Longevity & Aging

No doubt about it: at some point we’re neither semi-retired, findependent or fully retired. We’re out there in a retirement community or retirement home, and maybe for a few years near the end of this incarnation, some time to reflect on it all in a nursing home. Our Longevity & Aging category features our own unique blog posts, as well as blog feeds from Mark Venning’s ChangeRangers.com and other experts.

A Misunderstanding about Taking CPP Early to Invest

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By Michael J. Wiener

Special to Financial Independence Hub

Recently, Braden Warwick at PWL Capital created an excellent CPP calculator that we can all use.  One of the numbers this calculator reports is the IRR (Internal Rate of Return) you’ll get between your CPP contributions and the CPP pension you’ll collect.  Some financial advisors (but not Braden) decide it makes sense for their clients to take CPP as early as possible (age 60), and invest the proceeds.  Their reasoning is that they believe they can earn a higher return.  Here I explain why this logic compares the wrong returns.

The return you’ll get on your CPP contributions depends on the contributions you and your employer have made and the benefits you’ll get.  These amounts depend on many factors about your life as well as some assumptions about the future.  Typically, the return people get on CPP is between inflation+2% and inflation+4%.  (However, it can go higher if you took time off work with a disability or to raise your children.  It also goes higher if you ignore the CPP contributions your employer made on your behalf, but I think this makes a false comparison.)

If we examine people’s lifetime investment record, not many beat inflation by as much as CPP does.  However, some do.  And many more think they will in the future.  In particular, many financial advisors believe they can do better for their clients.

But what are we comparing here?  These advisors are imagining a world where CPP doesn’t exist.  Instead of making CPP contributions, their clients invest this money with the advisor.  In this fictitious world, the advisor may or may not outperform CPP.  However, this isn’t the world we live in.  CPP is mandatory for those earning a wage.

The choice people have to make is at what age they’ll start collecting their CPP pension.  The CPP rules permit starting anywhere from age 60 to 70.  The longer you wait, the higher the monthly payments get.  Consider an example of twins who are now 70.  The first started CPP a decade ago at 60 and the payments have risen with inflation to be $850 per month now.  The other waited and has just started getting $2000 per month.  The benefit of waiting is substantial if you have enough savings to bridge the gap between retiring and collecting CPP, and don’t have severely compromised health.

Those with enough savings to bridge a gap of a few years have a choice to make.  Should they take CPP immediately upon retiring, or should they spend their savings for a while in return for larger future CPP payments?  Some advisors will say to take CPP right away and invest the money, but this is motivated reasoning.  The more money we invest with advisors, the more they make. Continue Reading…

The Cost of Overspending in Retirement: How a Withdrawal Strategy saved $16,500 annually

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A Retirement Income Solution: How Milestones Retirement Insights helped one Alberta Couple Save $16,500 annually

By Ian Moyer

Special to Financial Independence Hub

Retirement is meant to be a time of relaxation and enjoyment, but for many Canadians, managing retirement income efficiently can be a major challenge. This was the case for a couple in Alberta, aged 70 and retired for five years. They were concerned about depleting their savings too quickly and needed a tax-efficient withdrawal strategy to better sustain their retirement lifestyle.

The Problem: Overspending Without a Plan

The couple had a mix of financial assets, including:

  • RRSPs: $400,000 remaining
  • TFSAs: $75,000 remaining
  • Joint Non-Registered Savings: $50,000 remaining

They were spending $80,000 a year without a clear withdrawal strategy, leading to inefficiencies and over-taxation. This lack of guidance was costing them $16,500 annually, money that could have been used to enhance their lifestyle.

 

 The Solution: A Tailored Withdrawal Strategy

Using Milestones Retirement Insights, they were able to restructure their withdrawals to maximize after-tax income while preserving their savings for the long term. Here’s how:

  1. Prioritizing TFSA Withdrawals: We tapped into their tax-free savings account first, allowing them to access funds without triggering additional taxes.
  2. Splitting RRSP Withdrawals Over Time: By drawing from their RRSP in smaller increments, we kept their income within lower tax brackets.
  3. Non-Registered Savings for Gaps: Joint savings were used strategically to fill gaps, minimizing tax exposure while ensuring consistent income.
  4. Optimal RRIF Conversion: We structured their RRSP to RRIF transition to further reduce taxes and take advantage of pension income splitting.

Key Consideration: RRSP to RRIF Conversion

When you reach retirement, a registered retirement savings plan (RRSP) has the option of converting to a registered retirement income fund (RRIF). To provide a sustainable retirement income and minimize your income and estate taxes, we’ve calculated an average annual RRIF payment of $28,112 starting at age 70. At an assumed rate of return of 5%, this investment will deplete to $0 at age 88. Continue Reading…

How to Prepare for Retirement as a Midwife

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Midwives play a rather important role in maternal healthcare. They provide crucial support to expectant mothers before, during, and after childbirth. While the focus of midwifery is on delivering excellent care to patients, it’s equally important for midwives to have a financial plan in place for themselves. Here’s a look at how midwives can prepare.

Adobe Stock Image courtesy logicalposition.com

By Dan Coconate

Special to Financial Independence Hub

Retirement planning is a critical step in ensuring Financial Independence and peace of mind after years of dedication to a meaningful career.

For midwives, who are often focused on caring for others, planning for their own future can sometimes take a backseat. This guide emphasizes how to prepare for retirement as a midwife so that you can build a solid plan that focuses on future financial strategies, career development, and truly golden years.

Get Familiar with your Financial Landscape

To plan effectively for retirement, you need a clear understanding of your financial situation, goals, and needs. Start by calculating your current income, savings, and any existing retirement benefits. Many midwives work as independent contractors or part-time employees, which can often mean fluctuating income. Identify what portion of your earnings you can set aside monthly for retirement savings.

Review any benefits offered by your employer, such as pensions or retirement savings programs, such as 401(k). If these aren’t included, consider opening a traditional or Roth IRA. Understanding your financial opportunities and constraints will form the foundation of your retirement strategy.

Explore Savings Plans and Investment Opportunities

Midwives often face unique challenges in saving for retirement due to irregular salaries or periods of self-employment. That’s why exploring diverse savings plans and investment opportunities is critical.

Consider options, such as SEP IRAs, which allow self-employed midwives to contribute higher amounts than personal IRA plans. Diversifying investments can also bolster your long-term savings. Look into index funds, bonds, or low-risk mutual funds to create a balanced portfolio. Remember, the earlier you start, the more time your compounding interest will grow your nest egg. Continue Reading…

7 Tips to Save on Health Insurance in 2025

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Image courtesy Pexels: Leeloo The First

By Evan Tunis

Special to Financial Independence Hub

As healthcare costs continue to rise, finding ways to save on health insurance is becoming increasingly important.

In 2025, it is estimated that the average American family will spend over $25,000 a year on healthcare expenses.

This high cost not only affects individuals and families but also puts a strain on the overall economy.

 

Here are 7 tips to save on health insurance in 2025

Compare Plans

With the rise of online marketplaces, comparing health insurance plans has become easier than ever. Take the time to shop around and compare different plans from various providers. Consider factors such as premiums, deductibles, and coverage options before making your decision. You may find a plan that offers the same coverage for a lower cost.

Consider High-deductible Plans

High-deductible health plans (HDHPs) typically have lower premiums but higher deductibles. This means you will pay less each month for insurance, but will have to pay more out of pocket before your insurance kicks in. If you are generally healthy and do not require frequent medical care, an HDHP could save you money in the long run.

Utilize Preventive Care Services

Many health insurance plans cover preventive care services at no additional cost to the patient. Take advantage of these services — such as check-ups, screenings, and vaccinations — to catch any potential health issues early on and avoid expensive treatments in the future. Continue Reading…

Estate Planning Checklist for Entrepreneurs

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Photo courtesy Pexels/Featured.com

By Robert Theofanis

Special to Financial Independence Hub

Estate planning is like going to the dentist. Everyone knows they should do it. But whether it’s getting your teeth drilled or contemplating your mortality, we’d all rather fill our time with just about anything else.

For entrepreneurs, this problem is even more acute. Your business depends on you, and high-priority items constantly appear at the top of your to-do list.

What I’ve found as an estate planning attorney is that my clients can get more done when we approach estate planning in a systematic way. This post contains an actionable plan for entrepreneurs like you to design and implement an estate plan.

I’ve organized the list by priority, with the most critical items first:

Obtain Term Life Insurance

If you have minor children, life insurance is the most important component of your estate plan. Most parents of young children simply haven’t had enough time to accumulate sufficient wealth to sustain a family without any additional income.

I like term insurance for this baseline protection because it’s cheaper than a permanent policy.

I also recommend that both parents have policies. Irrespective of who earns the income, both parents contribute to the household.

For the benefit amount, err on the side of more coverage and consider purchasing separate policies (e.g., two $1 million policies rather than one $2 million policy). This allows you to scale back the coverage amount without dropping coverage entirely.

If you don’t have children yet but are planning to, I still suggest getting coverage now. Life insurance premiums increase with age and pregnancy-related health issues may make it difficult to secure coverage later.

Create a Revocable Living Trust

A basic revocable living trust is the foundational legal document for an estate plan. Its purpose is to keep you and your property out of conservatorship and probate proceedings.

Included in this step is creating the other estate planning legal documents:

  • A pour-over will ensures that all property is distributed in accordance with the terms of your living trust, even if it’s inadvertently left out of the trust;
  • A durable power-of-attorney authorizes a financial agent to conduct transactions on your behalf if you’re incapacitated;
  • A medical directive authorizes a healthcare agent to make medical decision for you if you are unable to and specified your healthcare and end-of-life wishes (in some states, two separate documents are prepared for this purpose);
  • A guardian nomination appoints a guardian to raise your minor children if you are unable to.

Be sure to actually fund the trust! This is one of the biggest mistakes people make. This involves transferring title to real property, opening new financial accounts (bank, brokerage, etc.), and updating beneficiary designations.

Establish and Implement a Written Financial Plan

Estate planning is more than just creating a set of legal documents. It’s a multifaceted plan to achieve positive outcomes for you and your loved ones. So, while the first two items on this list are about limiting your downside, this item concerns your upside. Continue Reading…