My latest MoneySense Retired Money column is about when to take Old Age Security (OAS) benefits and has been posted at MoneySense.ca. Click on the highlighted text to access the full version here: Why I’m taking Old Age Security right at 65.
As the piece goes into in more depth, the Government incentivizes those in their 60s (including Yours Truly) to defer the date for commencing receipt of benefits of the Canada Pension Plan (CPP) and Old Age Security. The longer you delay between 65 and 70 (or in the case of CPP, beyond age 60), the better the ultimate payout: wait till 70 instead of 65 and OAS will be 36% higher and CPP 42% higher.
Reasons for Deferring CPP may not also apply to OAS
However, the circumstances surrounding CPP and OAS are not identical, so in my own case I plan to take OAS as soon as it is on offer, less than two years from now, while I will endeavour to defer starting the receipt of CPP for as long as I won’t need the money.
I predict that many aging Baby Boomers will — either by preference or financial necessity — delay traditional full-stop Retirement and instead embrace Semi-Retirement.
My latest Retired Money column, which has just been published at MoneySense.ca, explores the positive effect on retirement nest eggs of working at least part-time after the traditional retirement age of 65. For full article and chart, click on Should you work part-time in retirement?
It’s based on an analysis by ETF Capital Management, which showed the powerful impact of earning just $1,000 in part-time income each month between the age of 65 and 75; or in the case of couples $2,000 a month between them.
Not working at all after the traditional retirement age of 65 has financial implications, never mind boredom and lack of social interaction. In the case of a retiree with lifestyle expenses of $60,000 who undertakes a full-stop retirement at 65, and earns no extra income, there is a sharp fall in a $500,000 (combined registered and non-registered) portfolio starting at age 65. By the time they reach their early 80s, the nest egg is depleted to zero.
But a couple earning just $2,000 a month between them part-time after 65 and going until 75 will find the extra income delays the portfolio’s drop below zero beyond their early 90s. Not only does the nest egg not decline the first ten years, but it actually rises! By the time you reach 75 and finally stop working even part-time, the portfolio declines from a higher level and much more gradually.
Of course, the more you work, the better: for a couple earning $3,000 a month between them, the portfolio still has more than $200,000 by their 90s! Similarly, the analysis also shows what happens if you work extra hard, which many might argue wouldn’t even qualify as retirement. At $4,000 a month the portfolio is barely depleted at all by the time they reach 100!
To all our American readers, the Findependence Hub wishes a happy Independence Day, or as we like to say around here, Findependence Day.
Bloggers are fond of building posts around the July 4th celebration, and several are using the phrase Financial Independence Day. For instance, a year ago Forbes.com published a blog titled Financial Independence Day for Millennials.
In fact, on June 21st, 2016, Richard Eisenberg of Next Avenue and Forbes.com did just that, re-running a similar piece entitled How to Declare Your Financial Independence. And he did make an explicit reference to Findependence Day, more on which below.
This weekend’s Motley Fool Money podcast, as it was a year ago, is titled Declare Your Financial Independence. It features interviews with authors and radio personalities Dave Ramsey and Clark Howard. Continue Reading…
Over the years I’ve summarized many financial strategies for your successful retirement. Today I delve into shaping key “lifestyle” factors for your retirement happiness.
Definition of lifestyle is a very individual combination of activities. There is no one-size-fits-all scenario.
For example, try to diminish your work life gradually, say over two to five years. A series of short sabbaticals is another way to sample your new lifestyle.
Your retirement road map is a very personalized and unique process. Where there is a spouse, both should be involved in the planning.
Developing 5-year road maps within the money comfort works for many,
such as activities for age “60 to 64,” “65 to 69” and so on.
With millions of Baby Boomers poised to leave the workforce within the next decade, many of us want to find ways to contribute from our vast wells of experience and knowledge. We want more freedom of expression in our lives instead of continuing what might be a lukewarm commitment to a full-time job.
Yet there are those like Andrew Yarrow, vice president and director of Public Agenda, who’ve characterized retiring early as “profoundly selfish and unpatriotic.” However, we believe he is missing the mark completely, falling into painting a doom-and-gloom scenario instead of banking on the monumental range of creativity our age group has shown. After all, it was our generation who invented the life-changing personal computer and gave us rock and roll. We expect that we are quite capable of coming up with solutions to any difficult issues we may face in the future.
The Goldilocks scenario
Akaisha teaching Thai massage in Mexico
Finding a satisfying middle ground between what Marc Freedman, the founder of Civic Ventures, calls “the fallacy of 30 years of R&R” and our significant need to find meaning through imparting our collective wisdom, the sheer numbers of 60-somethings are having an effect on how people actually live during retirement. Some would say they’re creating a new stage of life by choosing an encore career.
If you find yourself in this position of wanting to retire without giving up entirely on being active, there are more options for you now than ever before in history. You may want to seek out opportunities for heartfelt jobs, artistic pursuits, spiritual quests, volunteer vacations, or job adventures abroad such as the Peace Corps.
Websites now abound with information on how to help adults in the second half of life set a course, connect with peers, and find pathways to significant service.
Groups like Experience Corps work to solve serious social problems here in the U.S. You can even use Craigslist to help you get involved in your community and find flexible jobs or volunteer opportunities. Boomers simply won’t go quietly into the good night.
Nor should they.
Work or volunteer?
It’s the American Way to be original and productive, and our generation illustrates both of these qualities. Yet if you fear that America isn’t ready to deal with older workers, take heart — there is growing evidence to the contrary.
Websites like Retired Brains, Senior Job Resource, and AARP‘s Best Employers Program Honorees all provide information for those who are 50+ and want to work full or part time. And due to simple demographics, these positions are only going to become more plentiful.
Billy built these tennis courts in Mexico
Looking at complete retirement can seem overwhelming to some. The idea of having no structure to their days — and the possible loss of ongoing relationships with patients or clients — can be a large detraction. The notion of forfeiting the intellectual and social stimulation of interacting with colleagues may seem like a kink in the perfect lifestyle away from work.
For these people, mentoring at SCORE, helping at Learning for Life, or volunteering time at your local hospice, food banks, or community colleges can also bring rewards beyond expectation. Money is not the only measure of wealth in a society.
The aim, we believe, is to activate the freedom to choose how to live your life no matter what stage you find yourself in — rather than letting someone else dictate your future ambitions. Once you’ve reached financial independence, you can easily move into a more rewarding position or challenge of your choice.
How you contribute to others in your retirement, and how you spend your time and your money is up to you and only you. Have confidence in yourself, know the value of your talents and endeavors, and build up your self-worth. After all, you’ve earned it.
It is from here that you will make all the difference in your world and in the world around you.
This is what we have done, and our personal lives have expanded significantly because of it.
About the Authors
Billy and Akaisha Kaderli are recognized retirement experts and internationally published authors on topics of finance and world travel. With the wealth of information they share on their popular website RetireEarlyLifestyle.com, they have been helping people achieve their own retirement dreams since 1991. They wrote the popular books, The Adventurer’s Guide to Early Retirement and Your Retirement Dream IS Possible available on their website or on Amazon.com
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My latest MoneySense Retired Money column is about when to take Old Age Security (OAS) benefits and has been posted at MoneySense.ca. Click on the highlighted text to access the full version here: Why I’m taking Old Age Security right at 65.
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