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February 25, 2019 | The Wave

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

“Hello Garth,” Lady Jane writes.  “I have been reading your website for a few years now and can’t recall seeing a scenario similar to mine. So I’m writing for myself and all the other single ladies over 70.”

Of which, by the way, there are many. Guys are great but they wear out faster, even the ones (ahem) with chiseled abs, furry pates and tight buns. Now as the Boomers move into the Thirsty Underwear Years, the number of wrinklie babes is about to pop as never before. It’s a big deal. Especially since women tend to be more risk-averse (savers, not investors) and therefore unready for a long, long life. How will all these people cope?

Look at the stats, ladies: the oldest Boomers hit 65 eight years ago. In a dozen years there’ll be 5.1 million senior women. By 2061, when today’s Mills are in their 70s with hideously sagging tats, almost 7 million women will be 65+, but fewer than 5 million men will make it.

In short, the population’s aging as never before, with females will be leading the wave. Why?

StatsCan says this:

“Since 1972, Canada has had sustained below replacement level fertility, which from a demographic perspective, means that not enough babies are entering the age structure to replace their parents, leaving the population to grow older. In addition, overall lower mortality rates throughout the life course over the past century has resulted in higher life expectancy for both females and males, meaning that more people are not only surviving to age 65, but are spending many years as a senior.”

In fact there are now more senior chicks (17.5%) than 14-year-old girls (15.5%). The first time that line was crossed was in 2011. It’s an astonishing trend. Look at this chart, and ponder where we’re headed as a society:

Girls aged 14 and under, women aged 65+ and women aged 80+ as a % of the female population, Canada, 1921 to 2061


Forty years ago the old-lady quotient stood at just 9% while the girls clocked in at 29%. But with guys, it’s the opposite (we’re apparently croaking in droves) – 15% are seniors while boys make up about 17%. In the past 30 years the median age of Canadians has exploded by 10 years – to 42. That’s almost four years older than in the US, where dudes die younger (probably Trump’s fault).

Anyway, here’s the problem: a country in which seniors outnumber kids, where women outnumber men, where fertility rates are falling and where the national savings rate is less than 1% is asking for trouble. Without immigration or boxcars of Viagra, plus more financial literacy, we may be headed for a state of poochedness – especially when today’s moisters are tomorrow’s prunes.

Well, back to Lady Jane:

“My financial picture is this, a non-indexed pension of $1,146 per month, plus OAS and CPP which total $2,318 monthly, annual income of $27,816 before tax dollars. I have TFSA’s totaling $41,400, no RRSPs, no savings to speak of. I don’t seem to have any extra to set aside due to increases in strata Fees and levies, property taxes and bank interest, with income tax to pay every year. I am 72 years old.

“I presently live in a North Van condo where the assessed value has gone from $274,300 in 2016 to $480,900 in 2019. It is a 1 bedroom, 600 sq.ft. space, wood construction with an outdoor patio. Rents start at $1,700+ for a 1bedroom unit. A 600 sq.ft. unit is presently listed for $465,000.

“Ideally, I think it might be time to find a rental in a concrete building that would meet my needs until I check out, or switch off, whatever old farts do when they croak. My opinion on diversity has evolved to hating the odour of pot smoke and the screeching banshee boinking noises at 2am. I’m also done writing letters to the strata.

“How bad is my situation? Is there a strategy that would give me shelter for 20+ years and be able to manage financially? I would appreciate your comments. Thanks and cheers, LJ.”

Face it, Your Grace, trying to get by on twenty-seven grand a year in YVR is no picnic. So a first question might be, why not move? Are you in North Van because of family? If not, there are plenty of cheaper places to be, within or outside Canada. Without change, yes, your situation is bad. Escalating strata fees alone will eat into your fixed income. A special assessment could be financially mortal, while making your unit unsaleable. You have lousy back-up finances.

The answer, clearly, is to sell, invest and rent. If you clear $450,000 after realtor commission and invest that for an average annual return of (say) 6%, your income doubles. Even after paying rent to live in the same place you’d be $600 dollars a month ahead of where you are now, and still have $450,000 liquid to support you in case of an emergency (as opposed to almost nothing now). Strata fees, homeowner insurance premiums, maintenance costs, property taxes and the threat of an assessment – all poof.

But, I hear you say, what of the risk?

Without a doubt, portfolios fluctuate month-to-month. Yet with a balanced and diversified approach those changes tend to be minor. Meanwhile the income you take monthly need never change since the advisor’s job is to ensure constant liquidity and a tax-efficient cash flow. Understand that by sinking the money into a GIC or a high-yield account you’ll have to dip constantly into the capital to get by. So the greatest risk is running out of money – which  outweighs the lesser risk of losing some.

Life is long, my dear Lady Jane. It’s expensive. It’s stressful. But better than the alternative. The last thing to do with your precious time is fret over money. Many men would trade theirs for one more morning.

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February 25th, 2019

Posted In: The Greater Fool

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