We review books that deal with everything from financial independence topics to politics, and anything in between. We may sometimes stray into films and music if there is a “Findependence” angle.

Retired Money: The “Glide Path” to semi- retirement

My latest MoneySense Retired Money column looks at a concept called “The Glidepath” approach to semi-retirement. Click on the highlighted text for the full version, which is headlined How to Transition Into Retirement.

The “Glide Path” is a term used by veteran and now semi-retired financial advisor Warren Baldwin. At 66, Baldwin still works part-time as a senior vice president T.E. Wealth, working out of Oakville, Ont.

When used in the context of airplanes and flight, glide path is a familiar image that Baldwin’s clients easily understand. His own “glide path” to semi-retirement began three and a half years ago. “Maybe it takes five years because it takes two years to plan and get your mind around it. For me, it was coming up three years ago, when I was 63. The timing was right.”

The “Work Optional” stage of life

Another way to describe this is the “Work Optional” stage of life, a term popularized by Emeritus Retirement Solutions’ Doug Dahmer, who is a frequent contributor to the Hub’s “Decumulation” pages. See for example, this post.

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Rockstar Finance’s review of Victory Lap Retirement

By Hélène Massicotte, Rockstar Finance

Mike and Jonathan walk the talk. They both have made sound financial decisions that enabled them to leave their corporate lives (either through retirement or redirection), allowing them to shift their focus toward what they wanted to do next without having to have money be the primary driver.

How can we start stacking the deck in our favor to do the same? By:

  1. Following the “Seven Eternal Truths of Financial Independence”
  2. Focusing on one important formula
  3. Forgetting traditional notions of retirement

#1. The “Seven Eternal Truths of Financial Independence”

When it comes to managing money, most of us want to improve our odds of success. That means ensuring we behave in a way that reduces the financial obligations that work to limit our personal and professional choices. The authors suggest the following behaviors can do a great deal to help us increase our financial flexibility:

  1. Live below your means
  2. Pay yourself first
  3. Get out of debt
  4. Buy a home and pay it off as soon as possible
  5. Be an owner, not a loaner
  6. Never say no to free money from your employer
  7. Take the government up on its few offers of free money

Two of these include interesting twists on the theme beyond what is usually covered in what’s considered mainstream financial advice:

#4. Buy a home and pay it off as soon as possible. This is great advice for those among us who want to own a home, but the authors take it one step further: we should look at our home as part need and part want. Need is the bare minimum of what we need in a home: shelter, basic utilities, safety, minimum square footage, proximity to other needs, etc. Want are the extras beyond what we need: extra space, extra features, better privacy, less noise, better outdoor space, better-than-needed neighborhood, etc.

Looking at housing this way can help us consider the appropriateness of the largest physical asset class we’re likely to ever own. It’s easy to justify buying too much house, thereby turning a good purchase into a bad one, and this “need vs want” can help us keep the inflation in check.

#5. Be an owner, not a loaner. This suggests that, though bonds are lower-risk investment vehicles, they won’t offer the returns that equity can, even when these are risk-adjusted. The authors suggest a diversified portfolio that includes high-quality dividend paying stocks and stress that qualifying dividend-paying stock income also offers some tax advantages over bond-related income for investments that are held in non-tax-sheltered accounts.

#2. The Freedom Formula

Mike and Jonathan managed to increase choice in their lives by focusing on one important formula:


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The Price of Security

By akaisha-in-a-longboat-on-the-mekong-riverBilly and Akasha Kaderli,

Special to the Financial Independence Hub

Security is mostly a superstition. It does not exist in nature, nor do the children of men as a whole experience it. Avoiding danger is no safer in the long run than outright exposure. Life is either a daring adventure, or nothing.” —  Helen Keller

Recently I have been reading a book called Daring Greatly by Brene Brown. You may have heard of it. The theme of the book is about being vulnerable, taking risks and being willing to expose ourselves to possible failure. It’s an enlightening read.

I bring this up because what I want to share with our readers is that security has a price. Everyone speaks about how risk is dangerous and sometimes unthinkable. It seems that everyone wants unmitigated surety – the 100% guarantee.

But security never makes one courageous nor does it make a person’s heart sing.

We all want our bases covered, and none want to be starving or out in the land of the lost. But there is an energy about taking a risk with the possibility of failure that adds dimension to our lives and creates memories that we share with our children and grandchildren and we can ruminate over when we become old. Having everything laid out, fully unchallenged with no adversary to overcome makes for a dull story.

Personal examples

To make my point, I want to share with you a couple of big risks I took with my life direction over the years.

In 1971 was 19 years old and my then 20-year-old boyfriend wanted to make an extensive summer motorcycle trip across the country from the Midwest through a semi-southern route, up the coast of California to Alaska and back again via northern roads. This sounded like the most exciting thing I could imagine in my life at that time.

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Review & Excerpt of Clay Gillespie’s Create the Retirement You Really Want

The Financial Post has just published my review of a new book by Vancouver-based financial advisor Clay Gillespie: Create the Retirement You Really Want: And Retire Smarter, Richer and Happier.

You can find the online review by clicking on this highlighted headline: From Dreams to Legacy: New Book Details the 5 Stages of Retirement.

And below is an excerpt from the chapter highlighted in the review. We may also run at least one other excerpt in the coming weeks. Over to you, Clay!

By Clay Gillespie

Special the Financial Independence Hub

Retirement isn’t an event; it’s a process, and it begins years before you actually retire. Working with hundreds of clients over many decades, I’ve come to realize that retirement success is best achieved in five distinct stages. Each stage reflects a different aspect of who you are and where you want to be in retirement, and it all begins with a dream.

       1.) Dreams stage

The Dreams stage of retirement typically begins about five or six years prior to actual retirement. This is the time when people have decided to retire but aren’t yet sure of the date. It’s the time where retirement goals and hopes for the future become defined and a preliminary retirement plan is developed. For couples, especially, retiring now becomes an ongoing topic of discussion, not just something brought up in passing.

2.) Reality stage

The Reality stage usually occurs between 6 and 24 months before retirement and its temporal proximity really starts to hit home. Lifestyle issues come into greater focus, along with fears that one’s retirement nest egg may be inadequate. This is a crucial time from a planning perspective. Old Age Security (OAS) and Canada Pension Plan/Quebec Pension Plan (CPP/QPP) applications need to be made, income streams need to be consolidated, taxes need to be minimized and portfolios need to be optimized for income and growth.

3. Transition stage Continue Reading…

A Procrastinator’s Guide to RRSPs

Procrastinators: There is just a week to go until the March 1st deadline for making contributions to a Registered Retirement Savings Plan (RRSP). My column in the Financial Post in today’s paper (page FP10) can also be found online by clicking on the following highlighted text of the headline, As the RRSP deadline looms, here’s what all the procrastinators need to know.

One of the sources cited is CPA David Trahair, author of the book illustrated to the left: The Procrastinator’s Guide to Retirement. Here’s a link to the Hub’s review of that book.

The FP piece notes that while making an RRSP contribution before the deadline is not technically a “use it or lose it” proposition, procrastination nevertheless provides opportunity losses: you end up paying more income tax than necessary for the 2016 tax year (reminder, THAT deadline is also looming: see Jamie Golombek’s reminder in his FP column: Tax season is upon us.) Procrastination also creates the opportunity loss of considerable tax-compounded investment growth.

While you can arrange an RRSP top-up loan or — for multiple years of under contributions — an RRSP “catch-up” loan, my conclusion is that the optimum course of action is to automate RRSP savings through a pre-authorized checking (PAC) arrangement with a financial institution. This approach also allows you to “dollar cost average” your way into financial markets: that way, you reduce the stress of coming up with a large lump sum to contribute, as well as the stress of fretting about the best time to invest.

Of course, as Trahair notes at the end of the article, and as Borrowell’s Eva Wong reminded us in her Hub blog on Monday, if you’re heavily in debt you may be better off eliminating that debt before getting too serious about RRSP contributions: See When you should NOT invest in an RRSP.