Victory Lap

Once you achieve Financial Independence, you may choose to leave salaried employment but with decades of vibrant life ahead, it’s too soon to do nothing. The new stage of life between traditional employment and Full Retirement we call Victory Lap, or Victory Lap Retirement (also the title of a new book to be published in August 2016. You can pre-order now at VictoryLapRetirement.com). You may choose to start a business, go back to school or launch an Encore Act or Legacy Career. Perhaps you become a free agent, consultant, freelance writer or to change careers and re-enter the corporate world or government.

How much is enough? Retirement Calculators and Rocket Science

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By Doug Dahmer

Special to the Financial Independence Hub

How much is enough? This is the number we all want to know as we strive to determine how much needs to be set aside to fund our aspirations for freedom of life after work. The industry’s tool of choice, to answer this question, is the retirement calculator.

While these calculators provide a rough guideline for those early on in their accumulation years; once the count down for retirement begins (around ten, nine, eight years before retirement lift-off), you need to shift your attention from the rough guestimates of retirement calculators to a more disciplined planning process. Failure to do so robs people of the retirement they dream of and keeps them from achieving the security they deserve.

Reality Oversimplified

I recently re-watched the movie Apollo 11: a film that focuses on the spaceflight that first landed humans on the moon.

While Commander Neil Armstrong and pilots Buzz Aldrin and Michael Collins garnered most of the headlines, as I watched the mission unfold, it occurred to me that the unsung heroes of this mission were really the 100+ engineers back in Cape Canaveral. These were the people tasked with planning and then monitoring every single detail of the flight.

Complex? Unquestionably. Yet, this mission did have a pre-planned duration (8 days), a known destination (the lunar surface), a highly-researched flight plan and the ability to pre-determine fuel consumption: prior to lift-off.

Those approaching or currently living in retirement should be envious of the simplicity of this type of mission. Why? Because baby boomers face a much more daunting mission. A journey of unknown duration (often 11,000+ days), to an (all too often) poorly defined destination, along an uncharted course (Baby Boomers are redefining retirement), while constantly worrying and wondering if they will run out of fuel (money) before their journey’s end.

Unfortunately, the guidance system offered by the financial services industry is based upon the simple math of retirement calculators. Google “Retirement Calculator” – you will find every financial planning institution has an on-line version readily available. Continue Reading…

RBC leads Big 5 banks in Retirement planning, Dalbar study finds

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The big 5 banks ranked by DALBAR in order of client preparation for Retirement

The Royal Bank of Canada (RBC) topped the list of big Canadian banks in serving the Retirement needs of Canadians, according to a new DALBAR study released this month. A first of its kind, the study — released on Feb. 5th and covered in the trade press — sought to assess how the Big 5 handled Retirement conversations through its retail branch network. It also rounded out the study with research on smaller banks, credit unions and regional financial institutions: 1,800 Canadians were polled, all with ten years or less until Retirement. 57% were males and and 74% had portfolios in excess of $100,000.

 

5 major alternative Financial Institutions ranked by client preparation for Retirement.

In this press release, DALBAR said “Retirement is an ever-growing concern for many Canadians, with increasing life expectancies, diminishing pensions, and a rising cost of living: the retirement nest egg has become more important than ever.”

Well, you’ll get no argument from me on that score, now that I’ve personally started to draw down on my own little nest egg. (Our family uses both RBC and TD, both for banking and through their online brokerage divisions. That’s typical, by the way: 29% of those polled had retirement money with more than one institution.)

Percentages of clients polled at major banks and other financial institutions

“RBC representatives used their experience and expertise to ease client fears, imparted useful knowledge about closing retirement shortfalls, and made the client feel it was a financial coaching experience instead of a transactional one,” DALBAR said. To me, the significant phrase their was “financial coaching experience instead of a transactional one.” Clients rated their experience with RBC to be one of “financial coaching” 70% of the time, higher than the 53% rate at the other big banks.

Only 50% of bank reps introduced the benefits of proper financial planning, although 82% of clients were promised a financial plan. Only 44% of the meeting featured itineraries. And while CIBC, RBC and National Bank led in offering followup meetings with 90% or more of clients, Scotiabank (number 2 overall) led in talking about digital retirement tools at 80% of meetings.

DALBAR vice president Anita Lo said many Canadians realize that government safety nets alone (i.e. CPP/OAS/GIS) are not enough to support healthy retirement lifestyles, so “this is the time for the banks to shine in helping Canadians plan for retirement.”

No surprise that when it comes to Retirement (and I’d argue just about everything else), Canadians prefer speaking to a real person for financial advice instead of relying on online information: DALBAR cited a CIBC study that found that’s the case for 70% of us.

Wide variance in placement of CFPs and PFPs before clients

Staffing with personnel with key financial designations is obviously a plus. DALBAR found RBC places staff with either the CFP or PFP designation 83% of the time for client conversations about Retirement, compared to just 40 across financial institutions generally. Continue Reading…

Think you’re the only one without a retirement plan? Don’t press the panic button

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By Jordan Damiani, CFP, TEP, RRC 

Special to the Financial Independence Hub

Like many Canadians with retirement on the short-to-midterm horizon, you may have spent more than one sleepness night worrying that you’re not prepared.

In fact, at least half of Canadians over the age of 50 think they’re not on track with their retirement planning and about the same number of non-retirees don’t have a financial plan.

Experience suggests that people may be afraid that they won’t have enough money to retire, but in reality, they may not even know the true answer. I take the view that not having a formal plan in place doesn’t necessarily equate to not being on track to retire. There are many steps you can take in the critical count-down years to retirement that will reframe your planning and investment approach and alleviate anxiety and stress.

Take inventory of present Financial Situation

I recommend assessing your last six months of credit, debit and cash spending: grouping your expenses into categories. To project for the future it’s important to understand where your money is being spent today. This activity will help to identify where better savings could be achieved. Completing a net-worth statement is also important to determine what you own vs what you owe.

Understanding your pension entitlements is also a key stress reliever. Pension plans will typically offer retirement projections. At 65, CPP has a maximum benefit of $1175.83 monthly and $613.53 for Old Age Security. It’s important to call Service Canada to get an accurate CPP projection to find out what you are eligible to receive. Similarly, OAS is tied to Canadian residency, with 40 years being a requirement for the maximum eligible payout.

Goal Setting and Strategic Planning

After taking inventory, the next step would be determining what income you actually need in order to retire. Completing a pre-and post-retirement budget is an exercise that will help determine the after-tax figure to target. Likely the targeted income would be tiered with a higher spend being projected for the first 10-15 years of retirement ($5000-$10,000 a year for travel) and lower lifestyle costs thereafter, with some planning as a buffer against long-term care costs. Continue Reading…

7 tips to create and maintain a healthy Lifestyle

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By Jessica Ann

Special to the Financial Independence Hub

A healthy lifestyle is a significant factor that can make your life more enjoyable. If you want to enjoy more of life and all the perks that come with it, you have to make sure that you are physically and emotionally healthy. These are the requirements for a longer and productive life.

Everyone should be able to recognize that having a happy existence is something they can achieve if they’re willing to embrace a life that is focused on caring for physical, mental and emotional flourishing. There are many factors that may affect your physical health but you also have to know that you can always change things and maintain a healthy lifestyle.

Here are some of the most important tips to help you create and maintain a healthy lifestyle:

 Apply rule ‘Early to Bed Early to Rise’

 You often hear people who were not able to get enough sleep about how this deprivation has affected their daily routine. Your productivity is also dependent on how well you rested the night before. This is because the body needs to recharge after a tiring day. With this, you should make it a part of your list to apply the rule ‘early to bed, early to rise.’ Make this a habit and be consistent in following this rule. This is  important especially if you are a very busy person.

Diifferent distractors can hinder you from sleeping early and these are the ones you have to eliminate. Before going to bed, you should put your smart phone and other gadgets aside. This way, you will be able to sleep immediately. Early risers have the best opportunity to do more during the day because they have more energy. Let this be a motivation for you to be able to apply this rule for yourself.

 Exercise regularly

Regular exercise is important for everyone because of the different benefits we can get from it. First, this is one of the most natural ways to reduce weight. For people who are planning on losing weight naturally, they should set a regular exercise routine. Aside from that, it can also lower blood pressure and the blood cholesterol level. And if you want to take care of your heart and avoid the risk of type 2 diabetes, exercise is the best thing to consider. As well as a regular meditation practice for helping calm the mind before bed. Mindfulness meditation is also best.

 Avoid Junk foods

 You become what you eat. This may sound a bit harsh but the reality is that the junk foods that you are eating greatly affect your body and your whole system. Remember that the body depends on the food you eat and how it functions in the long run will be affected if you are not going to choose wisely. There are different ways on how junk food can affect you. Instead of supplying your body with the right amount of energy, you are depriving yourself with the nutrients that you need to get through with the day. Continue Reading…

The costs of Quality of Life in our later years

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SeniorsAdvocate.ca

By Barbara J. Kirby, Certified Professional Consultant on Aging (CPCA)

Special to the Financial Independence Hub

Everyone measures quality of life differently but the underlying concern for many older people is how long their money will last? Aging and health conditions may dictate the type of accommodations and amount of support you need now or down the road. However, quality of life does not need to be measured by where you live but more by the effort you put into caring for yourself and planning for the right supports to be around you, including type and frequency of that support.

Whatever our situation we also need to draw on our inner strength to find comfort and solace if our lifestyle is not as expected. Basically, we need to toughen up. What is it that holds us back from having a good quality of life as we age then? Some of it is denial, and refusing to deal withour chronic aches and pains, loss of mobility, loss of hearing and loss of eyesightas well as simple activities such as cooking for ourselves and cleaning.

We either need to have the ability to pay to relieve the stress of these issues, or have other family or community resources and our quality of life can improve dramatically. I have seen the biggest turnaround in the quality of life for people who participate in fitness and social programs. Those who receive in-home physiotherapy get and use hearing aids that work well, have cataract surgery, knee replacements and hip replacements all with a good rehabilitation programs and continued physiotherapy after they come home.

These are all without exception of course to each individual unique circumstances but the simple rule of thumb is plan to pay for these support services. Rehab twice a week may cost anywhere from $50 to $150 per visit and a companion twice a week may cost anywhere from $25.00 to $40.00 per hour and usually expects to work for a minimum of 3 hours; some companies are saying 4 hours now. Having a family member who is a good advocate for you, who makes an effort to understand and ask questions re: medical issues, and who knows how to access resources when needed is a bonus. You can’t always expect a family member to fit into this role.

In addition, hiring a companion to give your family member a break is important: someone who is equal to you as a peer to have engaging conversations with and has the ability to drive. The common questions asked are, where will I live? What is available? How much will it cost? These are not simple questions to answer because there are many variables. Here are just a few questions to consider.

• What is your income level?

• Do you have retirement savings or access to other capital?

• What community do you want to live in?

• What are your health conditions?

• What are your expectations in relation to your future health needs as you age?

• How soon do you want to move and do you have family or anyone to support you In Canada and the Province of B.C.?

Our social system provides us with most of our medical expenses and offers subsidized housing and care if we are lower income. Accessing independent or assisted housing can be confusing. There are many access points to the different types of housing including, subsidized, private, co-op housing, co-housing, market rental housing, and low-income housing. Some of the entry points may be through the health authorities, or BC Housing, or directly through the homes and other various housing societies.

There is not one central point where you have access to all. You can go on line to Seniors Services Society, or call BC211or call a local seniors centre for information or ask for help from a professional housing specialist. Beware of the ones who don’t charge but are paid a referral fee by some of the private assisted living homes.

Here are rough numbers but they will give you an idea of where you fit in. Continue Reading…