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Tag: retirement

  • OAS payment dates in 2024, and more to know about Old Age Security – MoneySense

    OAS payment dates in 2024, and more to know about Old Age Security – MoneySense

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    For example, for income year 2023, the threshold amount is $86,912. If your income in 2023 was $120,000, then your repayment would be 15% of $33,088 (the difference between $120,000 and $86,912). That comes out to $4,963.20.

    OAS clawbacks are paid off in 12 monthly payments, starting in July of the following tax year (in this case, 2024) and ending the next June (2025, in this example). This July-through-June period is called the “recovery tax period.” Continuing our example: $4,963.20 divided by 12 is $413.60. That’s how much you would repay each month from July 2024 to June 2025. (See the OAS recovery tax thresholds for income years 2022 and 2024.)

    How can I avoid OAS clawbacks?

    With some planning, it may be possible to reduce or avoid OAS clawbacks. One strategy is splitting pension income with a spouse who has a lower marginal tax rate. Another strategy is to base withdrawals from your registered retirement income fund (RRIF) on the younger spouse’s age—your minimum withdrawals may be lower. Keep in mind that different kinds of investment income are taxed differently, too. (Learn more about how passive income is taxed.) Consider speaking to a financial advisor or tax planner about these and other strategies. 

    What is the Guaranteed Income Supplement (GIS)?

    The Guaranteed Income Supplement (GIS) is a part of the OAS program that provides an additional, non-taxable monthly payment to Canadian residents who receive the OAS and whose previous-year income is below a certain threshold. Like OAS, the GIS is indexed to inflation.

    The income threshold changes annually. For example, from July to September in 2024, the threshold is $21,768 for a single person. If your 2023 income was less than that, you may qualify for the GIS. 

    For couples, the maximum income thresholds for combined annual income in 2023 are:

    • $28,752 if your spouse/common-law partner receives the full OAS pension
    • $52,176 if your spouse/common-law partner does not receive OAS
    • $40,272 if your spouse/common-law partner receives the Allowance benefit (a non-taxable payment for Canadians aged 60 to 64 whose partner is eligible for the GIS and your combined income is below the threshold for the Allowance)

    If you don’t receive a letter from the government about the GIS, you can submit an application through a My Service Canada Account or by filling out a paper form and submitting it to Service Canada. You can apply for OAS and the GIS at the same time. Learn more about applying for the GIS.

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    Keph Senett

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  • More Americans Living Paycheck to Paycheck Despite Increased Budgeting

    More Americans Living Paycheck to Paycheck Despite Increased Budgeting

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    More Americans are living paycheck to paycheck despite increased budgeting, according to Debt.com’s 2024 budgeting survey of 1,000 Americans, which showed a mixed financial picture.

    While more people are budgeting and finding it beneficial to stay out of debt, the number of individuals living paycheck to paycheck has risen 10% over the past two years.

    In 2022 and 2023, 50% reported living paycheck to paycheck; this year that number climbed to 60%. Meanwhile, 90% of respondents say they budget, compared to 70% when the survey was first conducted seven years ago.

    “Debt.com’s newest survey indicates that while budgeting is becoming more common and beneficial, it hasn’t completely shielded Americans from financial hardship,” said Howard Dvorkin, CPA and Debt.com chairman.

    One bright spot is the percentage of people who say budgeting has helped them get out of or stay out of debt, increased to 89% this year from 73% in 2018. Millennials lead the way, with 92% reporting that budgeting has kept them out of debt, followed by 90% of Gen X, 86% of Baby Boomers, and 83% of Gen Z.

    The Debt.com survey also highlights the reasons people began budgeting:

    • 38% – Increasing wealth and savings
    • 21% – Tackling debt
    • 17% – Inflation and cost of living
    • 15% – Saving for retirement
    • 6% – Job loss
    • 2% – Divorce or loss of a spouse

    “The rising number of people living paycheck to paycheck indicates that economic factors may be driving the need for individuals to fine-tune their budgeting strategies,” continued Dvorkin.

    Of those who say they budget, 39% say their whole household works to stay on budget. The survey also shows that, overall men (94%) are budgeting more than women (87%). The top reason women cited for not budgeting was that they “don’t have much income,” while men primarily said it’s “too time-consuming.”

    Debt.com is a consumer website where people can find help with credit card debt, student loan debt, tax debt, credit repair, bankruptcy, and more. Debt.com works with vetted and certified providers that give the best advice and solutions for consumers “when life happens.”

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  • 40 and no pension: What do you do? – MoneySense

    40 and no pension: What do you do? – MoneySense

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    It’s not as big a problem as you might think. The key is to try to mimic the pay-yourself-first approach by setting up an automatic contribution to your registered retirement savings plan (RRSP) to coincide with your payday. A good rule of thumb to strive for is 10% of your gross income. Remember, in most cases the employees blessed with a defined-benefit pension are contributing around the same 10% rate (sometimes more) to their pension plan. You need to match those pensioners stride-for-stride.

    How much to save when you’re 40 and have no pension

    Let’s look at an example of pension-less Johnny, a late starter who prioritized buying a home at age 35 and has not saved a dime for retirement by age 40. Now Johnny is keen to get started and wants to contribute 10% of his $90,000-per-year gross income to invest for retirement.

    He does this for 25 years at an annual return of 6% and amasses nearly $500,000 by the time he turns 65.

    Source: getsmarteraboutmoney.ca

    Keep in mind this doesn’t take any future salary growth into account. For instance, if Johnny’s income increased by 3% annually, and his savings rate continued to be 10% of gross income, the dollar amount of his contributions would climb accordingly each year.

    This subtle change boosts Johnny’s RRSP balance to just over $700,000 at age 65.

    How government programs can help those without a pension

    A $700,000 RRSP—combined with expected benefits from the Canada Pension Plan (CPP) and Old Age Security (OAS)—is enough to maintain the same standard of living in retirement that Johnny enjoyed during his working years.

    That’s because when his mortgage is paid off, he’s no longer saving for retirement, and he can expect his tax rate to be much lower in retirement.

    40-year-old Johnny spends $40,000 per year, plus mortgage until the mortgage is fully paid off at age 60. Johnny retires at age 65 and continues spending $40,000 per year (inflation-adjusted) until age 95.

    CPP and OAS will add nearly $25,000 per year to Johnny’s annual income (in today’s dollars), if he takes his benefits at age 65. Both are guaranteed benefits that are paid for life and indexed to inflation. 

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    Robb Engen, QAFP

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  • Why a reverse mortgage should be a last resort for Canadian retirees – MoneySense

    Why a reverse mortgage should be a last resort for Canadian retirees – MoneySense

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    “This leaves a total outstanding now of $204,939, with the interest owing being 25% of the balance owing after only five years,” says Ardrey. “As time goes on, this can overtake the entire value of the home. Thankfully, they do note that there is no negative equity, but there is not much left at the end of the day for the home owner or their heirs.” 

    Heath points to the fact that reverse mortgage rates tend to be much higher than traditional sources. “A borrower can expect to pay at least a couple percentage points more than mortgages and lines of credit. But if you read the fine print in your home equity line of credit agreement, the lender typically reserves the right to decrease your limit or even call the outstanding balance.”

    So, homeowners should not count on their HELOC being available when they need it.

    Right now, reverse mortgage variable rates are in the 9.5% range, while 5-year variable mortgage rates are about 6% and 5-year fixed mortgage rates are about 5%. HELOC rates are generally 1% above prime, so they’re currently around 7.95%. “There is definitely a premium paid to take advantage of reverse mortgages,” says Heath.  

    Ardrey raises another concern: how retirement living care can be paid for. “Often a home can be sold when a senior moves into retirement living, allowing them to pay for this care. In this example, the ability to use the home for this purpose would be significantly impaired.”

    He suggests that instead of using a reverse mortgage that could cripple the financial future, retirees need to look honestly at their situation and the lifestyle they can afford. “Though it may not be preferable to sell their home and live somewhere else, it may also be their financial reality. This speaks to the value of planning ahead to avoid being house-rich and cash-poor.”

    What are the alternatives to a reverse mortgage for Canadian retirees?

    Allan Small, senior investment advisor with IA Private Wealth Inc., says reverse mortgages “have not played a part in any of the retirement plans and retirement planning that I have done so far in my career. I think the reverse mortgage idea or concept, for whatever reason, has not caught on.” Also, “those individual investors I see usually have money to invest, or they have already invested. Most downsize their residence and take the equity out that way versus pulling money out of the property while still living in it.” 

    Finance professor and author Moshe Milevsky told me in an email, that when it comes to reverse mortgages—or any other financial strategy or product in the realm of decumulation—“I always ask this question before giving an opinion: Compared to what?” He worries about the associated interest-rate risk, which is “difficult to control, manage or even comprehend at advanced ages with cognitive decline.”  

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    Jonathan Chevreau

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  • A parents’ guide to home down payment gifts and loans – MoneySense

    A parents’ guide to home down payment gifts and loans – MoneySense

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    Loan forgiveness is an option

    If you loan money to a child, you can forgive the loan during your life or upon your death. Of course, you should only do so if you know you won’t need or want the money back in the future.

    If you have loaned different amounts of money to your children, documenting the loans can help ensure an equal division of your estate. Some wills include a so-called “hotchpot” clause that accounts for all loans outstanding, so that one child does not receive a disproportionate gift or forgiven loan, as well as an equal share of the estate.

    What are the tax implications of a gift or loan?

    There are generally no tax implications to gifting in Canada. This differs from the U.S., which has a gift tax. U.S. citizens in Canada still need to be mindful of these U.S. implications. Only two situations may trigger additional income taxes for the parent: selling an asset at a capital gain or withdrawing an asset from a tax-sheltered account a registered retirement savings plan (RRSP). But gifting itself has no tax issues with adult children.

    If a loan to your child was for investment or business purposes, forgiving it can have tax implications. This is in part because loan interest on funds borrowed to buy investments or fund a business is generally tax-deductible for the borrower.

    As a result, forgiveness of such a loan may lead to a capital gain for the lender—if it’s forgiven during your life. If the loan is forgiven upon your death, there should generally be no tax implications.

    If you loan money to a child to invest and the loan does not bear the Canada Revenue Agency prescribed rate of interest—currently 5%—the income may be attributed back to you and taxable to you. You can give an adult child money to invest and not be subject to attribution. But if you loan it and can call it back without charging the prescribed rate, the CRA will attribute interest, dividends, rental income and business income back to you. Capital gains, however, are taxable to the child.

    Before you loan or gift money for a down payment…

    When considering a gift or loan, you should first and foremost be sure that you are in a position to help your kids without risking your own financial security.

    There may be family law, estate and tax implications to making a loan. Seek legal and tax advice from a qualified professional to protect yourself and your family.

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    Jason Heath, CFP

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  • Which types of pension income can be split with your spouse in retirement? – MoneySense

    Which types of pension income can be split with your spouse in retirement? – MoneySense

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    Here, we’re focusing on splitting pension income, which can include income sources that are not from traditional pensions.

    Can you split your income?

    Here’s a quick table for when you can and when you can’t split your income. Tap the pension income type to keep reading for the why and how.

    Income splitting for DB pensions

    When people think of pensions, they typically think of defined benefit (DB) pension income. DB pensions are calculated based on a formula that generally considers annual income and the number of years as an employee with the employer offering the pension, along with other factors, too. Most DB pensions will not make payments until age 55, but it may be possible to collect a pension earlier.

    DB pension income qualifies to split with your spouse or common-law partner. You can move up to 50% of the income to your spouse on your tax returns. You claim a deduction and they claim an income inclusion. You would only split pension income if it resulted in a net advantage, whether a reduction in combined tax payable or an increase in government benefits.

    Can you split income for SERPs?

    Supplemental executive retirement plans (SERPs) are non-registered plans for executives or other employees. And it bears mentioning that a supplemental DB pension, or top-hat executive pension, with payments that exceed the registered pension plan (RPP) maximums will not qualify for splitting.

    These pensions include a registered portion and an unregistered portion. The registered portion can be split, but the unregistered portion can only be reported on the recipient spouse’s tax return. The split between registered and unregistered will be reported on the pensioner’s government-issued tax slip so should be clear.

    What about RRSPs?

    Most people’s retirement savings are in their registered retirement savings plan (RRSP) account, including defined contribution (DC) pensions. RRSP withdrawals do not qualify for pension income splitting. However, if you convert your RRSP to a registered retirement income fund (RRIF), subsequent withdrawals will qualify starting when the account holder reaches age 65.

    You do not have to convert your RRSP to a RRIF until December 31 of the year you turn 71, with withdrawals beginning at age 72. But the ability to split RRIF withdrawals at 65 may cause someone to consider converting their account by age 64.

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    Jason Heath, CFP

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  • Annuity vs. GIC: What makes sense for retiring? – MoneySense

    Annuity vs. GIC: What makes sense for retiring? – MoneySense

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    As you know, of course, annuities and GICs are not the same thing. An annuity provides a guaranteed income for life, or a set time period, and it can be purchased from insurance companies, agents and brokers. And a GIC is primarily a savings vehicle, which can be bought from banks, trust companies, credit unions and investment firms.

    In most cases, purchasing an annuity means exchanging your capital—a lump sum of money—for a lifetime payment that is similar to a pension. It’s a fixed, guaranteed income for life, with no more worries about interest rates, stock market crashes, running out of money, etc.

    On the other hand, purchasing an annuity means making a long-term commitment to an unknown future. And you will no longer have access to your original capital.

    Consider this example: If you want to buy a new car, you can’t go to the insurance company and ask for a little extra money. It’s not your money anymore.

    I’m guessing you’re thinking about GICs as an alternative because you’re aware of the longer-term risks associated with an annuity, and you may want to maintain control and flexibility over your money.

    A GIC can give you a guaranteed income over the length of the term and control of your capital; however, there is no guarantee on future interest rates or a lifetime income. You may also find it difficult to draw a monthly income from a GIC portfolio. This will prompt you to create a GIC ladder with different maturity dates so there is cash available when needed. The laddered approach may have an overall return that is less than the five-year return you are using to compare to an annuity.

    Think about the different ways you—and the world for that matter—may change in the next 25 years. Look at interest rates, inflation, your lifestyle and spending habits, and so on. Inflation is likely the biggest risk you’ll face when purchasing a life annuity.

    If you purchase a $100,000 annuity, what other financial resources do you now have? What will be coming to you in the future? What can you use to deal with any changes in your life? It’s important for you to know the answers to these questions.

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    Allan Norman, MSc, CFP, CIM

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  • “Help! My RRSPs are all over the place” – MoneySense

    “Help! My RRSPs are all over the place” – MoneySense

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    On the other hand, if you aren’t happy with any of these options, do some research, says Ulmer. “Talk to people who you think are financially savvy and ask them for referrals. Then consult with three different advisors to see what’s the best fit for you.”

    Approach the provider you want to transfer to—not from

    Thankfully, you don’t have to have a big meeting or emotional “break-up” conversation to initiate an RRSP transfer. Instead, contact the provider you want to transfer the funds to with the request to move over the specified accounts. They will need the names of the financial institutions where you have your other RRSPs and the account numbers to fill out the appropriate form (CRA T2033, Transfer Authorization for Registered Investments), which they will send to you to sign and return. Some providers even handle all of this online. “They’re in the business of increasing assets under management, so they want to make it easy to transfer your money to them,” says Trahair.

    Opt for “in kind” transfers, where possible

    The provider you’re going with will ask you if you want to move the assets over “in cash” (which means all your investment holdings will be sold before they are transferred) or “in kind” (which means all your investments go over exactly as is). Both Trahair and Ulmer say to transfer your investments in kind, so long as the receiving institution can hold those investments. (Some proprietary mutual funds, for example, may not be available to other providers.)

    There are a couple of reasons why experts prefer in-kind over in-cash transfers. First, the timing may not be in your favour. If, for example, you happen to liquidate your investments right after a downturn, that money could be out of the market for a few weeks before it gets transferred and reinvested and you could miss the market rebound. In other words, you could end up breaking the first rule of investing by selling low and buying high. Second, selling your investments could trigger “back-end” fees, as explained below.

    Be aware of possible deferred sales charges for “in cash” transfers

    Some investment funds incur deferred sales charges (DSC) if you sell them within a specified number of years (typically seven) from the date of purchase. Those fees can be quite hefty and really add up, so you’ll want to avoid them if at all possible. Find out if you have any DSC funds and, if so, what the redemption schedule is. If you’re beyond that period, you can sell your holdings with no strings attached. If not, you can sell up to 10% of the fund every year without paying the fee, says Trahair. 

    “An advisor should think to check for deferred sales charges when you transfer investments to them,” says Ulmer. Otherwise, it’s a red flag that they’re failing to protect clients from unnecessary fees.

    DSCs will be less of a concern in the future—Canadian regulators banned the sale of mutual funds with DSCs on June 1, 2022. However, the redemption schedules for any existing DSC mutual funds still apply.

    Ask about account closing fees

    Although there shouldn’t be any fees to transfer your RRSPs, you might need to pay $50 to $100 to close each old account. Make sure to ask the receiving institution if it will cover all or part of those fees. It may be willing to do so to gain your additional business.

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    Tamar Satov

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  • CPP payment dates this year, and more to know about the Canada Pension Plan – MoneySense

    CPP payment dates this year, and more to know about the Canada Pension Plan – MoneySense

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    About the Canada Pension Plan (CPP)

    The Canada Pension Plan is a retirement pension that offers replacement income once a person retires from working life. The CPP is a social insurance plan, and it’s one “pillar” of the retirement income system for Canadians—the other three are Old Age Security (OAS), the Guaranteed Income Supplement (GIS) and personal savings. The CPP is funded by contributions from workers, employers and self-employed individuals. It’s not paid for by the government, despite what many Canadians may think.

    A federally administered program, the CPP is mandatory, meaning that all Canadian workers and employers must contribute. The plan covers all of Canada except for Quebec, which has the Quebec Pension Plan (QPP) for residents of that province. Below are the remaining 2024 CPP payment dates.

    CPP payment dates for 2024

    • January 29, 2024
    • February 27, 2024
    • March 26, 2024
    • April 26, 2024
    • May 29, 2024
    • June 26, 2024
    • July 29, 2024
    • August 28, 2024
    • September 25, 2024
    • October 29, 2024
    • November 27, 2024
    • December 20, 2024

    Where does the CPP money come from?

    Unlike OAS and the GIS, the CPP is funded by employers and employees, and by self-employed people. These contributions, which show up as deductions on a paycheque, are aggregated and invested. For self-employed people, the CPP owed on your net business income is added to your tax bill. The principal plus any revenue earned goes back into the program.

    In January 2024, CPP contributions were raised as part of a seven-year government initiative, started in 2019, to increase retirement income. Read more about the CPP enhancement to see how much more you will pay as an employee or a freelancer.

    Who manages the CPP’s investment portfolio?

    The pension plan’s investments are managed by CPP Investments, a Crown corporation operating at arm’s length from the government. Every three years, the Office of the Chief Actuary of Canada evaluates the sustainability of the plan; the next review will be in 2025. “The CPP is projected to be financially sustainable for at least the next 75 years,” CPP Investments states on its website.

    Am I eligible for CPP?

    If you’re at least 60 years old and have made at least one contribution to the CPP, you are eligible to receive CPP payments. You may also be eligible if you’ve received CPP credits from a former partner or spouse who paid into the plan. CPP benefits are available to Canadian citizens, permanent residents, legal residents or landed immigrants.

    Should I apply for CPP or QPP?

    If you contributed to both the CPP and/or the QPP in Quebec during your working years, your residency at the time of your application determines which plan you’re eligible for—if you’re a Quebec resident, you apply for your pension from the QPP. Otherwise, you apply to the CPP.

    When you can start receiving your CPP

    You’re eligible to start receiving your pension anytime between the ages of 60 and 70 years old, but the younger you are when you begin receiving CPP, the smaller your monthly payouts will be. Many Canadians choose to begin receiving payouts at age 65.

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    Keph Senett

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  • How much money should I have saved by age 40? – MoneySense

    How much money should I have saved by age 40? – MoneySense

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    All the while, you’ve got a serious case of FOMO every time you check social media—all those friends who are jetting off on lavish vacations, buying new cars and splurging on cottages. How are ordinary Canadians actually doing this? And how can you get ahead and save more?

    What’s the average savings for Canadians in their 30s? How much should they have saved?

    A lot of Canadians are managing to save, despite the above financial challenges and obligations. According to Statistics Canada’s 2019 figures (the most recent available), the average person under age 35 had saved $9,905 towards retirement (RRSPs only) and held $27,425 in non-pension financial assets. For Canadians aged 35 to 44, these numbers are $15,993 and $23,743, respectively.

    The table below shows the average savings for individuals and economic families, which Statistics Canada defines as “a group of two or more persons who live in the same dwelling and are related to each other by blood, marriage, common-law union, adoption or a foster relationship.” In 2019, the average household savings rate was 2.08%.

    Financial assets, non-pension No private pension assets, just RRSPs Private pension assets and RRSPs
    Individual under age 35 $27,425 $9,905 $25,263
    Economic family under age 35 $105,261 $140,662 $60,305
    Individual aged 35–44 $23,743 $15,993 $39,682
    Economic family aged 35–44 $131,017 $138,488 $399,771
    Source: Statistics Canada

    The pandemic had a positive effect on savings; the disposable income of the average Canadian rose by an additional $1,800 in 2020, according to the Bank of Canada. That meant most Canadians were able to save an average of $5,800 that year.

    Despite this pandemic silver lining, most Canadians aren’t saving enough for their age groups. When CIBC polled Canadians in 2019 on how much money they’d need in retirement, on average they guessed they would need $756,000. The actual amount you’ll need depends on many factors—to estimate your own number, check out CIBC’s retirement savings calculator.

    How to prioritize financial goals and obligations in your 30s

    With so much going on in your 30s, it can be very challenging to save when you have so much to pay for. After all, you may be carrying a lot of debt due to student loans, a car loan or a mortgage. In the third quarter of 2023, Canadians aged 26 to 35 owed an average of $17,159, and Canadians aged 36 to 45 owed $26,155, according to a report from Equifax.

    Maybe debt is less of a concern for you, but you’re saving for a big goal—like a down payment on a home—and you’re feeling the strain of a high interest rate and inflation. Perhaps you’d like to start a family, but you’re worried about the costs of raising a child. Or you’ve dabbled a bit in the stock market and want to make a few more investments.

    Whatever your situation, talking to a financial planner about your finances and your priorities can help you map out a customized financial plan that factors in your immediate goals—as well as long-term savings and retirement strategies. This might include focusing on paying off high-interest debt, putting aside money for a home, shopping around for life insurance and ensuring that you save each month.

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    Anna Sharratt

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  • Baby Boomer retirement wave means more job opportunities for younger Americans

    Baby Boomer retirement wave means more job opportunities for younger Americans

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    NEW YORK — The retirement wave is about to hit. A whopping four million Americans are expected to turn 65 every year for the next four years, and that can mean opportunity if you’re in the job market.

    This wave of retirements will have ripple effects across the economy, and a big part of what’s at play here is demographics.

    The Alliance for Lifetime Income found that 11,200 Americans will turn 65 every day through 2027.

    That’s a record number, up from 10,000 per day over the past decade.

    Some economists are calling it “Peak 65.”

    Of course, not everyone who turns 65 retires right away. We know many households are working for longer as the cost of living has gone up.

    But the big picture is there are more older Americans leaving the workforce than there are younger workers, like recent high school or college grads, getting in.

    People who are on the job hunt might find that they have more options.

    Right now, employers nationwide have posted a total of 8 million jobs they’re trying to fill, according to the Bureau of Labor Statistics.

    That number of job postings is actually higher than the number of people who are looking for work, and it could stay that way for the next couple of years.

    The other important dynamic for workers is this could help boost their salaries. If employers are competing to fill open jobs, they might offer to pay higher wages.

    One industry that will be especially hit as baby boomers retire is health care; think doctors, nurses, and home aides.

    Almost one out of every four health care workers is over the age of 55, so as those workers retire, their jobs will need to be filled.

    Plus, our aging population means there will be more people who need critical health care services.

    Other industries that have a big share of older workers are government and education.

    This is a time for younger workers to think about how to maximize their opportunities and earnings in their careers.

    The biggest share of workers under the age of 40 is in retail and hospitality. They might want to consider how their skills from those jobs can translate into more in-demand industries like health care in this changing workforce.

    Copyright © 2024 ABC News Internet Ventures.

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    ABCNews

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  • A review and summary of Die with Zero and 4,000 Weeks – MoneySense

    A review and summary of Die with Zero and 4,000 Weeks – MoneySense

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    Die Broke is the book where I first encountered the colourful quip about how the last cheque you write should be to your undertaker, and it should bounce. In other words, the closer you can get to spending all your money just as you die, the less you have to fork over to Uncle Sam—and for us, the Canada Revenue Agency (CRA).

    Problem is, of course, that no one can accurately predict when they will die. As one unknown wag once remarked, retirement planning would be a cinch, if you just knew the day you’re dying.

    Summary of Die with Zero 

    So, it was of interest to me when an old college friend mentioned how much he enjoyed reading a book titled Die with Zero (HarperCollins, 2021), by Bill Perkins. My first reaction was that it sounded just like Die Broke, but I valued my friend’s opinion enough to check out a free copy on the Libby app and also on the paid book service Everand (formerly Scribd). The books have similar premises: there are trade-offs between time, money and health. Indeed, the Die with Zero subtitle is “Getting all you can from your money and your life.” 

    Essentially put, we exchange our time and life energy for money, which can therefore be viewed as a form of stored life energy. So, if you die with lots of money, you’ve in effect “wasted” some of your precious life energy. Similarly, if you encounter mobility issues or other afflictions in your 70s or 80s, you may not be able to travel and engage in many activities for which you had been saving up. The “money as life energy” idea is most memorably articulated in another classic book about financial independence: Your Money or Your Life (Penguin Random House, 2008). 

    But, what about the children? The issue of inheritance and leaving money to your heirs is deftly handled by Perkins in Die with Zero. The advice amounts to the old bromide that it’s “better to give with a warm hand than a cold one.” In other words, why not give them some of your money when they really need it, and you’re still healthy enough to enjoy their company, and presumably their gratitude.

    Die with Zero review

    After I read Die with Zero and started to write this column, I happened to chat with blogger Mark Seed of MyOwnAdvisor. Quite independently, he published a review of Die with Zero on the website Cashflows & Portfolios back in January 2024, along with a book giveaway promotion.

    “It was ‘OK’ in terms of content,” Mark told me in an email. “Some of the writing was not very good, but the premise is good: avoid hoarding money you could otherwise gift, spend, enjoy, etc.” The review starts with the following quote from Perkins: “The real golden years—the period of maximum potential enjoyment because we have the most health and wealth—mostly come before the traditional retirement age of 65.” The review further says that most of us know this intuitively, but “so many of us might be giving up years of semi-retirement or retirement enjoyment, only to find out we’ve saved too much or put off many valuable experiences for far too long.” The reviewers liken the main premise and the notion that it’s better to give now rather than later, but they also found it quite repetitive and lacking a real recipe for implementing the Die with Zero mantra. 

    Living the Die with Zero mantra

    If you read and absorb the thesis, you may find that the book changes your day-to-day behaviour. This happened to me recently, when my wife and I spent a few days in Fergus and Elora, Ont., for a birthday celebration. Initially, we booked a tiny room at a correspondingly tiny price. Once we checked in, we asked to look at a more spacious and luxurious room. We had both read Die with Zero and, having discussed the book, mutually decided to upgrade our room, despite the price being roughly double. It’s a small example, but it may just be the beginning for us. 

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    Jonathan Chevreau

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  • The 2024 GOP Platform Promises To ‘Make America Affordable Again.’ So Why Are They Embracing Fiscal Insanity?

    The 2024 GOP Platform Promises To ‘Make America Affordable Again.’ So Why Are They Embracing Fiscal Insanity?

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    The Republican National Committee just released its 2024 platform. While calling it a platform is a stretch, the list of bullet points gives an idea of what the potential next Trump administration’s goals are. Here’s one issue that should be front and center: End inflation and make America affordable again.

    To be sure, “make America more affordable” would be a great slogan and a great objective. It’s similar to what many have called an “abundance agenda.” While there is plenty to dislike in a platform that at times feels unserious and destructive, this part I like.

    Abundance isn’t achieved by the same old subsidies or tax breaks for special interests, price controls, or spending loads of taxpayer money on transfer payments. It’s achieved by freeing up the supply side of our economy. That means freeing producers and innovators from excessive regulatory obstacles and heavy tax burdens (including tariffs) so they can provide more of what Americans need.

    The Trump administration platform assures us it will move in this direction. For instance, it wants to increase America’s dominance as an energy producer, which will only be achieved through a deregulation agenda. Apart from counterproductive tax incentives for first-time homeowners, it expresses a commitment to lowering housing costs through deregulation.

    The platform states it will “cancel the electric vehicle mandate and cut costly and burdensome regulations” as well as “end the Socialist Green New Deal.” I assume that means ending the expensive subsidies and tax breaks in the Inflation Reduction Act. Great idea, but get ready to hear all the recipients of these handouts cry that they won’t be able to do what they were already doing before being given the subsidies.

    A deregulation agenda would serve the Republicans’ goal of boosting manufacturing much better than tariffs, which former President Donald Trump continues to love despite overwhelming evidence that they don’t do what he claims. Most tariffs raise the prices of inputs used by American firms, including manufacturing, to produce outputs that serve their customers.

    Something similar could be said about Republicans’ swipes at immigrants. Fewer immigrants will create labor supply shortages, hurt manufacturing, and slow the economy.

    Still, even with their disastrous trade and immigration agenda and the many contradictory goals espoused by this platform, implementing the deregulatory part of the agenda will make some strides at freeing the supply side and hence lowering prices. Indeed, President Joe Biden has not only maintained many of Trump’s tariffs, but he’s added some of its own. He’s also systematically favored subsidizing the demand for certain things—nudging customers to buy what he wants them to buy—while taking actions that restrict supply. That’s a recipe for affordability failure.

    But as far as affordability goes, I’m less optimistic about the prospect of the next administration ending inflation. That’s because Trump and other Republicans are firmly embracing fiscal irresponsibility and excessive debt. The platform contains no mention of a plan to get government debt under control. Instead, it pledges to “fight for and protect Social Security and Medicare with no cuts, including no changes to the retirement age.”

    Many voters love hearing this promise. But maintaining these two objectively underfinanced programs will inevitably explode the debt burden over the next 30 years. In the entire history of the United States so far, Uncle Sam has accumulated roughly $34 trillion in debt. Under the Trump plan, the government would need to borrow another $124 trillion for these programs alone.

    Leaving aside the question of who will lend us all this money when foreign buyers are already scaling back purchases of U.S. Treasuries, remember that most of the inflation we’ve recently suffered is the product of massive Biden administration spending on top of the COVID-19 spending without any plan to pay for it. As such, announcing that the U.S. will simply go on another borrowing spree sends a poor signal, and it might even increase inflation.

    This is made more important because Trump wants to make permanent the tax cuts that are set to expire after 2025, end taxes on tips, and more. If Congress and the president do this without any offsetting spending reductions, it will add at least another $4 trillion in debt over 10 years. With more inflationary fuel, we could easily see the Federal Reserve raise interest rates again, making borrowing money even more expensive than it already is.

    The bottom line is that Trump’s deregulatory agenda could have a shot at lowering some prices. But it will only be a game-changer if he becomes serious about fiscal responsibility. Right now, he isn’t, so I wouldn’t count on it.

    COPYRIGHT 2024 CREATORS.COM

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    Veronique de Rugy

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  • I was scammed out of nearly $300,000 and was forced to abandon my retirement dreams

    I was scammed out of nearly $300,000 and was forced to abandon my retirement dreams

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    Getty Images; Jenny Chang-Rodriguez/BI

    This as-told-to essay is based on a conversation with Leonid Shteyn. It has been edited for length and clarity.

    Last year, I started looking for ways to make more money from my retirement savings. I’m 70, and my wife, who is also retired, is 68. We were worried about having enough money to live with rising inflation. We also wanted to have something to leave our four grandchildren, two of whom have special needs.

    I researched investment options online and eventually reached out to a friend. He connected me to a company he was investing in. I checked the company out online, and everything seemed above board. I spoke with a professional financial planner tied to the company.

    Still, I was cautious. I opened an account with just $250. Then, I transferred $10,000. When that investment began to grow, I wanted to go all in. I withdrew $100 from the account to make sure it was legit. After that withdrawal was processed, I transferred all my money: $256,470.

    Things quickly became strange

    After that, things started to get strange. The so-called investment company asked me to take out a line of credit. They encouraged me to invest in bitcoin and started charging me steep commissions.

    One day, I got an email, reportedly from a blockchain, the digital wallet where people keep bitcoin and other cryptocurrencies. When I looked closely, I noticed that one digit in the email was off—it was a scam meant to look like an official blockchain communication.

    That’s when I knew something was very wrong.

    I trusted the big bank that the scammers used

    Still, the so-called investment company called me, asking for more money. I got my own lawyer, who looked up the company’s legal representation. He couldn’t find any licensed lawyer with the name I’d been given. Next, I hired a private investigator. He tracked one scammer to Bulgaria and another to the US.

    My lawyer realized that I had sent most of my funds to an account at Bank of America. As an immigrant, I trusted Bank of America intrinsically. I never would have transferred money to a small bank or international establishment, but if you can’t trust them, who can you trust?

    Unfortunately, I feel Bank of America failed me terribly. Even after my lawyer alerted them to what was happening, they cleared a check I’d written to the scammers. They ignored requests from my bank to look at the fraud, and after three requests, my bank gave up.

    Within three months, I went from having a healthy retirement savings to having $20,000 in the bank. With lawyer fees and the private investigator, I was out nearly $300,000.

    Older people, like myself, need help to protect themselves

    This whole debacle is no one’s fault but my own. The thing is, I’m a smart guy. I ran a major business for 30 years. I am good at vetting people—or at least I thought.

    What frustrates me is that the lack of government oversight allows scams like this to thrive. I contacted my local police department, and they said they’d investigate. I didn’t hear from them, so I called back. They told me they have 600 cases like this and only three investigators. When I heard that, I knew the chances of my case being solved were slim to none.

    People always ask me what advice I’d give other seniors, but I think that’s the wrong question. Scammers will always exist, and people, especially older people, will always be vulnerable. We need to be able to trust the government and major institutions like Bank of America to stop this fraud. I believe they don’t because they make money in interest and fees from these fraudulent accounts.

    My retirement looks a lot different now

    I’ve started from scratch a lot in my life. I immigrated from the Czech Republic to New York in 1989 and later moved from New York to Texas. But it’s hard to start over at 70. I’ve been sending out my résumé and looking for work as a consultant, but I haven’t had any leads.

    I’m lucky to have a house and cars that are paid off and still have some money in the bank. I’ve abandoned my dream of helping my grandkids or traveling in retirement. I’m just hoping my wife and I have enough to live on.

    Editor’s note: In a statement to Business Insider, Bank of America said: “We don’t want any bank’s clients to become victims of scams. We try to work with victims and their banks to return the funds when feasible, but unfortunately, this is not always possible. We encourage clients to do thorough due diligence to ensure that they are transferring funds to legitimate businesses.”

    Read the original article on Business Insider

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  • Single, no pension? Here’s how to plan for retirement in Canada – MoneySense

    Single, no pension? Here’s how to plan for retirement in Canada – MoneySense

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    • Canada Pension Plan (CPP) deferral: CPP deferral is worth considering for any healthy senior in their 60s. If you live well into your 80s, you may collect more pension income than if you start CPP early, even after accounting for the time value of money and the ability to invest the earlier payments or draw down less of your investments. CPP deferral can protect against the risk of living too long, especially for a single retiree, and particularly for women, who tend to live longer than men. CPP can be deferred as late as age 70. The benefit increases by 8.4% per year after age 65, plus an annual inflation adjustment.
    • Old Age Security (OAS) deferral: Like CPP, deferring OAS can be beneficial for seniors who live well into their 80s. One exception is low-income seniors who might qualify for the Guaranteed Income Supplement (GIS) between 65 and 70. Single seniors aged 65 and older, whose income is less than about $22,000, may qualify. OAS can be deferred as late as age 70. The benefit increases by 7.2% per year after age 65, plus an annual inflation adjustment.
    • Annuities: Almost everyone wants a pension, yet almost no one is willing to buy one. You can buy an annuity from a life insurance company using non-registered or registered (ie. RRSP) savings. (What is a non-registered account? How does it work?) Based primarily on your age and resulting life expectancy, an insurer will pay you an immediate or deferred monthly amount for life—even if you live until 110. If interest rates are higher when you buy an annuity, the monthly payment amount may be slightly higher as well. If you don’t have a pension and you want the security of a monthly payment, an annuity can be worth considering. Especially if you’re in good health and are a conservative investor.

    Survivor benefits in Canada

    Most DB pension benefits are payable only to surviving spouses. Some pensions have survivor benefits for children or a guaranteed number of months of payments to an estate.

    A CPP survivor pension can be paid to the spouse or common-law partner of a deceased contributor. Single retirees are somewhat disadvantaged since their children will usually not qualify for a benefit if they die.

    Children’s benefits are only payable if a surviving child is under 18, or if they are attending full-time post-secondary education and are between 18 and 25.

    Advice, accountability and cognitive decline

    One of the challenges everyone faces as they age is making sound financial decisions. Our experience and knowledge may increase as we age but our ability to process complex decisions tends to begin declining before we retire.

    Single seniors don’t have a partner to bounce ideas off, so many may find themselves stressed about retirement and financial planning. And not everyone feels comfortable talking about money with their children and friends, and not everyone has a financial advisor, either. (Use the MoneySense Find a Qualified Advisor Tool to find an advisor near you.)

    Partners, adult children and friends can provide accountability, as well with spending and other financial decisions and keep each other in check.

    A single retiree can certainly be successful, but the challenges they face are different from that of couples.

    For these reasons, being conservative, deferring pensions, considering annuities, seeking financial advice, and proactively planning are all strategies to consider when planning for retirement as a one-person household—especially if you have no pension plan.

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    Jason Heath, CFP

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  • How to make the most of your compensation – MoneySense

    How to make the most of your compensation – MoneySense

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    Employees often receive other considerations such as benefits and health insurance, said Cindy Marques, a certified financial planner and co-founder of MakeCents.

    “That will result in dollars saved,” she said. “And essentially, dollars in your pocket when you think about not having to outlay that money yourself.” 

    People often forget what’s included in their package or don’t keep up with changes to group plans, Marques said.

    Make use of company perks and benefits

    Jillian Climie, a compensation expert and co-founder of Vancouver-based consulting company The Thoughtful Co., said employees should take time to research and read up on what the company has to offer in perks and benefits before seeing a human resources representative. 

    “They’re not the most exciting to read but they have a huge value—doing that pre-work yourself,” Climie said. Especially as employees get promoted, she said it’s important to take stock of benefits as new ones roll in, such as funding for professional development and coaching allowances. 

    Fitness allowances such as gym memberships or coverage for at-home workout gear like yoga mats or even treadmills could be included in benefits. Other underutilized unofficial perks could include at-home ergonomic setups, monthly phone bill payments, paid parking spots and travel expenses, Climie said.

    Marques said even the most common benefits such as vacation and health care go underutilized, with workers “not realizing that there’s actually a fair amount of value that they can extract from their workplace.”

    She said people often don’t fully use their paid time off because they can’t afford to travel. “You can still get paid your full wage to just stay at home and relax and give yourself a break,” she said.

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    The Canadian Press

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  • Scooter Braun Is Finally Quitting His High School Job

    Scooter Braun Is Finally Quitting His High School Job

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    Not to be all “in this economy,” but in this economy, it’s rare to see someone hold onto the same job for more than a few years, let alone 23 of them. Scooter Braun, however, has been a music manager for that long, beginning with, according to him, an Atlanta-based rapper called Cato, when Braun was 19.

    On Monday, Braun announced in a lengthy statement on his Instagram that he would be retiring from music management. “Along the way I have had so many experiences I could never have dreamt of,” he wrote.

    Instagram content

    This content can also be viewed on the site it originates from.

    Braun, whose retirement announcement came the day before his 43rd birthday, said in the post that he had been “blessed to have had a Forrest Gump–like life while witnessing and taking part in the journeys of some of the most extraordinarily talented people the world has ever seen.”

    Explaining his decision to shift gears, he wrote, “For my entire adult life I played the role of an artist manager on call 24 hours a day, seven days a week. And for 20 years I loved it. It’s all I had known.”

    But hold the phone, didn’t he say he had been a manager for twenty-three years? Yeah, about those last three.

    “Over the past two years I have been heading towards this destination, but it wasn’t until last summer that this new chapter became a reality,” he wrote. “One of my biggest clients and friends told me that they wanted to spread their wings and go in a new direction. We had been through so much together over the last decade, but instead of being hurt I saw it as a sign.”

    Braun did not name the client specifically, but the dots are not so hard to connect: Ariana Grande fired him as her manager last summer, with Puck reporting that the tipping point came when Grande was going through a very public separation from her husband while Braun was on vacation. One guess on the year Grande signed with him originally, and do not pass go, do not collect $200 if that guess is not 2013. Soon after, reports emerged of Idina Menzel, J Balvin, and Demi Lovato also ditching Braun, not to mention Justin Bieber sniffing around for new management. Taylor Swift fans were also familiar with the name, due to the long-simmering feud between the two over the ownership of her masters and the “incessant, manipulative bullying I’ve received at [Braun’s] hands for years,” as she wrote on Tumblr in 2019. In fact, she has credited his control of the tapes with inspiring her to rerecord her older albums and release the (Taylor’s Version) records. (In response, Braun later said he was “firmly against anyone ever being bullied.”)

    Now, in Braun’s words, he’s entering his “father first, a CEO second, and a manager no more” era.

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    Kase Wickman

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  • ComparisonAdviser’s Latest Study Investigates Whether Selling a Home in Retirement is a Smart Move

    ComparisonAdviser’s Latest Study Investigates Whether Selling a Home in Retirement is a Smart Move

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    Press Release
    •

    Jun 10, 2024

    One’s home is often their biggest and most important asset in their life. But should they sell it once they retire to bolster their funds? ComparisonAdviser examines this important decision in its most recent study.


    REDMOND, Wash., June 10, 2024 (Newswire.com)
    –
    A home is one of the most valuable assets people own. As individuals transition from their working lives into retirement, a common consideration is determining whether to sell or keep the property they’ve owned throughout their adult life. In its most recent study, ComparisonAdviser examines the factors homeowners should consider when deciding what to do with their homes as they enter their post-working life, including specific reasons for and against selling and why it’s important to seek financial advice. Click this link to access the article: https://comparisonadviser.com/news-and-studies/selling-your-home-in-retirement.

    The study begins by explaining why a home can be one of the most financially significant pieces of a household’s net worth. To demonstrate this, ComparisonAdviser uses data from a survey it conducted showing reported home ownership by age. It also uses outside data both from the U.S. Department of Health and Human Services and the Census Bureau to illustrate the weight of home equity in one’s portfolio, both for those with fewer assets in general and as one progresses in age.

    As outlined in the study, there are various practical and financial reasons why someone might want to sell their house before entering retirement. For example, people may want to downsize and move somewhere with less upkeep and space to manage. Others might aim for a change of scenery and relocate to a new city or move closer to family members living elsewhere. The study also highlights that selling one’s house around retirement age can give individuals access to a large lump sum of cash that can aid other plans they may have in place, such as travel or estate planning.

    Though there are several valid arguments for selling one’s house upon retiring, the study also lays out some reasons homeowners might want to keep their equity stake into their old age. One of the primary aspects it emphasizes is that owning a home can allow one to avoid high rent prices, rent out the home to tenants while living somewhere else or protect oneself against inflation. The article also points out that the sale and moving process can be hard, especially for those who aren’t as mobile.

    Finally, the study ends by shedding light on the importance of discussing one’s decision with a skilled financial advisor with expertise in retirement or estate planning. These can offer detailed insight into how the sale of a home, or keeping it, can fit into a comprehensive retirement plan.

    Source: ComparisonAdviser

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  • CrowdStrike Holdings, Inc. (CRWD) Stock Forecasts

    CrowdStrike Holdings, Inc. (CRWD) Stock Forecasts

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    Market Update: PSA, WTRG, CRWD

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