Tag Archives: income

Understanding Your Retirement Benefits: Part 1 – CPP

Posted By Financial Independence Hub | October 1, 2015

By Marie Engen, Boomer & Echo

Imagine celebrating at your retirement party without a clue as to how much you can expect to receive in pension income. It sounds incredible, but many people who will end their career in a few years are in just that situation.

When you work for an employer you receive your salary, but once retired your income can come from multiple sources. You need to know how much you will receive from these sources.

Since CPP is one of the cornerstones of retirement income, this is where I will begin.

A brief history of the CPP

The Canada Pension Plan (CPP) is a national public plan that covers people in all provinces except Quebec. It was created in 1966 by the government under Lester B. Pearson. Quebec wanted its pension monies to be under their control and so became the only province with its own program.

When CPP was created the contribution rate was 1.8% of pensionable earnings, to be shared by employers and employees; self-employed persons were on the hook for the full amount. The first deductions were so minuscule that they were unsustainable to fund the retirement costs of the baby boom generation that was just beginning their working years. Also, life expectancies were starting to increase substantially. Continue Reading…

A rare breed of financial planner

Posted By Financial Independence Hub | August 18, 2015

Piggy Bank Cuts with Money Savings Financial concept on Chalkboard Background — Photo credit: iStockphoto

by Doug Dahmer, EmeritusFinancial.com

Special to the Financial Independence Hub

Retirement Income Specialists are a very rare breed of financial planner. So rare, in fact, that to date, the vast majority of North Americans are unaware of their existence and consequently very few have benefitted from the valuable, and much needed, services they provide.

This new specialized category of financial advisor is at the leading edge of strategically assisting North Americans to convert their accumulated retirement nest egg into a reliable and sustainable income stream.

Long-lived boomers face greater saving challenge

The challenges are not for the faint of heart. With baby boomers living longer, the years to be funded have increased significantly. There is no clear path to follow, as baby boomers are redefining retirement in terms of both planned activity level and their desire to slowly transition out of active employment.

Most importantly, baby boomers represent the first generation where the vast majority will be left to their own devices to cobble together a process to fund their lifestyle after work ends. Continue Reading…

The case for dividend ETFs

Posted By Jonathan Chevreau | July 15, 2015

Here is my monthly ETF column for the Financial Post, titled Jonathan Chevreau: Why Dividend Funds are a smart financial move.

The piece mentions several dividend ETFs from manufacturers like BMO, Vanguard and iShares but also presents the views of a few ETF specialists who are not as enthusiastic about these products.

Well suited to TFSAs

Personally, I think Canadian dividend funds are particularly well suited to Tax-Free Savings Accounts: they’re diversified, provide dividend income, have reasonable fees and don’t result in any withholding of tax that may occur with foreign dividend ETFs. The latter are better held in RRSPs, in my view.

Of course, those who are cautious about the stock market will prefer to stuff registered plans with fixed-income vehicles like GICs and put their dividend ETFs into non-registered (taxable) accounts that let Canadians benefit from the dividend tax credit.

The case for being “an owner, not a loaner” was made by me in the fifth “Eternal Truth” of Personal Finance in the recent series that ran in the Post, both online and in the paper. You can find that piece as well as a short (1-minute) video under the headline Embrace Risk, Pay Less Tax. You can find the whole series here. Continue Reading…

Protecting Your Nest Egg In Retirement

Posted By Financial Independence Hub | July 9, 2015

By Marie Engen, Boomer & Echo

Special to the Financial Independence Hub

Investors who are in, or near, retirement are in a difficult position. They need their investments to provide them with steady cash flow to live on, but they also need their wealth to last for a potentially long life.

Retirees who are caught in a bear market don’t have the time to wait out temporary dips in stock prices, even if they have a greater risk tolerance. Being forced to sell investments that have plummeted in order to provide money to live could have a devastating effect on the sustainability of a portfolio.

Some investment advisors are mobilized to guide their pre-retirement clients out of equities and into bonds, in an effort to offer income and stability. But now that interest rates have reached historical lows, traditional bond portfolios will have a difficult time providing an acceptable level of income while protecting purchasing power over the next 25 to 30 years.

Structure your portfolio for both short- and long-term needs

You think accumulating wealth was hard? Try this.

Posted By Financial Independence Hub | June 29, 2015

By Doug Dahmer, Emeritus Retirement Income Specialists

Special to the Financial Independence Hub

How you deploy your accumulated assets to fund the second half of your life is much harder than how you built them up in your accumulation years.

Read this again if you need to, but be sure you get this point.

First build an asset pool under the spell of “Dollar Cost Averaging over the long-term” — the favorite aphorism of the investment management salesperson. For the 30-odd years of your prime saving and accumulation years this mantra encourages you to keep giving money to them, disguises bad performance and promises you future success. Given enough time, however, let’s hope you have more than when you started.

That’s the easy part.

The hard part: making it last a lifetime