Drops in the Bank of Canada rate will not solve housing affordability.

Spoiler Alert: The problem isn't just about interest rates

Dec 11, 2024

7 min

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

Find Experts

Aug 19, 2026

8 min

The MBA Halftime Show

Every football game has a moment when the players jog off, the field goes dark, and everyone wants to see what the halftime show will bring. My version came without a marching band or a surprise appearance by Beyoncé. Apparently, at seventy years old and doing my MBA (Yes, this is part IV of a series, links to Part I, II and III), halftime entertainment means staring at your grades, reviewing the game film, and asking yourself one honest question: what have you actually learned? Twelve courses down. Twelve to go. I am at that exact point, catching my breath, and somewhere in the distance I can hear the crowd murmuring, "Is she going to slow down now?" Spoiler alert: no. But let me show you the film first. The first half taught me a few things I did not expect. Technology and I reached an uneasy truce. Brightspace, Carleton University’s online Learning Management system, no longer feels like a hostage negotiation. I can upload a file, format a citation, and navigate a discussion board without a quick prayer beforehand. I would not call us friends, but we can now be left alone in the same room. Group work stopped being terrifying, too, once I understood something I probably should have known after decades in business: most people, students very much included, want to do their best work with the least effort required to get there. It used to sound like an insult. Now it strikes me as the most honest description of how most of us move through life, and in a program with this much content to cover, it is less a character flaw and more a survival strategy everyone quietly agrees to. If I had to pick one night that captures the whole term, it would be the one at ten o'clock, alone in my office, wrestling with an IEEE-formatted statistics report. The references would not cooperate. The formatting seemed to have developed free will, moving when I did not ask it to and refusing to move when I did. My dog Dottie had already gone to bed, which, from her, is roughly the equivalent of a slammed door. What made that night worse was that I was still stinging from a C+ in Financial Accounting. I wish I could tell you I shrugged it off with the wisdom of a mature student. I did not. When the grade first posted, I sat with the portal open for a good ten minutes, refreshing it as though the university might suddenly announce, "Our mistake, Sue. Clearly an A." No such luck. The grade stung more than I expected, and I carried some of that venom into the next course. Somewhere between the misbehaving references and the formatting that refused to cooperate, I realized I was not actually angry at the report. I was doubting myself. That C+ had cracked open a little door I suspect we all carry somewhere inside us, the one self-doubt likes to slip through when nobody is watching. Funny how quickly one lousy grade and a badly behaved reference list can turn into a full existential crisis at 10pm on a Tuesday. Even C's get degrees I kept going anyway and eventually fixed the report. Not gracefully. Not quickly. But I fixed it, closed the laptop, and sat in the dark for a minute, oddly proud of myself over a reference list. That was when the mantra found me again. Even C's get degrees. A friend handed me that one over a year ago, and it has never let me down, mostly because it keeps reminding me that the goal was never a perfect transcript. The goal was to stay in the game. Here is the adjustment I did not see coming. Business school quietly rewired how I make decisions. Full stop. Every decision, including coursework. The MBA program has an annoying habit of asking for evidence. Apparently, "it felt like a good idea at the time" is not an accepted decision-making framework. Who knew? Decades in sales and business taught me to read people, situations, and opportunities quickly, and I still trust that instinct. I just make it work harder now. I review the evidence, clarify what I am trying to accomplish, and ask whether the decision moves me closer to it. I used to pick a vacation package the way most people do. I looked at the brochure, felt something, booked it, and occasionally arrived to discover the "ocean view" required a telescope and a great deal of optimism. I still let myself feel the brochure, but now I also run the numbers, location, reviews, and value relative to cost. Whether it fits what I am trying to accomplish on this trip, rather than the fantasy I had while sitting on my couch. It has also taught me the difference between fear and desire, which sounds very self-helpy for a business degree. Stay with me. Demons run faster than dreams. Fear is fast. Give it half a chance, and it will make the decision before desire has even found its shoes. It tells you not to take the course, introduce your self to a stranger, or book the trip. Not to have the hard conversation. Not to risk looking foolish. As we get older, fear gets clever. It learns to dress itself up as common sense: be careful, be realistic, maybe it's time to slow down, don’t risk. I am learning to ask which one is driving before I commit to anything. A trip. A course load. A conversation I have been avoiding. Somewhere in all of this, I picked up a rule I am borrowing for the rest of my life: know when to stub your toe and when to put on safety boots. Some decisions can survive a little recklessness, the kind where you bump into the coffee table, yelp, and carry on with your evening. Others need the boots laced up before you take a single step. I am also in no hurry to rush toward a tub that enters from the side, thank you very much. That purchase can wait a decade or two. Caution has its place; it just does not get to run my whole calendar yet. The competition for my attention did not step aside just because I enrolled in school. Family wants time. Travel wants planning. Fitness classes want me to learn near choreography. My retirement advocacy wants everything I have left after that, plus a little more it did not ask permission for. Juggling it all has required negotiation skills I learned from a ten-pound dog. Dottie never begs or nags. She picks the one thing she wants, plants herself by the door, and waits, calm and immovable, until it happens. Everything else in the house can carry on without her weighing in. I am trying to negotiate my own priorities the same way. Decide what matters this week. Plant myself there. Let the rest of the noise wait its turn at the door. There is a voice in me that insists I should be doing it all, all the time, at full volume. This new way of deciding has meant learning the difference between what I want and what simply keeps me busy and conveniently away from the things that matter more. If I am being truthful, some of that motion is me pushing back against getting older, trying to prove something, mostly to myself. I have not figured out the balance yet, but at least I am aware enough to keep asking the question. Retirement, as a word, comes loaded with baggage. For most people, retirement still means earned rest, a slower pace, the right to finally exhale. For me, it has meant speeding up. Saying yes to things I never had time for. Treating this next chapter like an accelerator somebody left floored. People ask me, gently and sometimes not so gently, whether I am planning to slow down. I think some of them are really asking whether it is acceptable for them to slow down, and they are hoping I will give them permission. Of course you can. But I suspect others are quietly wondering the opposite, whether they are still allowed to speed up. Again, absolutely. So here it is, freely given, however you need it. Slow down. Speed up. Do some of both and change your mind next Tuesday. Take up Pickleball, or refuse to pick up a paddle just because apparently everyone over sixty has been issued one. Retire your way, not the way the world has always been sold to you. The only permission that truly matters is the one you give yourself. I have more years behind me than ahead of me now, which strikes me as a particularly good reason not to let fear decide what I do with the ones I have left. Most of us compare ourselves to people in similar circumstances. It is useful until it convinces you there is only one correct way to do this. I have never been particularly good at conforming, and it has always clashed with most of my outfits. There is an elective I keep hoping to find in this MBA, the one that teaches that ambition and quiet contentment can share a syllabus. Have not found it yet. Would sign up in a heartbeat. So here is where I stand at the halfway mark. My average has settled at an A- (that’s a minus, not an em dash. Take that Pangram!) This grade still surprises me every time I refresh the grade portal, the same one that put me through those ten rough minutes in Financial Accounting. But the transcript is not really the story. I am not just learning finance, statistics, and marketing. I am getting better at deciding what truly deserves my time, my energy, and, increasingly, the years still ahead of me. Already using the playbook for vacations, for priorities, and for what earns a spot on my calendar and what gets quietly cut. If you are somewhere in your own halftime, take the ten minutes the C+ asked of me. Let the sting have its moment. Mine reminded me that self-doubt can show up at any age. Fortunately, so can the determination to tell it to get lost. Then get back to writing your second half. The halftime show is supposed to be the big spectacle everyone remembers, with fireworks, a surprise guest, the works. I used to think I was waiting for my own JLo and Shakira moment, a grand, glittering proof that all this effort adds up to something spectacular. I do not think that is coming, and I have made my peace with it. That spectacle belongs to somebody else's show. Mine is different. In the second half, I am just calling my own plays, one deliberate decision at a time, with a ten-pound dog refereeing from the sidelines and no patience for a false start. Not to be outdone by JLo, my MBA halftime show featured its own wardrobe malfunction. My costume never slipped on live television. Instead, I changed out of a sixty-nine-year-old outfit called Perfection and into something that fits: my own judgment, a mantra with some mileage on it, and whatever grade shows up next. All out in the open for anyone to see. Cameras can roll. So, second half. Still curious. Occasionally humbled. Considerably less afraid of a C+ than I was a few weeks ago. There is still time on the clock, and I intend to use every last minute. Don't Retire… ReWire! Sue My Book is Available for Pre-Order I hope you will consider pre-ordering a copy of Your Retirement Reset for you, a friend or loved one. It's available September 29, 2026 published by ECW Press - You can now order at Indigo or Amazon. And if you love supporting Canadian booksellers, please also check with your local independent bookstore. Most can easily order it for you.

Aug 12, 2026

9 min

The Tipping Point: How Gratitude Grew into a Guilt Trip (and How to Get Off It)

My dog Dottie is, and I say this with love, a con artist in a fur coat. She has trained me to hand over a treat every time she sits, spins, or simply exists in my general direction, those big brown eyes fixed on me. If I hesitate even three seconds, she tilts her head and stares at me as if I have personally bankrupted her. I always fold. It turns out that I am not the only sucker for this routine. These days, entire industries have figured out that if you make a person stand there long enough while a screen stares back at them, they will fold too. Except instead of a milk bone, they want eighteen to twenty-two percent of your bill, and instead of a good girl, you get a receipt. Welcome to modern tipping culture, where a simple thank-you has somehow become a math test administered under duress, with a cashier watching as you decide, and somewhere behind the screen, a very deliberate mind has already worked out exactly how to nudge your answer higher. A Short History of Guilt with Percentages Tipping began as a compliment, not a demand. Historians trace it to a Tudor England custom called a vail, in which a noble slipped an extra coin to a servant for going above and beyond (Blueprint Financial, 2024). North America initially wanted nothing to do with it, meeting tipping's arrival in the late 1800s with the kind of suspicion usually reserved for chain letters. Americans who travelled to Europe came home grumbling about being nickeled and dimed by porters and waitstaff, and in 1884 the New York Times ran an editorial calling English-style tipping downright un-American (Mentzer, 2013). Between 1909 and 1915, six American states banned tipping outright, but it did not work. Tipping also has a less charming cousin: bribery, extra money paid in advance for special treatment, a jump on the waitlist, or a better table, not a reward for service already rendered. That is also roughly where the phrase "nickel and dimed" comes from, back when tipping meant tossing a server the smallest coins in your pocket. These days, the phrase seems to describe the opposite, a whole system of small additions that always land in the business's favour. Researchers who study why people tip find that the reasons run deeper than economics. One ethnographic study of servers and diners in Vancouver found that people tip for good service, to follow the social norm, out of sympathy, to signal status, or to lock in a preference for next time. Tipping has never been just a transaction; it has always been part performance and part quiet social contract, which is probably why opting out feels so uncomfortable. Then Tipping Went on a Growth Spurt Fifteen percent used to be the polite standard and twenty percent was for showing off. That range has crept steadily upward. Canadians now commonly tip eighteen to twenty percent at restaurants, bars and at hair salons. Even coffee shops and fast-food counters are edging toward five to fifteen percent as digital prompts normalize the ask (Blueprint Financial, 2024). Nearly two thirds of Canadians say they feel pressured to tip more than they used to, and the share tipping twenty percent or higher has more than doubled in under a decade (Blueprint Financial, 2024). In the US food industry alone, tipping adds up to an estimated forty-seven billion dollars a year (Azar, 2011), proof that this habit is not shrinking on its own. The Power of Suggestion (and the Screen That Stares Back) Once you know the tactics at play, it becomes easier to push back without guilt. The first is plain old anchoring. When a screen offers eighteen, twenty, and twenty-five percent as your only real options, your brain quietly narrows its sense of what is normal to fit that range, even if fifteen felt generous a few years ago. The second is assumptive closing, a sales trick in which, instead of asking whether you would like to tip, the screen assumes you already said yes and only asks how much, with the highest number often listed first or made visually larger. The third is technology itself, which makes the ask frictionless in places it never used to be, a tap and a swivel where someone just handed you a bag. And the fourth is old-fashioned shaming, the discomfort of picking a lower number while the cashier watches your thumb hover over the screen. If this sounds suspiciously like how Dottie gets her treats, that is because it is the same playbook. Offer a limited set of flattering options, stand there expectantly, and let the silence do the persuading. Research shows this tip-screen genuinely works, boosting tips by fifteen to thirty percent compared with a plain jar on the counter, largely because people gravitate to the middle option and nobody wants to look cheap in front of an audience (GlobalTill, 2026). One Toronto bakery owner told CBC that customers get visibly upset just being asked, even with signs posted that tips are not expected (CBC, 2022). University of Saskatchewan professor Marc Mentzer called the whole system a human rights catastrophe we are simply stuck with (CBC, 2022). None of these four tactics are about rewarding good service. They are behavioural design, and once named, they lose a surprising amount of power over you. Then the Pandemic Showed Up and Ruined Math for Everyone It is worth remembering why this all accelerated, because the original impulse was genuinely kind. When the pandemic hit, restaurant workers were being laid off and dining rooms were closed. Tipping generously was in solidarity, meant as temporary help during a crisis. Except it did not stay temporary, and that part was not really an accident either. Once businesses saw customers would tolerate a higher default tip during a crisis, many kept it in place long after. What began as compassion got hardwired into the software as the new normal, with no memo ever announcing that the emergency measure was now permanent. And Then Delivery Apps Moved the Tip Jar to Before Dinner Even Arrives Just as the tip screen had already rewired one part of the routine, delivery apps quietly rewired another. With services like Uber Eats and Skip the Dishes, you are asked to tip before your food has even left the restaurant, a bit like tipping a movie based on the trailer. The gratuity is baked into checkout, so what used to be a reward for good service becomes a pre-negotiated cost of doing business from your couch. Drivers often rely on that upfront tip because base pay per delivery is thin, meaning customers are subsidizing wages before a single doorbell rings, tipping blind. Wait, What? Are We Tipping the Government Too? If the delivery app section left you feeling like every corner of a transaction has been quietly monetized, buckle up, because there is one more layer nobody warns you about. Tipping etiquette has always technically called for calculating your percentage on the pre-tax total, but the machine does not know or care about etiquette. It simply applies a percentage to whatever total is on the screen, tax already included. So, the moment you tap one of those preset percentage buttons, you are effectively handing your server a tip on the government's cut of the meal too, not just on your food. The good news is the money itself still goes straight to the server, not to the government (phew). A flat twenty percent tip, calculated the way the machine calculates it, works out closer to twenty-two percent in provinces with a combined sales tax around thirteen percent, a touch less where the tax rate is lower, once the tax already baked into that total gets factored in (ouch). Let that marinate for a second. You went in planning to leave twenty and walked out having left twenty-two. When There Was No Service to Begin With And then there is the increasingly common experience of being asked to tip somewhere where no actual service happened. The dry cleaners. Seriously? You hand over a bag of shirts, come back two days later, and someone hands you the same shirts on a hanger, and now there is a tip screen. Insert the mother of all eye rolls. Nobody brought anything to a table; nobody checked on you twice. The job was already priced into what you paid. This is the moment tipping stops being gratitude and starts being a business outsourcing payroll onto customers who never agreed to it. Let's Talk About What This Does to Seniors This part matters to me personally, since I spend my days helping retirees stretch every dollar with intention. Tipping fatigue hits seniors differently and being asked to add another eighteen to twenty-two percent to everyday errands can feel less like generosity and more like an unplanned pop quiz. I have heard from clients who now avoid certain errands or choose a drive-through, specifically to sidestep the awkward prompt. Seventy-three percent of Canadians already believe tipping lets employers get away with underpaying staff, and fifty-nine percent would rather see fair wages built into prices than keep gambling on tip guilt (Blueprint Financial, 2024). If tipping anxiety is nudging older adults toward staying home instead of enjoying a coffee with a friend, this so-called social norm is quietly chipping away at connection, not what any of us want for our golden years. This is not strictly a seniors’ problem either. Many people across every age group now quietly admit to choosing pickup over dine-in, skipping a small business altogether, or simply going out less, purely to avoid the awkward math of a screen and an audience. The difference for seniors is that the squeeze lands on top of a fixed income and a lifetime of budgeting habits that never had to account for an eighteen percent surcharge for saying yes to a friend's invitation. Maybe It Is Time for a Cash Tip Movement Here is an idea worth trying and sharing with your friends. The next time the screen swivels toward you, select no tip (usually tucked into the custom tip section rather than sitting out with the percentage buttons), pay the bill, and leave whatever cash tip you want directly on the table or in the jar afterward. To be clear, this is not about skipping the tip; it is about choosing how and when you deliver it. The server still gets paid fairly, just without a screen and an audience deciding for you. That one move sidesteps the anchoring, the assumptive question, the audience, and the algorithm quietly nudging the suggested amount upward. You decide the amount in private, hand it over with a genuine thank you, and walk out having tipped exactly what you meant to, power fully intact. If anyone asks why you skipped the prompt, just smile and say you do not tip machines; you tip people. This is also a great excuse to talk about it with your people. Ask your friends what they tip and why and figure out together where you all want to draw the line. Strength in numbers works on tipping the same way it works on everything else. Taking Back the Tipping Wheel A couple of practical notes before the cheat sheet below. Most screens that appear to offer only percentages hide a custom tip option that lets you enter zero or a flat dollar amount. It is worth finding, since a flat five dollars does not creep upward the way twenty percent does as prices rise. What to Tip, By Service Tipping Around the World Check Please! At the end of the day, tipping culture can feel like a money furnace, quietly burning through your paycheque, one percentage point at a time, while insisting the whole thing was your idea. And when the topic is your own money and your own life, also known around here as YMYL, letting action absorb anxiety beats letting anxiety run the show every time. Decide your numbers ahead of time, carry a bit of cash, ask a friend what they think, and stop apologizing for wanting a system that rewards real effort rather than clever design. Dottie has never apologized for expecting a treat, and to be fair, she earns hers. A screen swivelling toward you over a bagel has not. Tipping began as a genuine thank-you for genuine effort, so keep it simple. Decide your number before the screen decides it for you and save the big percentages for those who earned them. Next time that screen stares you down for twenty-two percent, channel your inner Dottie: sit, stay, and reward only the performance that deserves it. Don't Retire…ReWire! Sue My Book is Now Available for Pre-Order I hope you will consider pre-ordering a copy of Your Retirement Reset for you, a friend or loved one. It's available September 29, 2026 published by ECW Press - You can now order at Indigo or Amazon. And if you love supporting Canadian booksellers, please also check with your local independent bookstore. Most can easily order it for you.

Aug 5, 2026

6 min

A Closer Look at Index Funds in Retirement

Someone in their early sixties slides a statement across the kitchen table. Balanced portfolio. Broad index funds. Low annual fees. They did everything the industry told them to do, in the order the industry prescribed. Then they ask the question that has nothing to do with the statement: "Will it last?" I call that FORO. Fear Of Running Out. People tell me it's just nerves. It isn't. Here's what I think is really happening. An index fund is a very good machine for one job: growing money over thirty years. It assumes you have time. It assumes you're buying, not selling. It assumes you don't much care what's inside, as long as the number goes up. Every one of those assumptions stops being true the day you retire. Why do index funds treat expensive stocks as growth stocks? Campbell Harvey teaches finance at Duke University's Fuqua School of Business. This spring, he published a paper with four colleagues in the Financial Analysts Journal that tackles something so basic that most of us never think about it. (Source: Arnott, Brightman, Harvey, Nguyen & Shakernia, "Fundamental Growth," Financial Analysts Journal, 2026.) Almost every index fund is built on one idea: if a stock is expensive, the company must be growing rapidly. Harvey's finding is that this is often wrong. A stock can be expensive because it's popular. But popularity and growth are two different things. If you want proof that price and business performance can go their separate ways, think back to 2021. GameStop. AMC. Stocks that shot up on Reddit forums, with very little of the chatter based on earnings reports. Think back to 2021. GameStop. AMC. Share prices shot straight up because people online decided they should. Not because those companies were selling more of anything. Now consider how index funds work across every retirement account. A stock becomes popular, its price rises, and the fund buys more of it, not because the business improved, but because the price went up. How concentrated is the S&P/TSX Composite? Everything above is American. Here's the Canadian version, eh? The main Canadian index is not a broad mix of the world's best businesses. It's dominated by banks, mining and oil. Those three groups make up close to 70% of the index. Banks alone account for about 31%. According to the iShares Core S&P/TSX Capped Composite, the ten biggest holdings are roughly 38% of the whole thing, with Royal Bank at the top. In fact, close to half the weight of the index is made up of just financials and energy. I'm not saying anything negative about those companies. I'm saying you own them, whether you picked them or not, in amounts you didn't choose, for reasons that have nothing to do with what you need at age 72. That's been a fine bet for long stretches. It's also a narrow one. And narrow feels very different at 65 than it did at 35, because at 65 you no longer have the thing that makes a bad market survivable. Time. Why does a market drop cost a 65-year-old more than a 35-year-old? Let’s illustrate this with an example. Two people own the same fund. One is 35 and still contributing, while the other is 65 and withdrawing. Both are dealing with $6,000 this year. A unit of the fund costs $100. Then the market drops 20%, and a unit costs $80. The 35-year-old puts in $6,000. Before the drop, that money bought 60 units. Now it buys 75. Fifteen units he didn't pay for. The 65-year-old needs $6,000 to live on. Before the drop, she'd have sold 60 units to get it. Now she must sell 75. Fifteen units she'll never get back. Then the market recovers. Units return to $100. His 15 extra units are worth $1,500 more than he paid for them. Her 15 units were sold at the bottom. They aren't there to recover. Same fund. Same market. Same $6,000. The only difference is the direction the money was moving. That's why a retiree needs to look inside the fund, whereas a 35-year-old mostly doesn't. RRIF minimum withdrawals: why Canadian retirees are forced to sell In Canada, we've set a rule. When your RRSP becomes a RRIF, you must withdraw a minimum amount each year. The rate starts at 5.28% at age 71 and increases each year after that. (Source: Canada Revenue Agency, prescribed RRIF minimum withdrawal factors.) So, a Canadian retiree can be forced to sell in a bad year, from a narrow index based on a definition of growth that a Duke University business professor has just called flawed. Three problems stacked on top of each other. None of them show up on the statement. This is exactly the point I made with EY Canada in The Canadian Retirement Evolution, published in July (Source: EY Canada, 2026). FORO isn't a personal failing. It's a design gap. We built a system to save money, then asked it to pay people reliably for thirty years. It was never built for that. And the biggest thing most Canadians over 55 own isn't in the index at all. It's the house. About 70% of the coming wealth transfer in this country sits in real estate, and more than 85% of seniors say they want to stay in their homes (Source: EY Canada, The Canadian Retirement Evolution, 2026). Asset-rich, cash-poor, and treating their largest asset as off-limits. 5 questions to ask your advisor about your index funds I'm not telling you to sell anything. I can't. I don't know your health, your pension, your taxes, or your nerves. But here's what I'd want answered before my next meeting with an advisor. What are the ten biggest things I actually own? Not the fund name. The holdings. Do my funds overlap? Three funds that all own the same five banks isn't three bets. It's one. What happens if I must withdraw in a bad year? Is my "growth" fund measuring actual growth, or just price? Where does my home equity fit into all this? Ask. A good advisor will be glad you did. If you get a pie chart and a pat on the back, ask again. One last point from Professor Harvey. More than half of all invested money now sits in funds that buy automatically. He thinks it could reach 80% within ten years. (Source: Duke University Fuqua School of Business, 2026.) When enough money buys without looking, price stops being a judgment and becomes a reflex. But retirees are the least able to afford someone else's reflex. Here's the plain truth beneath all the jargon: nobody swapped out your equipment when the game changed. You're still holding a golf club on a pickleball court. Momentum is still wearing a cardigan. Your funds still can't tell the difference between expensive and growing. And most retirement plans still hand you a seatbelt when what you need is a crash-proof suit. Nobody in the industry is racing to fix this for you. So I will. Consider this the first chapter, not the last word. It's time to take back our retirements and reset. Don't Retire…ReWire! Sue My Book is Now Available for Pre-Order I hope you will consider pre-ordering a copy of Your Retirement Reset for you, a friend or loved one. It's available September 29, 2026 published by ECW Press - You can now order at Indigo or Amazon. And if you love supporting Canadian booksellers, please also check with your local independent bookstore. Most can easily order it for you. References: All figures verified 4 August 2026 Important: This article is general information and commentary only and does not constitute financial, mortgage, tax, legal, or investment advice. Before making decisions about your retirement or home equity, consult qualified liscensed professionals who can assess your personal circumstances.

View all posts

Drops in the Bank of Canada rate will not solve housing affordability.

Spoiler Alert: The problem isn't just about interest rates

Read More

The MBA Halftime Show

The Tipping Point: How Gratitude Grew into a Guilt Trip (and How to Get Off It)

A Closer Look at Index Funds in Retirement

You might also like...

The MBA Halftime Show

The Tipping Point: How Gratitude Grew into a Guilt Trip (and How to Get Off It)

A Closer Look at Index Funds in Retirement