Monthly Archives: October 2016

The next Boomer wave: Semi-Retirement

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wave-1031216_640As I argue in my latest online column for MoneySense, published this morning, I believe that the next big wave to be surfed by the baby boom generation will NOT be retirement, but Semi-Retirement. Click on highlighted link to access: Why semi-retirement is the future.

See also my October 18th interview on this topic with CBC On the Money’s Peter Armstrong.

I’ve also argued that the boomers are largely going to be responsible for retiring the very word Retirement. This is of course the central theme of the book I co-authored with former corporate banker Mike Drak: Victory Lap Retirement, which MoneySense excerpted in its Summer retirement issue. See Why you wake up each day. (See also links to two recent reviews and a BNN clip listed at the end of yesterday’s blog: Millennials say Financial Independence defines Adulthood.)

Now a cynic might argue that in making the Victory Lap Argument, necessity is the mother of invention. A lot of us haven’t saved enough to retire in the style to which we’d like to be accustomed. Add to that the decline of corporate Defined Benefit pension plans and minuscule interest rates and there’s a lot to be said (at least financially speaking) for sticking at the old grind for five or ten extra years.

But those extra years don’t have to be spent as an employee in a corporate setting, complete with the challenges of coping with bosses, endless meetings, daily commutes and all the rest of it. There has to be a happy medium between corporate wave slavery and the traditional “full-stop” retirement that amounts to a permanent vacation. Some call this new stage between full-time careers and traditional retirement an encore career or a legacy career. We call it the Victory Lap.

The real wild card is extended Longevity

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Millennials say financial independence defines Adulthood

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When asked to define what constitutes adulthood, 40% of of millennials (aged 18 to 26) cited Financial independence, according to a Bank of America report issued on October 6. it was reported by Reuters under the headline “For millennials, adulthood now defined by financial freedom.”

As Bank of America executive Michele Barlow puts it, “It’s not so much that young adults are having trouble with adulting: they’ve simply redefined it.”

With so many millennials still living at home (often because they can’t afford to leave), it seems they view adulthood as being able to land a job and not depend on their parents for financial help. About 14% surveyed named moving out on their own as their top priority, while getting married, starting a family and getting an education were all cited by 7%.

This study is music to our ears here at the Financial Independence Hub. Of course, our definition of Financial Independence (or the contraction, “Findependence”) is a bit stricter than merely landing a job and no longer being financially dependent on parents. We tackled this early on: see the highlighted post, Merely leaving the nest does NOT constitute true Financial Independence.

Still, getting rid of debts, landing a job and no longer being dependent on the Bank of Mum and Dad is a huge step TOWARDS Financial Independence and ultimately what we used to call Retirement. While not quite synonymous with the outdated term Retirement, we view Findependence as having sufficient financial resources that you do not have to depend on employment income to make your daily and monthly expenses.

How do you know when you’re truly findependent? Continue Reading…

Retirement Planning for Small Business

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Portrait of retired manual worker sittiing in his small workshop in front of laptop and making online order. Small business.By Cher Zevala 

Special to the Financial Independence Hub

Small business owners typically spend their days juggling a huge variety of tasks, whether they have a team around to help them or not. From managing accounts and serving customers to handling marketing and sales and developing new products or services, there are many priorities which compete for attention. As a result, it can be tough for entrepreneurs to find the time and the energy to think about their future, particularly when it comes to retirement savings.

However, that doesn’t mean that it should keep being put off until later. If you own your own business, it’s important that you don’t end up at retirement age without enough savings to see you through. If you need to take care of your future, read on for some steps you can follow today to tackle retirement planning.

Know Your Goals

When it comes to retirement for small business owners, one of the first things entrepreneurs should think about is their long-term goals. Whether you want to retire in ultimate style one day or just want a basic amount of cashflow to see out your days with a simple life, it’s  important to be  clear on what your exact goals are for the future.

Apart from working out how much money you will need to retire in the manner you wish, you should also have goals about when you want to retire, and how you want to go about doing so. For example, would you prefer to sell your business, hand it down to a family member, friend, or colleague, or simply close it up when you’re ready to retire? Or perhaps you would prefer to sell just your share of the business to a business partner? Your goals for the future will determine how you prepare for your retirement, so you need to know them well in advance.

Make a Plan

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Switching your RRSP to a RRIF is best for those retiring soon

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Portrait Of Smiling Senior Couple Saving Money In The Pink PiggybankConverting your RRSP to a RRIF is clearly the best of three alternatives at age 71 and there are four ways to make sure you get the maximum benefit from the RRIF (Registered Retirement Income Fund).

If you have one or more RRSPs (registered retirement savings plans), you’ll have to wind them up at the end of the year in which you turn 71. We think converting your RRSP to a RRIF (registered retirement income fund) is the best option for most investors.

You have three main retirement investing options:

• You can cash in your RRSP and withdraw the funds in a lump sum. In most cases, this is a poor retirement investing option, since you’ll be taxed on the entire amount in that year as ordinary income.

• You can purchase an annuity.

• Proceed with the RRSP to RRIF conversion

RRIFs are the best retirement investing option for most investors

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Work while you play, play while you work

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“Playing” at Dublin’s oldest pub (photo J. Chevreau)

As I write an early draft of this blog, I am in Dublin, Ireland, at the midpoint of the second week of a two-week holiday. Readers may recognize this blog’s headline as the subtitle of the new book I’ve recently published, Victory Lap Retirement. It was written with ex-banker Mike Drak, whose blogs have been regularly posted or republished here at the Hub.

I believe it was our editor, Karen Milner, who came up with this inspiring subtitle but whoever first articulated it, we all agreed on it once it came up. I often think of it when I’m working and really playing, or vice versa.

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“Working” CIFFA executives at FIATA 2016 World Congress in Dublin this week.

For example, right now I’m working on writing this blog while officially “Playing” at being on holiday. The ostensible reason for the trip was to tack on a week’s vacation to a business trip my wife took to attend the FIATA 2016 World Congress in Dublin. That’s Ruth  on the extreme right of the photo, along with colleagues and a spouse at a reception at Dublin’s Trinity College.

Such “Work” came at the end of a solid week of being a tourist elsewhere in Ireland, with the couple with whom we’ve been travelling.

I suggested to them in jest that the job of being a “tourist” would be a tough one if it meant 49 weeks a year, eight hours a day of “touristing,” however much it might seem to be a dream job. Come the end of any week of touring historical sites, art galleries and such – much of it on one’s feet, either walking or standing – you’d greet the arrival of the weekend and the cessation of tourism for a few days with some relief! (If you happen to be a Facebook friend, you can see about 40 photos of the trip under Ireland, here.)

It’s all relative really: if you were a writer for a Tourist guide book like Lonely Planet, you’d no doubt regard tourism as “work.”

Playing while you Work

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