Becoming Retirement Ready

The Dream Stage

The most common way to start retirement planning is to determine how much money we will need. But, there is no magic number for everyone. Each person, or couple, is unique. A happy, fulfilling retirement means different things to different people. The amount you need depends on your lifestyle choices, so you won’t know exactly until you decide on what you want to do.

Retirement is not a one-time event. It’s an ongoing process that can last thirty years or more. It begins with focusing on what’s truly important to you and defining your hopes for the future. You probably have some idea of how you’d like to spend your retirement. But for now, don’t focus on the budget. Focus on ideas. Start listing all the things you want to do. What activities will you continue, and what new ones do you want to try? These activities could include travel, socializing, being with grandchildren and other family members (how much time? every weekend or just special occasions), playing sports, volunteering, reading, gardening, or crafts.

This doesn’t have to be a bucket list – just things that will give you pleasure. Get out your notebook and be as specific as you can. Don’t just write “travel,” write “take a round-the-world cruise,” or “see the African savannah by hot air balloon.”  

Retiring Couples 

Just because you’re married doesn’t mean you’re at the same place in your careers. Although you may be ready to focus on your flute playing, your spouse might still want to head to the office every day. Sometimes people aren’t quite ready to give up working yet for whatever reason. But at some point you will be retired together, and before that time you need to have a serious discussion with your spouse. Partners often have dramatically different ideas about what retirement will look like. One RBC retirement poll discovered that nearly 70% of pre-retired Canadians aged 50 and older have yet to discuss their hopes for their post-career lives with their spouse or partner.

Communication is key. You and your spouse need to be on the same page. Often people have very different visions of retirement. You may want to buy a motor home and barrel across the country, whereas your spouse may want to spend more time with the grandkids, or volunteer for a favourite non-profit. For decades you’ve spent most of your day apart.

Spending 24/7 together can require some adjustments. So you’re not continuously in each other’s pocket, find a balance between the amount of together time and time you spend apart pursuing individual interests.

Prioritize

Once you’ve decided on what you want to do, start doing your homework. If a Mediterranean cruise is the first thing on your agenda, start researching cruise lines, look at prices and schedules, and so on.

3 predictions for the future Retirement landscape

By Sia Hasan

Special to the Financial Independence Hub

Retirement should be a time everyone looks forward to embracing. Theoretically, everything becomes easier in time. A retiree doesn’t need to deal with all the pressures of a stressful full-time job. Days can be spent doing more of the things the retiree enjoys. Such imagery, however, may only reflect the most idealized version of retirement years. Relaxation in retirement remains heavily dependent on how much money has been saved for those golden years.

Saving for retirement has to be about more than just putting a set percentage of income away. Careful thinking and planning are required to make sure retirement assets become adequate enough to cover leisure and necessary expenses. The changing future landscape of retirement further necessitates better planning.

Longer Life Spans and Retirement Savings

Increased life spans definitely impact the way people save for retirement. Thanks to insights into healthier living and great strides in healthcare, a larger percentage of people live much longer. Living to the age of 100 may even be possible for a significant number of people. Better retirement planning definitely works to the benefit of someone who lives a very long life.

Working during early Retirement years

Upon retiring at age 70, maybe it would be wise to look for another job. Working a full-time job might not be necessary, but earning a small stream of income from a part-time job could prove very helpful. $10,000 earned from a part-time job covers $10,000 worth of expenses. Working a part-time job until age 75 leads to $50,000 in income. Earning additional money eliminates the need withdrawing an equitable amount of funds from a savings account or social security deposits.

Money saved may draw more interest and be set aside for use during very elder years. After looking at things from this perspective, making plans for a retirement job becomes an important priority.

Examine Annuity Income

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Blue Monday: Here’s what gives us the financial blues on this saddest day of the year

Feeling the financial blues a bit today? Little wonder because today, Monday, Jan. 15th, is Blue Monday, dubbed the saddest (most depressing?) day of the year.
 Call me a masochist but I also decided this was the day to download the 2017 online version of TurboTax and at least confront the looming reality of preparing another year’s tax returns. The program said it can be used to print and file your 2017 tax return by mid-January, and that NetFile will be available as of 6 am on February  26th. How depressing is that a mere two weeks after the holidays?

But if the thought of filing your taxes doesn’t make you blue, or even the snow that’s falling as I write this, maybe the thought of credit-card bills from the holidays will do the trick. Credit Canada and the Financial Planning Standards Council today released the results of  a Blue Monday themed Financial Blues survey that revealed that 53% of Canadians are “already feeling financially blue, with the younger generations struggling.”

The Financial Blues Survey was based on a Leger poll that asked Canadians “when it comes to your finances, what makes you blue this time of year?”

Well, bowl me over with a feather: the start of another tax season didn’t make the cut in the poll, or at least the top five “standout” findings. Here’s the top candidates for feeling blue in January:

  • 20% of us have a credit-card balance larger than our savings accounts
  • Younger adults aged 18 to 44 are especially blue about finances right now: 68% of them versus just 41% for adults aged 45 or older
  • 25% of us lack the funds to take a winter vacation in the sun
  • 6% have already broken their financial new year’s resolutions
  • 21% over-spent during the Holidays

Credit Canada CEO Laurie Campbell  says that while “we are seeing a good deal of Canadians stressed out about their financial situation … the takeaway message is that there is hope. Develop a plan, tackle debt, and realize your financial potential. There are professional resources available to you, so don’t feel you need to go it alone.” Continue Reading…

4 truths Business Ownership will teach you

By Sia Hasan

Special to the Financial Independence Hub

Running your own business is equal parts exciting and stressful. No one is telling you what to do, and instead, you need to make the correct decisions if you want your company to be successful. And it won’t just be your life that’s riding on those decisions – if you have employees, they depend on your business’s success, as well.

The responsibility of business ownership brings several important life lessons with it. Here are four of the most significant.

1.) Surround yourself with the right people

This advice is applicable to business success in two ways. The first is that you need the right people around you as either employees or business partners to build and maintain your business. You can’t expect to be successful if you try to do it all. As the business owner, you can’t spend valuable time learning every skill under the sun. Instead, you’ll need to outsource certain things.

The second is that you need to hang out with the right people in your personal life. It’s said that you’re the average of the five people you spend the most time with. If those are driven individuals, they will help raise your game. If they’re unambitious and lazy, they’re just going to hold you back when you’re with them.

2.) Fast, good and cheap: you can have two out of three

So you know you need to outsource certain areas of your business, and you’re thinking of hiring either full-time help, part-time help or a freelancer to work for you on a per-project basis. When you do this, you need to decide what kind of results you want, how quickly you want them and how much you’re willing to pay.

It’s best to look for people who can provide high-quality work quickly, and then pay them what they deserve. If you try to pinch pennies, it will likely end up costing you more in the long run.

3.) Everyone has limits

You’ve probably heard a few crazy stories about famous entrepreneurs and how they work 80 or 100 hours per week. Continue Reading…

Strapped for cash after holidays? How to make the RRSP deadline with no new money

How to beat the March 1st RRSP deadline without having to come up with new money is the subject of my latest MoneySense Retired Money column. You can access it by clicking on the highlighted headline: How to ‘find’ cash for your RRSP contribution.

As with the previous column involving doing the same thing for TFSAs, this involves a tricky procedure known as “transfers-in-kind,” which means you need some investments in your non-registered portfolio to pull it off. There can be tax pitfalls so you need to find investments that haven’t greatly appreciated in value, or find offsetting losers without falling afoul of the CRA’s superficial loss rules.

Seniors in particular likely have a good amount of money sitting in “open” or non-registered investment accounts, which means any securities can be “transferred in kind” to your RRSP, thereby generating the required receipt to generate a tax refund come tax filing time in April.

You don’t have to be a senior of course: any Canadian of any age can transfer-in-kind securities from their open accounts to their RRSPs; it’s just that many younger folks may not have a lot of money housed in non-registered accounts. Most tend to maximize the RRSP first and since 2009, the TFSA.

But beware the RRSP that gets “too big”

Of course, the kind of pre-retirees who read this column may want to consider whether their RRSP might become “too big” and eventually put you in a higher tax bracket once you start to RRIF after age 71. I looked at this “nice problem to have” in an FP column last May.

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