Decumulate & Downsize

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.

Budget 2015: Savers, retirees hope for more TFSA room, lower RRIF minimum withdrawals

Posted By |
17036735929_81f61edc6e_n
Finance Minister Joe Oliver (Department of Finance/Flickr)

By Jonathan Chevreau

Journalists and financial experts will be entering a “Lock-up” this morning in Ottawa, getting roughly a six-hour head start on the rest of us on the contents of the 2015 federal budget.

Even so, a combination of leaks and informed speculation give us a pretty good idea about the contents, which will gush forth within seconds of 4 pm, when the embargo is lifted.

Here at the Financial Independence Hub, we will be focusing on three main measures that if announced will do much to speed or improve our collective “Findependence.” Our hoped-for “trifecta” from Finance Minister Joe Oliver (pictured above) includes the much-delayed promise of a doubling of annual TFSA limits, a lowering of minimum withdrawal limits for RRIFs, and lower tax rates  for small business. Continue Reading…

How to Choose a Retirement Location

Posted By |

By Billy and Akaisha Kaderli,

Special to the Financial Independence Hub

Chiang Mai, Thailand

So you and your spouse have decided to retire. At some point in your retirement planning you must ask yourself where you would like to spend your Golden Years. The following questions and insight should place you on the right path for finding just the location that suits your needs.

First things first

The first question you must ask yourselves is whether you want to stay in the home in which you are currently living or would like to move elsewhere. Retirement is a big step.  Sometimes people feel more secure staying in familiar surroundings because it makes the transition to your new lifestyle smoother. Others, for financial reasons, a change of pace, health reasons, or for better weather, want to relocate. In this case, the next decision you must make is whether you want to stay in your home country or move overseas.

If you want to stay in your home country you must decide what sort of climate is most attractive to you. Do you want to experience the four seasons or have a more moderate, year-round climate? Do you like mountains or beaches? What size of city or town do you most enjoy? These questions are important because they automatically exclude places you won’t need to research. Knowing what you prefer in climate, city size and geographical configuration carries a lot of weight in terms of your happiness quotient.

Another thing to consider is that if you choose a town or small city, are there adequate medical facilities nearby? Larger cities tend to have a full range of medical care. Smaller towns generally have clinics and a variety of doctor’s offices, but perhaps not the equipment needed for complex medical situations.

Narrowing your search

Continue Reading…

Winning the Tax Game during Your Decumulation Years

Posted By |

Tax Game Screenshot (800x496)We’re happy to present another Decumulation blog from the forward-thinking Doug Dahmer, which you can find below.

This instalment focuses on a very interesting web-based game that demonstrates how important tax planning is, particularly during your Decumulation years.

No doubt you’ll be shocked but not surprised to discover that the single biggest expense in Retirement will be income tax. Fortunately, there is more opportunity to take advantage of proper tax planning once you have begun to draw down on your nest egg. After you read Doug’s blog below, click on the links provided to view a 3-minute video on how to play the Retirement Tax Game. Then you’ll want to play the game yourself to see how well prepared you are for this daunting task. Note that you may be asked to download Microsoft Silverlight in order to play the game. — Jonathan Chevreau 

By Doug Dahmer,

Emeritus Retirement Income Specialists

Special to the Financial Independence Hub 

Many of our clients and friends still believe there’s  inherent fairness in government programs.

When I point out disparities in medical services, government contracts, municipal board decisions, welfare payments and the greatest of them all —  taxation —  I, sadly, waken them to the painful reality that lots of government programs just aren’t fair.

Too often in our first world, enlightened, democratic society it is still “What you know,” “Who you know” and “When you know.”

While I can’t help with many of the program disparities I can help in one and it’s the most important to you anyway: Taxation.

The greatest expense in retirement Continue Reading…

Life Annuities: What to Watch Out For When You Buy

Posted By |
chantal-marr-findependence-hub
Chantal Marr

By Chantal Marr,

Special to the Financial Independence Hub

An annuity is a type of investment sold through insurance companies. You can think of a life annuity as a life insurance policy in reverse — you pay the insurance company a large lump sum of cash and in return the insurance company pays you monthly premiums for life.

This can act as a form of retirement income after you leave the work force. Although life annuities can be a great option, here is some advice on the things you should look out for when it comes to life annuities.

Know the Difference between Immediate and Deferred Annuities

You should understand and watch out for the language in an annuity agreement. There is language that will signal if the policy is an immediate or deferred annuity. As its name implies, an immediate annuity means that you will obtain your fixed payments right away. There will be no delay in receiving your money. A deferred annuity is different. Continue Reading…

Having retirement options means freedom

Posted By |
robb-engen
Robb Engen, Boomer & Echo

By Robb Engen, Boomer & Echo

Special to the Financial Independence Hub

Saving outside of my defined benefit pension plan will give me several options to consider when it comes to retirement.  To me, options mean freedom, even though I’ll be faced with some tough choices.  Here’s why:

According to my plan provider, I should be able to retire at 57 and receive an annual pension of roughly $64,800.  That will equal approximately 55 per cent of my average salary in my top five earning years.

(Note that I contribute nearly 12 per cent of my salary toward the pension plan each year, in case anyone believes these retirement benefits were conjured out of thin air).

I’ve also built up a decent sized RRSP portfolio – over $100,000 before my 35th birthday.  If left alone with no further contributions, and assuming an 8 per cent annual return, this portfolio will be worth $543,000 by the time I turn 57.

To stay in a 32 per cent tax bracket (22 per cent federal, 10 per cent provincial) I could withdraw up to $23,000 (in today’s dollars) from my RRSP to give me an annual salary of $87,800.

The RRSP Meltdown strategy Continue Reading…