Let’s call them what they really are: the Cash-Out Generation. Over a century of prior generations invested forward, only to have this single generation cash it all in (and take highly leveraged loans for future generations to pay, when the cash wasn’t enough).
Excess wages ($85K/year for a Packard auto plant employee to shuttle parts around on a cart). Early retirement. Guaranteed pension payouts that no private investor could match. Public sector perks like nice parks, roads and environmental “feel good” rules that were funded by loans, not their own tax payments. Social security demands unmatched by their payments. Even their children’s education was something they shortchanged, demanding loans pay what they wouldn’t.
They’re the narcissistic parasites who cashed it all in. The hell with this Boomer mandate that social security be treated as an untouchable third rail. Given the demographic data on boomer wealth, it’s time to match social security payments to actuarial models based on actual payments in, without interest (remember Boomers, you’ve rejected the opportunity to have such funds invested and earning interest).
It’s either that or we’re going to cut the funding to the senior centers and let the Boomers experience accountability in their last years.
Read the original post and other comments as well.
Lost Caper–your question has some validity, but I assume that the people you interview have been paying taxes and probably paying for health care for others, including the kids and the grandkids. Boomers of means will continue to pay taxes until they die and unless there is a spouse to take over the RRSP’s, whatever remains in the estate will be taxed as if all that income was earned in a single year. Anything left will then be distributed among those inheriting the estate. There are anticipated billions of dollars which will be inherited as the boomers die off. CPP is fully funded (I’m not sure how OAS works) and any other private or public pension schemes, which can vary in generosity, have been in part funded by those who benefit. The fact that governments and private companies have not been providing their share all along, thereby adding to huge unfunded liabilities, is definitely of concern and that should be addressed in legislation. It should not be possible for a company like Nortel to morph into some other company and leave all the promised pensions unpaid, forcing the government into a bailout scheme. Saskatchewan Teachers took the then government (Romanow) to court to change that little fiddle, and now that pension scheme is fully funded. I can’t speak for other public services. You can argue that it is not merited and that it is overly generous, but at least it should not present an unpaid bill at some time in the future.
Many Boomers at present, are helping their own kids financially, and some are helping aged parents. Those of my acquaintance who are retired, volunteer for many public services.
There is a lot to worry us regarding debt and the worsening economy. It’s discouraging when even a majority government will not tackle debt and deficits with the firmness they require. But when we try to demonize an entire generation we aren’t framing the problems correctly. We’re just looking for scapegoats–and this will not get us far towards solving them.
@ rita
Excellent reply. Personally I thought his post was too dumb to reply to but you did it in a manner he could possibly understand.
I wait with bated breath for his reply 🙂
Thank you for all the responses but no one has addressed my basic question. Why are future generations accountable for debts and unfunded liabilities that they did not incur.
In the specific:
CPP has been made solvent by raising the contribution rates of employees and employers. Bad news for workers and small businesses. The eligibility age will also be pushed to keep it solvent. So people will pay more to get less.
OAS is funded directly by federal taxes, which will have to increase (or cuts be made) to keep up with demand. So either more money taken away or less service.
Healthcare was not mentioned by anyone and is the looming bomb. The last year of life accounts for one third to half of a person’s lifetime costs for healthcare. There are going to be a significant bubble of people in this position over the next twenty years. How will that be funded.
As for the expected wealth to come, money locked in RRSPs is controlled by the government. Money you cannot access freely is not your money or your heirs. CRA has special rules called a “Death Clearance” that are not advertised, which will drastically limit what is inherited.
Finally, the value of homes will also fall. Unlike the US housing bubble, there will be a generational one. Simply, there will be less people in the country in twenty years. Who is going to buy the homes. Some areas will be valuable but in general will be a loss of value.
At no point did I state that taxes were not being paid while rewards are reaped. But clearly the amount is not enough – otherwise why the debt. Right now, 33% of federal spending is on debt, pensions and health. And all can only go up.
Lost Caper: The taxes from RRSP’s at the death of the owners will go into government coffers. So it will be like one last giant tax bill–often about 50% of the total because as I mentioned, it is all taxed as if that was income earned in one year. A good chunk of what you consider to be unfunded debt will come out of those taxes. The rest will go to the heirs. Within the next 10-15 years, there will be a huge transfer of wealth from one generation to the next. That might also help take care of some of the bills that you seem to think are due. Many of the inheritors will be able to discharge their mortgages and their own personal debt.
As far as those with lucrative pensions, you can be sure that as governments need more money, those will be taxed away. That is another way in which the outstanding bills will be paid.
Much of the debt has gone not to enrich the boomers, but to sustain their families, to educate their kids, to provide health care for the newly born all the way to the presently aged. The fact that some (not all) older people will require a lot of care at the end does not negate the fact that all through their earning years, they were paying for everyone else to have health care which they neither used or needed at the time.
Just a point: The “death clearance” you referred to (the clearance certificate?) simply means that all outstanding taxes are paid. It’s not a special extra tax like death duties. I’m not saying that death duties aren’t on the horizon. I think Ontario is considering them. But that would still be considered paying the bill incurred by the boomers wouldn’t it?
Rita,
I believe we are closer on this topic than it appears. I should mention that my ‘progressive tax proposal’ would wipe me out as well due to my age.
What concerns me are those who have not entered the workforce or not even born yet. There is simply no compelling argument as to why they are accountable for debt and unfunded (or underfunded) liabilities. The counterpoint that we paid into it and now it’s your turn will be lost.
Income Security & Pensions
The point I always hear is education. The cost of education in Canada is about $8,000 per student per year. The average cost of a person receiving CPP, OAS and GIS is $13,000 a year (even factoring not everyone will get all three). A child is in school for 12 years. The average Canadian lives 15 years after retirement. The programs and pensions put in place were not promised by the future generations, yet they are expected to pay for it in return for their education and other unspecified benefits. What I find interesting is there is no one mentions that the future generations’ children will pay for them in the future as well. No one believes the programs will last that long, further weakening any compulsion to support them in the near future.
Debt
As for the coming clawing of the Boomer assets, I agree it’s coming. If all the RRSP’s in the country were taken it would reduce the debt by about 60%. Where is the rest of the money going to come from? To someone not in the workforce, or not born, the logical location is in the assets of those that borrowed the money – not themselves.
The death certificate is not a tax per se but being wielded as one. Since most do not know of it, CRA waits a few years and then audits the deceased. Since by then, memory and records are lost or incomplete, it allows CRA to grab additional assets from the estate.
Finally “seem to think will come due” is the attitude that bothers me. It always comes due, why do governments and so many people believe it can go on forever.