Hub Blogs

Hub Blogs contains fresh contributions written by Financial Independence Hub staff or contributors that have not appeared elsewhere first, or have been modified or customized for the Hub by the original blogger. In contrast, Top Blogs shows links to the best external financial blogs around the world.

7 simple ways to pay off Debt in Retirement

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By Lyle Solomon

Special to the Financial Independence Hub

Carrying debt into retirement can ruin your golden days. You will most likely have a limited income after retirement. Though you can boost your Social Security income by taking the proper steps, your spending may rise yearly due to inflation, causing your budget to collapse. The burden of debt and the high expense of medical bills can wreck your retirement.

According to a CNBC report, the total debt burden of America’s senior citizens has increased by 543 per cent in the last two decades. 70% of baby boomers are in credit-card debt and are unsure how they can get out of it. It is recommended to pay off your obligations as soon as possible and enjoy your golden years. Repaying your debts during retirement is always a good idea. But how will you go about it? Here are some of the ways to repay your debt in retirement so that you can enjoy your golden years.

1.) Sort your debts by priority

The first stage in debt management in retirement is prioritizing which bills to pay off first. So, make a list of all your loans, including their interest rates and remaining balances. Unsecured debts, such as credit cards, typically carry high-interest rates because no collateral is required. I recommend that you begin paying off loans with the highest interest rates first, which will help you save money in the long term. Furthermore, unlike student loans or mortgages, you cannot deduct interest payments from your tax returns on unsecured debts.

It is preferable to pay off unsecured obligations first, as they are not usually tax-deductible.

2.) Seek professional debt assistance

Are you drowning in high-interest unsecured debt? If this is the case, you may be working hard to repay your obligations but cannot do so due to the constant high-interest rates. In that case, you can seek professional assistance by contacting a reliable debt relief business. The company’s debt advisers will examine your debts and develop a reasonable payback plan based on their findings. You can enroll in a credit card consolidation process to repay your huge credit-card debt. Settling debts can be possible under the guidance of a professional debt relief company. They will  negotiate with your creditors to lower the excessive interest rates. Once your creditors have agreed, you can begin making single monthly payments for all of your debts. In this manner, you may pay off your unsecured obligations without worrying about coordinating multiple payments. You can also save money on interest payments because your debts’ interest rates will likely be reduced.

3.) Examine your budget again

Hopefully, you have a budget to keep a proper spending plan and preserve money for your financial well-being. The more you put into your monthly loan payments, the faster you’ll be debt-free. As a result, you must save more to increase your monthly loan payments.

To do so, go over your budget and identify places where you may decrease costs and save money. You can save money on things like eating out, entertainment, cable TV subscriptions, etc. You can save a significant amount of money to put towards your monthly debt payments.

4.) Follow your preferred debt repayment plan

You can use any debt payback method, debt snowball or avalanche. The debt snowball strategy requires prioritizing the debt with the lowest outstanding sum first. At the same time, you must make minimum payments on all of your other loans. After you have paid off that loan, you must focus on the debt with the second smallest outstanding balance, and so on. Continue Reading…

Retired Money: Rising rates make annuities more tempting for Retirees

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My latest MoneySense Retired Money column looks at whether the multiple interest rate hikes of 2022 means its time for retirees to start adding annuities to their retirement-income product mix. You can find the full column by clicking on the highlighted headline here: Rising rates are good news for near-retirees seeking longevity insurance.

The Bank of Canada has now hiked rates twice by 50 basis points, most recently on June 1, 2022.  That’s good for GIC investors, as we covered in our recent column on the alleged death of bonds, but it’s also  welcome news for retirees seeking longevity insurance.

As retired actuary Fred Vettese recently wrote, retirees may start to be tempted to implement his suggested guideline of converting about 30% of investment portfolios into annuities. As for the timing, Vettese said it is “certainly not now: but it could be sooner than you think.” He guesses the optimal time to commit to them is around May 2023, just under a year from now.

After the June rate hikes, I asked CANNEX Financial Exchanges Ltd. to generate life annuity quotes for 65- and 70-year old males and females on $100,000 and $250,000 capital. The article provides the option of registered annuities and prescribed annuities for taxable portfolios. It also passes along the opinion of annuity expert Rona Birenbaum that she greatly prefers prescribed annuities because of the superior after-tax income. Of course, many retirees may only have registered assets to draw on: in RRSP/RRIFss and/or TFSAs.

For a 65-year old male investing $100,000 early in June 2022, with a 10-year guarantee period in a prescribed (non-registered) Single Life annuity, monthly income ranged from a high of $548  at Desjardins Financial Security with a cluster at major bank and life insurance companies between $538 and $542. (figure rounded). Comparable payouts on $250,000 ranged from $1299 to $1,390. Because of their greater longevity, 65-year old females received slightly less: ranging from around $500/month to a high of $518, and for the $250,000 version from $1238 to $1319.

Here’s what Cannex provides for comparable registered annuities (held in RRSPs):

For a 65-year old male (born in 1957), $100,000 in a Single Life annuity nets you between $551 and $571 per month, depending on supplier; $250,000 generates between $1,399 and $1,461 a month. For 70-year old males (born 1952), comparables are $625 to $640/month and $1,578 to $1,634 a month. Continue Reading…

Artificial Intelligence can help investors and advisors alike

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By Fuad Miah and Justin Hacker

Special to the Financial Independence Hub

Financial and wealth-management advisors tend not to be big fans of robo-investing. No surprise there because service and understanding the client are front and centre in what they do.

But for many investors today, especially younger ones, robo-investing may be seen as a low-cost, low-maintenance way to grow their wealth. Robo-investing relies on algorithms to make investments automatically and this is with minimal human supervision at best. But there is no ‘expert’ service involved and that is not good.

On the other hand, how about using Artificial Intelligence (AI) to assist advisors in better serving their clients and, in the process, help those clients build better portfolios? Don’t look now but the technology is here and it can start with meetings. Nowadays people are slowly but surely returning to the office and financial advisors are even getting back to meeting face-to-face with their clients. But a face-to-face meeting is not always required.

A new world of hybrid meetings

Today, however, we are in a new world of meetings where firms big and small are adopting a mix of online, in-person and ‘hybrid’ meetings which utilize both the virtual and in-person variety. With AI an advisor can make this choice wisely.

It involves human-like AI that enhances the meeting experience for both the host and the attendees by allowing participants to focus on the meeting and forget about labour-intensive tasks like note-taking. How? A full transcript and recording of what transpired are automatically created and then crafted into a concise executive summary. And the technology can do even more by using what is called ‘collected telemetry’ (the conversation data that pertains to everything from context to emotion) to build an advanced analysis of performance and even  sentiment. Continue Reading…

Why are Millionaires flocking to Mexico? (and Non-Millionaire Retirees, too!)

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Panoramic view of Guanajuato City

By Billy and Akaisha Kaderli, RetireEarlyLifestyle.com

Special to the Financial Independence Hub

According to the Mexican Government, around 1.1 million expatriates lived in Mexico as of 2020. Of those, about 700,000 were from the United States, making Mexico the #1 country worldwide for American Expats.

We have listed a dozen reasons below why Mexico is attractive to those with plenty of money, and also to those who don’t have that much.

Freedom

While there are many reasons to move to Mexico, the Number One reason people come here is for the freedom they experience.

With less regulation on all fronts, critics might think that Mexico is a lawless frontier.

Not so.

Mexico is still a place where one can walk the beach with a beer in hand. We can give a homeless person food without filling out countless forms to gain permission or explain if there is mayonnaise on the sandwich or have the food rejected because it’s not in a paper bag. While we personally are not smokers, an individual who chooses to smoke can do so without being read the riot act or be subjected to invectives about their personal worth as a human being.

Many medications can be purchased over the counter without a prescription. One can afford medical care and not be forced into buying an expensive health insurance policy that doesn’t coincide with their personal health approach. Homeopaths, Naturopaths, Chiropractors and those who practice acupuncture or massage can be found easily and their services are affordable. One can walk into a lab and order an x-ray or a blood test on their own without a prescription.

There is respect for the elderly and those over 60 are not invisible. People who are chubby are not judged and can easily find someone to date or marry. People on the street say hello and good morning to complete strangers, and men still tip their hats to women. The young offer their bus seats to those of us who have more years than they do.

People say “excuse me” when they walk in front of you, and it’s perfectly safe to walk through a group of teenage boys without fear.

Common sense is common.

Some are moving due to political climate at home

The world is changing, no doubt. Many have chosen Mexico to get out from under the tense political climate back home.

Mexican culture is lively and accepting and it’s a breath of fresh air to live here. Smaller towns, especially, are like Norman Rockwell paintings.

But bigger cities offer fabulous diversions away from home country political pressure. There are museums, international dining, hiking, cultural events, music, art and volunteer opportunities too.

The caution here, is to not bring the “old” political attitude with you when you move. Grow into the easy and into the pleasantry here in this country.

Zicatela Beach, Puerto Escondido

Affordability

Having money or not, your quality of life should expand over what you are experiencing now in your current home town. The cost of living is such that you will get more for your money and your nest egg will go farther.

Truthfully, depending on where you might choose to live, purchasing a home can be expensive, but rents are cheap. And if you are at retirement age, you might find that putting your money into “living” versus “housing” might be the better choice, anyway.

In either case, gardeners, housekeepers, maintenance people and supplies are all cheaper than you will find in the US or Canada. In Chapala, Mexico, a housekeeper runs about $6USD for 2.5 hours. In Ajijic, Mexico – another popular Gringo town –  it is twice that price, but still not outrageous.

Legalities of permanent status are easier

Getting a permanente or a temporada card is easy to do. While some choose to fill out the paperwork themselves, having a lawyer arrange for this is also quite affordable.

Qualifying for residency is based on your annual income and/or net worth, and the threshold is easy enough to meet. The requirements for getting a temporary card are lower, and after renewing annually for 5 years, the temporada moves into becoming a permanente.

If you have your own state’s driver’s license, you can use that here in Mexico, but if you are not able to renew it, you can obtain a Mexican driver’s license in its place. So long as your present driver’s license is still active, you will only need to take the written exam of 10 questions. You won’t have to perform a driving test in the parking lot.

One can live on Social Security alone

While it’s always great to have more money, one can easily live comfortably on Social Security. The average [monthly] SS check as of 2021 is US$1,658. Rents are available for $300-$600USD per month for a one bedroom or a casita. So, those who are on a limited income can readily find a comfortable place to live and still have money left over for a social life and medical expenses.

For those who actually are millionaires, one can live like royalty in homes with lake views, swimming pools, 3- and 4 bedrooms, plus house and garden help: and they can still keep their millions.

Adaptability

Yes, Mexico is a foreign country. However, our ability as Norte Americanos to adapt to these perspectives can be far smoother than with cultures with which we have less in common.

Celebrating many similar holidays, perceptions and values run concurrent with those we already have. The time zones are also similar to the US and Canada, making contact with family members on Zoom, Facetime, or Skype a breeze.

Weather is better: geographic choices

No matter if you enjoy having four seasons or prefer a tropical climate, Mexico offers it all. Continue Reading…

5 things Ex-Pats need to know before buying Property in Singapore

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Singapore

By Emily Roberts

For the Financial Independence Hub

If you are thinking about buying property in Singapore, you should consider a few things first. Diving headfirst is not always the best solution, as difficulties can arise along the way. Carefully planning your transition to a new place will make moving much sweeter. Owning a property is an immense achievement because not everybody can afford it.

Let’s look at the five things you need to know before buying a property in Singapore.

What types of Property you can buy

You need to understand your eligibility status before looking to buy property in Singapore. There are three types of property: public housing (HDB flats), hybrid or public-private housing, and private property such as condominiums.

The eligibility criteria consist of your age and whether you are buying the house alone or with somebody, among other things. It is also salient to know that a Singapore Permanent Resident (SPR) is considered a foreigner, and restrictions or limitations apply when buying property. Only people over 21 years old can purchase property in this country.

An SPR can buy properties like private condos but you cannot buy a resale HDB flat alone, and you can only buy resale ECs that reached a minimum of a 5-year occupation period (MOP).

Another major restriction, if you are not a Singaporean citizen, is that you cannot purchase new HDBs such as Build-to-Order (BTO) and Sale-of-Balance flats (SBF). Non-Singapore PRs can buy private condos, private ECs, and landed properties.

How to find a Property

There are a few ways to find properties in Singapore, but as an ex-pat, it’s easier to hire an agent. Choosing a local agent you can trust can make your search easier and hassle-free. A local agent can refine your search by guiding you towards the properties you can afford and the ones you are allowed.

As an ex-pat, you have some restrictions when purchasing property and land. Having an experienced agent with you means you will only look at the eligible properties. This way, you are also safer from scammers and overpriced property.

As the agent will be local, this person can help you negotiate better deals with the seller. While it does cost to hire an agent, it will make searching for a property way easier than alone. Even if you choose not to go with an agent, there will still be an agency fee of 1% of the purchasing price. It is to pay the agent selling the house.

Another way to look for properties in Singapore is to search online. There are a few good websites where you can get the feel of the housing market in this country. As a rule of thumb, when you search online, consider houses close to public transport and nearby amenities.

Plan your budget

Buying a property is a massive financial investment and a long-term commitment. To purchase any property in Singapore, you will most likely get a 30-year bank loan like most Singaporeans. It means 360 monthly installment plans throughout your life. Continue Reading…