Thursday, February 26, 2009

Earl Flormata - Canada Pensions down 30B

Hoo boy... down 30 Billion...

I remember reading from Kiyosaki's work that there's not enough pension to go round in the U.S. so when I saw the headline that Canada's pensions are down 30B since last year, I thought I'd do a little bit of digging in comparison.

From the Canadian Encyclopedia it states that from 1940 - 1960, there was an increase of 18% in the birth rate, or in numbers - an extra 1.5 million births that added to the population. With the baby boomers hitting the retirement age (around 8.6 MM) in that timeframe - let's do some simple quick math to find out how much they need to make it happen.

3.1 Percent average growth over 5 years, with 95.4B to work with averages around 2.9B to work with annually (suggesting also that it doesn't take another major hit or three). With 8.6 million people retiring, and say an average pension payment of around say $1000 a month - that adds up to 8.6 B to figure out. Now I know these are just arbitrary numbers and not an exact science, but last I checked, 8.6 - 2.9 = 5.7. A 5 Billion dollar shortfall even give or take a billion or two with my rough numbers is still somewhat worrisome. Being 28, and having the "proper retirement age" around 65-70 means that unless I do something for myself - I seriously doubt that the problem will solve itself by the time 40 years have passed.

This is one of the main reasons why I continue to read at a breakneck pace, and try to increase my financial IQ as much as possible, as quickly as possible so that I understand and can exercise as many options and start down the paths I need to run before time runs out.

With the current state of the economy, I've also been looking at more tangible solutions such as real estate with cash flow, and the idea of purchasing gold wholesale. I'm still pretty tax-centric in my research, but every little piece of the puzzle is what makes it whole.

Thanks for reading,
Earl Flormata off to find that 5 Billion ;)

No comments: