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.

Book Excerpt from The Wills Lawyers: The Knife in Dad’s Heart

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I will be one of four speakers tonight at The Financial Show in downtown Toronto. Three books will be distributed, including Findependence Day and The Wills Lawyers. The authors/wills & estates lawyers provided the Hub with a sample excerpt of their book below, a sad little tale that starkly reveals the need to have a will in place before the inevitable occurs. As it has already been published, we have not altered the text.  — JC

Les&BarryBy Les Kotzer and Barry Fish, The Wills Lawyers

Special to the Financial Independence Hub

It’s not as if Kayla and her three brothers had always gotten along with each other; but when Dad’s health started to go downhill, all four siblings agreed amongst themselves that in Dad’s presence, they would never argue and would never speak of sickness or death. All they agreed to speak of in his presence was the upbeat, the comical, only those special warm subjects that make people happy. Continue Reading…

Worried about money in Retirement? The best parts are free!

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happy mature couple relaxing baltic sea dunes
Walking by the lake? Priceless!

 

By Jonathan Chevreau

Here’s my latest MoneySense blog, entitled The Cost of Leisure Activities in Retirement. Given the media fuss today over Sun Life’s latest “Unretirement” survey — see Barry Critchley’s piece at the FP and my subsequent blog here at the Hub — you may find some solace in the MoneySense blog, which suggests that many common activities in retirement just don’t cost that much.

As for the prospect of more of us working until age 66, I don’t think that’s all that tragic: this web site focuses on longevity and the concurrent idea that the longer we stay active and productive the better — both for our financial situations and our sanity, or that of our significant other!

By the way, I expressed my views about the Sun Life survey and “Unretirement” Wednesday evening on CTV TV, which you can find here.

Here’s the blog: Continue Reading…

The Growing Power of the TFSA

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Canadian Tax-Free Savings Account concept word cloud

By Jonathan Chevreau

The Financial Post has just published an online version of my piece, entitled The Rising Power of the TFSA. Are RRSPs even relevant any more? Click on the link to read the full article.

In a nutshell, of course RRSPs are still relevant for most of us, and we’d hate to discourage people from topping up their RRSPs before the imminent Mar. 2nd deadline this year. My point really is that while there are certain people who should not RRSP if they have only enough money to fund a Tax-Free Saving Account, it’s not quite the same in reverse.

I really can’t think of a reason why anyone age 18 or over, anyone approaching advanced old age, and the rest of us between those extremes, shouldn’t max out their TFSAs. It’s the gift that keeps on giving — tax-free income, that is. (An aside for any American readers: Canada’s TFSA is the equivalent of the Roth IRA).

patmckeoughWe have run several pieces on TFSAs here at the Hub, the most recent one being a joint collaboration between myself and TSI Network.ca’s Patrick McKeough. (TSI is one of his flagship newsletters, The Successful Investor).

In the piece 5 low-risk investments for your TFSA, Continue Reading…

The Mathematics of Catastrophe

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dougdahmer
Doug Dahmer

By Doug Dahmer, Emeritus Retirement Income Specialists

Special to the Financial Independence Hub

I was not the best math student in the world but I certainly enjoyed numbers. I especially liked prime numbers and their unique indivisibility. I still cannot figure out how they come to be.

In the course of my retirement-income planning career I had another math lesson that now holds my interest even more. Here is the lesson. If you halve a number, you have to double the new number to get back to the original number.

Now put your income-generating capital into that equation and you will see why it holds my interest. If you are deriving income from X and it goes to 1/2 X … well, you don’t have to be Einstein to see the problem.

iStock_000034496492_Medium (640x427)When you draw a predetermined dollar amount from your investment portfolio and it drops by ½ you are about to experience the mathematics of catastrophe. Continue Reading…

Reflections From The Early Days of Spending In Retirement, Part 2

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By Patricia Gass,

Special to the Financial Independence Hub

sunset-landing

As we return to reality from our 3-week vacation “high,” I’m hoping to make the happy feelings last as long as possible.

After all, that’s what a great vacation is all about!

So, better late than never, I’m diving in to review the state of our spending for 2014. Scary task (especially given our recent travels) but someone’s got to do it.

Yes, we really did have a “spending plan” last year and will do so again religiously this year. How else do you think one achieves financial independence? Do you know that few people realize what they’ve spent in their first year (or even few years) of retirement?

Beware overspending in the early days

Nothing can derail a happy retirement more quickly than overspending in the early days. While looking ahead is certainly important (tough to fix what you’ve already spent!), you can really learn a lot by sizing up what happened each year. To supplement my “quick and dirty” monthly reviews, an annual review will give me a better perspective of our overall, longer term habits. Continue Reading…