tag:blogger.com,1999:blog-5465015914589377788.post3940363759923413958..comments2024-03-20T09:32:16.592-04:00Comments on Michael James on Money: Another Emotional Reason to Take CPP EarlyMichael Jameshttp://www.blogger.com/profile/10362529610470788243noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-5465015914589377788.post-28051849144239414422020-04-29T23:53:48.257-04:002020-04-29T23:53:48.257-04:00Hi Martin,
Every so often I actually go through a...Hi Martin,<br /><br />Every so often I actually go through all our spending over a year to see where the money goes. It's amazing how hard it is to come up with accurate figures unless you actually look at the records. Off the top of my head, I know our total spending over a year, but if I just sit down and try to write down how much we spend in different categories (without looking at actual records), it's hard to come up with even two-thirds of the costs. It's easy to come up with big costs, but it's easy to forget every-day little things that add up significantly.<br /><br />Looking at our actual spending, I estimate that just over one-third is my personal spending. My wife spends less than I do, but her personal spending is still over one-quarter of total spending.<br /><br />I don't claim that we are typical in any way. We travel more than most, sometimes together and sometimes not. We eat out a lot more than most. I have an expensive car.<br /><br />As you pointed out, we do have significant costs that are common, but for us they amount to less than 40%.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-7934106122970824202020-04-29T21:01:17.996-04:002020-04-29T21:01:17.996-04:00Interesting and thought-provoking article as alway...Interesting and thought-provoking article as always, MJ. However, are you confident of your calculation that one surviving spouse (in your case) would have expenses well below 77% of the couple? I've thought this through for my parents, and less carefully for myself and my wife, and come to the conclusion the passing of one spouse would have very low impact on total expenses. Yes, food and personal expenses would halve, but seems nearly everything else would stay essentially unchanged, unless a major lifestyle scaleback were consciously adopted. House and yard maintenance, furnishings, appliances/major electronics - unchanged (assuming house fully paid or, but still). Car - unchanged (I guess this depends on the fact that both my family and my parents have one car per family, not per person). Travel - reduced, but by much less than 50% (travelling single is expensive, moving to group tours even more so). Entertainment - possibly increased, since alone one needs to get more out of the house. Depends on the individual, of course, just colour me surprised that your own analysis indicates a significant expense reduction in this unfortunate (but forseeable) eventuality.Martin Phttp://www.balrisk.comnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-91597412477968620842020-04-27T14:20:59.514-04:002020-04-27T14:20:59.514-04:00Hi Garth: Here is a quote from a government websit...Hi Garth: Here is a quote from a government website confirming your recollection:<br /><br />"If the cost of living decreased over the 12-month period, the calculation of the percentage increase would produce a negative amount. However, as prescribed under the Canada Pension Plan Act benefit amounts do not decrease, they stay at the same level when there is a decrease in the cost of living."<br /><br />I didn't investigate any further, but I assume that when CPI rises again, CPP payments would not go up for the part of the CPI increase that made up for the previous CPI decrease.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-48202600291343444282020-04-27T14:03:47.526-04:002020-04-27T14:03:47.526-04:00Well done as usual. I really liked your analysis ...Well done as usual. I really liked your analysis of how spending would go down after the first spouse dies. <br /><br />CPP and OAS are both indexed of course. I seem to recall reading somewhere that if CPI goes negative (seems possible) that the benefits would never be adjusted to the downside. Anyone know if this is true? If it is, it would certainly add another reason to defer.Garthhttps://www.blogger.com/profile/14367654772040176371noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-51675603854282271042020-04-27T10:01:01.319-04:002020-04-27T10:01:01.319-04:00Interesting. I'm far enough away from retirem...Interesting. I'm far enough away from retirement that I haven't actually run the numbers for my personal situation, but will keep that in mind.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-20619962570411366432020-04-27T09:46:49.066-04:002020-04-27T09:46:49.066-04:00Anonymous: Thanks. It's true that having hole...Anonymous: Thanks. It's true that having holes in your employment history reduces the gains from delaying CPP, but I found the amount of reduction to be small compared to the gains from delaying CPP. Your mileage may vary.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-77823833428677262162020-04-27T09:43:44.498-04:002020-04-27T09:43:44.498-04:00This is an excellent and helpful analysis - thanks...This is an excellent and helpful analysis - thanks! I find that reason #3 in particular is often ignored in similar articles or blogs. As someone who had a low income as a student for a number of years after age 18 but who hopes to retire before age 60, this can be an important factor to consider. Anonymousnoreply@blogger.com