Tag Archives: Financial Independence

My recent blogs: KIPPERS, insecure retirement, annuities, post-Trump investing

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KIPPERS. Should parents dip into retirement savings to help their kids?

As regular Hub readers may know, I often write financial articles for other (mostly) digital media, usually the Financial Post, MoneySense.ca and Motley Fool Canada. Here’s some of the most recent blogs or columns, with links via the headlines.

Nearing Retirement and still insecure about your finances? Sadly, you’re not alone. (FP, Nov. 17)). This came out of a survey released this week by Mackenzie Investments that suggested many of us actually feel less secure financially about retirement the closer the actual date arrives. One reason is grey divorce and another perhaps related one is dipping into retirement savings to help adult children.

The latter idea was explored In an earlier FP blog I wrote this week: When Boomers should turn the taps off (or on) when it comes to financial assistance for their kids. (FP, Nov 15). There I pass along a term I learned from occasional Hub guest blogger Doug Dahmer of Emeritus Retirement Solutions: KIPPERS, also mentioned in the photo caption above.

KIPPERS stands for Kids in Parents’ Pockets Eroding Retirement Savings.  I also mentioned this in a short segment on this topic on Tuesday with Peter Armstrong on CBC’s On the Money show.

A few weeks earlier, the CBC aired another segment between me and Armstrong titled You’ve never going to retire, and Here’s Why.

Canadian Personal Finance Conference this weekend

That of course touched on the new book I’ve coauthored with Mike Drak, Victory Lap Retirement. The FP has also been running excerpts of the book the last several Mondays. You can find the first four here. Number 5 is slated for next Monday. By the way, co-author and fellow blogger Mike Drak and I both plan to attend the Canadian Personal Finance Conference 2016 this weekend in Toronto. Hope to see other financial bloggers there!

Last weekend, the FP ran a my column on Locked-in Retirement Accounts (LIRAs): The RRSP’s less flexible cousin: Everything you need to know about the LIRA.  Watch for a followup column that addresses reader queries on this topic.

Earlier this week, Motley Fool Canada ran my take on investing in the post-Trump-victory world: Don’t dump your long-term investment plan over Trump’s victory. And it’s just published my latest quarterly report for Stock Advisor Canada, this one on CRM2 and Best Interest (only subscribers with a user name/password combo can access this).

Over at MoneySense.ca on November 11th was the online version of my most recent column from the November issue of the magazine, which is on annuities: How to win using annuities in retirement.

Hey, no one promised my Victory Lap Retirement would be easy!

 

How a Personal Pension Plan can mimic gold-plated DB pensions

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Jean-Pierre Laporte

By Jean-Pierre Laporte

Special to the Financial Independence Hub

There are approximately 1.2 million Canadians capable of saving for their retirement and mimicking the ‘gold plated’ pensions of federal civil servants and teachers.  Are you among them?

It’s well-known in policy circles that traditional defined benefit (“DB”) plans are better for employees but worse for the employers that underwrite them.

Why? Because the nature of the pension promise itself builds in an assumption that there will be sufficient assets, on an actuarial basis, to replicate a certain level of income, well into retirement.  If markets do well, the promise is met.  If markets underperform, these DB plans require that the employer  dip into its corporate pockets to make up the difference through ‘special payments’.  Short of a corporate insolvency, the DB model offers a guarantee of financial security that does not exist in any other type of tax-assisted plans (such as the RRSP, DPSP, PRPP or Defined Contribution plans).

While the mention of DB Plans conjures up visions of large public sector behemoths like the Ontario Teachers’ Pension Plan or the Healthcare of Ontario Pension Plan, they also exist at the other extreme:  small professional corporations created by a single individual to carry out a given profession.  Recently, small business owners and professionals are turning to the Personal Pension Plan (“PPP”), a type of registered pension plan that offers both DB and Defined Contribution (DC) accumulation methods under a single roof, with the freedom to select between the two each year.

The reason why the PPP works so well at the individual professional corporation (“PC”) level is that the interests of the plan member and of the shareholder are perfectly aligned. In years of market underperformance the requirement that extra tax-deductible contributions (special payments) be made, is simply a transfer of wealth from the owner’s taxable corporate pocket to his/her tax-deferred personal pension pocket.  Likewise, strong market performance can lead to a “contribution holiday” for the PC and an even safer retirement pension for the shareholder/member.

Upgrading from RRSP savings to PPP savings

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Survey finds financial security beats milestones like buying a home and a car

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Laurie Campbell, Credit Canada Debt Solutions

In one of my books I’ve argued that young people should adopt the slogan “Freedom, Not Stuff” as a way to remind themselves that financial independence beats accumulating possessions via debt.

Now a survey being released by Credit Canada Debt Solutions and Capital One Canada has released a survey saying Canadians think financial security beats milestones like buying a home or a car. The two organizations are celebrating ten years of building financial literacy through Credit Education Week, which runs this week (Nov 7 to 11th).

The survey of 600 in four major regions of Canada asked consumers to share insights into their financial wins. While there’s a perception that Canadians hold the goal of home ownership above all else, the survey found that in reality, they rank milestones like buying a home (12 per cent) or car (8 per cent) as less important financial wins than feeling financially secure in their daily lives (25 per cent).

“There is so much to learn from the positive, everyday financial experiences of our friends and family,” says Brent Reynolds, Managing Vice President of Capital One Canada. “Milestone moments like a new home or car may garner more ‘likes’, but it’s the experiences not easily shared in 140 characters that are most impactful – like how we took charge of our finances or recovered from a financial stumble.”

80% reported a financial win this year

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FindependenceHub.com turns 2 today

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depositphotos_114420670_s-2015It’s hard to believe, but the Financial Independence Hub (aka FindependenceHub.com) is now  two years old, a veritable toddler!

We launched the evening of Nov. 3, 2014, several months after I declared my Findependence Day on May 20, 2014.

This is post number 802, which means we have more than exceeded our original goal of providing fresh content every day (Sundays excepted). While I try to write one or two blogs a week myself, this wouldn’t have been possible without the many guest contributors who have lent their time, energy and names to the project.

Thanks also to the early supporters of the Hub: you know who they are from the banner ads that provide a little operating cash and a lot of moral support.

Thanks too to the many individuals who registered on the site and subscribed to our daily news email. There is no charge for this service (that’s why we need some banners to defray costs): all that’s needed is to supply a valid email address.

What’s next? 

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Financial Independence, Zen and the Art of Wealth

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zenw_fr_500_773I was recently asked to review a new book, Zen and the Art of Wealth, by Warren MacKenzie. It’s the story of two friends who chat while one helps the other build his drystone wall.

It’s a good book and reminded me of some important life lessons that I had forgotten over the years. The book also triggered some memories about how I was first exposed to the world of Zen.

My first exposure to Zen was as a child, when I watched the TV show “Kung Fu” starring David Carradine as Kwai Chang Caine. In the first episode, Caine is accepted for training at a Shaolin monastery, where he grows up to become a Shaolin priest and martial arts expert. Caine fights for justice, protects the underdog and has a strong sense of social responsibility, something that is sadly lacking today. Flashbacks were often used to reveal specific lessons from Caine’s childhood training in the monastery, from his teachers: the blind Master Po and Master Kan.

I loved the lessons from Caine’s training in the monastery and those lessons have stuck with me for some reason over the years: Continue Reading…