’s no way I could have accumulated that much if I invested it in my own.
@@James_48 did you add your employer contributions? Did you add the investment growth each year?
@@davidpatterson9770 Here's my math. Total Contributions over 40 years (31 @ Max, and half the others, very close) is $66,542. Even at 10% annual interest that would accumulate to just under $490,000. This is just my contributions. My belief is that if there was no CPP then there was no employer's contributions - so they don't exist -you can't use them. A more realistic average return is 6-7%. At 7% my own contributions would amount to $250,000. When taking my CPP at 70 it will take me 9 years to "break even". If I live to 80 I will collect over $350k, if I live to 89, like both my parents, I will collect $750k. That seems like a pretty good deal to me.
@James_48 the cpp 10 year annualized return is 10.9% from 2013 to 2024. If I use the max cpp contributions of $7734 (employer and employee) that would be 2.3million in 34 years if you include the 10 years of what I actually paid in it would be 3.6million. I did assume a smaller rate of return than what they posted to get to 3 million.
I know some business owners that only pay the bare minimum and invest the rest of their money themselves. So less contributions into cpp. Sounds like a better plan maybe
Canadians are getting older and are having fewer children. This means we need to increase the contributions or cut current benefits. Yes, CPP has a huge amount of money but it is not infinite. Immigration is very good for Canada as immigrants in many cases have larger families and thus more younger people contributing to CPP.
None of that affects the fact that CPP is fully funded and doesn't require adjustment.
That causes issues with OAS, CPP actually has investments.
not if they are working under the table with cash money jobs which a LOT of immigrants do and are doing.
@@kater8730 If anyone is working under the table, then they don't get CPP for it. Your CPP is based on what you contributed. Sorry, but your racism failed you here.
That is great news but i do not trust governments i am taking it a 60
Me too.
I suspect with millions of new immigrants - paying into CPP .. it should be fine
Lots of research of economics suggest that our CPP needs to be increased so seniors have more income. With no few pensions and Canadians relying on RRSPs and savings more and more Seniors are living in poverty. Our next government needs the balls to increase CPP payments and increase the payouts as that money becomes available. With no intent to be political, there currently is only one national party that is not afraid to do it. I apologize to my Grandkids for the mess they inherit in climate change and know they will further struggle as they are the first generation to earn less than their parents.
The process of increasing CPP contributions and payouts has already started, but it will take years to have it fully in place. Ultimately, full CPP will be 33% of the average income, up from the current 25%
The cpp should be a flat account that you can draw any amount from until it's gone.
CPP is gone and stolen. I’m mid 30’s and will never see a penny from it.