Most of your investing life you and your adviser (if you have one) are focused on wealth accumulation. But, we tend to forget, eventually the whole idea of this long process of delayed gratification is to actually spend this money! That’s decumulation as opposed to wealth accumulation. This stage may also involve downsizing from larger homes to smaller ones or condos, moving to the country or otherwise simplifying your life and jettisoning possessions that may tie you down.
By Shael Weinreb, CEO and Founder of The Home Equity Partners
Special to Financial Independence Hub
November marks Financial Literacy Month, a time when Canadians are encouraged to “Talk Money” and build confidence in their financial decisions. When it comes to one of the biggest financial assets we own, our homes, though, that conversation is still far too narrow.
Right now, one message dominates the conversation: if you’re a homeowner struggling with affordability, a reverse mortgage is your best bet. Reverse mortgage rates are dominating headlines, even for retirees aging in place, but it’s making the alternative financing conversation biased and incomplete.
There’s no denying that reverse mortgages can be useful for some. They provide cash on hand, but they also saddle investors with new debt, compound interest, and a shrinking equity stake over time.
As someone who spends every day helping homeowners unlock equity without new debt, I see the same pattern over and over. People feel backed into a corner because they’re told they only have one choice. That needs to change.
The Alternative no one’s talking about
There’s another way to access your home equity, one that doesn’t involve taking on more debt or losing control of your home. It’s called a Home Equity Sharing Agreement (HESA).
Here’s how it works: a HESA gives you a lump sum today in exchange for sharing a portion of your home’s future appreciation. You keep full ownership and control. There are no monthly payments, no interest, and no loan sitting on your balance sheet.
When you sell (or buy out the agreement), the investor shares in your home’s gain or loss. It’s a partnership, not a payday loan in disguise.
This model works for a much broader group than reverse mortgages: homeowners under 55, people who can’t borrow enough through traditional channels, or anyone who wants to protect their equity while sharing market risk.
At The Home Equity Partners, we’ve helped clients use this model to pay off debt, fund renovations, or supplement retirement income without taking on new financial stress.
Why you haven’t heard of it
The simple answer? Awareness. Most advisors are trained on debt-based tools such as mortgages, HELOCs, and lines of credit because that’s what the industry sells. Reverse mortgages fit neatly into that mold. HESAs don’t. Continue Reading…
The majority of Canadians are afraid they’ll run out of money in Retirement, especially women and young people, according to a survey released Wednesday morning by the Canada Pension Plan Investment Board (CPPIB).
The 2025 CPPIB Retirement Survey (for Financial Literacy Month) says 59% of all Canadians are afraid of running out of money during Retirement, with the percentage jumping to 63% for women, compared to just 55% of men. It also found a whopping two thirds (66%) of Canadians aged 28 to 44 share the same fear. As the CPPIB graphic below illustrates, those who have a financial plan are slightly less worried.
As you’d expect the CPPIB to point out, the Canada Pension Plan (CPP) helps protect retired Canadians from this risk: as it says above, CPP “benefits are payable as long as you live and [are] indexed to inflation.”
Indeed, CPP and the other main government retirement income program, Old Age Security, are both valuable sources of inflation-indexed retirement income. CPP is available as early as age 60 and OAS at 65 but a staple of Canadian personal finance commentary is that the longer you wait to receive benefits, the higher the benefits will be. In the best of all worlds, you’d wait until 70 for both programs to start paying out, even if you have to keep working longer and/or start withdrawing money from your RRSP before it’s mandated at age 71/72. (While the CPPIB doesn’t mention it, retirees with no other savings may also benefit from the Guaranteed Income Supplement to the OAS: and the GIS is tax-free.)
The second graphic reproduced below is less straight-forward: it appears to present various excuses for delaying the creation of a proper financial plan to help get to Retirement. Roughly half of younger Canadians cite their need to advance their careers and make more money, and to buy their first home as priorities.
While it’s true that if nothing else, the future arrival of CPP and OAS benefits should put minds partially at ease about covering off basic Retirement expenses, it seems to me pretty obvious that at least for those who lack a generous employer-sponsored pension plan (ideally an inflation-indexed Defined Benefit pension), that it will be necessary to maximize savings in RRSPs and TFSAs as soon as possible.
Because of the Time Value of Money and the magic of compounding investment returns (especially when tax-deferred in RRSPs and TFSAs), the sooner you start saving in these vehicles the better. There’s no excuse not to make RRSP contributions from the get-go, ideally as soon as you land your first real job, since it reduces your income tax. Yes, decades from now when RRSPs become RRIFs you’ll have to pay some tax on the ultimate withdrawals, but that’s more than made up by the tax-deferred investment growth. Continue Reading…
My latest MoneySense Retired Money column looks at a must-read new book on Retirement as well as two related books on DIY stock-investing. You can read the full column by clicking on the highlighted headline: Who you gonna trust: Barry Ritholtz or Jim Cramer?
The must read and main focus of the MoneySense column is William Bengen’s A Richer Retirement: Supercharging the 4% Rule to Spend More and Enjoy More. If that sounds familiar it should: Bengen’s original book on the 4% Rule is considered the bible of retirement, with his famous “SAFEMAX” guideline of 4% a year being an annual amount of withdrawals that should be “safe” for retirees to continue for a full 30 years, even after inflation. The original book, titled Conserving Client Portfolios During Retirement, was first published in 2006.
Never mind that even Bengen considers 4.7% be a more universal SAFEMAX. The original book was aimed at financial advisors and professionals while the new one ostensibly is aimed at retail investors and retirees. I say ostensibly because I was a little disappointed with it and found the plethora of complicated charts and tables a bit much for lay investors. Still, there’s a lot of common sense there: Inflation is big long-term threat to retirees as are bear markets. Withdrawing too much from portfolios can be disastrous if you are unfortunate enough to retire just as a bear market hits and/or inflation starts to bite.
On the other hand, sticking with the old 4% rule or even the smaller amounts of 3% or even 2% advocated by some cautious souls, could result in you withdrawing less than you really need to enjoy retirement, although the tax department and any heirs might commend your caution and frugality.
How to make money in any market
Amazon.ca
While it’s rare for me to buy new hardcover books because I receive so many “free” review copies of financial books, I actually did buy A Richer Retirement as soon as it was available on Amazon. Plus, unusually, I also bought two other brand new books on the related topic of investing and stock-picking.
One was Jim Cramer’s How to make money in any market, by the sometimes revered but often maligned host of CNBC shows Mad Money and Squawk on the Street. It’s fashionable for some financial journalists who believe in efficient markets and indexing to diss Cramer but I am not in that crowd. In fact, Cramer recommends that newcomers to investing put the first US$10,000 into an S&P500 index fund or ETF.
However, for seasoned investors and even retirees, Cramer suggests putting half a portfolio in index funds and the other half in individual stocks. Where we part company is his recommendation that the bucket of stocks be restricted to just five names, which would mean 10% in each. For my money, that’s way too concentrated and risky, even though he often brags about how he is often accosted by Nvidia Millionaires who tell him they bought that stock as soon as he announced on air that he had renamed his dog Nvidia.
How NOT to invest
Amazon.ca
Finally, regulars to this site may already have read Michael Wiener’s review of Barry Ritholtz’s How NOT to invest, which appeared here in this blog a few weeks after appearing on his Michael James on Money blog.
To be sure, those who are fond of disparaging Jim Cramer might quip that should have been the title of his own book, seeing as there are actually ETFs out there that try to profit by shorting Cramer’s picks. As of this writing, my copy has arrived but I have not yet finished reading it, as it’s a bit longer than the other two.
But based on the book blurbs and Michael’s review, I have no doubt it will be worth reading, whether for younger investors or seasoned ones and/or retirees.
Finally, while I only just received my review copy, I note that David Chilton is publishing a new edition of his classic financial novel, The Wealthy Barber, which any young person just starting to invest should acquire. I look forward to revisiting it.
By Dale Roberts, CutTheCrap Investing, Retirement Club
Special to Financial Independence Hub
We all make mistakes. There is no such thing as the perfect portfolio. In the accumulation stage we usually have time to recover from mistakes and hopefully we’ll learn from those mistakes. Learning from mistakes will usually move us towards a more passive global core index-based portfolio. In retirement, we don’t always get a second chance. It is crucial to be aware and avoid any retirement pot holes. Kyle at the Canadian Financial Summit asked me to discuss and outline some of the key and common retirement mistakes. Of course, they are too many to mention in a 45-minute interview. Below, I will outline more of the common mistakes in retirement.
Here’s an AI outline of the Canadian Financial Summit.
The Canadian Financial Summit is an annual, free, virtual conference for Canadians to learn about personal finance and investing from Canadian experts. It covers topics like retirement planning, tax optimization, and investment strategies, with content tailored specifically for a Canadian audience to address Canadian-specific financial products and regulations. The goal is to provide practical advice to help attendees save money, invest better, and improve their financial literacy.
Canadian Financial Summit Speakers
The Summit begins on October 22 with headliners such as David Chilton (new Wealthy Barber book out in November), Rob Carrick, Jason Heath, Preet Banerjee and more. Here’s the list of speakers and topics.
Once again, I am covering common retirement mistakes. Here’s the range of topics I had prepared for my discussion with Kyle. We touched on a few of these.
We have to start in the accumulation stage
Many retirement mistakes are born in the accumulation stage, and in the retirement risk zone.
Too much risk
Most investors take on too much risk. They are not investing within their risk tolerance level. That said, it has not been a problem since 2009: we have not been tested. But retirees and near retirees were certainly burned by the financial crisis and the dot com crash. For too many, their retirement was greatly impaired.
And of course, we can add in not taking on enough risk, for those who are risk averse. We need to take on the risk necessary to achieve our financial goals. All said, we always need to invest within our risk tolerance level.
The accumulation stage is dead simple
Go for growth while investing within your risk tolerance level. More money is “more better.” More money will create more retirement income.
Paying ridiculously high fees
Fire your wealth-destroying high-fee mutual funds and the advisor they rode in on. Ditto for the retirement stage. You can do the research necessary, or look to an advice-only planner who specializes in retirement planning.
Don’t count the dividends
Don’t PADI – Potential Annual Dividend Income.
That’s like watching the oil gauge as you try to make the car go faster.
The dividends do not contribute to wealth creation. Dividends are a removal of value; that’s it. The share price drops by the value of the dividend. If you move the dividends back to your stock or ETF holding to buy more shares you are simply owning more shares at lower prices.
As Yogi Berra would ask: do you want your medium pizza cut into 8 slices or 6 slices?
You still have a medium pizza, no matter how you slice it.
Dividends are a tax drag in taxable accounts. You are paying tax on money you don’t need. You are paying tax on money that creates no value. It’s phantom wealth creation, but with real taxes.
Avoid covered calls and other specialty income
They underperform by design. That fact should be outlined in the prospectus.
Canadian home bias
This can be related to a fascination with Canadian dividends or Canadian Blue Chip stocks in general. For sure, building a portfolio of Canadian Blue Chips is known to greatly outperform the TSX Composite. But we need greater diversification to reduce risk.
A Canadian with severe home bias is putting all of their chips on a few sectors, one country and one currency. It’s not smart.
We should consider a global portfolio, at the very least a Canadian and U.S. portfolio.
Stock portfolios that are too concentrated
It’s common to see portfolios with just a few stocks. We need 15 to 20 stocks to mimic an index. You’re likely best to hold 20 or more.
We create severe company risk with a concentrated portfolio.
Clear your debt
Carrying debt into retirement is a common “mistake.” A recent report suggested that 29% of Canadian retirees will carry a mortgage.
Consider the tax burden that it takes to create the income to pay the mortgage. Every extra dollar is at the top marginal rate. It’s a mortgage payment plus tax on top. A $3,000 monthly mortgage payment might cost you $4,000 or more when you consider taxes. It could also contribute to OAS claw back.
Consider the car payment as well. Try to enter retirement with a paid-off vehicle.
This allows us to ‘split income’ before the age of 65. At age 65 we can then split income from your RRIF.
Ditto for setting up joint taxable accounts. Pay attention to attribution rules for taxable accounts.
The Retirement Risk Zone
Not preparing the portfolio (de-risking) for retirement before retirement is a common mistake. We enter the retirement risk zone several years before retirement. That was our topic last year for the Financial Summit.
Mistakes in Retirement
Not running a retirement cash flow calculator
This is a must for every retiree. A retirement calculator will help you discover the most optimal (and tax efficient) order of account harvesting. That is when, and how much, to remove from your RRSP / RRIF, Taxable accounts, and TFSAs, working in concert with pensions, other amounts plus, CPP and OAS. It can help us create tax efficiency and manage OAS claw backs.
Most Canadians will benefit from the RRSP / RRIF meltdown strategy. It involves delaying CPP and OAS for the massive increases in pension-like, inflation-adjusted income.
From age 65 to 70, CPP increases by 42%, OAS increases by 36%.
To delay CPP and OAS we often use the RRSP / RRIF accounts (and at times a slice of TFSA or Taxable) to bridge the gap during those years. That is, we spend more heavily from the RRSP / RRIF while we wait for increased CPP and perhaps OAS.
It’s different for everyone, the retirement cash flow calculators will help you uncover the right approach for you. Only the software knows.
There are many retirement calculator options that are free use, or available at a very low fee. We are reviewing many of them at Retirement Club.
Examples: MayRetire, Milestones, Adviice, Perc-Pro from Frederick Vettese, optiml.ca, PWL Capital also offers a retirement calculator.
Not spending, not enjoying their money
We might embrace a U-shaped spending plan. We spend more in the early years: the go-go years. It might dip in the slow-go years, and then increase again in the later no-go years as health care cost, living in place, or retirement home plus assisted living costs increase greatly.
Billy and Akaisha Kaderli, RetireEarlyLifestyle.com
By Billy and Akaisha Kaderli
RetireEarlyLifestyle.com
Special to Financial Independence Hub
While taking a break from the sun and surf, relaxing in my hotel room in a tiny beach town on Mexico’s rugged Pacific Coast, my cell phone rang.
‘Howdy, Beautiful!’ my friend of four decades shouted from snow country, thousands of miles away. “Been watchin’ your website for years and I read all your stories. Love ‘em. But I thought you were retired!“
How many times over the decades since we left the conventional work force have we heard that challenge? Our responses have ranged from surprised silence to justification of our volunteer work, to just laughing out loud.
We run a popular website, photograph our travels and share our lifestyle adventures with people like you. Some think that by doing this, we have somehow become unfit to call ourselves “retired.”
Today I would like to pose this question to you: “Once you leave the mainstream labor-for-paycheck world and become financially independent, aren’t you free to choose what you do with your time? When is something considered work, and when are you pursuing a passion?“
Receiving Monetary Compensation
Most people with whom we have this conversation have one particular definition of retirement: You are not retired if you are receiving money for work performed.
Well I guess that rules out all of the Wal*Mart Greeters… but seriously, we’d like to counter this simplistic point of view.
If you are a landlord with several rentals that bring in monthly retirement income, can you ever be considered retired? Do you not have to oversee the properties, be responsible for making repairs, pay for maintenance and upkeep and search for qualified tenants? At the very least you must concern yourself with your manager.
What if you are like a friend of ours who discovered he had a latent talent for making sculptures, and now sells his bronze statues all over the eastern seaboard at Toney art shows? He receives funds from his commissioned work, but he couldn’t be happier following his passion. What does he care if someone doesn’t think he is retired?
Other friends whom we know well sold their accounting firm and moved to a working ranch – a dream come true for them. Instead of pushing paper and tax forms, they now raise horses, scoop poop, grow grapes to make award-winning wine, and cultivate boutique vegetables which they sell at local farmers markets. Is that work? No question about it. However, they are undoubtedly following a passion and their lives are enriched because of it.
A friend of ours is a domestic goddess with unmistakable artistic flare, and her husband is an adventurous handyman. They purchase old Victorian homes, renovate them room-by-room and then sell them at profit. Sure they receive income from their labors, but this income isn’t what sustains their portfolio. And why not utilize your talents and implement your dreams at this time of life that should be yours?
If you have left your Monday-through-Friday job but own a diverse portfolio which you must manage, or if you are trading stocks or receiving dividends, does this monetary compensation for your lifestyle disqualify you out of the official definition of being retired? What if you find the world of finance riveting? Are you supposed to stay away because someone somewhere will think you are disingenuous or not “really” retired?
If you are working you are not retired
Some people believe that if you do any sort of activity that would be considered in any fashion to be work, or if it takes any effort whatsoever, you have become unsuitable to wear the “I’m retired” label.
Yet we know all sorts of single retired women who raise dogs to sell, train rescue dogs for animal shelters or have a modest dog-walking “business” that they run in their neighborhoods. How many older retired men have we met over the years and in numerous communities who will fix your plumbing for a pittance or trade, solve an electrical problem or put down some flooring in your home? What if you want to write music, direct a play or act in one? All of this takes effort, focus and work.
What if you wanted to build a boat, restore old classic cars and sell them, or play in a jazz band for the clubs in your town? Are you back to the working grind – or engaging your passion?
Volunteering or mentoring
One may or may not receive compensation for donating time and expertise. Teaching English as a second language could get you out of the house and add dimension to your day, or it could defray the cost of airline tickets to a foreign country. If you allow this skill to enhance your travel budget have you transgressed against The Rules of Retirement?
I taught Thai massage in Mexico for free and created a note card business for the local women in my neighborhood. Billy coached a women’s basketball team to the finals, imported an electronic scoreboard for the city gym and built tennis courts in this same Mexican town. Was this work? Definitely. We both put in more hours than we want to know, but the return was making friends and having personal satisfaction for helping others. Continue Reading…
Posted By 
Posted By 
