Retire

[Haggy64]

I asked before if I can retire at 62 with 600,000. Now I have 800,000 with house paid off. My advisor keeps telling me I’m good to go. Just wondering what you retired guys think.

I also mostly followed the approach that others have mentioned here. I’m debt free, own home and vehicles, boat etc., and not planning for that to change… but I also kind of looked at what I’m spending on a monthly basis ( historically fixed expenses like insurance, utilities, taxes., fuel,etc. plus fluid expenses like eating out, travel, hobbying, etc.) Interestingly my monthly expenditures seem to have landed in the same neighborhood for the last 15 years or so, on average.. without any real budget.
So my retirement was based on whether my current holding/investments, etc., could provide that monthly income for the number of remaining years I expect to live, assuming I wanted to enjoy the same lifestyle … because retiring shouldn’t be about compromising and giving up things I enjoy. (imo)

Now this was all calculated prior to seeing Abby. Once I finally do, I may have to go back to work!!

 

[LTO_3]

Thanks LTO. Great advice. Never hurts to ask around.

Forgot to mention but if you know any financial planners ask them to take a look at what you want to do and see what they say or suggest. But be certain to say you're only looking for an opinions/suggestions and not looking to buy from them.... some are notorious for doing that, especially those with banks.

LTO_3

 

[jeff2]

Forgot to mention but if you know any financial planners ask them to take a look at what you want to do and see what they say or suggest. But be certain to say you're only looking for an opinions/suggestions and not looking to buy from them.... some are notorious for doing that, especially those with banks.

LTO_3

It might be worth it to pay for advice. But advice only. Not tied to any products. I think fiduciary has different meanings in the U.S and Canada.

 

[LTO_3]

It might be worth it to pay for advice. But advice only. Not tied to any products. I think fiduciary has different meanings in the U.S and Canada.

Very true also. Once you pay get the receipt so you can use as a financial deduction.

LTO_3

 

[DesRicardo]

All I can say to you is make sure you understand your tax situation from here on out after retirement.

Emergency expenses can hurt but owing taxes is back breaking.

 

[jeff2]

Things can get tricky. Here is an example.

National Post article: Could an RRSP/RRIF meltdown reduce Liam’s GIS clawback without triggering a big tax bill?

Liam thinks he is in a 19% tax bracket. He isn’t. He is effectively in a 50% tax bracket because he pays 0% income tax, but loses 50% of additional taxable income through the GIS clawback. His situation is interesting because: In my latest article for the National Post, I look at why withdrawing...

edrempel.com

 

[bggolfingmaniac]

Informative thread here.

 

[barnacler]

Good God, people aren't paying enough attention to inflation.

Retire at 62, live 25 years, inflation is now around 3% per year, that amounts to an increase of cost over more than DOUBLE over that time period.

Any plan needs assets that at least keep up with inflation.. The nasty thing is that if, say, inflation goes to 5% for a few years, then interest rates will go up too, and that will quite likely put downward pressure on the valuations of stocks. Sure, dividends will likely keep coming, but heaven help you if you are FORCED to sell stocks at that time to pay for living expenses.

 

[kona]

Very true also. Once you pay get the receipt so you can use as a financial deduction.

LTO_3

Unfortunately fee only advice is NOT tax deductible. In order for it to be tax deductible, the advisor will need to advise on specific security or manage your portfolio.

my advice would be for OP to model out his situation using available software like adviice. Only $10/month.

 

[greensquare]

The OP is fine. I don't think he has much to worry about taxes on his investments. His house he said is worth roughly $900K. In the event he sells his primary resident and made $900K that's 100% tax free unless he moves some or all into an investment. It's better to just let it rest in some chequing or tax free type account. He could downsize and find a place to buy $200-300K based on where he wants to live. There's still some places around that price range or $400-500K.

 

[silentkisser]

I think an important question to ask is, do you have a DB pension that's fully vested? Because if you are one of the lucky few that still have that AND $800K, you're laughing. Most DB pensions have a Cost of Living Adjustment (or COLA). If you have that, you can help offset inflation. The reality is, at 62, you could theoretically live for 30+ years, and at the least, 15 - 20. Most inflation and taxes will take a bite out of your nest egg, and then there is the whole thing if you need care as you get older. That shit is expensive. Then of course there is the risk of a major stock market correction or financial crisis. Not sure if you've been looking at the bond market, but borrow rates are going really high, which will hurt the overall economy. And, there is always a chance that Donnie Dumb Dumb might put the US into default at some point.

I am not an expert on this by any measure. I do know a little about a lot, but its very narrow. Just be careful. You would hate to have to work at Walmart of something like that in a decade because you ran out of money.

 

[jeff2]

I think an important question to ask is, do you have a DB pension that's fully vested? Because if you are one of the lucky few that still have that AND $800K, you're laughing. Most DB pensions have a Cost of Living Adjustment (or COLA). If you have that, you can help offset inflation. The reality is, at 62, you could theoretically live for 30+ years, and at the least, 15 - 20. Most inflation and taxes will take a bite out of your nest egg, and then there is the whole thing if you need care as you get older. That shit is expensive. Then of course there is the risk of a major stock market correction or financial crisis. Not sure if you've been looking at the bond market, but borrow rates are going really high, which will hurt the overall economy. And, there is always a chance that Donnie Dumb Dumb might put the US into default at some point.

I am not an expert on this by any measure. I do know a little about a lot, but its very narrow. Just be careful. You would hate to have to work at Walmart of something like that in a decade because you ran out of money.

Pretty much all public sector DBs have indexing(COLA) or at least partial indexing at it's worst. Plenty of private sector DBs not indexed although the ones with the big unions usually are.
My company phased out DBs for new workers around 2000. Then about 8 years later they made the remaining DBs change to either a DC or a hybrid pension.
Women are more likely to have indexed DBs as a lot of them work for government or broader public sector workers in fields like health care, and education, and the private sector has gotten worse and worse over the last 45 or so years.

 

[xix]

Consider, not immediately but within a year or so, to move your investments - RRSPs(if possible), TFSA, mutual fund, ETFs, etc - into comparable funds from an insurance company. The only reason I'm suggesting this is because if/when you die, most money gets taxed immediately at death and usually about 50% goes to the government while those same savings within an insurance company the company will take about 25% and the rest goes to whomever you've named as the beneficiary(s).
insurance company's investments are not.
I've been doing the insurance company option and just wish I would have started moving my money there sooner.

Just another option for your consideration.

As long as your investments make (a lot?) more than you spend you should find your retirement funds growing even while you're using some of that money, as well as CPP/OAS to live.
Enjoy your retirement!!

LTO_3

insurance company option??? Could you please name a few?
Thanks.

 

[DesRicardo]

Good God, people aren't paying enough attention to inflation.

Retire at 62, live 25 years, inflation is now around 3% per year, that amounts to an increase of cost over more than DOUBLE over that time period.

Any plan needs assets that at least keep up with inflation.. The nasty thing is that if, say, inflation goes to 5% for a few years, then interest rates will go up too, and that will quite likely put downward pressure on the valuations of stocks. Sure, dividends will likely keep coming, but heaven help you if you are FORCED to sell stocks at that time to pay for living expenses.

This is a very good point. Inflation is killer and will eventually lead to him selling his house.

 

[DesRicardo]

I asked before if I can retire at 62 with 600,000. Now I have 800,000 with house paid off. My advisor keeps telling me I’m good to go. Just wondering what you retired guys think.

Honestly, fire your advisor.

 

[jeff2]

insurance company option??? Could you please name a few?
Thanks.

I have heard about this also over the years. I guess it could be an option for those concerned about estate taxes. I would just be concerned about the MERs on those segregated funds.

 

[kona]

Good God, people aren't paying enough attention to inflation.

Retire at 62, live 25 years, inflation is now around 3% per year, that amounts to an increase of cost over more than DOUBLE over that time period.

Any plan needs assets that at least keep up with inflation.. The nasty thing is that if, say, inflation goes to 5% for a few years, then interest rates will go up too, and that will quite likely put downward pressure on the valuations of stocks. Sure, dividends will likely keep coming, but heaven help you if you are FORCED to sell stocks at that time to pay for living expenses.

So what is your suggestion? Work until we die? People focus on lifespan, but there is something called healthspan that is equally important. Newsflash…in Canada it is ~67. In OP’s case, he has 5 good years left before health issues creep in affecting his life. You can adjust spending, but you cannot fight Father Time.

 

[barnacler]

So what is your suggestion? Work until we die? People focus on lifespan, but there is something called healthspan that is equally important. Newsflash…in Canada it is ~67. In OP’s case, he has 5 good years left before health issues creep in affecting his life. You can adjust spending, but you cannot fight Father Time.

The point I was making is the first sentence in the final paragraph.

Pay attention to inflation.

The topic is whether or not he has enough to retire. One possible reason why he may not have enough to retire is due to inflation eating into savings. There are many other reasons why he could possibly not have enough.

I believe the solution was pretty strongly implied in my post; have some exposure to assets that are to at least some degree linked toinflation.

Other solutions like work until you die are actually not relevant, considering the post is about retiring.

But to state it plainly, if one runs out of sufficient funds in retirement, then the suggestion would be obvious - reduce spending, or increase income, either through a better investment choice, or by earning income.

I doubt that many people are going to reduce their wish to enjoy their lives merely because statistically they reach an age where health issues begin to creep in. I am not that far off and I have no wish to reduce my living expectations. In fact, I am enjoying life more than ever!

 

[greensquare]

I don't think OP has to worry much about inflation when I mentioned in post #30 a $900K home is tax free once he's ready to sell. Unless he's blowing funds like crazy annually later on, but that's totally on him. OP seems to know what he's doing it seems.

 

[LTO_3]

insurance company option??? Could you please name a few?
Thanks.

There are many well-known Insurance companies that are available: Manulife, Canada Life, Beneva (started with 2 Quebec companies that amalgamated; SSQ and La Capital) and Sunlife to name just 4. I've had dealings with the first 3 but slowly working that down to two to have better control & oversite. It's a matter of researching and seeing if they carry the same ETF/mutual funds or something comparable, etc and fortunately I have some assistance with this.

LTO_3