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Canada’s RRSP Program Has Too Many Jobs
Summary: Since its inception in 1957, the Registered Retirement Savings Plan (RRSP) has been a cornerstone of Canada’s retirement system. However, the RRSP has taken on roles far beyond its original mandate, notably through the Home Buyers’ Plan (HBP) and the Lifelong Learning Plan (LLP). Although these programs provide short-term benefits, they significantly damage the long-term health of Canadians' retirement savings. This article explores how these additional roles are sabotaging retirement savings, highlights statistics about the state of RRSPs today, and discusses the disastrous impact these trends will have on future retirees. While listening to a recent economic presentation by Don Drummond, TD Bank's Chief Economist at the Mortgage Professionals Canada conference, the following stat stood out to me: "Median RRSP savings are $146K (RRSPs have been in existence for 6 decades)" I was stunned by how low this value was. Even with a government pension, in today's economic climate, to achieve a successful retirement, we need more than $146K saved. This prompted me to explore how the average value of RRSPs in Canada could be so low after some of us have had as much as 60 years to save. The average senior aged 65 in Canada receives $18,197 per year from OAS and CPP. If qualified for GIS, they would receive another $15,186 annually, for a total of $33,338 annually. This isn't much income, especially for homeowners who must pay for property taxes, utilities, upkeep, and maintenance. How it All Began At inception, the RRSP was called a Registered Retirement Annuity and was created in 1957. At the time, Canadians could contribute up to 10% of their income to a maximum of $2,500 annually. The goal was to give all Canadians the same tax benefits as members of registered employer-sponsored pension plans. Benefits of the RRSP Plan 1. Tax-Deferral: Contributions to an RRSP are tax-deductible, which can reduce your tax bill. 2. Tax-Free Growth: Your savings grow tax-free while the money is in the plan. 3. Retroactive: You can carry forward any unused contribution room to future years. The Multitasking Disaster Studies show that people are dreadful at multitasking; the same is true of government programs. Here is where the program went wrong. In 1992, the Home Buyer’s Plan (HBP) was made more flexible, which allowed first-time homebuyers to withdraw RRSP funds to buy a house. Then, in 1999, the Lifelong Learning Plan (LPP) was introduced, which permitted withdrawals to pay for education. The Home Buyers' Plan (HBP) was not introduced in 1957 alongside the Registered Retirement Savings Plan (RRSP) creation. Instead, the HBP was introduced in 1992 as a federal initiative to help Canadians buy their first homes by allowing them to withdraw funds from their RRSPs without tax penalties as long as they met specific conditions. Here's a timeline of crucial HBP withdrawal limits since its inception: Timeline of HBP and LLP Withdrawal Limits: 1992 - Introduction of the HBP • Maximum Withdrawal Limit: $20,000 per individual. • Purpose: To help first-time homebuyers purchase or build a home. 1999 – Introduction of Lifelong Learning Plan (LLP) • The annual withdrawal limit is $10,000 per individual • The lifetime withdrawal maximum is $20,000 per individual 2009 - First HBP increase • New Limit: $25,000 per individual. • The increase was introduced as part of federal budget changes to reflect rising housing costs. 2019 - Second HBP Increase • New Limit: $35,000 per individual. • Announced in the 2019 federal budget to support affordability for first-time homebuyers. 2019 -HBP Enhancement for Life Events • The HBP was expanded to allow individuals experiencing a marriage or common-law partnership breakdown to participate, even if they were not first-time homebuyers. 2024 - Recent increase • New Limit: $60,000 per individual. • The increase was introduced as part of federal budget changes to reflect rising costs. A Flawed Strategy The Home Buyers' Plan (HBP) and Lifelong Learning Plan (LLP) were introduced in Canada as tools to make housing and education more accessible. While well-intentioned, these programs effectively allow individuals to borrow from their future retirement savings—a strategy that can have significant negative consequences. Ask any high school economics student, and they will tell you that compromising two of the three main elements (principle and time) in investing growth will lead to a disappointing return. Here is the formula: principle X interest + time = compounded return. Are We Borrowing From the Future to Pay for Today? The Problem with the Home Buyers’ Plan (HBP): Addressing Housing Affordability at the Expense of Retirement The HBP permits individuals to withdraw up to $60,000 from their RRSP to buy a first home. In an environment of rising house prices, this measure may help buyers cobble together a down payment, but it drains retirement funds. The funds are unavailable to grow tax-free over decades, diminishing the compounding returns essential for retirement security. The Problem with the Lifelong Learning Plan (LLP): Financing Education by Sacrificing Retirement The LLP allows up to $20,000 in RRSP withdrawals to fund education, which can help individuals upskill. However, education often doesn’t yield immediate returns, and the withdrawn funds lose their growth potential, including the compounded returns. Why This Harms Future Retirees Issue #1: Loss of Compounding Growth Withdrawals disrupt the power of compounding, which is vital for retirement savings. For example, $35,000 left in an RRSP for 25 years at a 6% annual return could grow to over $150,000. If that same $35,000 were withdrawn 15 years ago and repaid over the same period as required by the HBP program, it would be worth $54,311, a loss of $95,689 Issue #2: Repayment Struggles While repayments are required, life’s expenses (mortgage, childcare, loans) often make it hard to repay on schedule. Failure to repay means the amount withdrawn is added to taxable income, further reducing the effectiveness of the programs. Issue #3: Insufficient Savings Most Canadians are already under-saving for retirement. Encouraging them to dip into their RRSPs exacerbates this shortfall. Two Different Problems. One Harmful Solution Housing Affordability Rising house prices are driven by supply-demand imbalances, speculation, and policy failures—not a lack of down payments. Increasing the HBP withdrawal limit does nothing to address the root causes of affordability, but it may drive prices higher by giving buyers more purchasing power. Retirement Security Retirement savings should be preserved and grown to ensure financial stability in later years. Programs like HBP and LLP blur the line between short-term needs and long-term planning. Why Would our Government Do This? Political Expediency Housing affordability and access to education are politically sensitive issues. Allowing individuals to tap into their RRSPs is a cost-neutral policy for the government (unlike direct subsidies or programs). Policies like these help politicians get elected or stay in office. And in proper political form, these policies only tell half the story. Vote for us because we will help you buy your first home, which is a great campaign strategy. Vote for us because we will make it look like we help you buy your first home when, in fact, we will set up a program that will allow you to borrow from yourself at the cost of your retirement, which is political suicide. Short-Sighted Economic Policies Policymakers may believe that homeowners and educated individuals are more financially secure, even if their retirement savings are compromised. The logic might be that owning a home or having better job prospects could mitigate future hardship. Assuming Home Equity is a Safety Net The government might assume that homeownership ensures financial stability in retirement. However, this overlooks that rising housing costs often mean seniors have high debt levels or are "house rich but cash poor." The Bigger Problem with the HBP and LLP Programs: No Warnings or Education Given to Canadians Neither the HBP nor the LLP adequately informs individuals of the long-term consequences of their decisions. To make matters worse, the participants of these programs will likely realize the impact once it is too late to take action. People considering retirement are often in their late 50s to early 60s, past their prime saving years. Borrowing from retirement accounts may seem like “borrowing from yourself,” but this lost growth can never be recouped. Many Canadians are not well enough informed to assess these trade-offs, leading to decisions that harm their financial future. In Case You’re Thinking, These Seniors Have Inadequate Savings - But at They At Least their Homes. The HBP and LLP programs may reflect a government view that seniors would be better off owning a home than relying solely on inadequate savings. But this is flawed for a number of reasons: A home is not a liquid asset—it cannot pay for groceries or healthcare. Also, Seniors with insufficient retirement savings often need help with financial distress despite owning property. They sometimes need reverse mortgages or sell their homes out of desperation. An Unfortunate Misguided Solution Rather than “quick fixes” that appear to solve immediate challenges while creating long-term problems, the Federal government should instead focus on longer-term, systemic solutions For housing: Governments need to curb speculative investments and provide targeted assistance for first-time buyers. Plus they need to focus on programs that increase housing supply, such as income tax incentives for homeowners to build accessory dwelling units (ADUs). These units could be rented out or used for caregivers. Or adopt a policy allowing first-time home buyers to not pay tax on their first $250,000 of income. First-time home buyers could use the tax savings as a down payment. For Education: Governments need to expand grant programs and low-interest loans to prevent reliance on retirement funds. This will not only help us increase the number of skilled workers to fill critical gaps in vital sectors such as technology, healthcare engineering and the trades. It will also contribute to a higher GDP and build a more sustainable tax base for future generations. Encouraging Canadians to steal from their future is not a sustainable strategy. Retirement savings should be viewed as sacred - not a piggy bank for solving unrelated issues. Don’t Retire … Re-Wire! Sue
Villanova Nursing Professor Addresses Overlooked Roles in Mental Health Care
Mental health crises, such as suicidal ideations or attempts, present profound challenges, not only for the individuals experiencing them, but also for the families and professionals who provide care. Parents, in particular, often find themselves stepping into the role of a primary healthcare provider when a child returns home from mental health inpatient treatment. Guy Weissinger, PhD, MPhil, RN, the Diane Foley Parrett Endowed Assistant Professor of Nursing at Villanova University’s M. Louise Fitzpatrick College of Nursing, explores the complex challenges parents face during these delicate situations and how the healthcare system can better prepare them for these responsibilities. Dr. Weissinger’s research also emphasizes the need to rethink how educators train and support healthcare providers involved in mental health care and suicide prevention. In a recent conversation, Dr. Weissinger shared insights into his research, the unique roles that parents and nurses have in managing mental health crises and the steps needed to create a more holistic and inclusive approach to care. Q: A large part of your research examines the parents of youth who are experiencing mental health crises. What challenges do parents face when tasked with providing ongoing healthcare for their children who might be facing these issues? Dr. Weissinger: There’s been a lot of recent work looking at how parents can be better supported in any kind of health crisis as their child is experiencing it. At the end of the day, a physician, therapist or nurse practitioner (NP) can support a patient with their clinical expertise in the hospital, but when those patients return home, the responsibility most often falls on the parent to continue that care. If we're then requiring parents to act as case managers and healthcare providers for their children, how can we best equip them to fill those roles? Q: How does a parent’s role in managing a child’s mental health crisis differ from the roles of a physician or therapist? Dr. Weissinger: I studied family intervention science, which looks at both the individual and family processes that may be related to adolescent suicide risk or any other mental health concern, so I like to ask the question: what is this person's role in their family system? Parents oftentimes have a particular role in the family system, and when there's any kind of mental health crisis, that role may have to change: how they act, what tasks they perform, etc. I’m studying the role transition of a parent during a suicide crisis—what are their struggles and what are parents identifying as their big needs? I’m finding that a lot of parents are feeling really alone or shameful in some way, and then they’re using their own money, time or social resources to try to provide care for their child. This often happens because they feel like the mental health system is not providing the support they need to take on that role, so they’re trying to figure out what to do on their own. Q: An additional part of your research surrounds the role of a nurse practitioner in suicide crises. What are some of the findings from your recent research with nurse practitioners (NPs) about their suicide prevention education? Dr. Weissinger: The findings, which will soon be published, are really interesting because they’re very mixed. I went out and asked NPs what they were taught about suicide prevention and when they were taught it as part of their education and training. Some said that their primary care education integrated suicide prevention as a focus of the curriculum. Others mentioned that they didn’t learn about it in their undergraduate or master’s programs, but they’re still expected to know about suicide prevention as part of their job responsibilities. It’s important to highlight these discrepancies and how we need to think about adapting nursing education to include these important topics. Q: What are some of the overlooked responsibilities and challenges of nurses in managing adolescent mental health? Dr. Weissinger: A large percentage of primary care visits are currently conducted by nurse practitioners, and now suicide screenings are expected to be a standard of practice in primary care visits, even though some NPs don't have that specific training. NPs are often left out of consideration and conversation around best practices related to suicide prevention, so we need to make sure that anyone who's conducting these screenings surrounding suicide has the training and the preparation to do so. It's a difficult conversation for NPs to have, especially when they’re working with kids and families. Q: Why is suicide prevention important to study from a nursing lens? Dr. Weissinger: So much mental health research lumps together groups or only studies psychologists and physicians, so a lot of people who provide mental health services or do suicide prevention screenings are left out of these studies. For example, nurses provide a majority of the discharge education on what parents are expected to do at home when a child leaves the hospital—whether that’s administering injections for a child with diabetes or making a house safer for preventing self-harm. Most of the time, a nurse is walking parents through next steps, answering questions and checking in on patient progress. It’s not the psychologists who evaluated the child, or the physicians who decided that the individual needed to be inpatient, it’s the nurses who are providing those points of contact. Q: What do you hope is the main takeaway from your work surrounding mental health and suicide crises? Dr. Weissinger: Suicide is a really complex thing to address, and it needs to be a conversation that isn’t looking for a silver bullet. It’s a conversation that asks the questions: how do we improve the mental health care system? How do we get primary care providers trained and involved in these discussions? How do we best prepare family members to support individuals who are struggling? Not all researchers need to work on every part of this, but it needs to be a total, all-encompassing effort.
Florida Tech’s Pallav Ray Seeks to Improve Accuracy of Rainfall Predictions During Monsoon Season
Growing up in Kolkata, India, Pallav Ray recalls hot spring days leading up to summer’s monsoon season. Temperatures sat above 35 degrees Celsius (95 degrees Fahrenheit), rarely falling below that. When it rained, however, that’s when he could find relief – often by walking barefoot on the cool ground. Now an associate professor of ocean engineering and marine sciences at Florida Tech, Ray studies tropical climate dynamics and their variability using observations, models and theory. His paper, “Rain‐Induced Surface Sensible Heat Flux Reduces Monsoonal Rainfall Over India,” was published in Geophysical Research Letters and highlights research he said was inspired by his childhood in India’s hot climate. His research, funded by the National Oceanic and Atmospheric Administration (NOAA), found that including a variable that is often neglected by climate models could improve the accuracy of rainfall predictions. In turn, that could help agriculture industries better prepare for regional irrigation and flooding during monsoon season. Ray’s climate modeling research spans across the globe, from India, to Chicago, Ill., and most recently the Indo-Pacific Maritime Continent archipelago, which includes countries such as Indonesia and New Guinea. The variable, notated as “Qp,” represents precipitation-induced sensible heat flux, which is a component of surface energy that influences precipitation. It essentially accounts for how precipitation cools land surface temperatures. Qp is calculated using a formula accounting for the specific heat of rainwater, density of rainwater, the rate of rain, surface temperature and the temperature of raindrops when they hit the surface. This variable is important, Ray explained, because the temperature of raindrops is typically cooler than the temperature of the surface, so when it rains, the surface cools down. During monsoon season, land is warm and the ocean is cooler, which pushes moist air from the ocean to the land. The higher the temperature difference between the land and the ocean, the stronger the monsoon because it brings more moisture, Ray explained. In testing Qp, Ray and his team of researchers ran simulations investigating the variable’s role on precipitation. They found that when incorporating it, not only is anticipated precipitation reduced by up to 5% – which he says is a significant reduction – but the models also reflect changes in the spatial distribution of precipitation. “The moment we include that term, it cools down the surface, land surface. The temperature difference is smaller between the land and the ocean,” Ray said. “That reduces the overall precipitation overland because now less moisture is coming from the ocean.” In India, Ray explained, most models, overestimate precipitation. His results generated predictions that were much closer to observed rainfall. He says that inclusion of this variable in common climate models could influence India’s regional agriculture and irrigation strategies. According to Ray, rainfall is closely tied to the India’s industries, especially agriculture. He said the variable may have the greatest impact on seasonal rainfall predictions, which happen months in advance and determine how the country approaches its agricultural practices. Policymakers rely on seasonal rainfall predictions to anticipate and plan for summer monsoons, and the money allocated to deal with excess rainfall is “tremendous,” he said. “If you can do a seasonal prediction a few months in advance and your precipitation actually changed by 5%, it’ll change whether you’ll have an excess year versus you’ll have a deficit year,” Ray said. “I think that’s where the main, major impact is.” In his future research, Ray would like to explore how Qp would impact climate models over urban areas here in Florida. If you're interested in learning more about predicting monsoons and the other fascinating research Pallav Ray is doing at Florida Tech - simply contact Adam Lowenstein, Director of Media Communications at Florida Institute of Technology at adam@fit.edu to arrange an interview today.
ChristianaCare Reduces Health Care Costs by $6.2 Million While Improving Care for Medicaid Patients
ChristianaCare’s Delaware Medicaid Partners Accountable Care Organization (ACO) has set the standard for innovative, high-quality care at lower cost for the State of Delaware’s Medicaid population. According to the most recent data available, ChristianaCare’s ACO reduced health care spending by $6.2 million in 2023 while improving care for nearly 30,000 Medicaid beneficiaries in Delaware, including approximately 8,000 children. “We’re demonstrating that population health works,” said Christine Donohue-Henry, M.D., MBA, chief population health officer, ChristianaCare. “Our neighbors count on us to take care of them — and we can improve their health while also helping the state reduce health care costs. We do this by delivering high-quality care that emphasizes preventive care and proactive management of health conditions, and by investing in our population health infrastructure. “In this way, we can keep people healthier and reduce the need for them to access the most expensive kinds of care, such as emergency care and hospitalization.” ChristianaCare’s Medicaid ACO includes more than 1,900 primary and specialty care clinicians who partner with patients and families to prevent illness, manage chronic diseases and help them achieve their health goals. The ACO makes it easy for adults and children to get the screenings and treatments they need, improving overall health. ChristianaCare’s Medicaid ACO is one of four authorized by the State of Delaware and the only one to voluntarily accept downside financial risk at its launch in 2021, which means that if ChristianaCare’s Medicaid ACO is not successful in reducing cost and improving care for a particular year, the ChristianaCare ACO is required to make a payment to the state. By sharing in both savings and losses, the ACO controls state health care costs while maintaining high-quality care. Bending the Cost Curve by Focusing on High-Quality Preventive Care Alongside financial savings, ChristianaCare’s Medicaid ACO has improved care quality and worked to reduce health disparities. By focusing on preventive care, the ACO has helped adults and children get the screenings and treatment they need, leading to better health outcomes and fewer unmet needs. Since launching in 2021, ChristianaCare’s ACO has met all required quality standards and consistently improved its performance each year on key measures like diabetes management, blood pressure control and breast cancer prevention. Year over year, breast cancer screenings have increased by 4%, while patients with high blood pressure (hypertension) have shown improvement in blood pressure control. Notably, healthy blood sugar levels (HbA1c less than 8%) have also improved in patients with diabetes by 7%. In collaboration with its Medicaid health plan partners, ChristianaCare primary care and imaging teams host patient-centered health and wellness day events to increase access to care, close quality gaps and improve the overall health of the communities they serve. These events help patients get preventive screenings and services, supporting the ACO’s goals of better care and health equity. The ACO’s success is driven by its focus on caring for entire families, including addressing the needs of pregnant mothers and supporting children and adults throughout their lives, according to Rose Kakoza, M.D., MPH, senior clinical network director, ChristianaCare Clinical Alliance. Key programs include enhanced maternity care to support mothers and infants, expanded mental health services and social support programs that address food and housing needs. By integrating clinical care with social support — such as help with food and housing — the ACO is working to break cycles of poor health across generations. This approach also has practical benefits. For example, the improved mental health of a parent strengthens the family environment, supporting children’s well-being and development. “By making significant investments in population health and addressing both medical needs and the social drivers of health, we’ve not only improved health outcomes but also more effectively managed costs for Delaware’s most vulnerable residents, helping to reduce state spending,” Kakoza said. About Delaware Medicaid Partners Delaware Medicaid Partners ACO, led by ChristianaCare, uses a family-centered approach to save money and improve care for Medicaid patients. By combining medical care with social support, the ACO addresses the unique needs of Medicaid patients, improving health and promoting equity. Care coordination is provided by ChristianaCare’s CareVio®, whose team of nurses, social workers, and pharmacists help patients with serious health conditions get the care they need. CareVio uses real-time data to prevent complications that could lead to unnecessary hospital stays or emergency visits. Through ongoing collaboration and innovation, Delaware Medicaid Partners ACO aims to set an example for other states working to improve care while managing costs.
Trump, Trade and Tariffs What to Expect, Will They Work and Who Benefits?
The threat of 25 % tariffs on Canada and Mexico had newsrooms buzzing, politicians scrambling and economists calculating who wins and who loses when trade wars break out among usually amicable neighbors. Factor in Greenland and China - and the story went global. It was a topic that headlined the news as many have watched and waited since the election for President Trump's first days in office to see what the country can expect with incoming policy changes. President Donald Trump said in an Oval Office signing ceremony Monday evening that his administration will impose 25% tariffs on Mexico and Canada on February 1, an extraordinary change in North American trade policy that could raise prices for American consumers. Trump still outlined his broader trade policy for his second term in an executive action Monday. But that action — described by sources as a “placeholder” — doesn’t institute new global tariffs that Trump promised on Day One. As a candidate, Trump proposed sweeping and across-the-board tariffs: up to 20% on imports from all countries, with a 25% tax on goods from Mexico and Canada, plus a punishing 60% levy on goods from China. He also pledged to use tariffs as a negotiating tool on other countries, including, for example, Denmark — putting pressure on the European nation to give control of Greenland to the United States. Asked Monday at an Oval Office signing ceremony about tariffs on China, Trump noted extensive tariffs he imposed during his first administration were still in effect after former President Joe Biden largely left them in place. And on universal tariffs, Trump punted, saying, “We may, but we’re not ready for that just yet.” The executive action signed Monday directed the secretaries of Commerce and Treasury and the United States Trade Representative to investigate the causes of America’s trade deficits with foreign nations, to determine how to build an “External Revenue Service” to collect tariffs, to identify unfair trade practices and to review existing trade agreements for potential improvements. It also directs the government agencies to analyze how the US-Mexico-Canada trade agreement (the USMCA) signed by Trump in his first term is affecting American workers and businesses — and whether America should remain in the free trade agreement. January 21 - CNN As business and political leaders in many countries, especially North America wait for what's ahead, there are questions to be asked: What industries will be targeted? Will tariffs cause higher prices for consumers and increased inflation? Who wins if an all-out trade war happens? How will interwoven sectors like the auto industry and agriculture be impacted? If you're a journalist covering this ongoing story - then let us help. William J. Luther, Ph.D., is an associate professor of economics at Florida Atlantic University, director of the American Institute for Economic Research’s Sound Money Project, and an adjunct scholar with the Cato Institute’s Center for Monetary and Financial Alternatives William is available to speak with media. Simply click on his icon now to arrange an interview today.
President-Elect Trump Receives Unconditional Discharge in Hush Money Case
Professor of Constitutional Law James Sample was interviewed by Courthouse News Service and WCBS-TV about President-elect Donald Trump receiving an unconditional discharge as a symbolic sentence in his “hush money” case in New York City.
Nosferatu - Why Do Audiences Keep Coming Back for an Updated Classic?
It's the latest take on an old classic. Nosferatu took the Christmas box office by storm and might be the first time a vampire movie dominated the traditional holiday cinema season that's usually family friendly and purposely 'PG'. Even the critics agree that this new take on an old classic was worth the 'bite'. An adaptation of F.W. Murnau’s 1922 silent nightmare (which itself was based on Bram Stoker’s novel Dracula and remade once before, in 1979, by Werner Herzog), Nosferatu recounts the tale of a most devious Count: Orlok (Bill Skarsgård), who strives to reach Europe’s shores by purchasing an aged manor house by way of a deal solidified with real estate agent Thomas Hutter (Nicholas Hoult). Yet Orlok isn’t interested in seeing Germany’s tourist sights—his true goal is reuniting with Ellen Hutter (Lily-Rose Depp), Thomas’ bride, who called out to him as a girl and, in doing so, created a wicked bond that strengthens by the day. As imagined by Eggers and Skarsgård, the vampiric fiend is a towering figure of corruption and carnality who both resembles his predecessors and is a unique monster in his own right, and his reign of terror plays out via a series of lush, hypnotic set pieces that resound with unnerving malice and profane perversity. January - The Daily Beast Horror movies have always had a certain allure for audiences, but there a re a few questions to ask: What does this story have that makes it possible to be remade over and over and still stay entertaining? What is it about vampires in particular that are linked to romance? As well, why do we pay money to be scared and why is this genre so popular and lasting? If you're covering this particular film or movies in general - then let us help with your questions and stories. James Kendrick is a professor and undergraduate program director in the Department of Film & Digital Media at Baylor University, where he teaches about film theory/aesthetics, the history of motion pictures, media and society, the films of Steven Spielberg, violence in the media, and horror film. James Kendrick is available to speak with media. In fact, Nosferatu is James' favorite movie, so simply click on his icon now to arrange an interview time today.
New Year's Resolutions: Why they fail and how we can stick to them
By now, most people have already made their New Year's resolutions and (hopefully) put them into practice. But most people — about 90% — give up on them within the first few weeks of the year. University of Delaware experts dig into the psychology behind why resolutions fail and offer a recipe for success. The timing of New Year’s resolutions also isn’t always ideal. According to Philip Gable, professor in the Department of Psychological and Brain Sciences, a lack of commitment is one reason why many people fail to achieve their goals. “New Year's resolutions sometimes lack in commitment,” he said. “It's just this time of year when people feel like they should make a resolution, as opposed to other times in the year when it's less common but maybe more meaningful, like if you get a doctor's report and realize you need to change that aspect of your life.” In order to be part of the 10% of people who keep their New Year’s resolutions, Gable said to break down big goals into small, achievable steps. “I think a lot of times with goals, people will commit to a very big goal and not realize the smaller steps they need to take to achieve that goal,” Gable said. “If we have too big of a goal, we get emotionally distressed when we can't do it, or we fail because we set too big of a goal. Or maybe we couldn't think through all of the elements required to meet that really big goal. So starting small gives us something achievable, and then that gives you a platform to go to the next thing.” Naomi Sadeh, associate professor in the Department of Psychological and Brain Sciences at the University of Delaware, said that part of the reason it’s so hard to make long-term changes is that humans are wired to prioritize instant gratification over delayed rewards. In other words, when posed with an option, we tend to pick the easy choice with an immediate outcome to satisfy a need today instead of delaying gratification for a bigger reward — we splurge on items we don’t really need instead of saving money, order takeout instead of cooking a healthy meal, or binge-watch a TV show instead of going to the gym. “With impulsivity and with breaking New Year's resolutions, often it's when people tend to opt for that sooner, smaller reward over the longer, bigger reward,” Sadeh said. “The sooner reward is really tempting, even if it's not as satisfying in the long run as the longer goal or bigger goal that you had.” When people set goals, they tend to feel very motivated for a few days and falsely assume they’re committed to their goal. But as soon as that motivation wears off, they give up. “There's potentially a mismatch in the timing of your goals,” said Rob West, interim chair and professor in the Department of Psychological and Brain Sciences. “Your goals are immediate, they're conscious, they're volitional. You have those in the moment, and they can be developed and abandoned quickly. But habits take a considerable amount of time and repetition.” To connect directly with Gable, visit his profile and click on the connect button. Interviews with other researchers can be arranged by contacting UD's Media Relations department.
Drops in the Bank of Canada rate will not solve housing affordability.
Summary: The Bank of Canada’s interest rate cuts won’t resolve Canada’s housing affordability crisis. Factors such as skyrocketing home prices, unaffordable down payments, and stagnant wage growth are other primary challenges to address. A personal example offered by the author shows how the price of her Toronto home surged over 1,000% from 1983 and 2024 while her wages during the same period rose only 142%. While some see this issue as a consequence of Baby Boomers remaining in their homes, it's more nuanced than that. We have systemic barriers in Canada that necessitate targeted policy changes. It’s time to tackle affordability and implement effective solutions. The Bank of Canada met today, to determine interest rates for the last time this year. They announced a drop of .50 basis points. This is part of a broader effort to stimulate economic growth in Canada, which faces challenges, especially a softening labor market and persistent inflation. Why Should You Care? Interest rates determine how affordable our debt will be and what return we can expect on our savings. Since mortgages represent most consumer debt, interest rates directly impact affordable housing costs, making them very newsworthy. However, interest rates only tell part of the story. When the Bank of Canada lowers its rate, it primarily impacts variable-rate mortgages. These are tied directly to the BoC's overnight rate, so a rate cut can reduce the interest costs on these loans. Homeowners with variable rates would likely see a reduction in their payments, with more of their payments going toward principal rather than interest. People without debt and savings (primarily seniors) will see a drop in their investment returns. In contrast, fixed-rate mortgages, which are not directly tied to the BoC's rate, are influenced more by the bond market, particularly the 5-year government bond yield. The current trend in bond yields suggests that fixed mortgage rates could also decrease over time. Let’s pause here and talk about the affordability of houses and how interest rates are not the reason housing is out of reach for most first-time buyers. A walk down memory lane might offer some perspective. I purchased my first home in the fall of 1983 for $63,500 (insert head shake). I was 27 years old, and before you do the math, yes, I am a Baby Boomer. My first serious (so I thought) live-together relationship had just ended, and I was looking for a place to live. I had finished school and had a good full-time job with Bell Canada. A rental would have been preferred, except I had a dog. Someone suggested that I buy a home. I did not know very much about purchasing real estate or homeownership, for that matter. But I was young and willing to learn. I had been working full-time for two and a half years. During my orientation at Bell Canada, my supervisor told me to sign up for their stock option program. She said I would never miss the money or regret signing up for the plan. She was right. When I purchased my home, there was enough money in my stock account for a down payment and closing costs. My interest rate was a terrifying 12.75%, yielding a mortgage payment of just under $670 monthly. The lender deemed this affordable based on my $18,000 annual wage. Life was good. This was in 1983, when the minimum down payment for a home purchase in Canada was typically 10% for most buyers. However, a lower down payment could be possible with mortgage insurance (provided by organizations like Canada Mortgage Housing Corporation (CMHC), which allowed buyers to put down as little as 5%, provided they qualified for insurance. This was commonly available for homes under $150,000, with stricter terms for higher-priced homes. If you had a higher down payment of 25% or more, mortgage insurance wasn't required, and you could avoid extra costs associated with insured mortgages. This was part of broader efforts by the government to make homeownership more accessible, especially amid the high interest rates of the time. So let's do the math. Circa 1983 I first needed to prove that I had saved $3,175 in down payments and $953 in closing costs for $4128. In the 2.5 years I worked at Bell Canada, I saved $4,050 (including Bell Canada’s contribution) in stocks. I also had another $5,000 in my savings account. $9,000 was enough to complete the transaction and leave me with a healthy safety net. Fast forward to 2024 Let’s compare what the same transaction would look like today. Using the annual housing increase cited on the CREA website, the same house would be valued at approximately $700,000 today. Interest rates are much lower today, at 4.24%, yielding a mortgage payment of $3,545. 1. The down payment rules have changed. For the first $500,000, The minimum down payment is 5%. 5% X 500,000=25,0005\% \times 500,000 = 25,0005% X 500,000 = $25,000 2. The minimum down payment for the portion above $500,000 is 10%. 10% X (700,000−500,000) = 20,00010\% \times (700,000 - 500,000) = 20,00010% X (700,000−500,000) = $20,000 3. Total minimum down payment: 25,000+20,000 =4 5,00025,000 + 20,000 = 45,00025,000+20,000 = $45,000 Thus, the minimum down payment for a $700,000 home is $45,000. Here is the comparison: 1983 Scenario 2024 Scenario Variance Purchase Price: $63,500 $700,000 up 1002% Down Payment: $3,175 $45,000 up 1317% Loan Amount: $60,325 $655,000 up 986% Interest Rate: 12.75% 4.24% down 200% Monthly Mortgage Payment: $670 $3,545 up 429% Wage: $18,000 $43,500 up 142% Gross Debt Service Ratio: 44.6% 97.8% up 119% Time to Save for Down payment: 2 years 12.4 years up 520% *Please note that this example does not include mortgage insurance The real problem As you can see, housing was much more affordable for me in 1983 and far from cheap in 2024. During the past 41 years, wages have increased by 142%, yet interest rates have dropped by 200%. But the most significant impact on affordability has been the over 1,000% increase in housing prices. So why is all the focus on interest rates? At the risk of oversimplifying a complicated issue, I believe the media often uses interest rates as a "shiny penny" to capture attention, diverting focus from deeper housing affordability issues. This keeps the spotlight on inflation and monetary policy, aligning with economic agendas while ignoring systemic problems like down payment barriers and the shortage of affordable homes. Indeed, a movement in interest rates often has an immediate and noticeable impact on borrowers' affordability, making it a hot topic for news and policymakers. However, the frequency and consistency of the Bank of Canada meetings on interest rates give the impression that rates are the primary issue, even though they are just one part of a complex system. For example, even if the Bank of Canada dropped interest rates below zero, it would do little to solve today’s homeownership affordability issue. The real problems: 1. Down Payment Challenges: With housing prices skyrocketing, the 5%- 20% down payment required has become insurmountable for many, particularly younger buyers. High rents, stagnant wage growth relative to home prices, and rising living costs make saving nearly impossible. 2. Lack of Affordable Starter Homes: Due to profitability and zoning restrictions, housing developments often prioritize larger, higher-margin homes or luxury condos over affordable single-family starter homes. 3. Misplaced Generational Blame: Blaming Baby Boomers for "holding onto homes" oversimplifies the issue. They are staying put due to limited downsizing options, emotional attachments, or the need for housing stability in retirement, not a desire to thwart younger generations. 4. Political Challenges: Addressing structural issues like zoning reform or incentivizing affordable housing construction requires political will and collaboration, which can be slow and contentious. A broader lens is needed to understand and address the actual barriers to home ownership. Interest drops are merely a band-aid solution that misses the central issue of saving a down payment. The suggestion that we have an intergenerational issue needs to be revised. The fact that Baby Boomers are holding on to their homes should not surprise anyone. However, Real Estate models that predicted copious numbers of Baby Boomers selling their homes to downsize got it wrong. Downsizing was a concept conceived in the 1980s. Unfortunately, it did not account for record-setting home price increases or inflation, leaving it undesirable for today’s seniors. Although this is a complex issue, a few suggested solutions are worth exploring. What can be done? Focus on Policy Innovations: To create housing, increase supply, curb speculative investments, and provide targeted assistance for builders to build modest starter homes. To create rentals, homeowners should also receive income tax incentives to build Accessory Dwelling Units (ADUs). These could be used as affordable rentals or to house caregivers for senior homeowners. Today, The federal government announced a doubling of its Secondary Suite Loan Program, initially unveiled in the April 2024 budget. This is a massive step in the right direction. To create down payments, adopt a policy allowing first-time home buyers to avoid paying tax on their first $250,000 of income. Then, they could use the tax savings as a down payment. Focus on Education and Advocacy: Include a warning that helps consumers understand that withdrawing from RSPs results in a significant loss of compound interest related to withdrawals and how this can harm income during retirement. Encourage early inheritance to create gifted down payments. Normalize the concept by emphasizing the benefits to the giver and the receiver. Educate the public on using financial equity safely and create down payments as an early inheritance for their heirs. This will shift the conversation and initiate an intergenerational transfer of wealth that empowers the next generation to own a home. The Bottom Line While the Bank of Canada interest rate cut may ease some financial strain for homeowners with variable-rate mortgages, it will do little to address the core issue of housing affordability. The media's fixation on interest rates as a "shiny penny" distracts from more profound systemic barriers, such as the inability to save for a down payment and the lack of affordable housing stock. These challenges require targeted policies, structural reforms, and intergenerational collaboration to be tackled effectively. The focus must shift from short-term rate adjustments to long-term solutions that prioritize accessibility and affordability in housing. Without meaningful action, homeownership will remain out of reach for many, perpetuating the cycle of financial inequity across generations. Dont't Retire... Re-Wire! Sue
Humans have long taken inspiration from the natural world. From the indigenous cultures of the world who understand and utilize the properties of plant and animal products, to Leonardo da Vinci’s “flying machine” sketches inspired by his observations of flying birds, humankind has often looked to nature to help solve its problems and drive innovation. With rapid scientific advancements of the 19th and 20th centuries, and the exponential growth of sustainability practices over the last quarter century, the concepts of bio-inspired design and biomimicry have been increasingly pursued across myriad disciplines of study and implementation. Alyssa Stark, PhD, associate professor of biology at Villanova University, is one of the “boots-on-the-ground” researchers in pursuit of nature’s solutions to human problems. She recently took the time to chat with us about these fields, her research interests and the future of biomimicry. Villanova PR: We sometimes hear the terms “bio-inspired design” and “biomimicry” used interchangeably. Are they the same concept? Alyssa Stark: I see those as two different things. Bio-inspired design is when we are looking at an organism and see that it’s doing something that we want to emulate as humans. I work with animals that have unique adhesive properties. I ask questions like: Can we see that? Can we build it? Can we transfer that information, those ideas, those principles – it could be chemistry, physics, biological structure – and make something useful for us? That is also true with biomimicry, but the big difference for me is that we're keeping in mind the sustainability components. The natural world is not polluting. If we're using this biomimicry lens, how do we learn from nature to make products or solve problems in a sustainable way, keeping in mind the specific environment in which we are located? As an example, we wouldn't use a heavy water process if we were in the Arizona desert, instead we should look to our immediate surroundings to solve problems. PR: It seems the work going on in this field really takes a unique level of interdisciplinary collaboration. What types of different professionals are working in biomimicry? AS: It really pulls together biologists, engineers, physicists, chemists, even design artists and businesspeople. I've worked with a lot of different businesses that want to have sustainability in their company at broad levels by using biomimicry. They are not motivated by making a cool product, but realizing it actually saves them money if they think about their whole company in a biomimetic perspective. There are people who work on the social side of biomimicry, helping these companies completely restructure themselves to be more efficient and more time and money sensitive, without ever making a product. But of course, products are a huge part of it, too. And to make that happen, all of those professions, and more, are vital and active in this space. PR: In terms of products, what are some of the most successful examples of biomimetic designs being implemented? AS: A classic one is a building in Africa that doesn't have any air conditioning units because it has a series of vents like a termite mound. Or the bullet train being shaped like a kingfisher’s beak. One scientist found that whales have bumps on their fins, which you might think is not hydrodynamic. But as it turns out, it actually cuts through water more efficiently by creating little vortices. This concept was then applied to wind turbines. There are many examples of biomimicry actually working and being used. My mind is blown when I talk to an artist or designer about biomimicry because it's just wild the way they think. PR: Where does your overall work as a biologist fit into the world of biomimicry? AS: My hard science work is very much functional morphology – shape and structure of things and how they function. That includes behavior and their organismal interaction with the environment. I ask questions like: How do their structures function and perform? How sticky are they? How fast are they? How do they behave in their environment? What happens if they hit different challenges in their environment? My work kind of naturally fits well with biomimicry, especially for product development. I observe the natural world and then I start testing questions and predictions that I have about it, like figuring out how the heck this ant is sticking to this wet leaf. My results can then be applied directly. We have to first understand how these organisms work, and then others can run with it to try to put it to use. PR: What organisms do you work with and what about them are you studying? AS: I mostly study geckos, ants, and sea urchins and I just started working with some coral, looking at why some coral undergo bleaching, and some don’t. With sea urchins, we're also figuring out where their incredibly hard teeth are mineralized so we can understand it enough to try to mimic it. I like playing in that zone, because it still provides me a chance to do the hard science, but also talk to engineers and others and provide them information. With geckos, what I kind of broke open with my PhD thesis was that they have an adhesive that works in wet environments. Having a reusable adhesive that can work on skin, especially in the medical world, is a big problem and where most of my research lies. Think of a bug that you can’t pry off, but then it suddenly runs. How do these organisms move with such sticky feet? Figuring out how to make a reusable adhesive that doesn’t get dirty and can handle all these different environments is a difficult problem to solve. PR: How do you see this field evolving, especially as we strive for a greener, more sustainable future? AS: I would say the next step is the social levels of these big ecosystems. How do we build a city that functions like a rainforest or like a coral reef? Not just a product, but how do we actually shape our world by taking behaviors, processes, or systems that we see in the natural world to help us? Look at a pride of lions and their hierarchy, or what kind of feedback loops are there in an ant colony that allow them to give information back to their colony members quickly and share resources. I think that is the future of this field, and it’s an exciting future. *To learn more about Dr. Stark’s research and the field of biomimicry, click here to listen to a recent episode of NPR’s science show, “The Pulse.”