All posts by Jonathan Chevreau

Post-budget primer on RRIF withdrawal strategies 2015 and beyond

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Adrian
Adrian Mastracci, KCM Wealth

By Adrian Mastracci, KCM Wealth Management

Special to the Financial Independence Hub

“Be very mindful of your RRIF. Understand its purpose. Then review it periodically to make sure it’s on track to deliver.”

It’s time to start paying special attention to RRIFs.
Even if you don’t yet need one.

RRIFs (Registered Retirement Income Funds) are income withdrawal plans, while RRSPs are savings plans.

No deposits are allowed to be made into a RRIF after the RRSP conversion.

The venerable RRIF remains firmly entrenched as a prominent retirement planning vehicle.
It has become an essential foundation of many a retirement nest egg.

Starting a RRIF at age 71 implies long-term planning, say to age 90 and beyond, especially if there is a younger spouse.

That’s one very good reason to be aware of the details.

Two major changes were proposed in the recent Federal Budget, starting in 2015:

  • Minimum RRIF draws are reduced for ages 71 to 94 (See highlighted figures in table below).
  • Re-deposit of the difference in draws is allowed by Feb 2016.

Continue Reading…

Weekly Wrap: Happiness without ambition, learning from divorce, how to hire a caregiver

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Ambition road sign

Can you be happy without ambition? That’s probably not a question many of us ask ourselves, but it was posed by Joe Udo the other day at his Retire by 40 site: Can you be happy without ambition?

I don’t know about Joe’s professed lack of ambition but in my view, achieving early Findependence by 40 and running a web site about how you did it qualifies as ambitious. And as I’ve often argued, such activities really do not constitute retirement in the sense of doing absolutely nothing all day long. Joe and the many other Early “Retirement” gurus are still working, and from what I’ve experienced the past year, are probably working pretty hard. Same with writing books and giving paid speeches. It’s still work  but there is some freedom being outside the corporate gilded cage.

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How to achieve “Flow” — or optimal experience

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flowBy Jonathan Chevreau,

Financial Independence Hub

In a book on happiness we reviewed here recently, I came across a book called Flow, billed in the subtitle as “The psychology of optimal experience.”

This book, first published as a hardcover way back in 1990, became a New York Times bestseller and has spawned several followup titles elaborating on the concept of flow and creativity. The author’s name is not easily recalled: Mihaly Czikszentmihalyi, a psychology professor at California’s Drucker School of Management and also director of the Quality of Life Research Center at Drucker. (Incidentally, if you find the name unpronounceable and unmemorable, as I do, one of his books helpfully suggests the surname can be pronounced “chick-SENT-me-high.”)

Here’s what Wikipedia says about Flow and the author who coined the term.

I must say that I was a bit skeptical about the term at first: Continue Reading…

US Large Caps top Templeton asset-class chart but remember Winners Rotate

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Here’s my latest MoneySense column, entitled Why Diversify? This chart shows you why. I used to write about this chart back at the Financial Post, and tacked the chart up on my cubicle wall. An updated version of the chart later followed me to my office at MoneySense, and the one below is now in my Editor-at-Large’s home office. Click on the above link to get to the chart, which can be further enlarged on your monitor.

The Hub’s version of the blog below also shows a second chart at the bottom about Risk. As you’ll see, it’s more predictable, living up to Franklin Templeton’s assertion that risk is more predictable than returns. I’ve always found it a useful reminder of the futility of chasing last year’s winners or attempting to predict next year’s winning asset classes. If you can’t get the charts  free through your financial advisor, you can download them here.

By Jonathan Chevreau

Franklin Templeton Why Diversify_low resolution

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How to get the new TFSA limit to work for you

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Illustration depicting a red and white road sign with a taxt free concept. Blue blurred sky background.

By Jonathan Chevreau

Financial Independence Hub

Here’s my latest column from the print edition of MoneySense magazine, written right after the federal budget: Get the new TFSA limit to work for you.

Click on the link for details, but in a nutshell — and has been extensively reported in the media, such as this piece by Gordon Pape (subscribers only)  — there’s no reason why you can’t add another $4,500 to your Tax Free Savings Account right now, in addition to $5,500 you may have contributed anytime on or after Jan. 1, 2015. (Note to American readers: the TFSA is the equivalent of Roth IRAs, providing no upfront tax deductions but which let you eventually withdraw money tax-free in Retirement or for other purposes).

That means a whopping $20,000 per couple. Now while Liberal Leader Justin Trudeau seems to think only “rich” people have that kind of money available, the fact is that many hard-working middle class people have been saving and investing for the better part of two or three decades, and built up substantial non-registered or “taxable” portfolios. Even though they may have paid income tax to acquire the capital in the first place, over those decades they have been paying annual taxes on interest, dividends and (often) capital gains generated by that capital.

As the column points out, those who have built such “open” portfolios don’t have to use new cash to put $10,000 per annum into their TFSAs. They merely have to start transferring their non-registered securities into their TFSAs. This is called a “transfer-in-kind” Continue Reading…