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Tag: retirement planning

  • Why can’t today’s young adults leave the nest? Blame high housing costs

    Why can’t today’s young adults leave the nest? Blame high housing costs

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    These days, housing affordability is a struggle for nearly everyone.

    But for young adults just starting out, soaring home prices and sky-high rents have become one of the greatest obstacles to making it on their own.

    Nearly one-third, or 31%, of Generation Z adults live at home with parents because they can’t afford to buy or rent their own space, according to a recent report by Intuit Credit Karma that polled 1,249 people age 18 and older. Gen Z is generally defined as those born between 1996 and 2012, including a cohort of teens and tweens.

    More from Personal Finance:
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    Did you break your New Year’s money resolutions already?

    “The current housing market has many Americans making adjustments to their living situations, including relocating to less-expensive cities and even moving back in with their families,” said Courtney Alev, Intuit Credit Karma’s consumer financial advocate.

    Overall, the number of households with two or more adult generations has been on the rise for years, according to a Pew Research Center report. Now, 25% of young adults live in a multigenerational household, up from just 9% five decades ago.  

    Finances are the No. 1 reason families are doubling up, Pew also found, due in part to ballooning student debt and housing costs.

    It’s the least affordable housing market in years

    Between home prices and mortgage rates, 2023 was the least affordable homebuying year in at least 11 years, according to a separate report from real estate company Redfin.

    Now, the average rate for a 30-year, fixed-rate mortgage is hovering near 6.6%, down from recent highs but still twice what it was three years ago.

    “Given the expectation of rate cuts this year from the Federal Reserve, as well as receding inflationary pressures, we expect mortgage rates will continue to drift downward as the year unfolds,” said Sam Khater, Freddie Mac’s chief economist.

    “While lower mortgage rates are welcome news, potential homebuyers are still dealing with the dual challenges of low inventory and high home prices that continue to rise.”

    Of course, housing isn’t the only issue. Millennials and Gen Z face financial challenges their parents did not as young adults. On top of carrying larger student loan balances, their wages are lower than their parents’ earnings when they were in their 20s and 30s.

    “At the end of all that, you are not left with a whole lot of money to spend on a down payment,” said Laurence Kotlikoff, economics professor at Boston University and president of MaxiFi, which offers financial planning software.

    For parents, supporting grown children can be a drain

    Even if they don’t live at home, more than half of Gen Z adults and millennials are financially dependent on their parents, according to a separate survey by Experian.

    For parents, however, supporting grown children can be a substantial drain at a time when their own financial security is in jeopardy. 

    Not surprisingly, parents are more likely to pay for most of the expenses when two or more generations share a home. The typical 25- to 34-year-old in a multigenerational household contributes 22% of the total household income, Pew found. 

    From buying groceries to paying for cellphone plans or covering health and auto insurance, parents are spending more than $1,400 a month, on average, helping their adult children make ends meet, another report by Savings.com found.

    “It has to go both ways,” Kotlikoff said.

    Overall, there can be an economic benefit to these living arrangements, Pew found, and Americans living in multigenerational households are less likely to be financially vulnerable. “If you are in financial union, make the best of it,” Kotlikoff said.

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  • 2024 Retirement Trends to Watch That Will Save You $1000/month | Entrepreneur

    2024 Retirement Trends to Watch That Will Save You $1000/month | Entrepreneur

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    Many people aim to retire in the near future. Hopefully, everything will go smoothly. However, retirement plans are always confronted with challenges, whether it is market volatility, healthcare affordability, or inflationary risks. On top of that, you’ll have less financial flexibility without a fixed income.

    Do not be alarmed, future retirees. In 2024, you can expect to see some exciting new trends that can help you not only reach your retirement goals but make your wallet fatter by $1000 per month as well.

    The Relocation Shuffle

    The importance of location in 2024 goes beyond scenic views. Instead, it’s about maximizing your financial resources. So, look for states with low taxes, affordable healthcare, and vibrant retiree communities.

    As of 2022, Florida, North Carolina, Michigan, Arizona, and Georgia remain the top states to relocate to for retirees, according to The Motley Fool. Several factors may be driving seniors to look for cheaper places to live, including higher inflation and lower living costs.

    As SmartAsset reported recently, Florida is home to the nation’s largest population of people aged 60 and older. Due to its warm climate and lack of state income taxes, the Sunshine State attracts thousands of seniors each year from other states. In 2021, 54% of those moving into the state were over 60, while 46% were 70 and older.

    As a result of the net migration of people 60 and older, four Sun Belt states – Arizona, South Carolina, North Carolina, and Tennessee – ranked next. According to census data, Arizona received 25,090 net inflows in 2021 and South Carolina received 19,004. During the same period, North Carolina and Tennessee recorded net migrations of 18,996 and 14,767, respectively.

    According to Choice Mutual, Iowa will be the best state to retire in 2024. There are lower crime rates for seniors in Iowa, as well as a good medical care system.

    Choice Mutual also found:

    • Overall, Florida is the safest state for retirees, followed by Wyoming.
    • With good scores for cost and access to quality health care, Rhode Island is the best state for retiree health care.
    • Due to its low cost of living and great tax benefits for seniors, Mississippi is the most affordable state for retirees.

    By choosing the right location, you can save thousands of dollars on taxes, healthcare, and overall living expenses.

    The Getaway Grab: Embrace Adventure (and Lower Costs!)

    Rather than Florida retirement communities, 2024 is the year the adventurous retiree enters retirement.

    In recent years, studies have shown that older travelers are becoming more adventurous and interested in adventure tourism in order to experience something they find personally fulfilling.

    Further, many travel tours cater to senior travelers, with hiking and biking trips suited to a variety of physical abilities across the world.

    Imagine yourself exploring vibrant coastal towns in Portugal, trekking through rainforests in Costa Rica, or soaking up Moroccan culture. Not only do these destinations offer breathtaking beauty and unique experiences, but they also offer a significantly lower cost of living than the U.S.

    Portugal, for instance, has a 38% lower cost of living than the U.S. Additionally, it costs 44.4% less to rent in Portugal compared to the U.S.

    It is, however, recommended that you research the available visa options, healthcare access, and local economy in the country you are considering moving to before retiring aborad. A good place to start is joining a travel group or an online community for retirees who are seeking adventure overseas.

    The Downsize Domino: Right-Size Your Living, Right-Size Your Expenses

    McMansions are a thing of the past. People of all ages, not just retirees, are seeking smaller, more manageable living spaces, often in walkable neighborhoods, in 2024.

    According to the National Association of Home Builders, new single-family homes are currently smaller than existing homes with a median square footage of 2,261 feet and a mean square footage of 2,469 feet.

    Obviously, this reduces your monthly housing costs. In addition, you get the opportunity to simplify your life, increase your sense of community, and have more time for things you enjoy. Since the average mortgage payment is $2,317, and the average rent for an apartment is $1,372, that’s an extra grand in your pocket.

    Before you commit to buying, however, consider renting. Find a senior living community that fits your lifestyle and consider co-housing options. Also, you need to be ruthless when it comes to downsizing and embrace minimalism.

    More Flexibility for 401(k) Savers

    As a result of SECURE 2.0, several retirement plan provisions become effective in 2024. Specifically, companies will be able to match contributions to employee retirement plans if they are paying down student loans.

    In other words, employee dollars go towards paying down debt, while employer dollars go into retirement plans. This type of match can be tax-deductible for employers thanks to SECURE 2.0. The employer is responsible for determining the specific match formula and whether or not they will match at all.

    Additionally, SECURE 2.0 allows plans to offer assistance to employees during times of need. Employees can now save for unexpected expenses with a “sidecar fund” offered by plans. It would cap contributions at $2,500 or even lower, and the principal would be protected by investing in principal-protecting investments.

    Alternatively, employees could withdraw up to $1,000 per year without being penalized for early withdrawals of 10%.

    Depending on the plan, these features may not be included right away. Get in touch with your organization’s benefits person or team if these are of interest to you.

    Ch-ch-ch-ch-Changes to Your Retirement Accounts

    Are you sitting on unused funds in 529 education account? If so, you can roll those savings over tax-free to a Roth IRA starting in 2024.

    Obviously, there are some restrictions. A Roth IRA has an annual contribution limit of $5,000, and there is a lifetime cap of $35,000 for rollovers. If you have $35,000 in unused 529 assets and are under 50, you can roll over $7,000 per year (this contribution limit may change annually). You must also have had the 529 account for at least 15 years.

    When you reach age 73 or older, Roth accounts designated in a 401(k) or 403(b) plan are no longer subject to required minimum distributions.

    RMDs can generally be delayed until your retirement year if you participate in an employer-sponsored retirement plan. When an individual dies, he or she does not have to withdraw money from a Roth IRA.

    It’s Time For That Roth IRA Conversion

    After 2025, federal income tax rates are expected to increase, so Roth IRA conversions may be advantageous. According to Sarah Brenner, director of retirement education at Ed Slott & Co., that allows you to lock in current rates.

    Others agree. But, they suggest paying attention to your tax bracket over a long period. “Plan your taxes over several years, particularly with the changes scheduled to occur Jan. 1, 2026,” added Lisa Featherngill, a senior vice president and national director of wealth planning at Comerica Wealth Management.

    “Determine if you will be in a lower bracket in 2024/2025 than 2026 and future. If so, consider a Roth conversion or partial Roth conversions in 2024 and 2025 to spread the tax payments,” Featherngill said.

    How does this benefit you in terms of your retirement and tax planning? Growth in Roth IRA accounts will be tax-free. Also, after five years from the original conversion date, there will be no withdrawals.

    You must wait five years before you can withdraw funds from a Roth IRA after converting to a traditional IRA or other retirement account. A Roth IRA is generally funded by after-tax dollars. Tax-free growth is possible in the account, and withdrawals are generally tax-free as well.

    To maximize tax-free growth, Featherngill recommends starting early.

    Converting your traditional IRA to a Roth IRA involves taking money out of your traditional IRA and depositing it into your Roth IRA. The distribution will be taxed at your ordinary income tax rate. Pay attention to whether the distribution will put you in a higher tax bracket, such as 24% to 32%, or 12% to 22%.

    Contribute More to Your Retirement Plan

    You can contribute up to $8,000 to an individual retirement account (IRA) if you are 50 or older in 2024. For older savers, that includes a $1,000 catch-up contribution. For people under 50, the cap is $7,000. Compared to 2023, both contribution limits have been increased by $500.

    The reason? Under the SECURE 2.0 Act of 2022, the IRA catch-up limit is now tied to inflation.

    You still have time to make contributions for the 2023 tax year. If not on your calendar yet, the deadline is April 15, 2024.

    The contribution limits for workplace retirement plans have also been raised. Age 50-plus workers can contribute up to $30,500 to their 401(k), 403(b), most 457 plans, or Thrift Savings Plan, if they work for the federal government. Compared to 2023, that’s an increase of $500. The contribution limit for younger adults goes up from $22,500 to $23,000.

    Those ages 60 to 63 will have a higher contribution cap starting in 2025.

    The Silver Startup Surge: Unleash Your Inner Entrepreneur

    The concept of retirement is no longer limited to rocking chairs and bingo nights. Instead, retirees are choosing to start their own businesses.

    According to one survey, the majority of small business owners are Baby Boomers (39.63%) and Gen X (47.20%). Further, workers aged 65 and older had the highest rate of unincorporated self-employment (15.5%) of all age groups. In addition, nearly two-thirds of Americans will open a small business after they retire.

    “People are living longer … and many are choosing to start a small business as a way to stay active,” said Luke Pittaway, professor of entrepreneurship at Ohio University. “In fact, the proportion of people starting businesses in the age range of 55 to 65 has increased in recent years and, at one point, even surpassed the typical entrepreneur age group of 25- to 35-year-olds.”

    “Silver startups” will continue to grow in 2024, where retirees use their expertise and experience to launch their own businesses. The possibilities are endless, whether you want to work for yourself, freelance, or open a niche online store. In addition to generating income, this also keeps your mind sharp, fosters a sense of purpose, and connects you with like-minded people.

    When it comes to retiring and starting a business, you need to determine your skills and passions. Take advantage of online resources and workshops designed specifically for senior entrepreneurs as well. And, engage in networking with other retirees who have launched successful businesses.

    Gig Economy Gurus

    If you want to earn money during retirement, you don’t just need to start your own business. In the gig economy, retirees are able to utilize their skills and experience while still enjoying flexible schedules and remote working possibilities. Whether you’d like to teach online courses or drive for Uber, the possibilities are endless.

    In fact, an AARP study published in 2023, found that 26% of US adults aged 50 and older are gig workers.

    The benefit of this is that even a few hours per week of gig work can make a significant difference to your retirement income. For instance, an additional $800 per month can be earned by working just 10 hours per week at $20 per hour.

    The Sharing Economy Boom

    2024 is all about sharing. In fact, 72% of Americans have used a shared service or app, 50% have purchased used goods online, and 15% have used a ride-hailing app. It is also expected that by 2027, the value of the sharing economy will reach $600 billion.

    For example, rent out your spare room on Airbnb, join a community garden, or share a car with neighbors to reduce expenses like food and transportation. By cutting expenses and providing alternative income streams, the sharing economy frees up funds for more leisurely pursuits.

    Imagine this. Your spare room could earn you $500/month, and you’d save $100/month on car expenses – that’s already $600 towards your goal!

    Technology Will Make Retirement Easier

    Don’t hold on to the flip phone any longer. It’s time to embrace the tech revolution! Technology can help you retire smarter and cheaper in 2024 in the following ways:

    • Budgeting apps like Mint or YNAB can help you keep track of your spending and identify areas for reductions.
    • Save money on financial advisor fees by using robo-advisors to manage your investments.
    • Reduce your energy bills by investing in smart home devices.
    • Consider telehealth as a cost-effective healthcare option.
    • To save on gas and impulse purchases, consider online grocery delivery.
    • Rather than clipping coupons, use digital coupons.

    By taking these tech-savvy steps, you’ll be able to save more money each month, bringing you closer to your $1,000 goal.

    Emerging Innovations and Trends in Retirement Planning

    The retirement landscape in 2024 will be shaped by the personalization of retirement, according to T. Rowe Price’s most recent report.

    “Targeted experiences can drive behavioral change and improve retirement outcomes,” states the report.

    T. Rowe Price anticipates that the use of data analysis, technology, and integrated experiences to engage diverse audiences will lead to improved retirement outcomes.

    Based on its findings, T. Rowe Price said, “Consumers are increasingly looking for personalization in all aspects of their lives. The retirement experience is no different.”

    An investor’s likelihood of sticking to their retirement plan can be improved by tailored and targeted experiences, according to data from the company’s workplace retirement plans.

    To put it another way, the one-size-fits-all won’t be as effective as it used to be. Report findings, for instance, showed that personalized educational videos and native language portals, such as those in Spanish, lead to better financial decisions.

    FAQs

    What are the biggest challenges facing retirees today?

    Retirement challenges today are complex, with varying degrees of impact on retirees. A few of the most notable ones are listed below:

    • Outliving their savings. For many retirees, this is their top concern. It can be challenging to ensure that their nest egg lasts throughout retirement due to rising life expectancy, volatile markets, and uncertain economic conditions.
    • Insufficient income. Most people have been unable to save enough for retirement, resulting in tight budgets or even financial hardships in retirement.
    • Medical expenses. A retiree’s healthcare and medical expenses are among his or her biggest expenses. With age, most chronic illnesses become more prevalent.
    • Inflation. As a result of inflation, the dollar’s purchasing power decreases over time. Keep up with inflation by considering investment returns.
    • Market fluctuations. It can be more difficult to manage assets in retirement than it was when you were younger. Time doesn’t allow you to overcome temporary market fluctuations.
    • Retiring too early. Those who retire too young could be forced to “pay for the rest of their lives”.
    • Unexpected costs. In retirement, unexpected costs can threaten the financial well-being of the retiree.

    How can I plan for a comfortable retirement even with limited savings?

    The possibility of a comfortable retirement is within reach even if you have limited savings. Here’s how:

    • Start now. The most valuable resource you have is time. Make small investments, like $25 per week, to grow with interest.
    • Maximize the employer match. Don’t miss out on the full match offered by your employer’s retirement plan.
    • Budget ruthlessly. Track expenses, find leaks, and eliminate non-essentials. A dollar saved is a dollar set aside for retirement.
    • Explore alternative savings. You may want to consider IRAs for tax benefits or downsizing to save money on housing.
    • Boost your income. Consider upskilling, side hustling, or delaying retirement for a few years. The little things add up.
    • Plan for a lower-cost lifestyle. If possible, relocate or modify your travel/hobbies to areas that are more affordable.
    • Prioritize your health. Long-term savings are possible with preventive care.
    • Embrace flexibility. As life changes, adapt your plans accordingly.
    • Seek free financial guidance. Use online resources, libraries, or community centers to assist with budgeting and planning.

    Keep in mind that consistency is key. It is possible to create a comfortable future with small, consistent efforts now.

    What are the best ways to stay engaged and active in retirement?

    Retirement isn’t a destination, it’s an adventure! Keeping your passions alive will keep you vibrant:

    • Explore new hobbies or rekindle old ones.
    • By taking classes or learning a language, you can challenge your mind.
    • Socialize with others. Consider joining clubs, volunteering, traveling, and building a social network for support and laughter.
    • Move your body to feel invigorated by walking, hiking, swimming, and dancing.
    • You can make a difference by giving back your skills and time.
    • No matter where you go, you can travel. Discover new cultures, rekindle old relationships, and make lifelong memories.

    Retirement is a unique experience for everyone. Make every day an adventure by blending these ideas and discovering what sets your spirit ablaze. There is even the possibility of monetizing these activities!

    How can technology help me manage my finances and health in retirement?

    You can use technology to your advantage in retirement.

    Budgeting apps, for instance, make it easier to keep track of spending, automate bill payments, and automate budgeting. Apps like Mint and You Need A Budget (YNAB) help you keep track of your budget, while investment platforms make it easy to buy and monitor investments. Looking for more? A robo-advisor offers automated investment based on your goals, and a secure communication tool makes it easier to work with a financial advisor remotely.

    Providing early warnings and data for health improvement, wearable devices monitor vital signs, sleeping patterns, and activity levels. The use of telemedicine apps allows for remote doctor consultations, which saves time and travel expenses. Personalized workouts and progress tracking are available in fitness apps, motivating you to stay active. In addition, online communities enable you to connect with peers and share social experiences with them.

    The post 2024 Retirement Trends to Watch That Will Save You $1000/month appeared first on Due.

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    John Rampton

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  • Falling behind on retirement savings? 4 steps to get back on track in 2024.

    Falling behind on retirement savings? 4 steps to get back on track in 2024.

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    For a substantial number of people approaching retirement, the future looks grim. Their savings rate is low, their anxiety level is high and they aren’t even sure they’ll be able to retire at all.

    More than one in five adults — 22% — have no retirement savings, according to AARP. Meanwhile, 64% are worried that they will not have enough money in their later years, and 47% of adults who are not yet retired think they will need to work at least part-time in retirement for financial reasons, AARP said.

    “It’s a public health crisis. Many people don’t have any retirement savings. People feel lousy — that they haven’t done enough — and say, ‘There’s nothing I can do about it.’ They put their head in the sand and try not to think about it,” said Mary Liz Burns, senior director of communications strategy at AARP.

    To raise awareness and in hopes of reversing this trend, AARP, the lobbying group focused on issues facing older adults, has launched a public service campaign with the Ad Council called “This is Pretirement.” The campaign is aimed at people who might feel invisible as they grapple with the stress of financing retirement, Burns said.

    “The average American is having a tough time saving. They’re not alone — there are many, many people in that same position,” Burns said. “There’s no judgment about what you have or haven’t done.”

    The multi-year “pretirement” campaign started in November and will continue to roll out to more markets and media outlets including TV, radio and social media. 

    The ads encourage pre-retirees to face the daunting aspects of saving for retirement. There’s also a website, ThisIsPretirement.org, that features free tips, resources and tools. Near-retirees can take a quiz and get a recommended action plan.

    “Think about actions you’re taking that may be harming you, such as carrying over credit-card debt each month. Think about the steps you can take to start,” Burns said.

    “Start somewhere. Anything is better than being frozen.”

    Where to start? 

    First, experts say you should create a budget that includes your income and all your expenses. You can do this on your own or with a financial adviser. 

    “Make sure you have a plan. If you don’t do the planning, you really won’t have a successful retirement,”  said David Schneider, founder of Schneider Wealth Strategies.

    JB Beckett, founder of the Beckett Financial Group, suggested working with a financial adviser who can examine your tax strategies, insurance coverage, Social Security strategy and healthcare expenses with an eye toward longevity and the unknown.

    And Joel Russo, founder of N.J. Retirement Planning, noted that retirement can last a long time. “A lifetime these days can be 100-plus years. People think retirement isn’t going to be that long, but it can last 30 years or more. That’s hard to finance without a comprehensive plan,” he said.

    Advisers need to look at a client’s whole situation to see the reasons someone may not be saving enough money.

    “People aren’t saving enough. But why aren’t they saving enough? What else is going on for them that they can’t?” Russo said. Getting an overview of your budget and your expenses can show you where your money is going.

    Catch up on contributions

    “Your 50s are a really important time to be very serious,” Schneider said. “Hunker down and get serious. Every investment needs to be prudent and diversified. Increase any savings, if possible. Make catch-up contributions, if possible.”

    Starting at age 50, you can make extra investments called catch-up contributions to your 401(k) and individual retirement accounts. In 2024, the 401(k) contribution limit will be $23,000, but catch-up contributions will allow you to save an additional $7,500. For IRAs, the contribution limit is $7,000, with a catch-up contribution of $1,000.

    Check in with Social Security

    As you work on your long-term plan, get your Social Security statement from SSA.gov and check it for errors. This will let you make sure you’re receiving credit for all your work over the years and find out where you stand with Social Security benefits, Schneider said.

    And because the last 10 to 15 years of your career are often peak earnings years, Beckett said to take advantage of savings opportunities to maximize your retirement efforts and minimize your expenditures.

    “You’re entering that retirement red zone in the last 10 to 15 years. If you haven’t saved enough, [then] cut expenses and save as much as you can,” he said. “Be careful not to spend too much. Don’t celebrate and buy a car when you get a promotion and end up with a $1,000 car payment. Use that extra money to sock away more money. Use science and math when it comes to money. Don’t get emotional with money.”

    It’s also crucial to prepare for the cost of long-term care.

    “The one thing that can erode an estate is long-term care,” said Eric Bond, wealth manager with Bond Wealth Management. “You might have $300,000 for long-term care, but that needs to be $500,000. It’s the most unsexy thing in the world to plan for, but you have to.”

    Earn more, save more

    You can also think about leveraging your experience and skills to get a higher-paying job that can help you close that savings gap, Bond said.

    “The best way to save more is to earn more. Try to make as much money as you can. Your job is to get another job that pays more,” he said. “In the past, pensions would keep people at companies longer. But now you can’t rely on a company that way.”

    Dial up retirement savings

    “Just try saving a little extra,” Bond said. “If you find you’re only eating mac and cheese, scale it back.”

    Bond also cautioned against borrowing or taking out a mortgage to fund your kids’ college education.

    “They can get just as good a job coming out of a state school. College is college. Unless [they’re] going to be a doctor, an attorney or an engineer — fine. But don’t sell your house or downsize to pay for college,” Bond said.

    Being open to continuing to work — even doing part-time or consulting work — can help you stretch your retirement nest egg. And working in your retirement years, if you’re healthy enough to do so, can provide not just extra income, but also routine and stimulation, which can be crucial for mental health.

    In the end, your retirement is likely going to be financed by your own savings and investments. So squirrel away as much as possible.

    “You only get one shot at retirement,” Beckett said. “There’s a retirement crisis out there. People need to save more — and save even more than they think.”  

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  • Inflation a scourge for retirees? Ottawa’s silver lining(s) – MoneySense

    Inflation a scourge for retirees? Ottawa’s silver lining(s) – MoneySense

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    Rising RRSP contribution limits

    Inflation also influences RRSP maximum contribution savings limits. In 2021, the limit was $27,830. For 2024, it is $31,560, which is a difference of 13.4%. Over a similar time period, 2018 to 2021, it rose from $26,230 to $27,830, a difference of 5.7%. 

    “Thus, recent inflation caused the RRSP limit to more than double over a similar time period,” Ardrey concludes. “This of course can increase your tax-deferred savings and also your annual tax deduction for your RRSP contribution.” 

    OAS clawback threshold also rises

    Among the goodies that will appeal to Canadian retirees is the rising threshold where they may encounter clawbacks of OAS benefits. Many retired couples in Canada pay close attention to this at the end of every calendar year. 

    The goal is for each member to maximize retirement income from all sources (pensions, investments, etc.) but to stay slightly below the point where Ottawa starts clawing back OAS benefits. 

    After all, OAS payments are for many a welcomed $690-a-month payment (that’s before tax) or $8,300 a year, and it’s inflation-indexed to boot. In 2020, the threshold at which OAS benefits began to get clawed back was $79,054, according to Hector, but that number has risen every year: to $86,912 in 2023 and a projected $90,997 in 2024. 

    So, senior couples with similar incomes in Canada should be able to earn almost $182,000 between them before even starting to see their OAS benefits get clawed back. And if that does happen, that’s what many would describe as a “nice problem to have.” 

    Is CPP inflation hedging a reason to take CPP a bit early?

    Fortunately, CPP benefits are not clawed back at any level, although of course they are still taxable. Here too, inflation indexing comes to the rescue for retirees and semi-retirees. In fact, for the second year in a row semi-retired actuary Fred Vettese argued that Canadian near-retirees hoping to maximize CPP payouts by waiting to age 70 might instead take it a year or two early to take advantage of inflation adjustments that kick in each January. 

    Vettese suggested that in late 2022—and more recently in this article—that those thinking of starting CPP in 2024 should start it before the new year. He responded in an email to me: “I determined it definitely made sense to start it in late 2023 instead. Doing so is worth an extra few thousand dollars.”

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    Jonathan Chevreau

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  • Home Page – MarketWatch

    Home Page – MarketWatch

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    S&P flash U.S. services index rises to 51.3 in December from 50.8

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    Jeffry Bartash

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  • A New Era of Income Investing Is Turning Boomers Into Bond Buyers

    A New Era of Income Investing Is Turning Boomers Into Bond Buyers

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    When it comes to the baby boomers’ run of investing luck, timing has been on their side. 

    Decades of stellar stock-market returns produced by a series of bull markets that began in 1982 coincided with boomers’ prime working years and made their nest eggs grow.

    Copyright ©2023 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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  • Should you hold onto unused RRSP contributions? – MoneySense

    Should you hold onto unused RRSP contributions? – MoneySense

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    When you contribute to an RRSP, you must claim the contribution on your tax return for the year. That is, you report the fact that a contribution was made. You do not, however, have to deduct that contribution. You can choose to carry it forward to claim in a future tax year.

    On your notice of assessment, there are three primary RRSP-related line items:

    1. RRSP deduction limit
    2. Unused RRSP contributions previously reported and available to deduct
    3. Available contribution room

    Your deduction limit means how much you can deduct for the year. Your unused contributions are previous RRSP deposits not yet deducted. These unused contributions reduce your available contribution room. So, if you have a $20,000 RRSP limit, but $5,000 of unused RRSP contributions from the past that you have not yet deducted, your available contribution room is only $15,000.

    Your available contribution room is how much you can contribute to your RRSP today. You are allowed to overcontribute by up to $2,000, so there is a bit of a buffer. However, if you exceed that $2,000, you are subject to a penalty of 1% per month.

    The $66,000 of unused RRSP contributions you have, Svetla, is pretty significant. It’s one of the larger carry-forwards I have come across. It represents tax deductions and potential refunds you have delayed.

    Now, should you hold onto unused RRSP contributions?

    You can carry forward your unused RRSP contributions indefinitely. They do not expire at age 71, when you would otherwise have to convert your RRSP to a registered retirement income fund (RRIF). It’s uncommon to carry unused RRSP contributions forward, but sometimes it makes sense, say when you’re going to have a much higher income year the following year. Your RRSP deduction may save you more tax if you save it for that subsequent year.

    Svetla, it sounds like you are building up your unused RRSP contributions with the intention of using them to offset the tax on your future RRSP withdrawals. This may not be advantageous.

    If you’re working and your income is higher now than when you retire, your RRSP deductions would save more tax today than in the future. Unless you expect your tax rate to be much higher later, you are probably better off claiming the deductions now. Furthermore, even if your tax rate was modestly higher in the future, by waiting several years to get those tax savings, it may not be worth it. If you could save 30% today or 35% in a few years, it may still be better to save 30% today just to get that refund in your pocket to do something else with it, like invest it or pay down debt. This is the “time value of money.”

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    Jason Heath, CFP

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  • Why wealthy investors put $125 billion into this new type of private-equity fund last year

    Why wealthy investors put $125 billion into this new type of private-equity fund last year

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    Private-equity funds aimed at wealthy individuals continue to draw in fresh capital as the universe of alternative investments grows beyond its roots serving endowments, pension funds and other institutions, according to industry data.

    Registered funds that take investments from individuals and smaller institutions rose by about $125 billion in 2022 from the previous year to total assets under management (AUM) of $425 billion, according to data from private-equity investor and data provider Hamilton Lane Inc. HLNE.

    The…

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  • Infinite banking in Canada: Should you borrow from your life insurance policy? – MoneySense

    Infinite banking in Canada: Should you borrow from your life insurance policy? – MoneySense

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    Now, after a fair bit of research and a few interviews with experts on infinite banking, I feel I know enough to pass on the basics—plus what you should think about before signing up. 

    What is infinite banking?

    According to a useful primer from independent insurance firm PolicyAdvisor, “Infinite banking is a concept that suggests you can use your whole life insurance policy to ‘be your own bank.’” It was created in the 1980s by American economist R. Nelson Nash, who introduced the idea in his book Becoming Your Own Banker. He launched the “Infinite Banking Concept” (IBC) in the U.S. in 2000, and eventually it migrated to Canada.

    An article on infinite banking that appeared both on Money.ca and in the Financial Post early in 2022 bore a simplistic headline that said, in part, “how to keep your money and spend it too.” The writer—Clayton Jarvis, then a MoneyWise mortgage reporter—framed the concept by declaring that the problem with the average Canadian’s capital is that it’s usually doing just one job at a time: it’s spent, lent or invested. 

    “But what if you were able to put your money to a specific purpose and continue using it to generate income? That’s the idea behind infinite banking (IB),” Jarvis wrote. He compared IB to a reverse mortgage: “In both cases, you still possess the appreciating asset being borrowed against—your policy or your home—and you have the freedom to pay back the loan at your leisure[.]” But Jarvis also evinced some skepticism when he added: “those who have sipped rather than chugged the IB Kool-Aid say it’s a strategy that may be too complex to be marketed on a mass scale.”

    Borrowing from your life insurance policy

    If you’re not familiar with the finer details of insurance, infinite banking does seem a bit arcane. Rather than put your money in a traditional bank—which until the last year or so paid next to nothing in interest on accounts—you would invest in a whole life or universal life insurance product, both of which provide some “cash value” from the investment portion of their policies. Then, if you want to borrow money, instead of making hefty interest payments to a bank, you would borrow against your life insurance policy. 

    As PolicyAdvisor explains, “Because you’re only borrowing from your policy, the insurance company is still investing your entire cash value component. So, your cash value still grows even though you’ve borrowed a portion of it.” 

    Those new to infinite banking should watch a YouTube primer made by Philip Setter, CEO of Calgary-based insurance broker Affinity Life. In it, he readily concedes that much of the marketing hype portrays infinite banking as some kind of “massive secret of the wealthy,” which essentially amounts to buying a whole life insurance policy and borrowing against it. Setter has sold many leveraged insurance products himself, but to his credit, in the video he calls out some of the conspiracy-mongering that seems to be attached to infinite banking, including the primary message from some promoters that traditional banks and governments are out to rip off the average consumer. 

    Infinite banking seems to be geared to wealthy people who are prepared to commit to the long term with the leveraged strategy, and who can also benefit from the resulting tax breaks (more on this below). It’s not for the average person who is squeamish about leverage (borrowing to invest) and/or is not prepared to wait for years or decades for the strategy to bear fruit. As Setter warns in his video: “Once you commit to this, there’s no going back.” If you collapse a policy too soon, it’s 100% taxable: “It only is tax-free if you wait until you die … you commit to it until the very end.” 

    Get personalized quotes from Canada’s top life insurance providers.All for free with ratehub.ca. Let’s get started.*This will open a new tab. Just close the tab to return to MoneySense.

    How are insurance advisors paid for selling infinite banking products?

    Asked how advisors are paid, Setter said they receive a lump-sum commission based on the premium amount of the policy. I also asked this of Asher Tward, financial head of estate planning at TriDelta Private Wealth. In an email, Tward said it’s “the same as with any insurance policy—mostly upfront commission based on premiums paid (higher if there is more initial funding). Fundamentally, this is a life insurance sale. If one undertakes an external or collateralized loan versus a policy loan, they may be compensated on the loan as well.”

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    Jonathan Chevreau

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  • Would you lend your mom your fortune? Estate planning with a twist.

    Would you lend your mom your fortune? Estate planning with a twist.

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    When it comes to estate planning and family giving, the funds tend to run downstream to the younger generations. But one strategy — called upstream giving — could assist older generations during their lifetime and lessen taxes for the family overall.

    This complicated strategy isn’t for the faint of heart. There’s a lot to consider, and a lot of steps need to happen in perfect order for it to work as intended.

    “While…

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  • 18 Retirement Planning Books to Help You Achieve Success When You Retire

    18 Retirement Planning Books to Help You Achieve Success When You Retire

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    There might be affiliate links on this page, which means we get a small commission of anything you buy. As an Amazon Associate we earn from qualifying purchases. Please do your own research before making any online purchase.

    Sooner or later we all reach that golden age of retirement. The thought of retirement is wonderful. But it takes a lot of planning to be able to retire and not need to get some sort of second job to balance your financial books.

    Are you ready for retirement? Do you have a retirement bucket list? Do you, or will you, have enough income put away to live a nice life off of the profits when you retire?

    If your answer is no, then you should consider the 18 retirement books below to be “must reads”.

    If you have a nice retirement nest egg, or are already well into the process of saving and planning for your retirement, you may want to cherry pick the books below to find the ones that might give you some new bits of information or act as great reminders.

    When is the Best Time to Start Reading these Retirement Planning Books?

    Due to the power of compounding interest, the best time to start reading these retirement books and beginning to make a plan and starting to save for retirement is when you are young.

    Even as young as 18-20 is a great time to begin putting away a few dollars toward retirement. A few dollars saved when young can grow to a nice nest egg by the time you reach your golden years.

    The second best time to start retirement planning is “tomorrow”. Even if you only have a few years to retirement, this “emergency” mode retirement is better than not saving for retirement at all.

    The clock is always ticking on retirement. You don’t want to put money into play without a plan, but it is essential to understand everything about retiring ASAP and begin your planning as early as possible.

    Below are 18 of the best books on retirement planning.

    They will help you maximize retirement savings, understand how to get the most from social security, how to live frugally on your retirement savings, retire overseas, where to live when you retire, how to “semi-retire” and make money in retirement from your passions.

    18 Retirement Books to Help you Achieve Success When You Retire

    1. The Smartest Retirement Book You’ll Ever Read by Daniel R. Solin

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    The Smartest Retirement Book You’ll Ever Read teaches the reader about the basics of making investments while considering the current economic scene.

    It also touches on other financial subjects such as reverse mortgages, social security distribution, delaying retirement, and prenuptial agreements for people who get married later in life.

    The author offers a clever and witty read with a skeptical approach to the art and process of investing, and makes it clear that he is trying to help his readers rather than businesses.

    Throughout this book, Solin uses humor, but also stays on topic and writes in a succinct way to get his point across to the reader.

    This book has charts and other tools to help the readers distribute their money in a way that will allow it to grow into enough savings for retirement.

    With its simple strategies, this is an easy book for people to follow. It warns people about possible scams that can cause them to lose money, and sets up a plan so that your money will outlive you.

    It also addresses common mistakes that people make that deplete their retirement money too quickly, and looks into some financial lifelines that people can rely on if necessary.

    2. The 5 Years Before You Retire by Emily Guy Birken

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    Despite the fact that many Americans put money aside throughout their careers for retirement, people often wait until they are in their sixties to realize they have not saved enough.

    The 5 Years Before You Retire, Updated Edition: Retirement Planning When You Need It the Most book aims to show the reader what needs to be done in the next five years to make the best use out of current savings and create a plan for the future.

    The goal of this book is to show people how to save in one of the most important times of their lives. The five years before retirement. While starting retirement saving young is essential.

    The 5 years before retirement is also the time when most people will be making the most money of their lives. Therefore, it is also one of the best times to save.

    Birken covers every aspect of retirement planning and provides straightforward strategies to explain how people can make the most of their last few years in the workforce while also preparing for retirement.

    This is a great book for anyone, whether you have been saving for retirement since the beginning of your career or you are just getting started.

    It will show you what is important to do now so you are able to live comfortably in the future.

    This book presents the information in a very clear way, which makes it quite easy to read. It is also great for people who are not clear on a lot of financial terminology but want to learn more.

    3. Get What’s Yours by Laurence J. Kotlikoff, Philip Moeller, and Paul Solman

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    This Get What’s Yours – Revised & Updated: The Secrets to Maxing Out Your Social Security book does a great job of addressing the confusing process of receiving Social Security and coming out with the most benefits possible.

    It includes strategies that have been written by successful financial commentators that have gone unpublished in other books on the same topic.

    There are a total of 2,728 rules of the Social Security system, and all have explanations to go along with them.

    Because this kind of document is not easily read by the common person, the authors of Get What’s Yours use this book to explain these rules in a way that is comprehensive yet simple to understand.

    They also teach the reader how making wrong decisions can have a long-term negative impact on one’s finances.

    While many personal finance books touch briefly on Social Security, none of them offers the full, authentic, and conversational analysis that this book has.

    The authors use basic strategies and incorporate relevant stories so the reader can relate to the topic.

    The book goes over some of the most frequent benefit scenarios that retired married couples face, along with divorced retirees, widows, and widowers.

    It offers advice for people who are in tough situations, such as retired parents of dependent children, those who have disabilities, and eligible beneficiaries who continue to work.

    It talks about the tax implications of your choices, in addition to the financial implications for your other investments.

    This invaluable book is great for anyone who is approaching retirement age.

    4. How to Make Your Money Last by Jane Bryant Quinn

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    This How to Make Your Money Last: The Indispensable Retirement Guide book aims to help readers turn their retirement savings into a predictable life-long paycheck. It covers each phase of finances in retirement. People often worry that they will outlive their money.

    However, as this book shows its readers, that won’t happen if you implement some tricks for getting higher payments out of your assets, including your Social Security account, pension, home equity, savings, and retirement accounts.

    Making the right moves will help stretch your money out for many more years than you are expecting. Essentially, this book teaches readers how to take their retirement and turn it into a lifelong steady paycheck.

    The author also shows the reader some new ways to view savings and investments. If you stay on the safe track, your money may not last for the rest of your life.

    While it is important to keep money in safe accounts, it is also vital to invest some money for growth so you will still have money to live off of in decades to come.

    The author shows the readers how to do this, which is increasingly important, as people are living longer these days but retiring with less money than they expected or hoped to have.

    5. How to Retire Happy by Stan Hinden

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    How to Retire Happy, Fourth Edition: The 12 Most Important Decisions You Must Make Before You Retire will help the reader make the best decisions to ensure that they are able to live a happy and healthy life during their retirement. It gives plenty of expert advice in a step-by-step way that is easy for anyone to understand.

    As an addition to the previous editions of this book, this copy offers new material on health insurance and prescription drugs, facts about all aspects of Medicare, the realities of Alzheimer’s care, Social Security strategies, handling financial realities of the current economy, and resources that anyone can turn to if they need additional advice.

    This is a very relatable book for people to read. The author is not a financial professional who has always had all of the secrets to retirement and is therefore living large.

    Rather, he is an average person who was unable to put away the money that he needed for retirement because things in life kept coming up, such as children, unemployment, college tuition, a few bad decisions, and a failed business.

    The reader is able to get information from someone who made some mistakes, and who has been in financially stressful situations.

    The author writes to the reader like he is a friend who just got out of a tough time and is trying to offer some insights to help prevent others from going down his path.

    He also focuses on the things that he did right so people can follow in his footsteps.

    While it may be disheartening to hear of these types of mistakes firsthand, it is better than waiting to face financial problems later on in life.

    The younger you are, the more this book will have to offer you because it lets you know that you still have plenty of time to put enough money aside.

    However, it is a great book for anyone who is getting close to retirement because if you are a bit short on money, it is important to make some good decisions.

    6. Ready to Pull the Retirement Trigger? by Mary Sterk

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    Ready to Pull the Retirement Trigger?: Your Strategic Guide to Retire With Confidence is a great tool to help potential retirees set themselves up to be able to enjoy their later years with confidence.

    Often, people are hesitant to retire due to the fear of having a financial burden come up. This book helps give people a path and strategy to create a plan.

    Retirement Trigger provides great lessons for people of any age. It contains a lot of practical and real-world advice from a financial advisor and coach with over 20 years in the industry.

    Offering a step-by-step guide to retirement planning, this book covers every stage of the process, from discovering your purpose after a career to creating a plan to fund your desired lifestyle.

    The author poses specific tasks and questions that are designed to show you what your ideal retirement looks like and how to make it happen.

    This is an engaging retirement book is written in an easygoing manner. It is full of personal stories and real-life examples, and is entertaining while also being educational.

    7. What Color Is Your Parachute? for Retirement, Second Edition by John E. Nelson

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    The current economy has changed people’s positive expectations of their life after retirement. However, there is still some hope that life after a career can be filled with freedom and the potential for self-determination.

    But how are people supposed to plan for a future that has the possibility of prosperity, happiness, and health?

    This What Color Is Your Parachute? for Retirement, Second Edition: Planning a Prosperous, Healthy, and Happy Future book offers its readers a holistic perspective of the years of retirement, in addition to practical tools to help create a life that is full of security and vitality.

    It offers information on Social Security, a detailed exercise on personal and financial values, and a new type of resource for organizing all of the information on finances and health during the golden years.

    This book is more than a guide on how to stay physically active, where to live, and what kinds of investments to choose.

    It helps people develop a detailed plan of an ideal retirement, so that whether you are planning to retire or you have already done so, you can take a complete approach to getting the most out of these important years.

    8. How to Retire with Enough Money by Teresa Ghilarducci

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    How to Retire with Enough Money: And How to Know What Enough Is offers an easy-to-follow program that can change the course of one’s retirement. It helps cuts through misinformation, confusion, and poorly executed policies that keep people spending or saving poorly.

    How to Retire with Enough Money covers how much money should be saved for retirement, and gives the basic principles that will help the money continue to grow.

    This includes ideas to help get any current expenses under control, including suggestions for getting rid of your financial advisor and take the reins on your finances yourself, and even why it is best to pay off a loan rather than keep paying for it every month.

    Providing the framework for securing your retirement, How to Retire with Enough Money looks at the risks of not saving enough money while you are working, and what other options you might have.

    It provides stable, solid, conservative advice for people who are interested in learning about long-term financial security.

    9. 65 Things to Do When You Retire by Mark Evan Chimsky

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    This 65 Things to Do When You Retire book contains 65 essays that give the readers practical yet entertaining advice on how to build the money habits to set themselves up for a fulfilling life of retirement.

    The authors who contributed to this book include recognizable names, respected retirement experts, and other people who are in their sixties and have been able to create progressive lives for themselves after retiring.

    This book covers a wide range of different people who are from all different walks of life, so there is something in here for everyone. The collection is full of honesty, humor, and knowledge.

    Some of the writers offer inspiring stories of their post-retirement goals, such as training for the Senior Olympics, traveling the world, moving to another country, and even developing a prison ministry.

    Other essayists give the reader step-by-step strategies for putting together a plan to fit one’s lifestyle, interests, and budget.

    10. How to Retire Happy, Wild, and Free by Ernie J. Zelinsky

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    How to Retire Happy, Wild, and Free: Retirement Wisdom That You Won’t Get from Your Financial Advisor offers its readers inspirational advice on enjoying life after retirement. In order to have an active and satisfying retirement, there are more things to consider than just financial resources.

    This book touches on the other important aspects of life such as leisure activities, creative projects, physical and mental well-being, and positive social support.

    It helps readers acquire the courage that is needed to retire early by teaching people how to put money into perspective to erase the feeling that you need millions to retire.

    The author also helps readers generate their life’s purpose in retirement, and motivates them to continue to live a meaningful life.

    By envisioning your retirement goals, you can live out your dreams instead of aiming to live the dreams of other people. Taking charge of your own life and well-being will help you make your retirement the best years of your life.

    This retirement book is different from others because it takes a holistic approach to address both the fears and hopes that people have about retirement.

    The author goes beyond the numbers that are typically the main focus of retirement planning, and delves into the details of a happy retirement and a meaningful life.

    One of the tools that can be found in this book that is not in others is called the “Get-a-Life Tree,” which is a priceless resource.

    The tips that are given in this book will help the reader understand that retirement is more than just about money. It helps readers create an active and satisfying retirement without having millions of dollars in the bank.

    11. 101 Fun Things to Do in Retirement by Stella Reingold

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    101 Fun Things to do in Retirement: An Irreverent, Outrageous & Funny Guide to Life After Work is a great little book to read or give as a gift to someone who is approaching retirement.

    It addresses the joys of not having to commute or deal with bosses anymore, in addition to not having to handle deadlines or clocking in and out every day to do a repetitive job.

    Free from being bound by convention, retirees are now able to push the envelope and do what they want to make their lives as fun as possible.

    This light-hearted book is all about the freedom you have once you retire.

    12. The Truth About Retirement Plans and IRAs by Ric Edelman

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    From the #1 independent financial advisor in America, ranked three times by Barron’s, comes a guide to making the most of your retirement plans and assuring long-term financial security.

    Retirement is complicated and confusing, and it makes your paycheck lower each month. For this reason, may Americans choose to not plan for retirement.

    However, Ric Edelman, a New York Times bestselling author and financial advisor, has advised thousands of people, and has put together some of his advice in this book.

    This The Truth About Retirement Plans and IRAs book is a step-by-step guide that offers enlightening prose and clear explanations on being a retirement plan participant.

    He talks about contributing to retirement even if you don’t think you make enough money to do so, how to make smart financial decisions, and how to make your 401(k) work for you by providing you with the income you need to have the lifestyle that you want for retirement.

    This book also helps to debunk common myths and addresses common confusions.

    13. Retirement Planning by Mark Bresett

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    Retirement Planning: What You Need to Do 5 Years Before You Retire explains that retirement is actually an easier transition than many people believe it is. It helps decrease worry and stress for those who have not planned for their retirement properly.

    It lays out what people should start doing at least five years before retirement. It talks about expenses, retirement needs, having a financial planner, budgets, expectations, tax returns, Medicare, and possible changes to health care.

    After finishing this book, the reader knows the necessary steps to take to plan for their retirement, whether that means getting a part-time job for a while or living off of a bit less than they have in the past.

    It reminds readers that they are in control of their own retirement, and that there is a luxury to be enjoyed during this stage of life.

    BIG LINK – Best Personal Finance books https://www.developgoodhabits.com/best-personal-finance-books/

    14. The International Living Guide to Retiring Overseas on a Budget By Suzan Haskins

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    The International Living Guide to Retiring Overseas on a Budget: How to Live Well on $25,000 a Year might be the right book for you if you are interested in retiring abroad. While this is a little-known strategy, it is very effective.

    The simple premise explains enjoying a happy, healthy, and fulfilling life after retirement that is more affordable than living in the U.S. or Canada.

    It explores overseas retirement and reveals affordable areas and necessary strategies for making a successful move.

    This book is great for retirees and near-retirees living in the United States and Canada, but also applies to younger people and those who have families who want to improve their quality of life and lower their cost of living. It also looks at some solutions for continuing to work and earn money abroad.

    The authors of this book have over 30 years of experience living internationally, and are considered to be experts on the topic.

    They have been writing about creating a life overseas for over 12 years, and have created popular blogs on the topic for popular outlets such as The Huffington Post and AARP.

    They include information and strategies for everyone, regardless of one’s political or economic stances. This is a great book for anyone who wants to live a happy, healthy, and affordable life.

    15. The Year Before You Retire by Sofia Martinez

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    The years leading up to retirement can feel unsettling—so much so that many people don’t think about preparing for their future when they are working.

    They don’t plan investments or savings to keep up the lifestyle that they are used to once they retire. However, with this book, you can follow your dreams and have the lifestyle that you want.

    The Year Before You Retire: Learn the 5 Easy Steps to Accelerate Your Journey to Retirement & Finally Live a Life of Freedom (Retirement, Retire, Retirement Planning) offers important concepts about wealth management to help ensure a successful life. It helps you steer clear of some common pitfalls by sharing secrets to success.

    This book teaches the importance of having an estate plan to prevent the state from administering one for you. You and your heirs will want to have control over how your assets will be distributed.

    Readers will also learn about some possible sources of income for retirees. With this knowledge, one can decide where to get money after retirement, in addition to any retirement plans that have been set into place.

    Furthermore, the reader will learn about budgeting during retirement, as well as buying insurance coverage, Medicare, and financial investments.

    Readers will learn that they can make gradual withdrawals from their retirement funds so the rest of the money can continue to grow.

    This book also offers advice on how to make these withdrawals while keeping the rest invested.

    16. Where to Retire by John Howells

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    Where to Retire: America’s Best & Most Affordable Places (Choose Retirement Series) offers great advice on options for relocation during retirement, as well as reasons why people should uproot their lives and move just as things are beginning to settle down.

    Retirement guru John Howells gives well-researched and updated information on how readers can find their ideal homes during their retirement years.

    The author offers things to consider when you are looking for the ideal community, including safety, housing availability, climate, cultural opportunities, and options for recreation and socializing.

    He also talks about affordability, health care, transportation, and volunteer opportunities.

    With a clear overview of how life could be in hundreds of affordable and comfortable places to retire in the United States, this guide helps people determine what might work best for them.

    17. The Number by Lee Eisenberg

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    The Number: A Completely Different Way to Think About the Rest of Your Life book includes commentary from wealth gurus, financial experts, and life coaches to explore people’s hopes for the future. This financial guide is great for everyone over the age of 30.

    The discussion about financial planning is often avoided due to its ability to induce stressful feelings in people.

    However, this book talks about the amount of money and resources that most people will need to be able to enjoy the life they desire after finishing their career.

    It uses imaginative reporting and intelligent insights to urge people to gain control and responsibility for their lives, and move forward towards their long-term aspirations.

    This book revolves around the “number,” which means different things to different people.

    It is a fluctuating idea in people’s minds, and symbolizes a variety of things for different people such as freedom, career success, luxurious indulgences, and even spiritual explorations.

    People tend to be private when it comes to talking about their bank accounts for fear of revealing too much or showing others that they are inept.

    In this book, the author describes this anxiety as a conundrum that is caught up in confusing financial lingo.

    The author sorts through the confusing jargon and translates finances into commonsense advice that is able to be absorbed by ordinary people who are just starting to realize that retirement is in their future.

    The author aims to help readers understand and efficiently manage their lives, money, and quest for happiness.

    18. Second-Act Careers by Sandy Collamer

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    This Second-Act Careers: 50+ Ways to Profit from Your Passions During Semi-Retirement book is all about rethinking your plan for retirement. While people used to associate retirement with grandchildren and golf, people are now taking the opportunity to take new adventures and explore new things.

    Some people even decide to take on another job to make money, but do it in an area that they have a lot of interest in.

    If you’re planning for retirement but want to keep working, this may be the right book for you. It is written by veteran career coach Nancy Collamer, who shows the reader how to find their interests and strengths and re-purpose them to generate income.

    Some options that are talked about include part-time employment, consulting, and internet-based options such as online teaching and writing a blog.

    Having a second career that is flexible and fulfilling can help the reader plan for their next move. Second-Act Careers illustrates how people can create a profitable and meaningful second career on their own terms.

    Final Thoughts on Retirement Planning Books

    Do you plan to retire soon? Have your started planning for retirement? Are you already retired? Have you read any of these retirement books?

    Please share your thoughts on retirement, retirement planning, these retirement books and anything else you fancy talking about in the comment block below.

    Sharing your knowledge on retirement books and retirement planning might help others to make better decisions.

    While you are here, I would also as you to take a moment and share the retirement books, artwork or this page on your favorite social media. Any shares you make will help others find this post and be appreciated.

    And if you’re looking for more resources on books to read, be sure to check out these blog posts:

    retirement planning books | best retirement plans | best investing booksretirement planning books | best retirement plans | best investing books

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    S.J. Scott

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  • RRIF withdrawals: What should seniors with million-dollar portfolios do? – MoneySense

    RRIF withdrawals: What should seniors with million-dollar portfolios do? – MoneySense

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    Registered retirement income fund (RRIF) withdrawals are fully taxable and added to your income each year. You can leave a RRIF account to your spouse on a tax-deferred basis. But a large RRIF account owned by a single or widowed senior can be subject to over 50% tax. A RRIF on death is taxed as if the entire account is withdrawn on the accountholder’s date of death.

    What is the minimum RRIF withdrawal?

    Minimum withdrawals are required from a RRIF account each year, and in your 80s, they range from about 7% to 11%. For you, Amy, this would mean minimum RRIF withdrawals of about $200,000 to $300,000 each year. This would likely cause your marginal tax rate to be in the top marginal tax bracket. Sometimes, using up low tax brackets can be advantageous, but you do not have any ability to take additional income at lower rates.

    RRIF withdrawals: Which tax strategy is best?

    Taking extra withdrawals from your RRIF when you are in the top tax bracket is unlikely to be advantageous. Here is an example to reinforce that.

    Say you took an extra $100,000 RRIF withdrawal and the top marginal tax rate in your province was 50%. You would have $50,000 after tax to invest in a taxable account. Now say the money in the taxable account grew at 5% per year for 10 years. It would be worth $81,445.

    By comparison, say you left the $100,000 invested in your RRIF account instead. After 10 years at the same 5% growth rate, it would be worth $162,890. If you withdrew it at the same 50% top marginal tax rate, you would have the same $81,445 after tax as in the first scenario.

    The problem with this example is the two scenarios do not compare apples to apples. The 5% return in the taxable account would be less than 5% after tax. And the same return with the same investments in a tax-sheltered RRIF would be more than 5%. As such, leaving the extra funds in your RRIF account should lead to a better outcome.

    So, in your case, Amy, there is not an easy solution to the tax payable on your RRIF. You can pay a high rate of tax on extra withdrawals during your life, or your estate will pay a high rate on your death. Given you do not need the extra withdrawals for cash flow, you will probably maximize your estate by limiting your withdrawals to the minimum.

    Should you donate your investments to charity?

    You mention donating securities with capital gains. If you have non-registered investments that have grown in value, there are two different tax benefits from making donations.

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    Jason Heath, CFP

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  • Public workers may receive reduced Social Security benefits. There’s growing support in Congress to change that

    Public workers may receive reduced Social Security benefits. There’s growing support in Congress to change that

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    Araya Doheny | Getty Images

    When Dave Bernstein, 87, started working at the U.S. Postal Service in February 1970, he was making $2.35 an hour.

    To supplement his income, he also took on other work. Years later, Bernstein decided in 1992 to take a voluntary retirement.

    “We knew there was going to be a reduced pension because of the early out,” said Phyllis Bernstein, Dave’s wife, who is 84.

    But what came next was something the couple did not expect.

    While Dave was expecting a monthly Social Security check of around $800, it ended up being just about half that amount – around $415 – even though he had earned the required 40 credits to be fully insured by the program. The benefits were adjusted based on rules for workers who earn both pension and Social Security benefits.

    More from Personal Finance:
    Will Social Security be there for me when I retire?
    Medicare open enrollment may cut retirees’ health-care costs
    How much your Social Security check may be in 2024

    The couple, who reside in Tampa, Florida, have had a different retirement than they envisioned due to the lower income.

    Phyllis kept working until she was 82. They have also turned to family for financial support.

    Their lifestyle is frugal, with home-cooked meals and cars they kept for 20 years, or “until the wheels were falling off,” the couple jokes.

    But their limited resources have made traveling to Australia and New Zealand – Phyllis’ dream – out of reach.

    “When he retired, I was working,” Phyllis said. “We just couldn’t do the travel.”

    Today, Dave is pushing for the Social Security rules that reduced his benefits to be changed.

    His union, the American Postal Workers Union, has endorsed the Social Security Fairness Act, a bill proposed in Congress that would repeal Social Security rules known as the Windfall Elimination Provision, or WEP, and Government Pension Offset, or GPO, that reduce benefits for workers had positions where they did not pay Social Security taxes, also called non-covered earnings.

    The legislation has support from other organizations that represent public workers, including teachers, firefighters and police.

    The bill has overwhelming bipartisan support in the House of Representatives – 300 co-sponsors – at a time when that chamber has been politically divided. That support recently prompted House lawmakers to send a letter to leaders of the Ways and Means Committee to request a hearing.

    The Social Security Fairness Act has also been introduced in the Senate, with support from 49 leaders from both sides of the aisle.

    Yet some experts say just getting rid of the rules may not be the most effective way of making the system fairer.

    How the WEP, GPO rules work

    The WEP applies to how retirement or disability benefits are calculated if a worker earned a retirement or disability pension from an employer who did not withhold Social Security taxes and qualifies for Social Security from work in other jobs where they did pay taxes into the program.

    Social Security benefits are calculated using a worker’s average indexed monthly earnings, and then using a formula to calculate a worker’s basic benefit amount. For workers affected by the WEP, part of the replacement rate for the average indexed monthly earnings is brought down to 40% from 90%.

    The GPO, meanwhile, reduces benefits for spouses and widows or widowers of recipients of retirement or disability pensions from local, state or federal governments.

    It affects hundreds of thousands, if not millions of public employees that paid into Social Security and essentially are being penalized because they also happen to be public servants.

    Edward Kelly

    general president of the International Association of Fire Fighters

    Under the GPO, Social Security benefits are reduced by two-thirds of the government pension. If two-thirds of the government pension is more than the Social Security benefit, the Social Security benefit may be zero.

    The impact of the rules is far reaching, according to Edward Kelly, general president of the International Association of Fire Fighters. Many firefighters work in second jobs in the private sector as cab drivers, bar tenders or truck drivers, where they earn credits toward Social Security.

    “They steal their money, because they’re also public employees,” said Kelly, who describes his union members as “passionately angry” about the issue.

    “It affects hundreds of thousands, if not millions of public employees that paid into Social Security and essentially are being penalized because they also happen to be public servants, whether they are teachers, cops and, obviously, firefighters,” Kelly said.

    Why experts say another fix may be better

    The WEP and GPO rules were intended to make it so workers who pay Social Security taxes for their entire careers are treated the same as those who do not.

    But under those current rules, some beneficiaries receive lower benefits than they would have if they paid into Social Security for all of their careers, while others receive higher benefits, according to the Bipartisan Policy Center.

    Yet repealing the WEP and GPO rules would result in Social Security benefits that are “overly generous” for non-covered workers, research has found.

    Part of what may create that advantage is that Social Security benefits are progressive, and therefore replace a larger share of income for lower earners. So someone who only has part of their salary history in Social Security may get a higher replacement rate without considering their pension income.

    Fully repealing the WEP and GPO rules may also come with higher costs at a time when the program facing a funding shortfall. The change would add an estimated $150 billion to the program’s costs in the next 10 years, according to the Center on Budget and Policy Priorities.

    Another way of handling the disparity may be to create a proportional approach to income replacement. Instead of the WEP, workers’ benefits would be calculated based on all of their earnings and then adjusted to reflect the share of their careers that were in jobs covered by Social Security. A similar approach may be taken with the GPO.

    Certain bills on Capitol Hill propose a proportional approach.

    However, a proportional formula may not solve all the inequities in the current system, according to Emerson Sprick, senior economic analyst at the Bipartisan Policy Center, which has prompted to think tank to work on refining its proposal.

    ‘Extremely complex’ to understand

    An important advantage to reforming the current formulas would be making it easier for workers to understand and plan for their retirements.

    “It is definitely extremely complex, and very hard for folks preparing for retirement or in retirement, to understand what it means for their benefits,” Sprick said.

    Social Security statements that provide retirement benefit estimates do not take these rules into account.

    Consequently, many workers find out their benefits are adjusted when they are about to retire.

    shapecharge | E+ | Getty Images

    “The young guys don’t pay attention to it because it’s too far out; they’re not worried about it,” Kelly said of the firefighters.

    “It’s not until you’re ready to go out the door that you actually start paying attention to what you’re going to have to live off when you actually retire,” he added.

    The reductions to their Social Security benefits can be a shock.

    For beneficiaries like the Bernsteins who start out with lower benefits, it can be difficult to catch up, even after a record 8.7% Social Security cost-of-living adjustmentw went into effect this year.

    “Gas this summer and in the spring at $4 a gallon ate that money up like it wasn’t even there,” Dave Bernstein said.

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  • Here’s how to use the new tax-bracket information for 2024 to lower your tax bill

    Here’s how to use the new tax-bracket information for 2024 to lower your tax bill

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    When it comes to managing your taxes, where you fall in one of the seven progressive tax brackets is the key to understanding how much you’re going to end up paying when you file your return.

    The Internal Revenue Service announced new inflation-adjusted brackets for 2024 on tax rates that go from 10% to 37%. The dollar amounts of income separating the bands run from as little as $11,600 to more than $365,000, for those filing single, with similar ratios for those married filing jointly. 

    You can pay no attention to this at all, and just let your tax preparer or software figure out the math for you. Or you can delve into the details and potentially reduce the amount you owe. 

    A progressive tax system means you don’t pay the top rate on your whole income. Instead, you pay the rates for each band in a row as you go up the income ladder. If your taxable income as a single filer is $11,600 in 2024, you’ll pay 10% on the entire amount. Anything above that, and you pay the 10% tax on that first chunk, and then add each additional band on top of it.

    Next year, for instance, if you have taxable income of more than $609,350, that puts you in the 37% bracket. You’ll pay $183,647.25 — the stacked combination of the 10%, 12%, 22%, 24%, 32% and 35% brackets — plus 37% of the excess over $609,350. 

    To figure out where you fall on the spectrum, you just need to estimate your 2024 taxable income or extrapolate from your previous tax returns. You can see the full tax-bracket charts here. 

    This may seem like just a curiosity for those with straightforward income, but you’ll need to pay close attention if you’re planning any atypical financial moves, such as a retirement, a conversion from a 401(k) to a Roth IRA or the sale of a business or significant piece of property. 

    “Everyone seems to care about tax brackets,” says Sri Reddy, the senior vice president of retirement and income solutions at Principal Financial Group. “But I wouldn’t tell you to worry about it. You should make as much money as you want, because you get to keep some portion of it. I’d just rather have you have an awareness of what it might mean to you.”

    Here’s where tax-bracket management matters most: 

    Retirement savings

    You can know your tax bracket now, but you don’t know what it will be in the future. Your retirement savings are stuck in the middle. 

    Should you pay tax on your retirement savings now and save in a Roth IRA or Roth 401(k), so the growth is tax-free after you’re 59½? Or should you save in tax-deferred accounts and pay tax down the road when you spend the money — or are forced to withdraw it yearly for required minimum distributions? And if you do this, at some point do you want to convert some of those funds to Roth, pay the tax and then let the funds grow tax-free into the future? 

    “If you’re in a high tax bracket now, doing a Roth contribution to your 401(k) makes no fiscal sense,” says Chris Chen, a Boston-based certified financial planner who runs Insight Financial Strategists. 

    Chen recently advised a couple in their 50s who wanted to shift all of their 401(k) contributions from tax-deferred accounts to Roth to save the hassle of converting the funds later. The challenge is they are currently in the 35% tax bracket, and must also pay Massachusetts’ 5% state income tax. They plan to retire early, at which point they’ll probably drop to the 12% bracket.

    “So putting money in Roth now does not make sense from a tax standpoint,” says Chen. “They got persuaded to continue putting money into a traditional 401(k), and they deferred the Roth idea to later.”

    Roth conversions

    When you do come to the Roth conversion stage, you’ll need to look even closer at your tax bracket so that you can see how much income you can add without pushing into the next level. It’s a particularly steep increase from the 12% bracket to the 22% bracket, and then from the 24% bracket to the 32% bracket. 

    “You have to see at what point is it too painful to pay the tax,” says Ryan Losi, a CPA and executive vice president at PIASCIK, based in Glen Allen, Va. “We don’t want to go up to 32% or 35%, because that’s too big a payment.”

    For example, if your taxable income for 2024 is going to be $80,000 as a married couple, you’d be in the 12% bracket. If you plan to convert $20,000 from your 401(k) or IRA to Roth, that pushes you over the $94,300 limit, and $5,700 would be taxable at 22%, to the tune of $1,254. So perhaps you’d want to only convert $14,000 instead, and by controlling the size of the conversion, you can minimize your tax liability. 

    You can do some of this tax-bracket management on the income side as well, Reddy says. You can employ a bunching strategy, meaning you make all your stock sales that would cause capital gains in one year and avoid transactions the following year. Or you might be due a lump-sum payment for disability or severance or from an annuity, and you can spread it out instead. “This is where awareness is important,” says Reddy. 

    Charitable giving

    Bunching strategies also are helpful with charitable giving. Losi’s high-income clients are big users of donor-advised funds, which are charitable accounts that allow donors to take a deduction the year they deposit the funds and then distribute them later. “Clients will call and ask me, ‘What do I need to contribute this year to get me out of the 37% bracket?’” Losi says. 

    This works with the lower brackets, too, not just among the rich. If you’re in a high-tax state or paying a mortgage, it might benefit you to see where you are in your tax bracket. If you make a charitable donation of even a few hundred dollars, it could make sense for you to itemize instead of taking the standard deduction, and that extra amount could push you into a lower bracket. 

    Business owners and QBI

    Business owners and sole practitioners are the ones who pay the most attention to their tax brackets, Losi says, especially because of the qualified business income deduction that can reduce taxes on business income by up to 20%. The rules are complicated, and it takes a lot to manage not only where you fall in the brackets, but also the phase-outs for specific trades. 

    For these taxpayers, it may make sense to try to get paid less by clients in a certain calendar year, and pay themselves more. 

    “You can invoice, but tell clients to hold off on payment,” Losi says. “You can accelerate deductions. You can deduct 100% of capital spent for automobiles, desks, chairs — everything [a business] needs to run.”

    Losi also encourages business owners to pay themselves a healthy salary, which can reduce business income, and then set up solo qualified plans and cash-balance pension plans to put that money away pretax. “Heck yeah, cash-balance pension plans,” Losi says. “I’m the trustee of ours.”

    More on investment tax strategy:

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  • Haley, Christie open to raising Social Security retirement age

    Haley, Christie open to raising Social Security retirement age

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    Social Security’s pending insolvency grabbed attention at the Republican presidential debate Wednesday night, with some candidates saying they would be willing to raise the full retirement age for young people just starting out.

    “We have to raise the retirement age,” said former New Jersey Gov. Chris Christie. “I have a son who’s in the audience tonight, who’s 30 years old. If he can’t adjust to a few years increase in Social Security retirement age over the next 40 years, I got bigger problems with him than his Social Security payments.”

    Also see: ‘Rich people should not be collecting Social Security,’ Chris Christie says at GOP debate

    Nikki Haley, the former South Carolina governor, said promises to current older adults must be kept, but young people just starting out should see higher retirement ages.

    “What we need to do is keep our promises, those that have been promised should keep it,” Haley said. “But for like, my kids in their 20s, you go and you say ‘We’re going to change the rules.’ You change the retirement age for them.”

    Currently, the full retirement age is 67 for those born in 1960 or later.

    Read: Social Security is now projected to be unable to pay full benefits a year earlier than expected

    Haley declined to cite a specific age that retirement should be raised to, but said it should reflect longer life expectancy.

    Sen. Tim Scott, however, said he would protect Social Security for older adults and not raise the retirement age.

    “Let me just say to my mama and every other mama or grandfather receiving Social Security: As president of the United States, I will protect your Social Security.”

    Florida Gov. Ron DeSantis said he’d protect Social Security for seniors.

    “I know a few people on Social Security and … my grandmother lived until 91 and Social Security was her sole source of income. And that’s true for a lot of seniors throughout this country,” DeSantis said. “So I’d say to seniors in America: Promise made, promise kept.”

    When pressed whether he would raise the retirement age, he said: “So it’s one thing to peg it on life expectancy, but we have had a significant decline in life expectancy in this country, and that is the fact.”

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  • You can save up to $23,000 in your 401(k) next year, IRS says

    You can save up to $23,000 in your 401(k) next year, IRS says

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    Retirement savers can tuck away slightly more in 2024 than in 2023, but this year’s contribution increases are more modest than last year’s, according to new inflation-related adjustments released by the IRS.

    People who are building up their 401(k) accounts will be able to contribute a maximum of $23,000, a more than 2% increase from the $22,500 maximum for 2023.

    IRA contribution limits will climb to $7,000 for 2024, a 7.6% increase over the $6,500 limit in 2023.

    When the IRS announced its adjustments for 2023, 401(k) savers got a big increase of nearly 10% year over year, and the IRA contribution limit went up more than 8%.

    The 2024 adjustments reflect an economy where inflation rates, although cooling, are still warm.

    For 2024, the catch-up amount for workers 50 and older is holding at a maximum of $1,000 on IRA contributions and of $7,500 for people with 401(k)s and other defined-contribution plans, the IRS said.

    The IRS numbers set a limit on how much people can set aside each year in 401(k) accounts, but data suggest many people fall far short of those maximums.

    In 2022, people with retirement accounts through Vanguard had an average account balance of $112,572. The median account balance was $27,376, the wealth-management giant reported.

    The new retirement-account contribution limits are part of the tax code’s yearly changes to account for inflation.

    Taxpayers are still awaiting the IRS adjustments for tax brackets, standard-deduction amounts and other provisions for tax year 2024.

    The tax agency adjusted the ranges on income-tax brackets last year by 7%.

    Roth IRA rules and the Saver’s Credit

    The numbers on 401(K) and IRA contributions were just one part of the IRS announcement Wednesday.

    The tax agency also lifted the income thresholds for people making Roth IRA contributions. Roth IRAs are funded with after-tax dollars, so they aren’t taxed when account holders pull out the money.

    Read also: If saving $23,000 in your 401(k) next year isn’t enough, you can double that (or more) with the right strategy — and it’s legal

    But Roth IRA contributions hinge on household income. In 2024, individuals and people filing as head of household who make between $146,00 and $161,000 must limit their Roth IRA contributions. People with incomes above $161,000 won’t be able to contribute to a Roth IRA.

    That’s up from a 2023 phase-out range of $138,000 to $153,000.

    For married couples filing jointly, the phase-out range climbs to $230,000 – $240,000. That’s an increase from this year’s range of $218,000 to $228,000.

    Other retirement tax rules are also slated for 2024 updates.

    For example, there’s the “saver’s credit” which is designed to help low- and moderate-income households that are finding a way to put aside money for retirement. It pays up to $1,000 for individuals and up to $2,000 for married couples. The amount depends on income and contribution amounts.

    For 2024, married couples saving for retirement are eligible for the credit if their income stays under $76,500, up from $73,000. The income maximum is $38,250 for individuals, up from $36,500.

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  • OAS entitlement and deferral rules for immigrants to Canada – MoneySense

    OAS entitlement and deferral rules for immigrants to Canada – MoneySense

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    You generally need 40 years of residency in Canada after the age of 18 to qualify for the maximum OAS pension. The maximum monthly payment as of the fourth quarter of 2023 is $707.68 for someone who started their OAS at age 65. Someone aged 75 or older would be entitled to up to $778.45.

    Exceptions to the OAS residency requirement

    There may be situations where you qualify for the full pension without meeting the 40-year residency requirement. One example would be if you were over 25 and lived in Canada or had an immigration visa on or before July 1, 1977.

    Another instance where you may qualify for a higher pension is if you lived in a country with a social security agreement with Canada. Time spent in other countries may count towards your OAS residency formula. If you worked outside Canada for the Canadian Armed Forces or an international charitable organization, this time might also count.

    Deferring OAS to increase residency requirements

    If you have under 40 years of residency, your pension is pro-rated. You need to have lived in Canada for at least 10 years after the age of 18 if you apply for OAS as a Canadian resident. If you live outside of Canada when you apply, you need 20 years of residency.

    Interestingly, Amin, you can defer your OAS pension after age 65 to increase your residency requirements. This can work well for someone who is trying to get to 10 or 20 years, respectively, to qualify for the pension at all. In your case, the deferral will not have an impact on the residency calculation. I will explain why.

    The reason is an OAS recipient deferring their pension after age 65 can only benefit from one of two enhancements: one, the years of residency; or two, the age-based increase. If you defer OAS to after age 65, your age 65 entitlement increases by 0.6% per month or 7.2% per year of deferral. You can start it as late as 70 for a maximum 36% increase.

    If you get an extra year or 1/40th of residency, that amounts to a 2.5% boost in your OAS.

    Unfortunately, Amin, you cannot get the 2.5% residency boost and the 7.2% age boost for deferring. You get the higher of the two, which is obviously the age-based adjustment of 7.2%.

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    Jason Heath, CFP

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  • Suze Orman: ‘Big mistake if you park your money forever in bonds’

    Suze Orman: ‘Big mistake if you park your money forever in bonds’

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    Suze Orman has a warning for investors relying too heavily on bonds.

    The personal finance expert believes the draw of high interest rates and an aversion to risk taking are preventing too many people from taking a “lifetime opportunity” in the stock market.

    “Some of these stocks — how do you pass them up? I mean, you have to go into them. Now, do you go into them with everything that you have? No. Do you dollar-cost average into them, and take advantage of [down] days? … Yes,” the “Women & Money” podcast host told CNBC’s “Fast Money” this week. “You’ll be making a big mistake if you park your money forever in bonds.”

    Orman, who is also co-founder of emergency fintech company SecureSave, notes long-term investors should have the stomach for the stock market’s twists and turns.

    ‘I want to buy a stock, and I hope it goes down’

    “I have some serious losers at this point. However, I don’t care,” said Orman. “I want to buy a stock, and I hope it goes down. And I hope it goes further down and down so I can accumulate more.”

    She does recommend keeping some money in fixed income to mitigate risks in a volatile environment.

    At the same time, she still sees a role for bonds in portfolios. She likes the three– and six-month Treasurys and is ready to start looking longer term.

    “The play may start to be in long-term Treasurys. So, I’ve started to dip my toe in. Every time the 30-year [yield] crosses five percent, I buy,” said Orman.

    The 30-year Treasury yield is still near 2007 highs. It traded above 5% as of Friday’s close.

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  • How to plan for retirement for Canadians: A review of Four Steps to a Worry-Free Retirement course – MoneySense

    How to plan for retirement for Canadians: A review of Four Steps to a Worry-Free Retirement course – MoneySense

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    At $499, the course does represent a major investment, but the outlay could be considered a bargain if it helps some DIY retirees escape the clutches of conflicting securities salespersons who actually do care more about their own retirement than that of their clients.

    Consider some of the impressive testimonials. Long-time consumer advocate and former Toronto Star personal finance columnist Ellen Roseman asked Prevost “Where have you been all this time?! … Most of us need guidance on taking money out of our savings without depleting our resources once we leave work—and I suspect this interactive multimedia approach to learning will be far more interesting and memorable than simply reading a book. Kyle has done his research and provides plain-spoken views about what’s good and what’s bad in the process of making our retirement income last as long as we do.”

    Fee-only financial planner and financial columnist Jason Heath (of Objective Financial Partners) says “Kyle’s course is a great resource for someone preparing for retirement or already retired … His background as a teacher definitely comes across in the course. Too many financial industry people do a poor job of conveying financial topics in a way that makes sense. The approach of the course is meant to teach and empower, and it definitely does just that.”

    My review of Worry-Free Retirement

    So, let’s take a closer look at the course, which I dipped into in a few weeks in order to write this review. It comprises 16 units, each starting with a short audio-visual overview, followed by more in-depth backgrounders, videos and links to other content. I’d suggest focusing on a single unit per session, as there’s plenty to digest. 

    The first unit takes you through how much money you’ll probably need to retire in Canada. Subsequent units are devoted to the major government programs like the Canada Pension Plan (CPP) and Old Age Security (OAS), and employer-sponsored pension plans, including both defined benefit and defined contribution plans. Later the course also tackles that perennial retirement chestnut, the 4% safe withdrawal rule (to which Prevost isn’t married but sees as a good starting point for guest-imating retirement income). 

    I’m particularly partial to unit six, titled “Working for a Playcheck,” as that term was coined by Michael Drak and myself in our jointly authored 2014 book, Victory Lap Retirement. Units seven and eight go into some depth in investing: what to invest in and how to buy and sell securities. 

    Units nine and 10 go into depth on registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs), then handles the whole topic of decumulation and the crucial transition (at the end of the year you turn 71) from RRSPs to RRIFs. No doubt, I will personally revisit that module at the end of next year! 

    Unit 11 examines how you can create your own pension through annuities. Units 12 and 13 look at mortgages: whether one should retire with one (spoiler: one shouldn’t) and deciding between downsizing and reverse mortgages or home equity line of credits (HELOCs). 

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    Jonathan Chevreau

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