tag:blogger.com,1999:blog-7994331885039650384.post7598447862443384552..comments2023-04-17T07:26:17.527-04:00Comments on A Loonie Saved: Orders of wealth magnitudePatrickhttp://www.blogger.com/profile/16816252455472704262noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-7994331885039650384.post-9514188477973351012011-08-08T10:55:21.285-04:002011-08-08T10:55:21.285-04:00@Michael: Very true. In fact, to be fair to the L...@Michael: Very true. In fact, to be fair to the LICO, it does vary depending on where you live and the number of people you support. Here is <a href="http://www12.statcan.ca/census-recensement/2006/ref/dict/tables/table-tableau-18-eng.cfm" rel="nofollow">the chart for 2005</a>, for example. My $20k figure is the LICO for a single person in a large city, or a rural family of 3. In your situation, the LICO would be more like $38k.<br /><br />I chose the smallish $20k figure because I was aiming for a "poverty line" (which LICO is explicitly not designed to be).Patrickhttps://www.blogger.com/profile/16816252455472704262noreply@blogger.comtag:blogger.com,1999:blog-7994331885039650384.post-4668538264852083182011-08-08T08:57:30.572-04:002011-08-08T08:57:30.572-04:00It's not that I thought your post was wrong. ...It's not that I thought your post was wrong. I was just thinking about my "number" (the wealth that I'd feel comfortable retiring with). These things obviously vary from person to person. A single person at age 65 might feel comfortable with a LICO bump on top of CPP and old age payments. A younger person supporting 3 others needs more than LICO and is justified in being more nervous about 4%.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-7994331885039650384.post-49396863277032384542011-08-07T21:59:43.792-04:002011-08-07T21:59:43.792-04:00@Michael: I should finish by saying this: please f...@Michael: I should finish by saying this: please feel free to substitute your own criteria and see how it works out. If you'd like to earn the Canadian median household income using a 3% rule, for example, then your zero-decibel point would be around $2M, and you'd be more interested in 15-decibel differences rather than 14-decibel ones. Selling a house in Vancouver would leave you 5 decibels (which is a long way) from wealth.Patrickhttps://www.blogger.com/profile/16816252455472704262noreply@blogger.comtag:blogger.com,1999:blog-7994331885039650384.post-63821954662811394582011-08-07T21:53:05.485-04:002011-08-07T21:53:05.485-04:00@Michael: That's a fair point. Perhaps $500k ...@Michael: That's a fair point. Perhaps $500k was too low. I really did agonize over this zero-decibel mark quite a bit, originally intending to use $150k (roughly the median Canadian household's net worth), $1M (nice round number), or $1.5M (which the 4% rule turns into the median Canadian household income).<br /><br />Ultimately I picked the poverty-level income for a couple of reasons. First, it's at least somewhat objective: if your wealth can't lift you out of poverty, you're definitely not wealthy. I don't think I'd get any argument on that point. Second, even if you can't really support yourself on your wealth alone, by the time you're earning the LICO amount, that income is a substantial supplement to a middle-class income, and so it would (if spent) have a notable impact on one's standard of living.<br /><br />All in all, $500k doesn't seem an unreasonable amount to declare someone to be crossing the threshold into the "wealthy" category.Patrickhttps://www.blogger.com/profile/16816252455472704262noreply@blogger.comtag:blogger.com,1999:blog-7994331885039650384.post-84127184956134729982011-08-07T15:09:36.734-04:002011-08-07T15:09:36.734-04:00Interesting analysis. By your definition my decib...Interesting analysis. By your definition my decibel level is positive, but my family would not tolerate $20k/year. Also, I wouldn't be comfortable counting on the 4% rule as typically stated where it is an inflation-adjusted 4% of the starting wealth level. When I change 4% to 3% and change $20k/year to a much higher figure, I suddenly feel less wealthy.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.com