Financial Planning, Retirement Issues

Manage divorce and personal finances after age 65

March 7th, 2018 ernie Posted in Financial Independence | No Comments » is difficult enough at any time in your life. The younger you are when you divorce, the longer you will have to recover financially from the settlement whatever it may be. But when you manage divorce and personal finances after age 65 or after you retire, it can be much more complicated and financially difficult. There is the usual splitting of assets based on age, dependency, support needs and access to the kids. With two people no longer sharing the expenses of running a household, it can become much more expensive for the individuals involved to handle all of the associated expenses. Significant adjustments for all parties are often needed, sometimes with painful financial realities.

A middle aged manager who reported to me who decided that he was going to separate from his wife and move into a place of his own, indicated to me less than six months later that he could not afford to live separately. It was just too expensive. He decided to move back in with his wife and children because it was just too expensive otherwise. Now imagine if you have just retired and are around  65 and have decided to retire. What are the impacts of retirement, divorce and suddenly realizing that you have to split all of your assets and income with your spouse?

Manage divorce and personal finances after age 65

Unless it is way beyond making it work, we suggest that people in this situation find ways to make work for them and recover their relationship. We will not even begin to address what this might mean on an emotional level. It is far too complex and varied to address. We will try to address some of the financial considerations instead. As a couple, you may be financially secure, sharing the expenses and supporting one home, car etc.  We are following this with a list of areas that need to be considered assuming it is a 50 – 50 split which it seldom will be in most situations. Readers can apply this list to their own situation and make adjustments as needed.

Your Home – assume you will either sell your home and split the proceeds or one spouse will buy out the other. Either way you end up with 50% of what you had and all of the expenses. Most people cannot replace their current home with 50% less.

Your Car – if you only have one car, you may have to buy another and split the value of the current vehicle 50 -50. Even if you own two cars, chances are one is worth more than the other.

Your investments – while your investments and pension income may be sufficient to support cohabitating couples, after they are both split 50 -50, will you have sufficient income to live in the manner you have become use to. Not likely and significant adjustments in life style will be needed.

Your debts –  are much the same. If the debts were jointly created then you have 50% ownership, however once divorced your credit rating may fall and suddenly consumers find themselves unable to find lenders to loan them money to finance their portion of the debt.

Insurance Coverage – do you still need life insurance coverage? Will the insurance costs double because now you need to support two homes etc. Look at all of your insurance coverage to ensure that not only is affordability considered, but you have adequate coverage for your needs.

Health coverage and benefits –  this can be a huge area especially for consumers in the US. Does one spouse lose coverage after the divorce and do they need to find additional coverage often at considerable expense?

Gifts to the kids – gifts to the kids that were previously shared are now individualized and may cost more as well when you consider that as a couple you are actually spending more money. Cut backs may be needed in order to survive.

Personal Items – that have significant value are some of the most difficult to deal with. Not only do they have significant sentimental value, it might be difficult for one spouse to buy the other out.

This is a relatively short summary, however the ramifications can be significant for spouse planning to separate and get a divorce after they retire and after the age of 55. Sometimes it is just much easier to Manage divorce and personal finances after age 65 than it is to actually divorce. Think carefully about what action you want to take before initiating action that cannot be stopped once it begins.

For more on this subject, Manage divorce and personal finances after age 65 , click here.


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Should I Carry some Debt into Retirement?

February 21st, 2018 ernie Posted in Debt Reduction | No Comments »

problem for new retireesThe quick answer to the question, should I carry some debt into retirement is no, if you can avoid it. Obviously who would want to knowingly carry debt into retirement, however there are lots of people that are retired and are carrying some debt. Whether it is credit card debt or a line of credit, it is another monthly payment that must be made and depending on the interest rate it can also be very expensive. Credit cards carry interest rates of 21% or more on any unpaid balances. Even unsecured lines of credit can be expensive. They typically are higher amounts and the interest rates are higher as well for anything that is un-secured.

Why You Might Answer Yes to the Question, Should I carry some Debt into Retirement

Sometimes life just gets in the way. The best laid plans are foiled by early retirement. People get laid off from their jobs, are forced to retire early because of health or down sizing. If you find yourself in this situation and you still carry a mortgage, chances are you will carry it into retirement as well.

Many people decide to go on trips when they retire. Some will spend money on the house to freshen it up. There are many ways to spend money and if we are not careful it means we carry it into retirement as debt.

Debt in retirement does not always have to be a bad thing. Obviously we would prefer not to have any debt. Manageable debt that is declining over time through monthly payments is okay. Debt that is used for investments is obviously higher risk, but it can have tremendous payback.

For most people if you have debt, try to repay it as quickly as possible, paying down the highest interest rate debt first. Renegotiate your debt to arrange for lower interest rates and less fees. Avoid missing payments and if you must downsize your home and expenses to focus on reducing your debt as quickly as possible. Avoid spending money that you do not have and prepare for the day when an emergency will eat up a lot of your savings.

For more about debt reduction in retirement, click here.

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Senior Nomads AirBNB

February 7th, 2018 ernie Posted in Senior Life Style | No Comments »

We recently read an article about older Americans who are living a nomadic life. In her powerful new book, Nomadland, award-winning journalist Jessica Bruder reveals the dark, depressing and sometimes physically painful life of a tribe of men and women in their 50s and 60s who are living out of an RV or trailer. They travel around the US in search of good weather and most of all jobs. They find temporary jobs and work at these jobs while they last. Most are seasonal and very demanding physically. There is another sector of seniors who fall into the category of Senior Nomads Airbnb.

She also talks about some of them who live in Airbnb’s. these people have sold their homes or at the very least rented then out while they travel. They have more money and are out to see the world. Some will work as well at part time jobs while they travel. They live off their pension and investments from their homes and are out to see the world.

Senior Nomads Airbnb – RV Nomads – Locked in Place

There are many people who cannot afford to travel and who either rent a home or live in the home they have had for years. They can barely live on their incomes and their homes are gradually falling apart because they cannot afford to keep them up. These folks might be termed as locked in place. They cannot sell and they cannot move, because it would just cost too much money. Money that they cannot afford.

At least the folks who live out of their RV’s and travel around the US have a place to live and a home such as it is. As long as they can continue working, they can live and put food on the table. If they get sick and need medical treatment, they will be destitute and broke from medical bills.

If you are a senior and own a home, perhaps by creating an AirBnb in your home, you can add a little money to your income and live more comfortably. There are many people who love to travel and spend many days each year going from city to city for vacation as well as work related activities. This approach could add thousands of dollars to your budgeted income and make life just a little more comfortable.

Use the guidelines provided by Airbnb to help you make arrangements, accepting credit cards, deposits and much more.

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Living a Nomadic Semi Retired Lifestyle

January 21st, 2018 ernie Posted in Senior Life Style | No Comments »

There is a disturbing trend that appears to have developed since the 2008 depression and the real estate crash. many people are living a nomadic semi retired lifestyle. Many people lost their homes due to foreclosure, loss of jobs and also loss of savings. The value of homes plummeted and many found that their home was less than what they originally paid and less than their mortgage. Many chose to walk away.

At the same time, the stock market fell over 50%. If you sold your investments you locked in your losses and never recovered. with so many companies going bankrupt and cutting back, many lost their jobs. Whats left for these people. They rent homes, they have low paying jobs and some live in RV’s and follow the temporary job route.

Living a Nomadic Semi Retired Lifestyle

These seniors do not have sufficient savings to retire. They buy older RV’s and live in trailer parks or other temporary locations around the country. They need to work and will go wherever they need to go to find temporary work.

Of course they would like something more permanent, but these kinds of jobs are long gone. They work at seasonal jobs for companies like Walmart and Amazon, or worse in the fields planting and picking crops. Hard work and they walk many miles every day.

These folks are trying to survive and live as nomads traveling around the country, many living on less than $1000 a month. They lost their 401k investments in the market, they do not have a pension and they are too young in many cases to collect state and federal handouts. They need to work and survive on little money where ever they can.

This is a rough life for seniors Living a Nomadic Semi Retired Lifestyle or really anyone at any age trying to get by with this lifestyle. For more lifestyle related posts, click here.



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Senior Nomads Living in AirBNB’s

January 7th, 2018 ernie Posted in Senior Life Style | No Comments »

Just read a post about a couple that rented out their home and then began traveling. They have traveled for the last 4 years staying in AirBNB’s the entire time in over 68 countries. They are living a dream life, touring, meeting people and running a blog about their travels. These are Senior Nomads Living in AirBNB and living their dream travel life. The picture on the left is of one of the BNB’s they stayed in. They try to stay in locations that are interesting and also under $100 a night.

For many seniors this is a dream they may never follow. For one reason or another, seniors may not have the money, they may find it too risky or they may be afraid to travel to other locations. Like exercise, you cannot run a marathon without training for it. Travelling and staying in air bnb’s should start small and gradually increase as you become more comfortable with the approach.

Senior Nomads Living in AirBNB’s

We have recently stayed in an AirBNB in Montreal Canada. It is located in the plateau area near Laurier St, close to restaurants and shopping. A beautiful treed street within a block of everything you might need. A grocery store, drug store, local coffee shops, liquor store, and restaurants. The metro is only a 5-minute walk. Visitors can travel all over the city.

Montreal, like many cities is a bike friendly city and of course you can rent bikes on the street. There is a bike rental location just around the corner.

Travelling and staying in other people’s homes can be fun and safe. Only rent from AirBNB hosts with a 5-star rating to ensure that the cleanliness and quality are superior. The AirBNB we stayed at can be found at – Click Here

For more posts about lifestyle and senior living, click here.


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Retirement is a Dangerous Time for Many People

December 21st, 2017 ernie Posted in Life Style | No Comments »

secure retirementThere are many factors that consumers should consider when they retire whether it is by choice or they are forced to retire through downsizing or economic upheaval. Suddenly they are not going to work any longer. They do not see their friends and they may have lost their reason for being. Their self image was tied too much to the job and now they are stuck at home with nothing to do. Sure there are the hobbies, golf and the repair jobs around the home. These run out over time and perhaps are boring when there is no challenge. This is when retirement is a dangerous time for many people! They gain weight, their blood pressure goes up and they are stressed for no apparent reason. These are all indicators of health problems that may get worse.

Retirement is a Dangerous Time for Many People

Common sense says that humans cannot really sit around and do nothing without getting into some kind of trouble. In this case we are discussing a retired person without anything to do, not stimulated, bored and letting their activity level decline. This is a recipe for going to a senior home or worse.

Every person knows themselves the best. If you do not have hobbies and do not want any, go back to work or volunteer. Gain the personal interaction back that you crave. You may even make a little bit of money while doing this work. If your volunteering, you never know where it will lead.

The writer is a retired person and is busy investigating what works for them. I have always been interested in computers and writing. Teaching myself to first code HTML and then later build websites with a content management system like WordPress was the challenge and stimulation I needed. Although it is a hobby that interests me, it also pays a little bit as well. Enough for my coffee in the morning!

The point is to find something that keeps your mind working, your body exercising and something you find challenging. This is the best way to avoid the Retirement is a Dangerous Time for Many People syndromes.

For more posts about life style and seniors, click here.

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Seniors Saying Yes too Often are Getting Into Financial Trouble

December 7th, 2017 ernie Posted in Life Style | No Comments »

Money Management for KidsMore and more often we are hearing about seniors saying yes too often are getting into financial trouble and then have nowhere to turn. They may be supporting elderly parents who themselves do not have the funds to pay for their own health care in long term stay homes. Then there are the children who used to a life of never wanting for anything expect the same thing as grownups. They forget that their parents worked hard for the money and saved before they bought a big home, car etc.

Why are Seniors Saying Yes too Often are Getting Into Financial Trouble

In most situations, they just want to help their family members now while they are still alive. If they help them now they can also enjoy what their financial gifts have purchased for their kids. Quite often it is the children putting pressure on the parents for them to help out.

Perhaps a down payment on a home or a new car. There credit card bills are due and they need help paying the bills. It might even be verbally worded as a loan, however one the money is given, most never see a penny back again. If you do give money to a family member, assume you will never see it again. If you do it is a bonus.

Seniors sometimes give too much money away. Then they find that they are living longer than anticipated and run out of funds to pay for whatever expenses they have. Many are forced to take room mates, move in with the kids or just downsize to a one room apartment. If only they had been more careful with their money and perhaps had held back a bit. If only their kids were now in a financial situation to help them now.

Sadly, the money is gone and no one has enough to support their parents in this kind of situation. The answer is that every senior should evaluate the impact of loaning or giving money to a family member. Will impact their lifestyle or quality of life in the future? What will be the impact if you never see this money again?

Make plans now to set up a budget that ensures you will have the funds you need to pay all of your bills and living expenses. Then if you think you will have money left over, you might consider gifting funds to your family while still alive.

For more information on life style issues and retirement, click here.

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Investment strategies and using full service Investment Advisors

December 1st, 2017 ernie Posted in Investing | No Comments »

Investment strategiesI recently had a conversation with my kids around what the MERs mutual funds charge and also what sales commission is charged when you buy or sell an equity (I use equity and stock interchangeably). Mutual funds charge from 1% to 3%, the norm being around 1.8% whether you make money or not in any given year. Investment strategies for many consumers never considers these costs, however over the years, the approach you take can add considerable costs to your plan.

Trading directly in equities (stocks) with a firm like Edward Jones result in high trading fees compared to other online no service trading accounts with the banks etc. Over the life of your RRSP savings, a significant amount of money could be saved and reinvested making even more money by using discount traders and staying away from mutual funds. So why not invest directly in equities instead of mutual funds? The devil is in the details.

My own personal strategy is to use Edward Jones  to bounce ideas off of and for them to keep me abreast of changing legislation that could impact me. There have been two major ones over the past 15 years which has saved me quite a bit of money. The amount I pay Edward Jones for MER and trading fees has been well worth it. If I was trading more often then using a discount broker is definitely the way to go.

Investment Strategies

These are some of the rules that I try to follow with regards to my investment strategy.

  • Set goals related to when you want to retire and how much you will need to maintain the standard of living that you want to have when you retire. Your income will come from pensions, CPP, OAS, and Savings. Life will throw curve balls at you so you need to be prepared for whatever comes your way.
  • Your investment advisor works for you and should provide you with guidance however only you understand your investment goals and direction and requirements over your lifetime. You need to pay attention and learn as much as you can to make well informed decisions, just like your job.
  • Treat investing like a project as part of your job. Apply the same approach to investing that you would to do your job. This means you need to pay attention all the time to your investments. Set a time twice a year to do a full review. Are you meeting your goals?
  • Diversify your investments between high-risk, moderately conservative and ultra conservative. Your investments should be roughly 10% high risk 85% moderately conservative and the rest in cash or money market waiting for opportunities.
  • Always diversify your investments across industries, banking, energy, communications, goods and services.
  • Invest in high-quality stocks for equities, that are paying regular dividends, and have a history of increasing their dividends at regular intervals.
  • Minimize trades to minimize costs for trading commissions, only rebalance when absolutely necessary.
  • Mutual funds should be part of your plan but only 10 to 15% of your total investment strategy. Although you are paying MER, investing in a dividend focused mutual fund gives you additional diversification.
  • Many people use the DRIP approach, dividend reinvestment plan, offered by many companies to avoid paying advisor fees when they buy stock. This is a great way to increase your investment in the quality stocks that your own, without additional advisor fees.
  • If you invest in high risk stocks, that appreciate considerably, lock in profits by selling a minimum of 50% of the shares you own. High risk stocks can go up and down very quickly. Remember until you sell you have not locked in any profits or losses.
  • The stock market goes through minor corrections of 10% every year. Be prepared to ride out these volatile situations, since history has shown the stock market will appreciate 10% and more after a correction within six months. Major corrections such as 20 to 25%, example 2008 and 2009, take longer to correct. You only lose money if you sell at a loss, the market corrected itself and has more than doubled since 2008.

With this strategy in mind, utilize your investment advisor as a consultant that can help you adjust your investment strategy over the years. They will try to get you to make trades to rebalance your investments etc. but if you’re comfortable with your strategy there should be no need to sell and trade equities very often.

If you follow this approach, the commission you pay on mutual funds will be minimal, and the trading costs associated with trading through someone like Edward Jones or another full-service investment company will also be minimal.



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4 Questions to Ask Yourself Before Retiring

November 21st, 2017 ernie Posted in Retirement Income | No Comments »

4 questions to ask yourself before retiringWith so many people retiring over the next 20 years, many are wondiering if they will have enough money to last through their retirement. Should they keep working? Should they retire now and enjoy life? What are the questions we should ask ourselves to make sure we are ready for retirement. We have assembled 4 questions to ask yourself before retiring which many people will find challenging. It is definitely worth it to address these areas to ensure that you will achieve your objectives in retirement. Another key recommendation is to discuss your retirement plans and the answers to these questions with your partner or spouse. They need to be on board and satisfied with the lifestyle that you both will have in retirement. Here is a list of 4 questions that all consumers approaching retirement should consider.

What are the 4 Questions to Ask Yourself Before Retiring

It should be pointed out that these 4 questions are all inter related. The decisions you make in one area will impact the decisions that you make in another. Consider them carefully and review the answers every 6 months to ensure you are om course to achieve your objectives.

  • Will You Have Enough Money
  • Where will you Live
  • What will I do With My Time
  • How will Retirement impact My Financial Life

Will You Have Enough Money – Add up all of the income that you will receive in retirement from pensions, savings and even part time jobs. How does this income compare with what you make now. Do you need to save more or work longer to meet your objective.

Where will you Live – will you downsize or stay in your current home? Can you afford the expenses associated with your current house, the taxes, the upkeep and the regular utilities etc. Do you need to move to control your costs and put them in line with your retirement income?

What will I do With My Time -Suddenly you will have 40 plus hours a week to fill. Once you complete all of the projects around the home, golfed as much as you want, traveled and got all of this out of your system, what will you do? How will your plans affect your expenses? Do you have sufficient money to do everything you want?

How will Retirement impact My Financial Life – There will be lots of changes to your lifestyle, your expenses associated with work that you no longer have etc. Take a few minutes to determine what the impacts will be on the positive and minus sides. With more time on your hands you could end up spending more money than you planned.

Revisit these questions and the answers you gave every 6 months. There will be changes and adjustments you need to make that reflect your plans and the reality of your life.

For more retirement income discussion, click here.

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Prioritizing Debt Reduction or Adding to My Saving for Retirement

November 7th, 2017 ernie Posted in Debt Reduction | No Comments »

prioritizing debt reduction or adding to my saving for retirementMany people want to know if it is better prioritizing debt reduction or adding to my saving for retirement? They also should add to this question of whether they have emergency savings available to deal with big financial surprises. As with most questions of this type there are several different answers depending on the situation that each consumer finds themselves in. Factors such as loan interest rates, existence of emergency savings, whether you own or rent, how long it will be before you retire and how much you have saved for retirement. We will look at each of these issues. Bottom line is that each consumer must make their own decision based on their personal situation.

Prioritizing Debt Reduction or Adding to My Saving for Retirement

A little more detail about each of these major areas.

  • Debt Interest Rates
  • Emergency savings
  • Years to retire
  • Retirement savings

Debt Interest Rates – Basically if you have a thousand dollars and you can  earn 5% income by investing the money compared to your loan at 3%, then you probably should save the thousand and invest it. If the 5% income will be taxed, then it might be equivalent since taxes will take some of your income. For loans and debts carrying interest rates higher than 6% e.g. credit cards at 21%, pay off the credit cards first.

Emergency savings – Everyone always needs to have money set aside for emergencies. Whether it is major repairs to your home, your car or a health issue, make sure you have 6 months of savings set aside to deal with emergencies. It could take 6 months to find another job if you lost yours.

Years to retire – If you are planning to retire shortly, pay off all of your debt as quickly as possible so that you are debt free when you retire. You may work longer, however saving will be much more efficient when there is no debt.

Retirement savings – Saving for retirement is incredibly important. So is paying off debt. Finding the right balance depends on how close you are to retirement, how much debt you have, the interest you are paying on this debt and what you can earn in your retirement savings plan.

Generally experts advise paying off debt as quickly as possible since in most cases the interest rate is higher than any investment income you can earn after taxes are paid.

Comments are welcome. For more information on this subject, click here.

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