Jan 152014

The Canada Pension Plan is a retirement plan that all working Canadians must pay into. It’s similar to Social Security in the U.S.

Right now roughly 5% of my gross salary up to ~$50K goes to pay for my CPP premium, and my employer matches this amount. If I work all the way to 65 years old and retire then I would receive about $12,000 a year of CPP benefits in today’s dollars because the payout is indexed to inflation. CPP benefits are not income tested, so how much income I make in retirement from other sources does not affect my CPP payments ๐Ÿ™‚ This is different than Old Age Security (OAS)

With an aging population in Canada, many are concerned about poverty in the senior community. A few provinces are starting to talk about expanding the CPP. They want current workers to pay more into the CPP system so when they retire they will receive more benefits. I think a lot of Canadians can benefit by increasing their pension plan. But I’m not sure expanding the CPP is the right way to do it.

For example, if I want to retire at age 45 then I have to wait another 15 years before I can apply for CPP benefits. The earliest someone can receive CPP payments is at age 60 so it’s not up to the individual when they want to retire. The other issue is since employers have to match their worker’s contributions, higher CPP premiums will mean a higher payroll tax for businesses.

Perhaps the best solution is a voluntary government pension system on top of the current system without increasing CPP. I suppose we shall see what happens in time.

Dec 202013

Fed Taper

The Federal Reserve announced earlier this week that they will begin to taper their bond/mortgage program from $85 billion a month to just $75 billion starting from January next year. I was a little surprised when the stock markets jumped on this news. I suppose investors believe the economy is doing better. What does this mean for regular folks? Not much. It’s a pretty small taper relatively speaking so I expect stocks to continue going up in early 2014 ๐Ÿ™‚ There are many online trading brokerages such as Motif that makes it easy for anyone to invest in the markets. I’m planning to do some more investing next week.

CPP Reform Talks

Also this week, the Canadian finance ministers gathered to discuss policies. One hot topic talked about was enhancing the Canada Pension Plan (U.S. Social Security equivalent.) The concern is that some Canadians aren’t saving enough for retirement on their own. So one proposal is to increase the contribution rate, effectively forcing people to save more, which will allow for higher pension benefits at retirement age ๐Ÿ™‚ I wouldn’t mind paying more into this public pension fund if it means I can get more out of it when I retire. But what really grinds my gears is that the earliest you can start receiving benefits is at age 60, which makes it difficult for people who want to retire earlier like myself ๐Ÿ˜• I currently pay about 5% of my income into the CPP program every year, but if I wanted to retire at 45 I would have to delay the fruits of my contributions by 15 years. There’s no choice to retire early and receive a reduced pension like you can in the private sector (>_<)

Positive News For Consumers

Credit monitoring company TransUnion recently said it expects loan delinquency rates to decline next year,ย “falling to 1.66% at the end of 2014 compared with 1.76% forecast for the fourth quarter of this year.” Less people defaulting on their loans must mean it is becoming easier for Canadians to handle our consumer debts. Yay! I guess there’s no rush to pay back my $69K of consumer debt between my various lines of credits ๐Ÿ˜€


I just saw a cool camera pen in London Drug’s flyer. I don’t have a lot of money in my bank account right now. I guess I’ll have to dig deeper into my LOC again lol. I should also probably get a new fridge this holiday. The one I currently have is over 20 years old ๐Ÿ™‚ #AddictedToCheapCredit

Video of the Week

This is why we haven’t sent any people to the moon in decades…


Blog roundup โ€“ย Below are personal finance and other articles from around the web this week.