With all this retirement talk lately...

[Steve]

Let's face it. We all want to retire (or at least most us, lol).

 

However, for many of us, retirement is just a dream.

 

One common piece of advice is to "start planning early".

 

With that said, if you're not in a union job, or not in a public service job, retirement planning is even more important.

 

Obviously RRSP's are a key....but there must be more to it than RRSP's.

 

Can someone who is "almost" there, or maybe has some financial planning/retirement planning knowledge, provide those of us not in the public sector, or unionized environment, some advice?

 

Thanks greatly!

 

Steve

 

edit: Grammar.

Edited December 3, 2014 by Steve

[Gerritt]

Steve, I just went through my pension package for the company I work for (non Union factory) I had some choices to make...

 

I could go with either a DB or defined benefit package

 

Or

 

A DC defined contribution package.

 

The difference between the two is that the DB package the company administering the plan makes all the calls where my money is invested.

 

The DC package I can direct where my money is invested, after speaking to a financial planner the DC option was a better option in terms of return.

 

That said I can change to the DB plan at any time. And visa versa.

 

My pension is 100% company paid. I can contribute additional funds as I see fit ie. Company stock which are match to a certain percentage by the company (free money!)

 

I am also given a percentage of my wages based upon years of that I can put into rrsps, tfsa, company stock or into gics etc.... I chose the rrsp route but have directed those funds into my wife's rrsp account. This is a tax savings for me, as I still get the tax write off, but pay less taxes when they are used based upon my income and the other monies I will be receiving.

 

Speak to a financial planner. Speak to several of them if need be. Tell them what you think you will need to retire monthly. They will tell you what is needed to achieve your goal.

 

Just advice from a normal guy that just went through the process.

 

G

[Raf]

educate yourself and take control of your finances. read some books on the topic [wealthy barber is a great place to start and should be part of school curriculum]. don't rely on investment advisors/financial planners. they make money whether or not you do. my investments are self directed, it's not rocket science. if you work for someone else, many companies match rrsp contributions, take advantage of that. you're still young, markets go up and markets go down, dont worry about the speed bumps. over 30 years, you will come out ahead.

 

these days many people are relying on real estate (their home) as their retirement nest egg. better make sure it's paid off and there's no bubble.

Edited December 3, 2014 by Raf

[DRIFTER_016]

You could do what I did.

Waste most of your life fishing and having fun and then when you finally figure out that you are going to need to retire at some point find one of those lucrative public service jobs!!!

[sleepjigging]

I have stopped buying RRSPs. The banks want your money, so they can make money - for the banks. The financial gain is for them. Not you. Watch the funds tank during the next financial melt down. (That would be a good time to buy if you are still wanting some RRSPs.)

 

I am currently working to make somebody else rich. (The owner of the business.)

 

We are trading our time for money. ($x/hr or salary/yr)

 

The only way to have financial freedom is through a proven business.

 

I have 20 more working years. But I plan to retire in 3-5 years from my day job by building a business. PM me if you have any desires to be a business owner.

 

Sleepjigging

[Old Ironmaker]

Finances are an intricate portion of retirement and one must prepare for it. I can't quantify the percentage that good finances are to a successful retirement but it isn't only finances. Mental preparation for who you will be, what will you do and how you will do it is in my opinion equally important as being financially sound. We concern ourselves with the money and do not prepare ourselves with the reality that retirement is. What you did before you retire is what you will do after retirement. Don't think that you take up golf, or start fishing, or travel because you don't have the time to do it working if you have never done it before, not always but seeing many guys retire one usually does what they did before. I had a few things I've never one and actually did it, if only to prove myself wrong. Actually joined the local Theatre and did a stage play. That turned into lead roles that turned into a few "guy looking tough in the background" real pay to see movies, no talking, they have to pay you for that above the 10 bucks an extra gets, plus you need something called talent. That was fun. digress as usual, sorry.

 

I as well as many thought this place I work my entire life including weekends in High School just can't do without me, think again. The day after you are gone you become a second thought. A few months latter there may be a lunch, dinner, golf tourney that you used to organize, the next year they may forget to invite you. It's just the way it is. I left very early. Having started at 19 and with our bonus of 20% credited service given without penalty I left with 27 1/2 years service at 45. Fantastic, healthy, a great pension with full benefits, just turned 45. I always wanted a job in the fresh outdoors and no responsibility. So I took a dream job working the grounds on a 4 star not yet open golf course. Free golf, no one to manage, no meetings, no MOL or MOE investigations, no getting called in at 4 AM on Christmas day and everything that goes along with really good money back then. Yea right, when a kid that had 3 years from community college reminded me I was supposed to clean the front stoop of the clubhouse and actually wrote me up, the first time in my life, ever disciplined, I quit right on the spot, handed her my name tag and walked to the opposite side of the counter to book a T time. Actually that was fun, I had never resigned or quit anything in my life. What wasn't funny was when the owner asked me to come back in and the poor 24 year old "manager" was in tears when he made her apologize to me and ask me not to leave. That was sad to see. Needless to say I started my own business a month latter and I was sweeping the stoop in front of the showroom.

 

Be prepared besides the financial aspect. Both mentally and physically. Don't forget you won't be 40 forever and along with a CPP payment comes many a prescription for old timer meds.

 

Check out HBO Sports program 30-30. Just today the Peter Berg documentary program interviewed Brett Favre. Michael Strahan, Tiki Barbour as well as the soldier who's story was told in the movie Lone Survivor. Marcus Littrel is the Navy Seal frogman that was portrayed by Mark Walburg. If even one smige of what he went through in the movie is true this guy's the real deal. It explains exactly what I'm talking about, check it out.

Edited December 3, 2014 by Old Ironmaker

[Tomcat]

Pay yourself first.

 

Bust your butt to get out of debt (all debt) as soon as you can.

 

I happen to think that TFSAs are a better deal than RRSPs. Sure you don’t get a tax refund but all income earned is tax free and more importantly you get to control when you take back some dollars. If you can sock away more each year than the allowable TFSA limit, then consider RRSP contributions. Remember that Government forced withdraws from RIFFs at age 71 can lead to OAS clawbacks.

 

Spend the time to learn how to invest in the stock market for yourself.

 

[BillM]

Be diversified. So many people put all their eggs into one basket. That's a bad bad decision. RRSP, ETFs, DCCP through work, stock purchase plans, etc..

[Old Ironmaker]

As far as financial investment, for me it was real estate. You can touch it, see it, smell it and have control over it, not for everyone but of all the people I know that have had a good nest egg when they have retired had a large real estate portfolio. Regardless of capital gains it has worked well for me as well. Plus we can go to one when we want a tan, any time we want. Not for everyone, absolutly. I just don't think you can lose if you are able to manage it. When I got hit big in a market crash in 81 that was enough for me trusting my hard earned money with someone in a glass tower. Where else do we see returns in the hundreds of percentage points after 20 years besides Google and Apple. Hey I;m no financial wizard and don't even recognize half of the acronyms used when some talk finances.

 

Remember BreEx Gold Mines (sic) anyone? Not good when the CEO jumps out of a Helicopter when he is going to prove where the mine was if I remember right.

[irishfield]

He was pushed....

[Mr.Topwater!]

Tomcat has a good point. Pay down debt! Increase mortgage payments, Tax free savings account , every bit helps. These are obvious points. Or you could quit your job, become a guide, and NEVER retire!

[bigugli]

In the real world there is no goose that laid the golden egg. That only exists in fairy tales and government jobs.

 

I learned that you can trust no one. Lost one company pension when the company went bankrupt. Govt allows companies to borrow against the pension.

Had a great RRSP until the I.T. stock collapse. The investment fund stopped paying out, and remains locked up until the RRSP has recovered from the losses.

 

Biggest challenge to retirement is health care costs. There is a lot the government does not cover. If you have pre-existing medical conditions, most private health plans will decline you or bleed you. This I have learnt watching my wife spend 6 years going through the surgical revolving door.

Edited December 3, 2014 by bigugli

[crappieperchhunter]

I agree with Tomcat. Pay yourself 1st, get rid of debt ASAP and TFSA's are your friend. I also agree with Old Ironmaker. Real Estate has worked for us. Having tenants is not for everyone....but it sure is nice having someone else pay your mortgage off for you. Our son has jumped into that pool now as well. Got a place 3 years ago when he was 22 and has 3 tenants. The first 2 years he was working part time and going to school full time...I really don't know how he managed all that on his own. His entire mortgage is covered by his tenants. Now he's full time and making a decent wage so he is really paying down his mortgage fast. Made a lot of sacrifices...how many 25 year old's still don't have there first car...but have a house? Very proud of him.

[Old Ironmaker]

I agree with Tomcat. Pay yourself 1st, get rid of debt ASAP and TFSA's are your friend. I also agree with Old Ironmaker. Real Estate has worked for us. Having tenants is not for everyone....but it sure is nice having someone else pay your mortgage off for you. Our son has jumped into that pool now as well. Got a place 3 years ago when he was 22 and has 3 tenants. The first 2 years he was working part time and going to school full time...I really don't know how he managed all that on his own. His entire mortgage is covered by his tenants. Now he's full time and making a decent wage so he is really paying down his mortgage fast. Made a lot of sacrifices...how many 25 year old's still don't have there first car...but have a house? Very proud of him.

Not for everyone, the kid's on the right track, you must be very proud of him. Most his age and older are still living in the basement playing video games and smoking stupid stick all night and wake at 1 and repeat. A close friend has a lout for a son, 27 and going on 12.

[Garnet]

I started finical planning very young. Have read most books on the subject and have made it to retirement. 7 years'.

 

It's just like building a house, start with the foundation. Daily expense's, weekly expense's, monthly expenses and yearly expense's. This means pay your bills on time, avoid late charges, don't pay weekly insurance that cost more at end of year. And at pay yourself first. (Wealthy Barber) 10%.

 

Then look into pension plans.

 

Everybody should have both tfsa and rrsp to some degree . You need to understand these are just suitcases that you hold investments in.

 

These investments might be GIC,Stocks ,bonds, riets , etf's , mutual funds.

 

Real Estate is also investment it's like buy a job.

 

Financial Planners are a mine field. They are mostly salesman working a commission, banks just as bad as private planners. The best are for fee planners and you need a 1/2 ton on money. Likely 500k.

 

Make sure you study Canadian investments.

 

This is just a small outline something to remember we spend hours and days and weeks researching boats motors, fishing rods, resorts. Your future takes twice the time.

[Salmonidstalker]

The key is getting out of debt as soon as possible. I'm 32 and I've never bought anything if it wasn't in cash, including my house, my boat and my cars. It's probably my European background. I'm completely debt free and what a load off it is not to have the mortgage payment every month, car payment every month etc. Im also a saver. I sacrifice a lot but what I get in return is much greater and deeper than having more STUFF.

 

Add up your interest amount on your house, your car and everything else you need a loan for and you'll probably see that you are working for the bank not yourself.

 

If you have debt, get rid of it and you'll see that retirement will not only come sooner, but the load off your shoulders while getting there will make a huge difference in your overall happiness.

 

Debt.......that is the killer.

 

I guess to add to this is that I am not retired so, I can't really add the advise of those that are there; however, I think I'm headed in the right direction. Can't imagine how hard it must be for young families out there with kids, a never ending list of bills, a mortgage, and car payments. At the end, very little must be left.

Edited December 3, 2014 by VXP

[crappieperchhunter]

The OP was asking this question with regards to people being close to retirement. I'm 44 months out so I guess I qualify. I have a question of my own to throw out there as well. Recently my wife the banker has been asked when we plan to retire. Her birthday is in May and mind is July. So we where looking at retiring Aug 1st. She has been advised to retire at the start of a year. The reason being you will have less income to claim and can potentially save thousands in taxes.

 

Haven't looked into this yet to see if it will really make any kind of a difference. Being the cheap so and so I am I got no problem retiring Jan 1st instead of Aug 1st if it means more $$$$ left in my pocket. Anybody out there know more about this?

Edited December 3, 2014 by crappieperchhunter

[LostAnotherOne]

Live at home with your parents and save as much as you can. Your twenties should not be about partying, but for saving. Don't get credit card debt. Almost 19% interest would kill anybody.

[wkrp]

True your financials should be in place but remember that life is short and to have fun as well.You will never have as much as some others but you will be rich in life. I see too many people accumulating wealth while forgetting to live.

[bigbuck]

I was a financial advisor for 17 years before I sold my business this year to switch gears in my life and focus on what really matters most, my health and my family. There are many good points here. For the average person working for a living, RRSPs combined with a TFSA are definitely a huge part of retirement. I also stress that consumer debt is a killer, get out of it asap. Mortgage debt is different, at the end of the day you have 4 walls you can eat or pass on to your heirs. Buy a rental property if you can muster up the down payment. The sweetest money you will make is the money made while you sleep. Someone else is paying your mortgage for you. It is work and has its ups and downs but if you buy the right property and are handy, you will do ok. When you have to pay someone to unplug a toilet, then rentals are not for you, you will end up spending more than you bring in on the property.

As for RRSPs and TFSAs, balanced investments are the way to go. You need the fixed income portion to cushion the downs and equities to provide the upside. Yes, the market tanks every few years, it has always done it, but it makes its way back up over time, our whole economy is based on this. For the doomsayers that think everything is a house of cards and it will come crashing down, it probably is BUT if our economy and way of life collapses, you could have a mattress stuffed full of cash that will only be good for lighting a fire, nothing else.

Buy monthly, ignore the noise and when the market tanks, put more money in, that it the absolute hardest thing to do but let me tell you, if you have the intestinal fortitude to do that, you will make out like a bandit if you buy into companies that are perfectly fine but get dragged down with the rest of the market.

Use your tax refund to either pay down your mortgage or fund your tfsa. Do not blow it on frivilous things.

PM me if you want to chat. I can help you out with a few ideas, FOR A PRICE, a fishing spot or two.......

[dave524]

 

Buy monthly, ignore the noise and when the market tanks, put more money in, that it the absolute hardest thing to do but let me tell you, if you have the intestinal fortitude to do that, you will make out like a bandit if you buy into companies that are perfectly fine but get dragged down with the rest of the market.

 

 

This is true, I retired June 2008 just before the markets tanked, it was a scary ride down, the TSX lost about 40% of its value. Make sure you position yourself to make more on the way back up than you lost on the way down and you will be fine.

 

Started with a max RRSP contribution in the late seventies and went payroll deduction RRSP thought the 80's and 90's , mostly gic's cause the interest rates were good sometimes over 10% back then. Last few years couldn't do RRSP's cause past service adjustments to my company pension ate up my deduction amount.

 

One of the best funds I have is a TSX index fund, strange that many funds can't outperform the TSX index , don't say much for fund managers.

 

Instead of GIC's look at buy and hold stocks, like Bell Canada Enterprise and majour bank stocks, the dividends paid are higher than interest today.

[Salmonidstalker]

Is it just me or does anyone else not believe in rrsp's and the stock market. To me, putting your money out there without anything tangible to attach it to doesn't sit well. You'd better be prepared to lose it all at any given time.

[BillM]

Is it just me or does anyone else not believe in rrsp's and the stock market. To me, putting your money out there without anything tangible to attach it to doesn't sit well. You'd better be prepared to lose it all at any given time.

 

The returns I've seen over the past few years would disagree with you. The only times you see a loss is when you actually pull the money out..

[irishfield]

I had an Engineer that worked for me from '85 to about 93 that believed that the only reason there was RRSP's was so that the government would know where your money was and how much they could steal by simply passing some legislation. He know lives in a shack up near Magnetawan trying to make ends meet. Deferred taxes... RRSP's work if you are even one step up off the minimum tax bracket. Save the tax on that amount.. make interest tax free and hopefully don't need to pull it out until you can do so in the lowest tax bracket.

 

That said... the Government is starting to go along my Engineers thinking... Capital gains on some RRSP funds will now be taxed fully as fully taxable income and not at the 50% of the gain as in the past.

[irishfield]

........

Edited December 4, 2014 by irishfield