This ad has driven a lot of questions to the Gumshoe doorstep — the pitch is from Zachary Scheidt for his Lifetime Income Report, and it implies that we can get extra “benefits” by “piggybacking” on the Social Security plan of Canada.
Well, no. Not in the way you’re thinking. But if you have a very open interpretation of the word “piggybacking” and are willing to accept an imaginative turn of phrase, there is a little something to the ad. Let me explain.
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And here I should note that this ad was originally sent around in May of 2015, and that’s when we covered it. I have lightly updated a few things here today, but the following article is essentially unchanged since 5/13/15 (the ad being sent around today still has a May 2015 signature line on it, so that presumably hasn’t really been updated either).
The only real change in the ad is that the hook is now not just that there’s a way to “piggyback” on “Canadian Social Security” with Scheidt’s special piggybackretirement.com website … but that this secret “rattles the cages” in Washington, and Zach Scheidt got a threatening letter from a government agency because he sent this ad around (he doesn’t share the text of the letter, but I would guess that the content was more along the lines of “stop misleading consumers” than it was “stop revealing these important secrets”).
Back to Zach Scheidt’s ad… the headline is what really gets peoples’ attention, I think, that notion that somehow “piggybacking” Canada’s retirement plan is going to get you some “benefit” checks…
“Americans Now Legally Piggybacking ‘Canadian Social Security’… And Collecting Extra Monthly “Benefit” Checks From $400 to $4,700”
And no, you’re not going to get that. You can’t get benefits from the Canada Pension Plan (that’s what they call their social security system) unless you pay into it while you’re working in Canada — in broad strokes, it’s not too different from the US Social Security program.
But you can, kinda, copy them. If you want to.
That’s a big difference, no? Imitating someone, versus collecting checks from them? I’ll explain a bit more in a moment, but first I have to share with you just a bit more of the misleading teaser pitch — here’s the part about why you’d want to “piggyback” on Canada’s scheme:
“I recently heard some fascinating claims about a potential loophole in the Canada Pension Plan…
“A loophole that allows Americans of any location, age or income level to begin collecting ‘work-free’ income checks running from $400 to $4,700 per month.
“The Canada Pension Plan — in case you didn’t already know — is the Canadian equivalent of the Social Security system we have here in the States…
“…except for a few key differences.
“Unlike American Social Security (which is run by overpaid government bureaucrats), the Canadian variety is managed by a highly skilled team of professional investors.
“Also, unlike American Social Security (which you and I both know is a system that’s running on fumes), the Canadians have managed to more than DOUBLE their reserves since 2004.
“In fact, from the projections I’ve seen… reserves for the Canada Pension Plan are set to QUADRUPLE by 2040 (which, ironically, is the same time when most experts believe American Social Security will be completely bankrupt).”
All that is pretty much true — the Canada Pension Plan does really include a distinct account, and it is managed as an investment account like most private sector pension funds, buying up equities and bonds and valuable assets around the world in order to meet their future income obligations. Canadians don’t get more retirement income when the pension plan does better, their benefits are set by law and regulatory guidelines in much the same way that US Social Security benefits are set, but they do enjoy a bit more security, perhaps, because they have what I consider a much more viable system.
The Canada Pension Plan has probably about a 75-year horizon of reasonably being able to pay expected benefits based on the current contributions and the value of (and returns from) the investment fund, so it’s not just a pay-as-you-go benefit like Social Security (though the fund only represents a small portion, 20-30%, of future liabilities, the rest is like Social Security and dependent on future contributions), and the government hasn’t been using all the cash flow from Canada Pension Plan contributions for other things — the Canada Pension Plan, unlike Social Security, is partly in a “lockbox”, at least for now, and it’s not just an IOU from the government.
But can you piggyback on it? What the heck does that even mean? Scheidt goes through several examples of readers he has talked to who have, or at least so he implies, somehow invested in the “Canada Pension Plan