For number of years now, my husband and I have had a conviction to set our financial house in order. We began to live not only within, but also way below our financial means. We also paid off all our debts and have been living debt free for the past four years. We have no mortgage or credit card debt and as a matter of fact, credit card company that we use is paying us for using their card, and we have no other types of loans, while our savings have been growing.
Due to the current housing bubble in our country, we decided not to buy a house at this time, and now we fully understand why. Last summer, we read a very interesting book about geopolitics where author, Peter Zeihan, mentioned a very simple demographic fact that will have a huge impact on global economy. This impact will be of such magnitude that there will not be a single person untouched by what is coming.
According to Peter Zeihan, beginning in the year 2022, the largest portion of the biggest demographic boom in history is going to retire. They are called "the baby boomers." They are the generation born shortly after the horrors of the Second World War. As they have gone through various stages of their lives, because of their sheer numbers, they have driven the global economy for decades. They are behind the latest and the longest economical boom in the world history. Most of that generation is residing in developed well to do countries and is very well off too. As they began nearing the retirement age, they started pouring trillions of dollars into world economy in the form of high interest retirement investments, thus creating a tsunami wave of money flooding the economy, making cheap credit available for everyone, and keeping the normal economical busts mostly at bay.
But as majority of them retire between 2022 and 2026, and not only stop contributing all these money, but begin withdrawing it, it will create a reverse effect. This receding tsunami wave will begin to cause the collapse of that artificial global financial bubble. Interest rates will begin to rise and financially ruin those who have unsustainably high levels of debts, so if you don't want to be one of those people, you must do anything possible to pay off your debts and stop living above your means. Life is about to get hard for those who did not prepare. There will be chaos.
According to Statistics Canada, as of 2017 only 19,663,000 were employed and thus paying taxes for healthcare and other services that the Canadian government provides for Canadians. That is roughly 54% of Canadians working and supporting the other 46% of Canadian population. As the boomers retire on mass over the next few years, there will be fewer Canadians working and paying taxes than those who do not because they are children, unemployed, retired, or on a disability. That means many of those government services that we take for granted today will be cut, and we will have to either pay for them from our own pockets or go without...
Most of the other developed countries face the same problem. Things will only get progressively more and more difficult. We will need a lot of wisdom to navigate those times.We need to use what we have now to prepare for that.
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