Category Archives: Retirement Planning

Don’t Let Wish Full Thinking Ruin Your Retirement

Don’t Let Wishfull Thinking Ruin Your RetirementOne of the easiest ways to ruin your retirement is to avoid reality. What do we mean by that statement? Don’t let wishful thinking ruin your retirement! For example, believing you will win the lottery is one of the most obvious. Many people believe or hope they will win the lottery. The reality is that only an extremely small percentage of people will win a lottery. Of those that do, most squander their cash long before they retire. We have identified and covered several other areas later in this post. If you fall into any of these kinds of wishful thinking traps, it is time to step back and assess your chances. Will you have a comfortable retirement with the real money that you will have during your retirement?

Don’t Let Wish Full Thinking Ruin Your Retirement

It will all work Out Just Fine

Many people have this approach and just do not worry about the future. The reality is that unless you take specific action, there is a good chance you will be poor in retirement

The Market Goes Up Every Year

The market does not go up every year. Just look at the years 2000-2001, 2008-2009 and even more recently 2018 to date. There have been significant declines in these years. Over the long term the market on average has increased. But what do you do when you need funds and the markets are down in a specific year?

Don’t Let Wish full Thinking Ruin Your Retirement – Maybe I will Inherit Money

With baby boomers retiring and passing along a great deal of wealth there is a good chance you will inherit something. But will it be enough? How much will you actually receive after taxes are paid on the estate, legal fees and distribution to other heirs. Probably not that much and certainly not enough to retire on.

I have Lots of Equity in my Home

You may indeed have lots of equity in your home. Will you down size? Will you sell and rent? You have to live somewhere.  Real estate sometimes can decline as well.  Will you have sufficient equity that you can access to pay the bills etc.

I Have a Business, I will Fund My Retirement

Will your business continue to thrive until retirement? Can you sell it or will you have to work well into retirement to generate sufficient income? Develop a transition plan for your business and yourself to ensure there is something for you from your business.

Saving When There are no Expenses

There are always expenses. There are always repairs needed on the house, the car, or even health bills. they never seem to go away. Start setting aside money to save now and don’t stop.

Planning to Make More

That raise, that promotion etc. will allow me to save more or start saving. What happens if you get laid off? Companies downsize all of the time. Other people get the promotions. Don’t count on the promotion etc. Stat saving now.

Don’t Let Wish full Thinking Ruin Your Retirement = Win Big on a Sure Thing

An investment that is going to pay really well may not turn out. A business venture that may or may not work. Real estate investments that take longer to appreciate than planned. All of these can happen, but they have a very high risk associated with them.

Avoid wish full thinking and live in today’s reality. Start saving immediately for retirement. If some of these areas do turn out, you got lucky! Don’t Let wish full thinking ruin your retirement

Five Retirement Issues

Five Retirement IssuesEveryone should consider five fundamental retirement issues if they are going to retire anytime soon! Savings, income, expenses, health, and time management. If you have a plan for each that meets your needs in retirement, you are well on the way to a successful and satisfying retirement. Many people only think about retirement once they are heading out the door. Either voluntarily or forced out in a corporate restructuring or downsizing. Don’t wait; develop your plan now!

Five Retirement Issues

Have You Saved Enough

How much income will your savings generate? Post-investment advisors assume 4%. It can be drawn down each year. This number assumes a reasonable probability that your savings will last well into retirement. Will you have enough when you add income from other sources, such as pensions? If not, keep working and beef up your savings.

Verify Your Income

How much income will you have in retirement? Add up the income from your savings, pension, investments etc. How does this number compare to your current income? If not enough should you work longer, save more etc?

Review Your Budget

Review your budget now and how it will change post retirement. What expenses will disappear? Will you have new expenses? Travel, new car, home renovation, upgraded and health issues come to mind.

Time Management

Most people will have up to ten hours every day to fill which were originally filled by work. How will you fill these hours after you retire? Many people find it difficult after all the travel and the Home projects are completed. What is your long term time management plan?

How is Your Health

Your health can play a huge factor in retirement. Not only in terms of enjoyment but also from a budget perspective. Be realistic and plan accordingly.


Are You on track to a secure retirement

Are You on track to a secure retirementThe question, are you on track to a secure retirement is a common one that many people have. They may be nearing retirement or their company is about to provide a special retirement plan. They wonder if they should take it and whether they will be OK financially in retirement. Whether you are retired or about to retire or have a few years yet to work it is never too late to assess whether you will be comfortable in retirement.

Are you on track to a secure retirement?

One of the best ways to answer this question is to build a retirement budget. First, you should identify where your income is going to come from. Your income may include company pensions, government pensions, income from investments, and other miscellaneous income that is on a recurring basis.

Next, you must consider all of your expenses. Your expenses will include all of the regular monthly expenses such as heat, Hydro or electricity, and utilities such as cable TV, telephone, etc. You should also include your taxes and mortgage payment if you have one. Your home is going to need maintenance over the years and you should budget an amount each year for maintenance of your home. The same applies to your car and whether you have a car payment or car maintenance, insurance, etc. this should be part of your budget.

Once you have totaled up all of your income and expenses you will have some idea as to whether you will have sufficient money during your retirement. You may find that your expenses are going to be greater than your income. You will either have to work longer or cut your expenses. You may also decide that you will increase your savings if you have time.

Another area that we did not mention is all of your expenses associated with your free time. You now have a great deal of free time to pursue hobbies, travel, and even go back to work. Depending on what you decide he may need to budget for this activity.

A good plan developed early, reviewed regularly, and adjusted as needed will help to ensure a secure retirement.

Things to do Before You Retire

Things to do Before You RetireWe have divided our list of things to do before you retire into two categories. First, there are the usual financial priorities that we will list in a moment. These are the ones that most people focus on. There are other areas that are nonfinancial that are also important. If you are going to truly enjoy your retirement, regardless of when you retire, pay attention to these areas as well.

Financial Things to do Before You Retire

The first section is all about creating the right conditions to provide as much flexibility as you can financially. You want to enable you to do the things you want to do in retirement, whatever they are. Basically it maximizes income and minimizes expenses. Arrange a budget that helps you avoid more debt.

Pay off the Mortgage – no mortgage payment frees up all kinds of cash flow that can be used for all kinds of things. Without this burden, you have much more freedom to live in the manner you wish.

Reduce debt i.e pay off cars and loans – the same applies to loans and other debt that you may have. Pay it off, go to one car, focus on reducing your debt payments to zero. You want the flexibility of cash flow to deal with whatever comes at you later in life.

Ensure you have sufficient pension income and savings income – review your income and where it will come from. If you feel you do not have enough, added savings may be in order. Reduced expenses or even downsizing might be needed.

Minimize your expenses – we tend to be a bit frivolous with money especially the small change. Before we know it the money is gone. Watch the big and especially the small expense areas. Reduce or eliminate where possible to build cash flow. Build savings and have more free cash to do some of the really important things you always wanted to do.

Lifestyle Things to do Before You Retire

You may have all of the money that you need to live a comfortable lifestyle, however, if you are bored, not challenged or miss the social side of work there is a good chance of really not enjoying your retirement years. Focus on the following areas can sometimes help with these issues.

Create goals – for yourself, review them regularly, adjust them as needed and most important build a plan to actually make them happen, just like you might at work. This will give you purpose and something to look forward to.

Getting adjusted to Retirement – does take time and it is different for each person. Some have so many hobbies and things to do that they wonder why they ever worked while others watch the grass grow and are bored. Review all of the items in this post and figure out what is right for you and what would make it interesting for you during your retirement.

Exercise and eat in a healthy manner – to stay healthy. If you do not have your health you are not going to enjoy retirement. Your health is a precious commodity that you can lose at any time.

Travel – may not be for everyone, but if you want to travel do not put it off. There will come a time when you are unable to travel and you will wonder why you did not do it.

Live on a reduced budget – lets you sleep at night, especially when you know you have enough income and savings to live comfortably. Establish a realistic budget, track your expenses and adjust as needed.

Keep in touch with friends – having a social life is incredibly important. Never lose sight of your friends, help them when needed, and enjoy them for as long as you can.

Retirement Numbers to Watch

Retirement Numbers to WatchWhen you are approaching retirement there are lots of things to think about, but there are a few retirement numbers to watch and pay attention to. You want your money to last and you want your retirement to be pleasant and comfortable throughout your retirement life. If you are going to achieve these objectives, consumers need to pay attention to the withdrawal rate from your savings, the level of pensions that you will receive and the amount and timing of the government pensions that you will receive. Pay attention to these numbers, make the right decisions and re-evaluate as you get closer to retirement to make sure you working with the most up to date information.

Retirement Numbers to Watch

Withdrawal Rate – this is the rate that you withdraw from your savings. The amount you need vs. take will depend on a number of factors. First you need to decide just how long you need your savings to last, what the income level is from your savings and of course how long you will live. Many advisers suggest 4% as a reasonable withdrawal rate. We happen to think that the rate you use should depend on the income level from your investments and the health of your investments. Some years when investments are not doing well you may want to take less, while in good years you can afford to take more out.

Reliance Rate – percentage funded by pensions from employer and government. How much will your income amount to in retirement compared to what you were making prior to retirement. The difference is how much you will need to make up from savings, perhaps working longer and expense reduction.

When to Claim Government Pensions

Claim early and you will suffer a penalty i.e. a reduction in the amount paid out, claim later and the pension amount goes up, but you have to do without that income until you claim it. Can you afford it? Will your cash flow allow you to delay your claims?

Add up all of your income from all sources in retirement, compare to your current income level and develop a plan to source the difference in income.

Have You Saved Enough for Retirement

Have You Saved Enough for RetirementHave you saved enough for retirement? Most people don’t know and do not know how to even figure it out! This is the sad reality and one of the things that this website and writer are trying to help consumers with. You can meet with a financial adviser, but that typically costs money. Unless you have some kind of investment portfolio, they probably will not want to spend too much time with you. What can you do to answer the question, have you saved enough for retirement? The answer is fairly simple and we will attempt to help you with  this question.

Have You Saved Enough for Retirement

Start by assessing where your income will come from during retirement. Do you have social benefits, old age pensions, medical benefits, company pension, government pensions and any savings that you may have. Add all of the sources of income you will have during retirement to gain some idea of the income available to you during retirement.

Also take a look at how long these various incomes will continue, whether they will increase or not and how safe they are. Government pensions are often indexed based on the inflation rate. Other pensions may not increase as much. Savings income will change as well based on the type of savings you have and how they are invested. Always try to preserve your original investment and just live off the income.

Next compare this number to your current level of income to see if you have enough to live on during retirement. If your income during retirement is less than your current level of income don’t despair. You will need to make changes, but maybe not as much as you might at first think.

The next step is very important. What are you going to do about the situation you find yourself in? Can you save more money, can you reduce your expenses, can you share expense with a family member etc?During retirement some expenses will naturally be reduced. Commuting and clothing costs will certainly change. Asses how your expenses will change compared to what they are now.

Develop a plan to address this problem and begin working towards developing the income you need to have in retirement. Or perhaps how you can reduce your expenses overall.

Note that your savings are very important, both the amount and how you invest it. Always invest diversely, live off the income it generates to maintain the principle during your retirement. If you spend the principle, it is gone and there may not be anyway to replace it. Spend the principle carefully and wisely if you have to. It has to last a lifetime during retirement.


Money Moves for a Happier Retirement

Money Moves for a Happier RetirementMixed messages about retirement are everywhere. Most people are confused about what they will do in retirement. They just float along through life and hope for the best. The message here is that you can love retirement, have a great time, and be fulfilled and satisfied while living comfortably. All you need to do is do a little planning and preparation before you retire to have the type of lifestyle that you really want to have. We cover a few Money Moves for a Happier Retirement in this post that is based on experience as well as many years of research.

Some people ask, “What will I do with my time?”. Will I be bored, will I keep working and what about all of the people from work, who will be missed? Some people are so ready to get away from work that they really don’t care what they will do. The sad reality is that they may end up being bored to death, literally! Then there is the big elephant in the room! Do I have enough money to live my life in retirement the way that I want to? If you do not do a little planning and saving, then you probably will not live a happy retirement and certainly not in the manner you expected.

Money Moves for a Happier Retirement – Start Planning

Start planning for retirement! When will you retire? What debts will you have when you retire? What will you do in retirement? Travel, work, babysit the grandkids, or just take up the hobbies you never had time to do? There are some basic things you can do to begin answering these questions.

The first step is to hire a financial planner who can walk you through the financial side of things. You may want to meet with several in order to get several opinions. They should be reviewing your income in retirement, your expected savings at retirement, your lifestyle plans while retired, and your overall health relative to how much money you will need while retired. This will take several iterations before you settle on a final plan since there really is a lot to think about.

Visualize what you will do in retirement since this is a really big issue for many people. Even if you are an avid golfer, you cannot golf all the time. What hobbies will you take up? What will you do with all of that time?

How much money is available from your employer’s retirement fund? This is probably a first step. Find this out and then figure out how much more you will need to live the lifestyle that you really want to have while retired. The earlier you begin planning and taking action, the better off you will be in retirement!


Can you retire early?

Can you retire earlyCan you retire early, or do you even want to retire early? The surprising answer to this question is that many people do not want to retire early for many different reasons. Some would not know what to do with themselves. Others did not start saving soon enough and needed more money set aside for retirement. And many more are facing mounting expenses for health issues. They may need money to support their kids or mortgages that they never paid off. Regardless of whatever your situation is, planning for an early retirement is always a plus. You can still work as long as you want for whatever reason, but at least you have the flexibility to make your own decision about when you retire.

Can you retire early?

Have your financial planner assess your financial situation, taking into account your age, your savings, your debt, and your plans for retirement. Consider this a first draft. It is ok to change it as you go. You may make changes anyway as you near retirement. The important thing is to have a plan and to know when it might be feasible to retire.

Let’s assume that you have paid off your home, you have a pension at 55, and you have sufficient savings to live the lifestyle that you want for retirement. You also have your health, and this really represents the ideal situation. If you decide to work longer, you have the confidence of knowing that you have sufficient income when you do decide to retire. If a health issue gets in the way, at least you will be comfortable.

On the other hand, if any of these assumptions are not correct, you may have to work until you are older before you can comfortably retire unless you take some steps to correct whatever the issue may be. Completing the financial plan and asking yourself Can you retire early will put you on the road to ensuring that your retirement is what you had envisaged.

Some people do not want to know the answer to the question, Can you retire early? However, asking and answering the tough questions can always help you plan for the future.


How to Retire Rich

How to Retire RichKnowledge is everything and as it turns out it is true when it comes to retirement. Having enough money to meet your goals and objectives during retirement is critical on how to retire rich. One study confirmed that if you could answer questions about interest rates, inflation etc, you stood a much better chance of having enough money to retire.  Most people cannot answer these questions and have to live unknowingly with less money than they should be. It affects their quality of life during retirement which is when we should all be enjoying our lives.

In fact over your working life you could end up with 25% more savings if you understand and can answer the following three questions.

How to retire rich – Three Important Questions

  1. Interest Rate: Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow? Answer choices: More than $110, Exactly $110, Less than $110.

The answer is More than $110, assuming that you reinvested the interest income each year. At the end of the first year you would have $102. At the end of the second year you would have $104.04 An additional four cents is not much in this example, but it adds up quickly when you are talking thousands of dollars.

  1. Inflation: Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, how much would you be able to buy with the money in this account? Answer choices: More than today, Exactly the same, Less than today.)

The answer is less than today. Your savings account would have $101 dollars in it at the end of the year. With two percent inflation your original $100 would only purchase $98, add your $1 income and you have a total of $99 in purchasing power at the end of the year. If you had to pay income tax on this income, then you will have even less to spend.

  1. Risk: Is this statement True or False? Buying a single company’s stock usually provides a safer return than a stock mutual fund.

Diversity is incredibly important to avoid losing everything when you invest on one company and it goes bankrupt. Mutual funds go up and down. But at least you are protected because you are invested in many companies in stocks and bonds as well as cash. Remember that regardless of how you invest, spread your investments across good quality mutual funds or stocks.


Am I on the right track for retirement

Am I on the right track for retirementMany consumers asked themselves every day whether they have enough money saved for retirement. Am I on the right track for retirement? They are struggling to pay the bills, look after their families, save for emergencies, and save for retirement. They really want to know how much money they need to have to live comfortably during their retirement years. There are many options with respect to retirement. Including living independently, living with friends, and moving in with the kids.

So economists feel that you should have 1.4 times your annual salary set aside by age 35, 3.7 times by age 45 and 7.1 times by age 55. This can be a great deal of money for many people. For example at age 35 if you make 50,000 a year you should have $70,000 saved for retirement. At age 55 you should have $350,000 saved for retirement. But starting at a young age to begin saving and allowing the income to be reinvested these numbers are achievable.

Am I on the right track for retirement

What can you do to verify your retirement programs progress

There are a variety of steps that you can take to assess how you’re doing relative to your retirement plan. For example start off with reviewing your retirement investments and asked for a projection of what these investments will be at various age levels. Secondly find a good retirement planning tool that allows you to input your savings, your anticipated savings and your expenses at retirement age. You should also be able to enter all of your income from pension, government support and your savings into this plan.

Once you’ve completed your initial plan you will get an assessment of whether you have enough money set-aside for retirement and what your retirement will look like. The next step is to make adjustments in real life in terms of working longer, earning more money, saving more money, or reducing your overall expenses to enable you to have the type of retired life that you would like to have.

It is this self-assessment that can make the difference in achieving the quality of life that you would like to have during retirement. Don’t wait get started now with a savings plan and also analyzing your retirement future regardless of what age you are right now. The sooner you do it the better off you’ll be.