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.

Large RRSPs nice problem to have, tax on them not so much

Posted By |

My latest Financial Post column can be found in Friday’s paper or online by clicking on this headline: Confronting the ‘wonderful’ problem of the too-large RRSP.

It describes what one source describes as a “nice problem to have.” That’s having accumulated so much money in a Registered Retirement Savings Plan (RRSP) that it presents a lucrative source of tax revenue for the federal Government once you reach age 71 and have to start making forced annual — and taxable — withdrawals from a Registered Retirement Income Fund or RRIF.

Doug Dahmer

This is a huge tipping point: moving from Wealth Accumulation to De-Accumulation, or what this site calls Decumulation.  Suddenly, you’re confronted with the flipside of what CIBC Wealth’s Jamie Golombek has famously dubbed “being blinded by the refund,” a reference to the juicy tax deductions we enjoy by making regular RRSP contributions during our high-earning high-taxed working years.

The article quotes regular Hub contributor Doug Dahmer – president of Burlington, Ont.-based Emeritus Retirement Income Specialists, and pictured here – who says baby boomers have a huge looming tax problem ahead with their 6-figure RRSPs once it comes time to start withdrawing money or securities from them. The FP piece references Dahmer’s Hub blog earlier this year: Better Retirement Choices: An elegantly simple solution.

The case for early RRSP withdrawals and delaying Government benefits

As Dahmer has related here and elsewhere, he does believe RRSPs can get too large (at least if you’re averse to generating large amounts of taxable income down the road), so he is an advocate of drawing down RRSPs during the low-taxed years that many semi-retirees may experience somewhere between corporate life (typically early 60s) until it’s RRIF time in your early 70s. Continue Reading…

A cure for the Retirement Blues

Posted By |

Whaaaat? Is it possible that this whole retirement thing can be a letdown once you finally get there — that some people may experience the Retirement Blues?

My latest MoneySense Retired Money column looks at the problem of having too much free time in your golden post-employment years, which you can find by clicking this highlighted headline: Retiring frees up 2,000 extra hours a year.

In the piece, I describe at least one senior who felt in retrospect that he retired too early: he had a great pension so money wasn’t a problem but he soon realized he had started to miss the many benefits of work. In short, he had a mild — or not so mild — case of the Retirement Blues.

As you’ll see, the column references an RBC program called Your Future by Design (See www.retirementdesigners.ca).

The 2,000 hours is the result of a simple calculation: 50 weeks multiplied by 40 hours a week equals the amount of “found” leisure time freed up by no longer working full-time. The 2,000 hours figure was referenced in a survey by the Royal Bank last year. Those with long commutes can add a few more hundred hours a year of “found” time.

Keep in mind that if you don’t work at all in retirement you’ll have a lot more than just those 2,000 hours a year to fill. Subtracting 3,000 hours for sleep, you’ll have a total of 5,840 waking hours every year. So if you live 30 more years after retiring, that’s 175,000 waking hours to be occupied.

Little wonder that 73% surveyed by RBC aren’t sure what they’ll do with all that time. We spend more time planning vacations (29%) or weddings (19%) than on retirement!

5 top retirement activities, plus a sixth that should be considered

RBC finds the top five activities for replacing work are health & fitness, travel, hobbies, volunteering and relaxing at home,  but I suggest in the column that many recent retirees may discover they want a sixth activity: work, if only on a part-time basis.

Imagine that: doing a little more of what you may have done too much of during your primary career, but enjoying it for its own sake, its networking properties and social stimulation. And, incidentally, adding a little to your retirement nest egg while you’re at it.

Continue Reading…

Me, retired? No way!

Posted By |

The other day I was at my local bank branch doing some business and the teller asked me how I was enjoying my retirement.

Hearing that surprised me but then I realized they had a message on their computer system that identified me as a retired employee of the bank.

For some reason I felt the need to defend myself and started to explain that I in fact was not retired, that I was busier than ever running my blog, selling my book, serving as a retirement coach and doing public speaking. But then I had a sudden change of heart and decided to stop what I was doing. I realized that defending myself was the OLDME raising its ugly head again and I don’t like OLDME anymore.

Label Me Anything But Retired!

The word retirement is being thrown around these days, describing so many things from the old style “full stop” retirement to everything but the kitchen sink. I believe lack of clarity is causing confusion for a lot of people these days.

Why should we automatically label someone retired just because they decided to leave a job which in my particular case lasted for 36 years? Continue Reading…

How to Double your Social Security payout

Posted By |

By Akaisha Kaderli

Special to the Financial Independence Hub

The average monthly 2016 Social Security check is US$1,341, which is US$45 per day, or a little over $16,000 per year.

Stories abound about how people are not able to live – or only struggle to get by – on their Social Security income in the United States. Even if they can manage to walk the budget tightrope, it’s not much of a retirement to look forward to and usually it’s one that is supplemented with work.

You can do better

Now is the time for you to take control of your finances so that you are financially fit for your retirement..

First you need to learn what your benefit will be upon your retirement age. You can do this by contacting social security .gov, opening an account and seeing your work history and future earnings. This can also be done via phone and snail mail but why? It’s much more convenient to do it online.

Once you know your estimated payout you can get to work doubling it by building a portfolio of dividend paying growth stocks. Or you can use an ETF such as DVY ( iShares Select Dividend ) which yields over 3% at its current price. Mix that with VTI ( Vanguard Total Stock Market ) and SPY ( S&P 500 Index ), both paying over 2% and you have a solid dividend growth portfolio.

While you wait for your retirement date

You can reinvest the dividends while you are in your accumulation phase thus compounding them for faster results. Over time you will see your quarterly dividend payments grow and grow as well as your portfolio value.

Why a dividend fund Continue Reading…

Weekly Wrap: Census; Estate planning; Trump’s succession plan; Mutual Funds embrace ETFs

Posted By |

Based on the widespread media coverage of the 2016 Canadian census this week, Canada’s baby boomers are going to be just as much of a demographic force as ever once they enter their golden years. For the first time, our seniors now outnumber our kids, the CBC reported.

Not all seniors are baby boomers, of course, but sadly the reverse will soon be true: most if not all baby boomers will be seniors. For this generation retirement (or semi-retirement) is a huge looming event, as a quick browse of this site will establish. Hey, just this week I got a package from Service Canada advising me that I will be able to draw Old Age Security (OAS) when I turn 65 next April. And I intend to take it then too, as I wrote in MoneySense last August: Why I’m taking OAS right at 65.

Boomers need to face up to their own mortality

All of which suggests it’s time for Canadian boomers to start looking more seriously at their own mortality and the admittedly dreary topic of estate planning. I covered this Thursday in my latest MoneySense Retired Money column: Retirees need to start thinking ahead.

In my Financial Post article that ran on Wednesday, I looked at estate planning from a different perspective: how the original “Wealthy Boomer” —  Donald Trump —  is tapping his family members for senior roles in his administration and possibly for his business succession planning. Click on Donald Trump is upping the ante in the Wealth Transfer game.

Ian Campbell

One of the sources for the FP piece was business transition and valuation expert Ian Campbell, pictured. (He himself admits to his strong resemblance to investing legend Warren Buffett!). By coincidence I reached out to Ian about the Trump piece just as he had published a blog on that very topic. It ran on the Hub Wednesday under the headline Generational Business Transaction: The Apprentice. Check the links to his site for his free newsletter.

The Truth about Working in Retirement

Our best-selling (G&M, Amazon among others) book, Victory Lap Retirement, continues to get some positive reviews. Earlier this week Ellen Roseman of Toronto Star fame wrote the following review on Golden Girl Finance: The Truth about Working in Retirement. As Ellen recounts, she herself has retired from her full-time newspaper gig but continues to be fairly busy in the semi-retirement described in our book.

Mutual fund companies Excel Funds, Franklin Templeton enter ETF business

Finally, some big news in the asset management industry, where it was announced that two Canadian mutual fund companies — Excel Funds Management and Franklin Templeton Investments — are entering the ETF business. The Globe & Mail’s Clare O’Hara reported this on May 2nd. Click on Franklin Templeton, Excel Funds to enter Canadian ETF market.

Continue Reading…