Biggest Money Mistakes

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Biggest Money MistakesWe recently read an article online that discussed the standard money mistakes that the average consumer makes over their lifetime. Although this was a great article, we decided to write our own biggest money mistakes with some of our own real-life situations that we have encountered. Here is our list of the biggest money mistakes.

Biggest Money Mistakes

Selling an Investment Property too Soon:

Buying an investment property is probably the second biggest money decision most people make next to the decision to buy their own home. We purchased an investment property back in the ’80s with the idea of renting it out and watching the investment grow. Well after about 6 years and no appreciation we decided to sell. Had we waited another 5 years we would have tripled our original investment? Real estate is a long term investment!

Paying for Something Before it was Delivered:

We all have done this. We have paid for something that will be delivered in a few days or weeks in good faith. More and more often now, goods are not coming through on delivery due to delays are at worst companies going bankrupt. Now I always go for 10% down and the rest on delivery. At least this way I only lose 10% if something happens.

Not Selling High: Classic greed is all this is:

Holding a stock that has gain like crazy, expecting it to go higher and then it cracks and nosedive. Nortel is the classic case in recent memory. Sell at least half of your stock so that you capture some of the profits and lock them in. Sell them all when you have made a decent amount of money. Avoid being greedy!

Buying a Vacation Home as an Investment:

Some vacation homes will be a good investment, however, it is the old issue of supply and demand. Vacation homes can fall into oversupply and or low demand depending on the economy. If you can buy a place such as a cottage where no additional building is allowed, then you may be ok. Buying a vacation home in Las Vegas is the other extreme and really follows the oversupply and low demand phenomenon at the present time.

Keeping too Much Money in Employers Stock:

We have all heard the horror stories where someone’s total savings are locked up in company stock which is losing ground. Never do this. Diversify your savings or retirement portfolio to protect yourself from the troubles a single company may have.

Too Risk Adverse for My Age:

Common theory these days is to move from high-risk investments to safer investments that are income-driven as we get older. If you have a company pension then you can afford to take more risk, while people who depend on their savings for income should move to lower-risk investments as they get older.

Trusted and Advisers Guidance, and Ignored Fees:

Following an advisers guidance to invest in a high load mutual fund is probably the worst you can do. There are high fees that the mutual funds pay to the advisers. Also, trading stocks often is another way the advisers make their money. Always look at the investment and don’t blindly follow the investment advice.

Chased Hot Stocks:

Sometimes you win, but most times you lose. Most of us are too far removed from the investment to be able to react quickly enough to a hot stock that has suddenly gone cold. Unless you can follow a stock almost 24 hours a day, stick with blue-chip stocks that pay a good return.

Short Term Money into Hot Stocks:

Short term money should be put in something that is guaranteed to return your original investment. Never go with short term hot stocks for money that you will need soon. It may not be there when you need it.

Failed to Re-balance:

Re-balancing stocks and funds in your savings plans should be reviewed on a regular basis. Make sure that you continue to follow a diversified portfolio investment plan. This approach lowers your risk and ensures that you are not overexposed in one sector.

Panic When the Market Dropped:

I just spoke with an adviser who is a friend of ours. He mentioned that out of 400 clients, 2 sold and got out of the market when it crashed in 2008. The rest stayed pat and recovered all of their investments and then some. Once you get out of the market at a low point, that money that you lost is gone and can never be gained back.

Good luck with your investments and hopefully these ideas and money mistakes can be avoided in your future. Comments welcome.

Will My Money Last Through Retirement

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This is the key question for many middle-aged people and seniors who are contemplating joining the retired ranks, “will my money last through my retirement years”? The baby boomers are retiring and we see various statistics that show that some people have lots of money saved while others know they will have to work well past the normal retirement age just to buy food and live somewhat comfortably!

We recently came across a post on CNN Money recently that really caught our attention and although we are not republishing it here, we are reposting an image that was in the article since it was so clear about the issues we are all wondering about.

Will My Money Last Through Retirement

Will My Money Last Through Retirement

How Much Money do You Have

The first assumption is that the retired person has $500,000 when they retire at age 65. The column on the left assumes that you withdraw 4% each year. Which is only $20,000 and concludes that you have an 80% chance that your money will last until age 95.  They do not state what assumptions were made regarding income rates and stock market performance.

Option 2 assumes that you take an extra $10 k out for the first 5 years, with market drops assumed in the far right option. While the percentage probability decreases that you will make it to 95, it also assumes that you must take a spending drop after age 70. This may be a reasonable assumption since most of us will be less active after age 70. This is part of the normal aging process. Why not spend our money while we can enjoy it is the motto of these two plans!

Some people would say they were loaded if they had $500,000 in savings. They would not spend a second more thinking about the issue. While others would feel that they were vastly underfunded. They would continue working and saving until they either had what they felt they needed or were forced to stop work due to poor health.

How Long Will Retirement Funds Last

The answer is that all of us must figure out what we need on an annual basis to live on. Some can get by very nicely on $30,000. While other people feel that they would need at least $100,000 a year to live. Don’t forget to also take into account all of your income from other pensions and old-age benefits. If you are happy today living on $30,000 chances are you will be satisfied with the same amount while you are retired. Figure out how much you need to live on each year. Then figure out how much you need to save to generate this income.

Assume that you will withdraw 4% each year. Also that you need $30,000 a year from your savings to add to any pension income. Divide 30,000  by 4% to get $750,000 of savings that you will need using the 4% option. You still have an 80% chance of making it to 95 with sufficient income to live on.

This is a good exercise for anyone thinking of retiring and living off their savings plus their pensions. Whether it is a company pension and/or old age pensions.  If you do not have a pension, then you must rely totally on your savings to live on into retirement. On the other hand, if you have an excellent pension, you may not have to be concerned at all about how you spend your savings. This is a very personal decision. Every situation will be different for every person or couple thinking of retiring.

Build Your Own Retirement Model

Personally, I built a spreadsheet with my age, my savings, and an assumed growth rate every year. Then I added an assumed withdrawl rate every year. Once the model was built I can easily change the percentages to look at the impact of various scenarios. This is an excellent tool, It brings to light what I needed to do to develop a winning situation. One that would ensure that not only do I have enough money. But I also identified the steps I need to take to improve my situation.

If you are not familiar with spreadsheets ask a friend who can set it up for you and show you how to manipulate the variables. It is definitely worth the time it takes and you will have peace of mind as well.

Feel free to write us a comment or two about your retirement dilemma and what your solution is to deal with your concerns.

Thanks for A Retirement System

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Retirement SystemWe all love to gripe and groan about the state of something in North America. The government is spending too much money, our health care system is expensive and slow, we are paying more taxes, and on and on. Sure some things can be improved and will be improved over the coming years, but we already have such a great system of freedoms and safety nets that we should also be thankful for what we do have. More than half of the countries in the rest of the world do not have the life expectancy, the support systems, and retirement systems that you find in North America.

Our Retirement System

Here are 10 reasons why we should be happy with our retirement system and why we should always take the glass half full approach!

1. Better demographics
2. Social Security and Medicare
3. Personal savings
4. Better 401(k) plans
5. More advice, and free money
6. The ability to work longer
7. Longer lives
8. Better health care
9. There is a retirement
10. It’s more than money

More Detail about our Retirement System

1. Better demographics – sure baby boomers are retiring in droves and placing a burden on the health system. But this retirement exodus makes way for young people to get jobs and continue the lifestyle we have in the US and Canada.

2. Social Security and Medicare – At least we have some medical care as compared to none. And yes it is expensive and yes it can be drastically improved. But can you imagine a system with no medical care and no support for medical issues in retirement? Some countries are faced with this issue and it is not a pretty sight.

3. Personal savings – There are lots of people with insufficient savings for retirement. But many have something and many have enough. We have families that can support us and we are not losing our homes to wars and famine. Many people today have savings or pensions that they will have available in retirement.

Better Savings Plans

4. Better 401(k) & RRSP plans – 401(K)’s are used in the US and RRSP’s are used in Canada as a means of tax-free savings. At least we have them and people are placing money in them for their retirement.

5. More advice, and free money – There is sometimes way too much advice out there on the net and in banks and other investment houses. But at least it is there and you have to use your own brains to make sure that you are invested well – The golden rules – Diversify, Go for quality, get Involved.

6. The ability to work longer – Now we can even work longer, past the age of 65 if we want. Some people groan at this idea, while others welcome it as something to do in their retired years and as a source of contact with people, almost a social life for some.

Living Longer

7. Longer lives – We have good food, we have good medical care and we have a safe environment compared to many other countries. We are living longer to enjoy our families and our lives, especially in retirement.

8. Better health care – We probably complain about health care the most, but we have it and we have excellent care when it comes to the serious stuff. We do have to solve the expense side of health care, but compared to not having health care options we are so far ahead of other countries.

9. There is retirement – We take this for granted, but if you plan properly, save your money, there is retirement and you have some of the funds you need to enjoy it. Your own savings should be high on the priority list, but you also will receive some money from the government as well. Enjoy retirement and enjoy every day!

There is More Than Money

10. It’s more than money – Enjoy the family, enjoy the weather and enjoy your friends and acquaintances. If you have ever had a serious illness, then you will understand that every day is a blessing and we should all enjoy just being alive!

Count our blessings, at least we have a retirement system!

 

Should I Change Jobs

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Should I Change JobsI was recently asked by a friend for some advice about changing jobs and basically starting a new career. I am always a bit reluctant to give this kind of advice. Because you do not want to be responsible for the person who follows your advice. If the  new job does not really work out very well, what then? Should I Change Jobs?

I prefer to ask the person a number of questions and point out areas that they should consider. After all it is a very personal decision and it really depends on the situation that person finds themselves in. It is impossible for me to know what their situation really is and how they should respond.

What is the Situation and Should I Change Jobs

First of all it is important to understand the current situation that my friend is in. they work for a private company for the past 20 years, their pension is vested, however they are not eligible to collect a pension yet due to their age. Unfortunately there are situations at the company which has a lot of people upset including my friend. For example on Dec 31 , 2016, any one retiring after that date loses their health benefits. They retire with a pension, but no benefits. They cannot retire until Jan 2017!

The management situation at work is not a positive environment. They are looking or appear to be looking to retire people early and bring on new hires. My friend feels that even though they have fantastic reviews , they may be a target sometime in the next 5 years before they retire to a pension with no benefits.

I also feel that my friend is probably a bit bored and not challenged in the manner they used to be and that means you usually do not do your best work! That is just a human situation and not a criticism.

What are the issues to consider?

  • Salary
  • Benefits
  • Pension into locked RRSP
  • How much, are you penalized in any way
  • Can only withdraw % starting at 55
  • Vacation
  • Sick days
  • New pension?
  • RRSP goes to survivors
  • Must decide how to invest
  • Opportunity to advance?
  • Probability of being tapped to leave current company
  • Are you leaving any money on the table
  • Benefits when you retire from new company
  • Challenge
  • Job satisfaction

Comments about each area mentioned above:

Salary – the new job may mean a drop in pay, but there is potential for upgrading and there are better benefits when they do retire
Benefits – no benefits at the current company vs. benefits  at the new company when they retire
Pension into locked RRSP – Current pension will likely be placed into a locked in RRSP, and collected when they turn 55
How much, are you penalized in any way – Leaving early usually means you are penalized in some way regarding the amount of money you take with you


Can only withdraw % starting at 55 – percent you can draw at 55 is around 6%
Vacation – Probably will have less vacation since new employer will not want to provide as much vacation to a new employee

Sick days – currently no sick days allowed, while new job provides for sick days automatically
New pension? – What do you need to do to qualify for a pension at the new company?
RRSP goes to survivors – a big benefit of withdrawing pension from existing company is that anything that is left when you die goes to your estate and your survivors, not to the company that paid into your pension.
Must decide how to invest – With a self managed RRSP , you must invest wisely and carefully, this is your retirement

Should I Change Jobs – Opportunity to advance?

What are the opportunities to advance and increase your salary to catch up to were you were ?
Probability of being tapped to leave current job – There is a strong feeling by many people that they will never make it to retirement and will be tapped anyway to leave before their time for retirement is ready.
Are you leaving any money on the table – always the big question. How much money are you leaving. Can you negotiate a better package to take with you?
Benefits when you retire from new company – Never a a 100% guarantee, but then they already know that they will be retiring without benefits at the current company

Challenge & Job satisfaction – go together. Many people like a challenge and will not do well if they are not challenged and their job satisfaction suffers as well. This can be a downward spiral so sometimes it  is a good idea to move on and take that next job!

Finally, always make sure that you have an offer in hand before you make the leap from your current company.  You never want to find yourself without a job in today’s current economy.

Comments about this subject are welcome. Additional ideas and suggestions about what everyone should consider when looking at another job would be much appreciated.

Negotiate Before You Sign

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Negotiate Before You SignThis is another post about changing jobs that was instigated by a phone call from a friend who was thinking about changing jobs. You can check out my previous posts – “Should I Change Jobs” and “Leaving a Job, Talk to an Adviser”  and “Handing in my Resignation” which covers those topics. Also some of the things you should consider before making the decision to change jobs. In this case it is negotiate before you sign.

This post focuses on completing all of your negotiations for your new job before you sign your new contract. After you sign, all of your negotiation power is gone. The mantra of this post is always ask in a polite way about items you feel you need or want. The worst that will happen is that the interviewer will say no. There is of course a time and a place to bring your negotiating points up in the process to allow you to gain the most.  Hopefully the following comments and thoughts will help the reader in their quest.

When to Negotiate Details on New Job

There are many opinions about when you should negotiate details such as salary, benefits and perks on a new job. However the consensus seems to be that negotiation starts when you are discussing an offer that may be made to you. Always negotiate before you sign any documents.

Negotiating  salary, etc at an initial interview is not seen as a positive thing to do. No one has offered you the job. You may even turn the interviewer off by making demands too early. Wait until the interviewer has introduced the topic and even then go slow. If you sense that they are reaching closure on a potential offer, now is the time to discuss possible additions that you may be looking for. Note that I wrote discuss, rather than demand. It is all about reaching a compromise that both people can live with. Without being so demanding that you paint yourself into a box that you cannot get out of.

By the time you receive a letter offering you  the job all of the details should have been worked out and the letter should reflect those details. However if there is something missing that you felt had been agreed to, then obviously it should be discussed before you sign the agreement letter signifying that you are taking the job.

Negotiate Before You Sign – Alternate Solutions

There are many ways to solve issues and that is what negotiations are all about. An example of a colleague centered around vacation. The new job only offered 3 weeks vacation. However my colleague had been receiving 6 weeks vacation due to seniority with the current company they were with.

They knew that asking directly for 6 weeks vacation was going to be a non starter in this situation. However  they still expressed their concern about losing so much vacation on moving to a new job. Note that it was an expression of concern and not a negotiating demand.

The Human Resources person recognized that this was an issue for someone who was senior and brought a lot of experience to the job. They could not offer 6 weeks paid vacation, but what they could offer was the opportunity to reduce the salary by 10% and take an additional 6 weeks off fully paid at the lower salary rate. This was in addition to the regular paid 3 weeks vacation. Although they would be paid for 12 months, the pay rate would be 10% lower than the negotiated salary. For some people this is a definite win win, while others may feel they really need that 10%.

The point of this section of this post is that there are many ways to solve issues and create unique solutions. If you do not ask you may not be made aware of them.

Be Prepared for Negotiations At All Times

This is so important. You may find yourself negotiating during an interview when you did not expect it. Or you may receive a phone call from someone at the company you are considering after your first round of interviews. Rather than bring you in a second or third time, they may decide to complete final negotiations right there on the phone.

The point is you never know when you will be asked to consider a proposal. So you should always be ready. Know what you need to have. Know what you would like to have, and know what you are willing to compromise on. Be ready to negotiate the best deal you can at the time. Once you have said yes verbally and on paper, that is pretty much it. Unless you want to risk losing that particular opportunity! If you reopen negotiations after they were closed, it usually means that both parties can re-negotiate the agreement. Overall it is a bad situation to be in.

Comments are welcome about your experiences, do’s and don’ts etc. Anything that will assist our readers in their quest for better and more interesting jobs are welcome.

Alternative Retirement Solution to a Pension Cut

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Alternative Retirement SolutionMany people are dealing with reduced or eliminated pensions. Some are finding Alternative Retirement Solution that allows them to travel and live inexpensively in another country.

We saw this post a few weeks ago and thought that it might be of interest to our readers, who are planning to travel to Mexico for vacation or are looking to stretch their dollars further – Retiree’s Solution to a  Pension Cut

Alternative Retirement Solution

This was sent to me by email about Alternative Retirement Solution and I think it is a great idea for many people.

Alternative Retirement Solution Move to Another Country

One person investigated the cost of living, medical coverage, and lifestyle advantages and has recently bought a house in Ensenada which is only about 70 miles south of San Diego, California.

There is a sizable Canadian and American ex-pat population in and around Ensenada, San Felipe, La Paz, and a reportedly largely Canadian community in Todos Santos, all on the Baja peninsula. He and his wife were able to get retirement visas for Mexico based on his Nortel pension. As residents of Mexico, they are also eligible for free medical care, which in major centers can be very good.

He still has to pay the Canadian non-resident’s tax on his Nortel pension but this tax depends on the total dollar value of your income and can be very little or even zero on small pensions. Mexico, on the other hand, charges no income taxes on foreign income. Land taxes are very low compared to Canada and the USA. In his case, these are less than $100 CD. Utility bills as well are low, providing your use is moderate (i.e. the electrical charges are 3 tier system and the bottom 2 tiers are very reasonable). He finds it easy to stay in the lowest tiers and pays less than $10 CD per month.

Sample of Monthly Utility Costs in Mexico

  • Utility Pesos CDN_$
  • Electricity 120 10
  • Tap Water 60 5
  • Propane 300 25
  • Telephone_plus_Internet 420 35
  • Total 900 75

The cost of living in Mexico lets him achieve a comfortable standard of living for much less cost than if he had stayed in Canada. Expats that have lived in Ensenada for some time tell Wayne that a family of two can get by on as little as $600 Canadian per month plus whatever you pay in rent or mortgage, although $1000 per month provides a more comfortable living. Rent and house prices are much lower as well.

However, to qualify for a retirement visa (FM3) you have to demonstrate that you have a per person reliable income equal to or greater than 200 times the Mexican minimum wage or about $1000 CD monthly. There is a reduction for spouses and a reduction in owning your home in Mexico. Showing bank statements with regular deposits was enough for him and his wife to qualify for FM3 visas.

You can check here http://www.inm.gob.mx/index.php/page/pagina_principal/en.html for the requirements (and to practice your Spanish). There are businesses and individuals that help you with the paperwork, but the Snyders chose to do this for themselves. The Mexican officials are very cooperative and helpful. And you get more practice with your Spanish this way. Some ex-pats choose to stay with just a tourist visa which is available for just $10 at any port of entry.

Supplement Pension Income

There are ways to supplement your pension and still enjoy retirement. He knows ex-pats that work in the USA but lives in Mexico. Some manage businesses through the internet. Others work periodically in the USA then return to Mexico. He knows an electrician that schedules all his work in California for 1 week every 2 months this provides for his family. Another travels to Wisconsin twice a year and works for a month each time and this gives him enough for himself and his wife.

In the major cities and in tourist areas Spanish isn’t essential but learning it will add to your ease of living and enjoyment.

Owning Property in Mexico

Yes, you can own property in Mexico. If the property is 100 KM from the border and 50 KM from the coast foreigners can own the property outright. If the property is near the coast then the Mexican government has legalized a method for foreigners to own land. This is through a “Fidecomiso” or Bank Trust. This costs $500 US a year. In the past, some foreigners lost their property in Mexico. This was due to a land ownership issue. They bought from someone who didn’t have a clear title. But this pensioner’s experience is that now the title is thoroughly investigated and title insurance is available. The Real Estate and escrow companies they used were very helpful and competent.

Moving to Mexico

Moving your personal effects to Mexico can be either relatively easy and expensive or difficult and economical. There are movers that are authorized to move personal possessions into Mexico but they were prohibitively expensive. They couldn’t find a rental truck that they could drive across the US, Mexico border. So, that meant putting everything in the storage on the US side and using a trailer (again you can’t rent one and take it across the border) to move in many smaller loads.

Mexico allows a one-time duty-free move after you have your FM3, but the form costs $130 US and this was more than the duty on small loads. The first $75 per person is duty-free and 16% on the value of the property above that. But they are very lenient and often charged little or no duty. You do need a detailed list of your cargo in Spanish with the value. Google translate usually worked well. With the trailer they sometimes want you to cross at a commercial border crossing such as Otay Mesa instead of a tourist crossing like Tijuana. Moving their possessions themselves was the most difficult aspect of the move for the Snyders, but it saved a lot of money.

Crime in Mexico

In the media, there are many reports about crime in Mexico however crime varies from area to area.  All the locals that he spoke with a report that it is relatively safe. In fact, they felt that it was safe enough that his wife lived there alone for 6 months prior to her husband joining her. They feel safer in Ensenada than where he just finished working in the USA. There is a military base in Ensenada and there are military checkpoints on the highway. These are much, much less invasive than airport security checks. Ensenada’s police force is also very visible thus keeping crime lower.

Alternative Retirement Solution – Other Ensenada attractions:

The weather is wonderful! The ocean and the coast are beautiful! Ensenada is one of Mexico’s most prominent educational centers. There are many universities. People from all over Central America come to Ensenada for higher education. And the famous Baja 1000 race starts in Ensenada.

So take heart, at least one pensioner has been able to turn adversity into an adventure.  While this won’t work for everyone, it is nice to know that you do have options.

There are many web pages with helpful resources about living in Ensenada and other parts of Mexico. Many are commercial sites, so we don’t want to promote these here. You can search the internet for “living in Ensenada” and pick the information you find most helpful. There may be an Alternative Retirement Solution in your future.

If you have a story that you would like to share on how you have reorganized your life to accommodate the coming Nortel pension cut, please let us know by leaving a comment.

Retirement Surprises

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Retirement SurprisesThe biggest issues that new retirees tend to underestimate are not the standard things that everyone thinks about, but the surprises that come along that we either did not think about or did not plan for.  They are retirement surprises. We have assembled a list of items that may be standard to some people, and surprises to others. If yours is not on the list let us know by adding a comment. We will add it to our list for our readers.

Retirement Surprises

  • Assuming that spending will drop after retirement
  • Spending actually rose for many retirees
  • More travel
  • Travel to see the grand kids
  • Gifts for the grand kids
  • Health issues
  • Higher inflation
  • Living longer than the averages
  • Not tracking your expenses and savings
  • Car expenses and repairs
  • House expenses and repairs
  • Support of family members

Retirement Surprises – Plans Go Awry

No matter how much you plan, chances are that something will intervene to get in the way of your financial plan. Remember you are planning for the future which is a combination of some known factors and many unknowns that will crop up.

A common assumption is that you will only need 70% to 80% of your income after retirement. True you need less clothing since you are not dressing for work and you do not have to buy lunches and incur travel expenses to get to work. People tend to forget that they now have all of this time on their hands and typically what happens is that they spend money! It may be on travel or hobbies, but is money they did not spend pre-retirement to the same levels.

Travel To See Family

Even traveling to see the family involves expenses that you did not perhaps have while you were working. Grandparents often purchase lots of gifts for the kids as well.

You may be traveling more often to see them and doing side trips as well. Also you may be adding baby supplies including cribs, toys etc to your own home for when the kids come to visit.

Inflation

This is a difficult one to deal with. There will be spikes in the inflation rate and at other times almost zero inflation. Over the years, the average has been around 3%, which is a good number to include in your planning for retirement.  However you will need to adjust your estimates and savings level required every year to reflect the inflation levels and the overall cost increases for the things that you are interested in. For example if you like to go on cruises and they increase in cost every year by 5%, then you may want to account for this higher than average increase.

How Long Will you Live

People are living longer and longer. Start with the age that your parents lived, assuming that they lived an average life and did not die from accidents or other reasons. Add at least 10 years to your plan to adjust for the fact that we all are living longer and are healthier well into our retirement years.

Use a retirement planning tool to estimate your income, savings and expenses to assess if you will have sufficient funds available for your retirement. It is a good idea to stress test your plan by adding one or all of the following surprises:

  • Live longer
  • Higher inflation rate
  • Large Surprise expense

Hang with Like Minded Friends

This may seem silly at first, however if you follow this advice, you will spend time with people who have the same attitudes about spending money, about enjoying life and about extending their retirement years.

If you hang around with people who tend to spend a lot more than you do, next thing you know you will be spending this money as well and may find yourself short of funds in retirement years. This is a hard fact of life, but it is something to be aware of.

Work After Retirement!

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Many of our friends are retiring now from the job they have worked at for manyWork After Retirement years. Some are planning to continue to work after retirement, while others are adamant that they will not work again. They want to enjoy life and forget about having to get up to go to work. Various surveys have been completed by a host of organizations and it turns out that the majority of  residents expect to work after retirement, primarily to stay mentally and socially active. Many people are retiring earlier than our parents and they need something to keep them alert and active. Following this approach will actually help them live longer as well.

Work After retirement – Never

One couple we know tell us that not only do they not want to work again, they do not miss any of their colleagues at work. Their social life and challenges they get will be more than enough to keep them active.  In fact he listed the things he is not going to miss while retired:

  • Getting up early to go to work
  • Commuting to work everyday
  • Meetings with people he does not respect
  • Working on projects that make no sense to him
  • Not having the time to pursue hobbies

Sounds a little sad but that is their opinion! They plan to travel a lot and see the world. Another golf’s 5 or 6 days a week and loves it. They go south in the fall so they can golf even more and spend the winter in California golfing. Too much golf for me, but everyone has to find something that they enjoy. Another friend of ours plans to work as long as he can. He says he would be totally bored at home and would probably drive his wife crazy. This is also a little sad since it implies that he has no hobbies or interests outside of work.

Work After Retirement – Surveys

Surveys we have read about people who plan to retire, indicate that seven-in-10 (70 per cent) plan to work during retirement, primarily to remain mentally (72 per cent) and socially (59 per cent) active. However, nearly half of consumers (44 per cent) expect to work after they officially retire out of financial necessity. This latter group has not saved sufficient funds for retirement and feel they must continue working during retirement.

Many residents, as much as a third of  residents think they will need between one and two million dollars to fund their retirement, while half (51 per cent) believe they will need less than a million dollars. The remaining  group of retirees feel that they need (16 per cent) two million dollars or more for their ideal retirement.

The amount of money that you need really depends on the life style that you plan to lead in retirement. New cars cost money as do many trips and visits to family. Expensive condos or vacation homes are also a factor. Many residents are finding that the plan to downsize is really not practical with builders pricing homes at a cost that does not make sense to a lot of seniors.

Sources of income for most residents are :

  • Registered retirement savings plans
  • Savings
  • Investments
  • Pension plans for some
  • Government benefit programs

If you are retired and reading this post, you have already started your retirement journey. You are in the process of making decisions to work or not to work. If you are still working, save as much as you can afford now so that you have options when you do retire.

Comments from anyone who has retired and your thoughts about what to do in retirement are appreciated. Our readers will enjoy the assistance you may be able to provide them about working after retirement.

Enjoy Retired Life

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enjoy-retired-lifeEnjoy Retired Life? There are many studies that have been completed to try to figure out what helps to keep retired people happy and be able to enjoy retired life. After you boil away all of the words and statistics there seems to be several things that seem to emerge as key elements to enjoying retired life. These include and we must say here that they are not in any particular order:

  • Having sufficient money for your desired lifestyle
  • Matching your lifestyle with what really interest you
  • Being close to a supportive and loving family
  • Enjoying close friends and family
  • Having an active life in terms of social as well as activity
  • Having a rough plan that evolves with retirement

These are pretty general items and some people may rank some higher than others. Again the list above is not ranked because each of these items will have a different level of importance for each person. One couple we know has different views between them. The grandmother just wants to stick around home and see her children and grand children every week. she cannot get enough of them and does not want to go on trips. Her spouse on the other hand, loves his kids and grand kids, but wants to go on trips and travel a bit. He enjoys his family but occasionally wants a break. They will need to work this out between then and find a solution that works for them.

Concerns about Retired Life

It is only natural to have concerns about retirement. Most people are concerned about retirement however, it’s important to understand this is likely the fear of the unknown, which can often be an unfounded fear.

The best approach to deal with concerns is to talk about them with people who can assist you with these concerns. Whether it is a family member or a financial adviser discuss your concerns and develop a plan to deal with these concerns. Quickly the unknown will become known and you can approach retirement with confidence.

Regrets about Retired Life

When it comes to regrets, many people have regrets and these regrets manifest themselves as you get closer to retirement. If you are young and reading this post, now is the time to give some thought to these issues and do something about them to avoid them as you get older. If you are retiring now, why not address some of these issues as best you can to improve your retirement and enjoy it more.

Some regrets among retirees include:

  • Not taking better care of themselves;
  • Not starting to save earlier for retirement; and
  • Not traveling enough
  • The main regret of pre-retirees was not starting to save earlier for retirement .

Successful Attributes about Retired Life

The vast majority of retirees who say they are having a successful retirement indicate the following are very important to that success:

  • Biggest secret to retirement success being realistic expectations
  • Having saved enough money
  • Good planning ; and
  • Staying involved with people.

Having a realistic plan about retirement is tough to do. Usually there is a spouse involved. Both parties must face retirement together with similar plans. Other wise you risk disagreement and conflict that will get in the way of your retirement success.

Being retired, we can say that all of these ideas are excellent and something that we all should pay attention to. There is one more which we alluded to in the previous paragraph. That is excellent communication with your spouse. Which leads to shared goals and realistic objectives with your spouse. Sometimes you just need to talk things out and work them out until you find a solution that works for them.

We appreciate your comments and ideas about this post and retirement in general. Our readers will appreciate the suggestions and help that your comments provide.

 

Hiring Financial Advisors – 7 Mistakes

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Hiring Financial AdvisorsNone of us can afford to make a mistake when it comes to our personal finances. And yet many people will turn over all of their money, Sometimes to a complete stranger, under the guise that this person is a financial adviser. Hiring Financial Advisors should be done with care.

If you were planning to hire someone at work, would you hire the first person you talk to, hire them without talking to references or looking at their resume. Many people do this when they hire a financial adviser to manage their investments!  It happened to me and all the guy wanted to do was to buy and sell stocks for me. The worst part is that he could not even remember my last name! He did not last long.

Hiring Financial Advisors

What are the Mistakes that We All Make?

Here are seven common mistakes you can avoid when hiring a financial adviser.

  • Interviewing just one candidate
  • No background or reference check
  • Focusing the search on cost or payment style
  • Expecting credentials to make an adviser ‘good’
  • Expectations and results based entirely on returns
  • Letting the adviser control everything
  • Hiring friends and relatives

Let’s face it most people do ok because most advisers are honest and hard working. However, we have all heard of the terrible things that have happened to people that have lost everything because their advisers either made huge mistakes or defrauded them out of their life savings. If you avoid these most common mistakes, at least you have a better chance of avoiding losing everything.

Common Mistakes Made by Many People – 1: Interviewing just one candidate

You have decided that you need more than just a broker to help with your finances. You have questions about your investments and whether your savings will last into retirement. It is time to hire an adviser. Do you hire the first guy to come along or do you interview a number of people?

Do you buy the first house you see, the first car on the lot, and do you compare prices for items you buy? Why not compare the services from advisers? After this is your savings for you and your family for retirement. This is important, right?

Yet many people will hire the first person they talk to. Sometimes it is because a friend or a relative recommended them. Do you take the advice at face value or to do you do your own investigation? Sometimes word of mouth works great, but it still is the best advice to check several advisers out before you make a decision.

Common Mistakes Made by Many People – 2: No background or reference check

Fancy offices, nice cars, rich clients, and fancy clients do not mean success. After all, they could be living off your commissions or even your own money.

Check with references that you trust. Radio hosts who have advisers on their shows are looking to fill time on the radio not invest with the adviser. As long as they sound good they will have them on their show. This is not a reference check. Some of the time on the radio is even paid for by the advisers, so even though it sounds like investment advice, it is really just advertising.

Even after checking references etc, some may still get past you, however, the chances are much reduced and your investments will remain safe.

Common Mistakes Made by Many People -3: Focusing the search on cost or payment style

Everyone objects to paying fees for questionable advice. Most advisers collect fees by selling and buying investments on your behalf and therefore every recommendation must be suspect as a result.

Sometimes paying by the hour can be more beneficial and less costly, however, it really depends on the trading action and investment style you have.

The real answer is how much money you will make, “NET” and which approach will be more successful.

Common Mistakes Made by Many People –  4: Expecting credentials to make an adviser good

Professional credentials are easy to get for financial advisers. My adviser has a wall full and yet I don’t think I get any better advice from him than I did before he got all these diploma’s

Hire a person that you trust and not a credential; Even if you trust the person completely, never let go of the control of your investments. Money corrupts and after all, it is yours to lose not someone else’s.

Common Mistakes Made by Many People – 5: Expectations and results based entirely on returns

People hire advisers because they need help, they want to make money, and want to get their finances in order. They often fire advisers because they don’t earn a big enough” return.

For every person who gets rich quick, there are a thousand that lose their money. You want an adviser who is going to counsel you to ride over the bumps of the market. They should position you to have a nice nest egg by the time retirement comes around.

Long-term performance is what really allows them to ride the market roller coaster and retire comfortably.

Common Mistakes Made by Many People – 6: Letting the adviser control everything

It is your money and never relinquish control of your funds to someone else, especially your adviser. You have the most at stake, the most to lose so it only makes sense that you make the decisions!

Common Mistakes Made by Many People- 7: Hiring friends and relatives

It is hard enough to fire a person who works for you, i.e. your adviser, it is many more times difficult to fire someone who is a friend or a relative. If you have to fire that friend or relative, chances are they will no longer be a friend and your relative may not speak to you for a while.

Hire based on references, background checks, and performance.