Tag Archives: Retirement

7 simple ways to pay off Debt in Retirement

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By Lyle Solomon

Special to the Financial Independence Hub

Carrying debt into retirement can ruin your golden days. You will most likely have a limited income after retirement. Though you can boost your Social Security income by taking the proper steps, your spending may rise yearly due to inflation, causing your budget to collapse. The burden of debt and the high expense of medical bills can wreck your retirement.

According to a CNBC report, the total debt burden of America’s senior citizens has increased by 543 per cent in the last two decades. 70% of baby boomers are in credit-card debt and are unsure how they can get out of it. It is recommended to pay off your obligations as soon as possible and enjoy your golden years. Repaying your debts during retirement is always a good idea. But how will you go about it? Here are some of the ways to repay your debt in retirement so that you can enjoy your golden years.

1.) Sort your debts by priority

The first stage in debt management in retirement is prioritizing which bills to pay off first. So, make a list of all your loans, including their interest rates and remaining balances. Unsecured debts, such as credit cards, typically carry high-interest rates because no collateral is required. I recommend that you begin paying off loans with the highest interest rates first, which will help you save money in the long term. Furthermore, unlike student loans or mortgages, you cannot deduct interest payments from your tax returns on unsecured debts.

It is preferable to pay off unsecured obligations first, as they are not usually tax-deductible.

2.) Seek professional debt assistance

Are you drowning in high-interest unsecured debt? If this is the case, you may be working hard to repay your obligations but cannot do so due to the constant high-interest rates. In that case, you can seek professional assistance by contacting a reliable debt relief business. The company’s debt advisers will examine your debts and develop a reasonable payback plan based on their findings. You can enroll in a credit card consolidation process to repay your huge credit-card debt. Settling debts can be possible under the guidance of a professional debt relief company. They will  negotiate with your creditors to lower the excessive interest rates. Once your creditors have agreed, you can begin making single monthly payments for all of your debts. In this manner, you may pay off your unsecured obligations without worrying about coordinating multiple payments. You can also save money on interest payments because your debts’ interest rates will likely be reduced.

3.) Examine your budget again

Hopefully, you have a budget to keep a proper spending plan and preserve money for your financial well-being. The more you put into your monthly loan payments, the faster you’ll be debt-free. As a result, you must save more to increase your monthly loan payments.

To do so, go over your budget and identify places where you may decrease costs and save money. You can save money on things like eating out, entertainment, cable TV subscriptions, etc. You can save a significant amount of money to put towards your monthly debt payments.

4.) Follow your preferred debt repayment plan

You can use any debt payback method, debt snowball or avalanche. The debt snowball strategy requires prioritizing the debt with the lowest outstanding sum first. At the same time, you must make minimum payments on all of your other loans. After you have paid off that loan, you must focus on the debt with the second smallest outstanding balance, and so on. Continue Reading…

Why are Millionaires flocking to Mexico? (and Non-Millionaire Retirees, too!)

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Panoramic view of Guanajuato City

By Billy and Akaisha Kaderli, RetireEarlyLifestyle.com

Special to the Financial Independence Hub

According to the Mexican Government, around 1.1 million expatriates lived in Mexico as of 2020. Of those, about 700,000 were from the United States, making Mexico the #1 country worldwide for American Expats.

We have listed a dozen reasons below why Mexico is attractive to those with plenty of money, and also to those who don’t have that much.

Freedom

While there are many reasons to move to Mexico, the Number One reason people come here is for the freedom they experience.

With less regulation on all fronts, critics might think that Mexico is a lawless frontier.

Not so.

Mexico is still a place where one can walk the beach with a beer in hand. We can give a homeless person food without filling out countless forms to gain permission or explain if there is mayonnaise on the sandwich or have the food rejected because it’s not in a paper bag. While we personally are not smokers, an individual who chooses to smoke can do so without being read the riot act or be subjected to invectives about their personal worth as a human being.

Many medications can be purchased over the counter without a prescription. One can afford medical care and not be forced into buying an expensive health insurance policy that doesn’t coincide with their personal health approach. Homeopaths, Naturopaths, Chiropractors and those who practice acupuncture or massage can be found easily and their services are affordable. One can walk into a lab and order an x-ray or a blood test on their own without a prescription.

There is respect for the elderly and those over 60 are not invisible. People who are chubby are not judged and can easily find someone to date or marry. People on the street say hello and good morning to complete strangers, and men still tip their hats to women. The young offer their bus seats to those of us who have more years than they do.

People say “excuse me” when they walk in front of you, and it’s perfectly safe to walk through a group of teenage boys without fear.

Common sense is common.

Some are moving due to political climate at home

The world is changing, no doubt. Many have chosen Mexico to get out from under the tense political climate back home.

Mexican culture is lively and accepting and it’s a breath of fresh air to live here. Smaller towns, especially, are like Norman Rockwell paintings.

But bigger cities offer fabulous diversions away from home country political pressure. There are museums, international dining, hiking, cultural events, music, art and volunteer opportunities too.

The caution here, is to not bring the “old” political attitude with you when you move. Grow into the easy and into the pleasantry here in this country.

Zicatela Beach, Puerto Escondido

Affordability

Having money or not, your quality of life should expand over what you are experiencing now in your current home town. The cost of living is such that you will get more for your money and your nest egg will go farther.

Truthfully, depending on where you might choose to live, purchasing a home can be expensive, but rents are cheap. And if you are at retirement age, you might find that putting your money into “living” versus “housing” might be the better choice, anyway.

In either case, gardeners, housekeepers, maintenance people and supplies are all cheaper than you will find in the US or Canada. In Chapala, Mexico, a housekeeper runs about $6USD for 2.5 hours. In Ajijic, Mexico – another popular Gringo town –  it is twice that price, but still not outrageous.

Legalities of permanent status are easier

Getting a permanente or a temporada card is easy to do. While some choose to fill out the paperwork themselves, having a lawyer arrange for this is also quite affordable.

Qualifying for residency is based on your annual income and/or net worth, and the threshold is easy enough to meet. The requirements for getting a temporary card are lower, and after renewing annually for 5 years, the temporada moves into becoming a permanente.

If you have your own state’s driver’s license, you can use that here in Mexico, but if you are not able to renew it, you can obtain a Mexican driver’s license in its place. So long as your present driver’s license is still active, you will only need to take the written exam of 10 questions. You won’t have to perform a driving test in the parking lot.

One can live on Social Security alone

While it’s always great to have more money, one can easily live comfortably on Social Security. The average [monthly] SS check as of 2021 is US$1,658. Rents are available for $300-$600USD per month for a one bedroom or a casita. So, those who are on a limited income can readily find a comfortable place to live and still have money left over for a social life and medical expenses.

For those who actually are millionaires, one can live like royalty in homes with lake views, swimming pools, 3- and 4 bedrooms, plus house and garden help: and they can still keep their millions.

Adaptability

Yes, Mexico is a foreign country. However, our ability as Norte Americanos to adapt to these perspectives can be far smoother than with cultures with which we have less in common.

Celebrating many similar holidays, perceptions and values run concurrent with those we already have. The time zones are also similar to the US and Canada, making contact with family members on Zoom, Facetime, or Skype a breeze.

Weather is better: geographic choices

No matter if you enjoy having four seasons or prefer a tropical climate, Mexico offers it all. Continue Reading…

Case Study: Am I going to be okay when I retire?

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Photo by LinkedIn Sales Navigator from Pexels

By Ian Moyer

(Sponsor Content)

Pamela is a 63-year-old widow residing in Ontario, Canada with two adult children who live on their own. Pamela worked for more than 30 years as a Payroll Manager and was able to pay off her mortgage with the life insurance inheritance she received from her husband’s passing and put her savings towards retirement.

She is preparing to retire in two years and has increasing concerns about the amount she has saved for retirement.

Pamela earns $76,000 a year. Now age 63, she has saved:

  • $306,000 in a Registered Retirement Savings Plan (RRSP), contributing $5000 annually until retirement
  • $36,000 in A Tax-Free Savings Account (TFSA), contributing $1000 annually, which doubles as an emergency fund.
  • At age 65 Pamela plans on selling her cottage and adding $400,000 to her retirement funds.

Using Cascades Financial Solutions retirement income planning software, we help Pamela determine if she can retire at the age of 65 and sustain her lifestyle and accommodate traveling.

Pamela will decide to retire at the age of 65 if the after-tax income will meet her needs. With retirement fast approaching, she has three main questions:

  1. Do I have enough to retire? Pamala assumes she will need approximately 50% of her income to travel for five years.
  2. What are other income sources I can rely on? Pamela is concerned about the sustainability of her RRSP, TFSA and sale of the cottage alone.
  3. How do I deal with taxes? Pamela is unsure about the amount of taxes she will need to set aside.

Answering Pamela’s first question: “Do I have enough to retire?” The answer is YES! Based on her needs.

Using Cascades Financial Solutions, we’ve run a retirement income withdrawal plan resulting in three different ways to produce an after-tax annual retirement income of $45,703 for Pamela:

We’ve selected an asset allocation as moderate in the software: Moderate: 60% Fixed Income, 40% Equity,  5% rate of return and 2% inflation. All income and savings are reported in “today’s dollars” by Cascades.

Strategy Descriptions

Registered Funds First: This strategy involves creating retirement income from registered funds first, reducing the risk of leaving highly taxable investment accounts to an estate. The second priority is given to taxable non-registered accounts, leaving Tax Free Savings Accounts (TFSAs) last.

Non-Registered Funds First: This strategy involves creating retirement income from non-registered funds first, deferring the income taxes payable on registered investments. The second priority is given to registered investments, leaving Tax Free Savings Accounts (TFSAs) last.

Tax Free Funds First: This strategy involves creating retirement income from non-registered funds first and postpones the use of registered funds as long as possible. The second priority is given to Tax Free Savings Accounts (TFSAs), leaving registered funds last.

Determining a Winning Strategy: With all other factors being equal, the winning strategy provides a client longevity and the highest estate value, net of taxes and fees, at life expectancy. The differences in the net estate value represents the income tax savings of the winning strategy.  

Answering Pamela’s second question: “What are other income sources I can rely on?” There are two main programs that provide retirement income for most Canadians: the CPP or Quebec Pension Plan (QPP), and OAS.  The maximum CPP / QPP Pension you could receive starting at age 65 is $1,203.75 monthly ($14,445 annually) for 2021.[1]

Continue Reading…

Die with Zero?

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By Bob Lai

Special to the Findependence Hub

Recently I met up with a good friend for a much-needed chat. Over the course of a few tasty cans of beer, my friend mentioned that he recently listened to the “Die with Zero” audiobook and really enjoyed the key messages of the book.

Curious, I borrowed the book from the local library and finished reading it in two days.

The book’s author, Bill Perkins, suggested that we should all aim to die with zero dollars in our bank account, or at least as close to zero as possible. He argued that too many people spend unnecessary energy working extra years only to earn money that they wouldn’t be able to spend in later years and die with a large sum of money in their bank accounts. This is definitely different from the traditional belief of saving money during your working career and spending your savings once you’re retired.

Why die with $200k in your bank account, considering it took you an extra five years to save it, when you could have stopped working five years earlier?

Perkins believes that our lives are the sum of our life experiences which can be quantified and optimized. Therefore, we should focus on spending our money when we are younger and obtain as many life experiences and memories as we possibly can.

My friend now believes in spending his money in the most optimal way to obtain memorable experiences for himself and his family while keeping a focus on saving for retirement in the best approach. This is similar to what I’ve been preaching on this blog – find your own personal balance between spending money to enjoy the present moment and saving money for your retirement.

The fallacy of “save-save-save” mentality 

For many of us on the financial independence retirement early (FIRE) journey, we think about saving money constantly. We think about what’s the best way to save money and how to boost our savings rate, so we can become financially independent earlier.

But the “save-save–save” mentality isn’t actually healthy. It’s actually giving the FIRE movement a very bad vibe.

I’ll be honest, I was certainly guilty of focusing purely on our savings rate early on our FIRE journey. I wanted to cross the finish line and hit the escape button. Over time, however, I found that I wasn’t enjoying the small things in life. I felt frustrated when we spent money eating out or having a cup of coffee and treats at a cafe; I was having arguments with Mrs. T over these small expenses, because I wanted to save more money to expedite our FIRE journey.

When I stepped back and looked at the bigger picture, I realized that the “save-save-save” mentality wasn’t healthy. It was actually quite detrimental, especially to my relationship with Mrs. T.

The idea of becoming financially independent faster but without my lovely wife was not a price I was willing to pay. I realized there’s a fallacy in the “save-save-save” mentality.

Continue Reading…

How to enjoy your retirement while getting paid

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By Carlos Blanco

Special to the Findependence Hub

Spending a week in Napa’s wine country, enjoying the good life during retirement, and meeting new friends. Sounds like a dream, right? Having the chance to do all this and be paid might sound too good to be true, but I assure you: it’s possible!

For more than a year, I’ve been using an app called Instawork to pick up shifts whenever and wherever I want. I found the platform through a friend and began using it to pick up shifts in order to build a work schedule that best suits my personal schedule. It’s been a wonderful experience where I’ve been able to meet new people and experience different facets of the world. As a friendly guy who likes socializing, it’s been a perfect fit for me.

Prior to using Instawork, I worked as a journalist. That ranks up there as one of the most stressful careers you can have. That kind of stress can take a toll on you after a while and with me it did. The hospitality shifts I’m working now are much more relaxed and I’m truly enjoying myself. From coordinating and assisting at events throughout the year to interacting with clients and guests at a variety of different locations, no two shifts are the same. As an added bonus, I can expand my budding coaching career and attract new clients from different walks of life.

Despite Great Resignation, many still want to work

There’s a lot of talk right now in the news about the Great Resignation and the Great Reshuffle and how people don’t want to work or how the economy is dying. The pandemic shook everything up and made a lot of people reevaluate how they were living their lives and what they wanted out of work. In my view, the economy is not dying and people absolutely do want to work. They just want to do things their way, on their terms, be treated fairly, and to get paid well while doing it. The country and its hourly workers are in a period post-pandemic, where people are just transitioning from one place to another and deciding what type of jobs works best for them. Continue Reading…