A recent Family Finance column in the Financial Post showed something strange about the way that financial planners calculate a person’s net worth. Apparently, having a defined-benefit pension plan does not add anything to your net worth.
The article profiled Doris, a grandmother with a simple balance sheet. She has a car worth $3000, owes $10,000 on her line of credit, and can begin drawing a $1400 per month pension in two years. For some reason, her pension just doesn’t count and her net worth is listed as -$7000. This isn’t an isolated case; I’ve seen this in many other net worth statements as well.
I have several family members in dire cases because they didn’t plan ahead for retirement and so depend heavily on CPP.
So word to everyone: Begin saving early or prepare to really feel the pinch when you get into your elder years.
Thankfully i’ve been taught well and i will retire comfortably. I have several investments too.
Advice from experts always vary and for this woman’s case using the multiplier of 15x seems a bit baffling. It’s so arbitrary. Yes she is not in a great position but the options are little unusual.
Cash-flow is what must be considered heavily for this case.
What i cant understand is how pension keeps up with inflation? If pension programs pay out at consistent rates then what happens if i live to something like 120 will the amount of payments grow to keep up with inflation?
So this is what cpp is for? I always wondered about the thing when i see it on my T4 slips and just considered it another money grab by Canada Revenue.
Canada is being shifted to Left and needs more Conservative leadership since i personally dont think CPP or any other pension style approach should be done. It should be left to the markets and for people to become more responsible with their savings.
If they can’t do that we the people should not be forced to pay for their laziness until they die.
Is CPP only done through the CRA taxes or can we also contribute more by other means?