Threshold

This month, my retirement savings surpassed what my parents sold their detached home in an Ottawa suburb for in the mid-nineties, and two-thirds the cost of the two-storey home with a pool they bought in the early aughts.

I can’t afford a small apartment-style condo. The median cost for one is over double the cost of that detached home twenty years ago. It took me a dozen years to build enough savings to afford the down-payment; partly because home prices kept outpacing wage growth, partly because rent exploded during the same period, and ate at my savings. My current two-bedroom apartment costs $2,100 a month, and is a third of the size of the $900/mo townhome I was renting fifteen years ago.

My problem is no longer a down-payment, it’s that now I can’t afford the mortgage. At the current prime rate plus condo fees, property taxes, and utilities that works out to over $3,000 a month. A typical salary for my field works out to $5,000 a month after tax. If I had a partner, that would cut the payment in half, and would help with income through lay-offs. I don’t have that.

What’s scaring me is that retirement isn’t some distant affair; my parents were only fifteen years older than I am now when they retired. If I don’t have a house, then I have no idea how I’ll afford a roof over my head given that rents keep increasing at incredible rates and my income will be fixed. Owning a home isn’t a luxury, it’s a necessity to keep costs in check during retirement given that rent control, social housing, and indexed pensions are a thing of the past. Without it, what are going to be my options in retirement? Homelessness? MAID? I’m saving everything I can for retirement, but that won’t be enough.

Frustratingly, the Prime Minister opposes getting housing costs back down, because the rapid rise in housing value in the past few years is creating a massive wealth transfer from first-time home-buying generations to older home-owning ones, alleviating another crisis: the lack of the latter’s retirement savings.

At the very least, the government could expand CPP by a few percentage points, since it’s well-established that RRSPs are not going to cut it. We also need a government that properly acknowledge the affordability crisis and provides meaningful policy solutions.

I don’t think we’ll see that for another generation, when it will be too late.