| What global withdrawal rates teach us |
| 04/14/24 | | Retirement |
"One thing that I think withdrawal rate sceptics have right is their suspicion that over-relying on the performance of one country isn’t necessarily the best approach for risk management. The top global withdrawal rate portfolios all have heavy allocations to foreign markets either through stocks, bonds, or global real assets. Small bias to the home stock market can be productive, as well as a healthy dose of domestic bills. But if you want to protect yourself from the home economy tanking, global diversification is the way to go."
|
| Back to work |
| 04/14/24 | | Retirement |
"Call it the great unretirement. Hit by rising living costs and unexpected feelings of boredom, one out of eight retirees plan to return to work this year, according to a recent survey."
|
| A quiet life |
| 03/23/24 | | Retirement |
"For me, retirement isn't all that different from childhood. There have been very few other times when life felt relatively carefree. These days, I solve puzzles on my phone, rather than in a magazine, and I write my life stories using a Chromebook, not a notebook. The quiet life isn't for everyone. But it suits me just fine."
|
| Seven reasons to work |
| 03/17/24 | | Retirement |
"Before you dive into the world of endless vacations and gardening, consider that keeping a toe - and perhaps your whole foot - in the workforce might be the secret ingredient to a fulfilling retirement."
|
| A Protestant retirement ethic? |
| 03/03/24 | | Retirement |
"Moshe Milevsky and Marcos Velazquez have identified one area where there is an advantage to being a Protestant, or at least living in a heavily Protestant society. They document a statistically significant relationship between the share of Protestants living in a country and the quality of the pension system in that country."
|
| Faulty assumptions |
| 02/24/24 | | Retirement |
"Many people put a lot of faith in planning software, betting their financial life on assumptions, projections and past performance. The assumptions are usually theirs, but are they accurate? Do they reflect the reality of how they'll live in retirement?"
|
| Fire meets ice |
| 02/16/24 | | Retirement |
"While I think our current concept of retirement could do with some tweaking, I wouldn't want to discourage folks from saving aggressively for their later years. At the same time, I think it’s instructive to think about a different model of retirement, one where we continue to earn at least some income well into our 70s and perhaps beyond."
|
| Lifecycle Investment Advice |
| 12/15/23 | | Retirement |
"Given the sheer magnitude of US retirement savings, we estimate that Americans could realize trillions of dollars in welfare gains by adopting the all-equity strategy."
|
| Withdrawal symptoms |
| 12/08/23 | | Retirement |
"After more than a year of working part-time, I fully retired two months ago. Without a paycheck, our bank account balance soon fell to a level where we needed to transfer funds from savings to pay the monthly bills. The amount I transferred was equal to just over half of my fulltime monthly paycheck. The mental anguish was palpable."
|
| Years left to live |
| 12/08/23 | | Retirement |
"A key takeaway with life expectancy is that it increases as one gets older."
|
| Retirement roulette |
| 11/26/23 | | Retirement |
"What about the 4% rule? I might use it as a guideline to make sure I'm not overspending. But I'm going to be flexible about how much I spend each year, taking my cues from my portfolio's performance. At the same time, as a cushion, I plan to keep five years. worth of expected portfolio withdrawals in high-quality short-term bond funds, so there's scant risk I'd ever need to sell stocks during a market downturn."
|
| Safe withdrawal rates |
| 11/19/23 | | Retirement |
"This is where Dave Ramsey went wrong when arguing for an 8% withdrawal rate. This only works as long as you don't get unlucky during the first 10 years of retirement. Given that the probability that you run out of money over a 30-year timeframe is only a little worse than a coin flip (42%), Ramsey's advice is far riskier for a retiree than he might have initially imagined."
|
| Best-laid plans |
| 11/12/23 | | Retirement |
"I spent a lifetime planning for a happy financial ending, never considering that my health might derail those plans. Today, I'd urge others to follow their dreams as best they can while they can."
|
| Bracing for evening |
| 11/05/23 | | Retirement |
"Not much rattles me. I'm unperturbed by stock market crashes and I don't worry whether tomorrow will come. But I must confess, I look ahead to the no-go years with trepidation. But I'm hoping that, as with so many things, thinking about the future - and planning for it - will ease those fears."
|
| The retired kid |
| 11/05/23 | | Retirement |
"Back at work. At age 78, partly by game plan and partly by chance, I've arrived at a productive and meaningful partial retirement."
|
| Coming of age |
| 10/14/23 | | Retirement |
"Inspired by the experiences of my patients, I'd like to illustrate several of the hurdles men encounter while navigating their retirement years."
|
| Starting late |
| 10/07/23 | | Retirement |
"What would our financial situation be if we retired and our only income was Social Security? That was entirely possible. My employer's pension plan had been woefully underfunded when I began working there. Future pension benefits were far from certain. Meanwhile, my wife's employer had recently been sold, and the new owner had no pension plan."
|
| Getting ready |
| 09/16/23 | | Retirement |
"I underestimated how much cash I should have on hand. I thought of myself as a 'rational person.' I could just sell investments when my cash cushion got close to zero, right? Wrong. It turns out I needed a larger cash buffer to sleep well at night. In my defense, it's hard to predict this number without living through a year or two of retirement spending, and watching your dollars dwindle. The lesson: Err on the conservative side."
|
| What we lose |
| 08/27/23 | | Retirement |
"If we're to be happy retirees, we need to think hard about how we'll cope with these losses. For some, what's lost won't seem all that bad. But for me - someone for whom work has been so central to my life - the seven losses below loom large."
|
| Less money than you think |
| 08/20/23 | | Retirement |
"The median household in this study simply spent the income from their portfolio and avoided taking from the principal portfolio balance."
|
| Financial superpowers |
| 08/20/23 | | Retirement |
"The lower your fixed living costs, the easier the rest of your financial life will be. You'll have more for discretionary 'fun' spending, for savings, and for giving both to charity and to loved ones. In addition, if your fixed monthly costs are low, you'll be in better shape if your financial life takes a big hit, such as losing your job or needing to pay for a major home repair."
|
| Modest, but enough |
| 07/29/23 | | Retirement |
"It's easy to be intimidated into thinking you need a lot of money to retire comfortably. The media is full of stories and advertising promoting luxury lifestyles. That can lead you to believe you need to spend six figures to get the most out of your golden years. The truth is, plenty of typical middle-class Canadians live comfortable and satisfying retirements on much more modest budgets."
|
| How much to retire? |
| 07/29/23 | | Retirement |
"Now we tackle the tricky question of figuring out how much you can draw from your savings at a sustainable rate that involves little risk of outliving your wealth."
|
| Visiting death |
| 07/29/23 | | Retirement |
"The difference that stands out to me is that such old folks no longer seek nor expect personal transformations. They are comfortable and secure in their personalities, styles, views, relations, and accomplishments, and rarely seek big changes to such things."
|
| Why I retired |
| 07/02/23 | | Retirement |
"Ken, why are you here on a Sunday if you can retire? This isn't a dress rehearsal for life. This is it. You don't get a second chance."
|
| How we unretired |
| 06/25/23 | | Retirement |
"One recent trend among newly minted retirees: unretirement. According to an AARP study, some 3% of retirees are back in the workforce one year later, taking on either fulltime or part-time jobs. Often, unretiring wasn't part of the retiree's original plan - but we shouldn't assume it's necessarily about needing money."
|
| Key to work-life balance |
| 06/11/23 | | Retirement |
"80 percent of semi-retirees say they're employed because they want to be; working after retirement is actually more common among workers with higher socioeconomic status. Though some of them might appreciate the extra income, many seem to also find these jobs enjoyable and fulfilling."
|
| When to retire |
| 06/03/23 | | Retirement |
"I found it's a good idea to make a list of financial benefits you want to take advantage of before you retire. You should also consider any expenses that could influence your decision. What follows are nine financial situations that might determine your retirement date."
|
| Automatic enrollment |
| 04/16/23 | | Retirement |
"In 2006, nearly one-quarter of participants ages 18 to 24 had no equity exposure. In 2021, 97% of automatically enrolled Generation Z participants had an equity allocation between 41% and 99%." [pdf]
|
| No going back |
| 03/18/23 | | Retirement |
"But there's a downside to making the emotionally safe choice. The problem: In some cases, the path that promises least short-term regret - by, say, claiming Social Security right away, taking the pension lump sum and avoiding immediate annuities - could end up hurting us financially over the long haul."
|
| The Other Enough |
| 03/12/23 | | Retirement |
"Many folks are happy to get off the career treadmill. But for others, including me, calling it quits doesn't come easily. We humans are inherently restless. We want more stuff, more money and, yes, another success. And when we get these things, we quickly grow dissatisfied and start hankering after something else. We never achieve that final, fully satisfying triumph that we crave."
|
| Riding the rails |
| 03/05/23 | | Retirement |
"Each strategy has some merit. The 4% rule is a great shorthand tool because you can often do the math in your head. Guardrails, on the other hand, may be more complex, but the way it responds to changes in the market makes it more realistic. Many school endowments, it's worth noting, use a hybrid approach: They withdraw a fixed percentage of their endowments, but that fixed percentage is often set in relation to a three-year moving average of the endowment's value."
|
| No need to guess |
| 02/25/23 | | Retirement |
"Since so much of personal finance is beyond our control, it's important to control what we can - in other words, to know which questions can be answered without reference to a crystal ball."
|
| A place to start |
| 01/15/23 | | Retirement |
"The 4% rule may be making a comeback. But it's just a starting point - and you shouldn't necessarily follow it precisely."
|
| It is not a bad time to retire |
| 12/17/22 | | Retirement |
"I've seen a number of articles suggesting that it is a bad time to retire at present, because the market value of portfolios has declined. I'm here to tell you that the opposite is true."
|
| Going the distance |
| 10/09/22 | | Retirement |
"The average American spends the last 12+ years of life with their activities at least partially and often seriously curtailed by illness, injury, or cognitive impairment"
|
| Beginning badly |
| 09/18/22 | | Retirement |
"You might view sequence-of-return risk as the opposite of dollar-cost averaging. Instead of buying more shares when stock prices are down, you're selling additional shares at lower prices to generate the same amount of income. This year, unfortunately, provides a good example of how market forces can affect retirees' savings - and their plans."
|
| Changed by the trip |
| 08/14/22 | | Retirement |
"Humans are hardwired both to worry and to strive. But looking back, all our worries - to the extent we can even remember them - appear to be a colossal waste of mental energy, while the goals we struggled to achieve now seem of little import."
|
| Retirement riddles |
| 08/01/22 | | Retirement |
"I spend significant time reading the viewpoints of people who are planning for retirement or who are already retired. My frequent reaction: What are they thinking?"
|
| After you leave |
| 02/20/22 | | Retirement |
"I'm sensitive to this issue because, during my working years, I received many calls from new widows asking about their survivor pension. Often, there was none because their husbands had selected to receive income only over their life, with no survivor benefit. Times have changed, of course. There are new laws to protect spouses, plus many couples have dual incomes. But at the same time, retirement is more the individual's responsibility than ever before."
|
| Use it or lose it |
| 02/04/22 | | Retirement |
"My contention: It's a mistake to let the fire go out when we retire. Transitioning from a mentally challenging job to a sedentary lifestyle, where you spend a lot of time sitting around watching TV or on social media, is going to cost you."
|
| Life's not a beach |
| 01/22/22 | | Retirement |
"For the past 50 years, retirement commercials have been showing the couple on the beach or the golf course. But this is nonsense. Not every retiree wants to live like that, nor can every retiree afford to. Watching such commercials causes retirees a lot of stress. Deep down, most retirees know that most retirements - including theirs - won't look like that. In fact, most of them have no idea what their retirement will look like."
|
| Is it now the '3.3% Rule'? |
| 12/19/21 | | Retirement |
"Recently a highly respected financial publisher issued a research paper claiming that the 'safe' withdrawal rate from tax-advantaged retirement portfolios could be as low as 3.3%, due to the high valuations of financial investments. As you may know, as an outcome of ongoing research, I recently increased my estimate of the 'worst-case' withdrawal rate to 4.7% (for a 30-year time horizon). How do we make sense of these two widely disparate results?"
|
| Nonportfolio strategies for retirees |
| 12/12/21 | | Retirement |
"Strategies that reduce expenses or boost non-portfolio income, like delaying Social Security or employing annuities, can be even more impactful than adjusting a portfolio or withdrawal-rate system and therefore should precede withdrawal rates in the retirement-planning process."
|
| The state of retirement income |
| 11/30/21 | | Retirement |
"Because of the confluence of low starting yields on bonds and equity valuations that are high relative to historical norms, retirees are unlikely to receive returns that match those of the past. Using forward-looking estimates for investment performance and inflation, Morningstar estimates that the standard rule of thumb should be lowered to 3.3% from 4%."
|
| 44 years studying retirement |
| 10/30/21 | | Retirement |
"I got up this morning without much to do and I hadn't finished it by the time I went to bed."
|
| CDs and cemeteries |
| 10/03/21 | | Retirement |
"'A year to live.' That's the name of a class I've been teaching on and off for the past 20 years. My hope: Participants will gain more understanding, acceptance and peace about one of life's few guarantees - death. This year's class members have a little over five months left to live."
|
| Rule your world |
| 09/12/21 | | Retirement |
"I'm still wary of rules of thumb, but Gigerenzer makes a useful point. It's good to be analytical where appropriate. But sometimes, employing a rule of thumb might be better. Below, for example, are five questions that might be better answered with a rule of thumb than a spreadsheet"
|
| Not a law of nature |
| 08/02/21 | | Retirement |
"The first thing to understand about the 4% rule is that Bengen never intended it to be a rule per se. In his paper, he's clear that 4% is just a recommendation - and only under certain circumstances."
|
| Ask the question |
| 07/25/21 | | Retirement |
"We should ask ourselves all kinds of tough financial questions. But many of the toughest never get asked - because we know answering them will involve agonizing choices, difficult conversations and unthinkable amounts of dollars. Consider these four..."
|
| A better retirement |
| 06/13/21 | | Retirement |
"Among the unhappy retirees I've talked to, most are bored because they don't have anything to do. That can usually be fixed."
|
| Work in progress |
| 05/23/21 | | Retirement |
"Thanks to the pandemic, most of us have discovered there's plenty of fat in our budget. Think about how much you saved over the past 14 months by not going on vacation, cooking at home and avoiding the shopping mall. During retirement, if your nest egg looks a little depleted, perhaps you should adopt a 'pandemic budget' for six months or a year."
|
| Built for Ease |
| 05/09/21 | | Retirement |
"My father loathed the idea that he would spend his final years in a nursing home. In the end, he never had to confront that possibility: At age 75, while riding his bicycle, he was struck and killed by a speeding car. Still, I think often about his reluctance - because I share it. Despite exercising every day, I know I'm not as flexible or as fast as I once was, and it takes longer for the stiffness in my muscles to ease each morning. Meanwhile, I'm well aware that two of my four grandparents had dementia at the end of their life."
|
| Sustainability of withdrawal strategies |
| 04/18/21 | | Retirement |
"The most important financial issue retirees have to deal with is whether their strategy will be able to sustain all the withdrawals they expect to make in retirement, as well as a bequest they aim to leave. For this reason, it is critical to periodically monitor the evolution of a financial plan in order to detect early signs of trouble, which may lead a retiree to introduce dynamic adjustments to a strategy. To that purpose, this article features two tools, a sustainability test and the sustainable withdrawal, and shows how to apply them. It also discusses the empirical evidence on both tools based on a comprehensive sample of 22 countries over a 120-year period."
|
| What scares me about getting old |
| 04/11/21 | | Retirement |
"The truth is that even for a guy who's spent a vast majority of his waking hours helping others imagine the best way to age, there's a lot that scares me about getting old."
|
| Don't get burned |
| 04/03/21 | | Retirement |
"Financial independence. Retire early. FIRE. It's the dream, right? No one to report to. Nowhere you have to be. You live life completely on your own terms. But as much as this movement has been revered by some in the personal finance community, it also has its downsides which are discussed far less often."
|
| Family money |
| 03/08/21 | | Retirement |
"getting both partners involved has meant pushing back when the investment advisor tells her to follow up with the husband. "I'm like, wait, what about the wife? And they'll say, 'Oh, she doesn't do the money.' All the more reason because if something happens, she needs to have a resource."
|
| Variable percentage withdrawal critique |
| 02/14/21 | | Retirement |
"The main assumptions behind the VPW tables are that you'll live to 100, stocks will beat inflation by 5%, and bonds will beat inflation by 1.9%. These figures are average global returns from 1900 to 2018 taken from the 2019 Credit Suisse Global Investment Returns Yearbook."
|
| CPP at 60 |
| 12/12/20 | | Retirement |
"The average Canadian who takes Canada Pension Plan benefits at age 60 rather than 70 can expect to lose more than $100,000 of income over the course of their retirement"
|
| CPP timing |
| 12/12/20 | | Retirement |
"The 'standard' age to take CPP is 65. If you take it early, your benefits are reduced by 0.6% for each month early. This is a 36% reduction if you take CPP at 60. If you wait past 65, your benefits increase by 0.7% for each month you wait. This is a 42% increase if you wait until you're 70."
|
| Boring |
| 11/27/20 | | Retirement |
"So that's my verdict after four years of early retirement: boring."
|
| Delaying CPP |
| 11/22/20 | | Retirement |
"Delaying CPP and Quebec Pension Plan (QPP) payments is the surest way to secure lifelong income, MacDonald said, but very few Canadians are taking advantage. More than 95% of Canadians start taking their CPP/QPP benefits at 65 or earlier, and fewer than 1% wait until they're 70."
|
| Sequence risk |
| 11/14/20 | | Retirement |
"Financial planners are keenly aware of, and routinely warn clients about, sequence risk; that is, the possibility of facing a sequence of low returns early in retirement that may force retirees to scale down the plans they had made. This really is a scary scenario, but one that the evidence here shows that retirees are not very likely to encounter. A new and refined definition of sequence risk is advanced in this article, linking this type of risk to the sustainability of a withdrawal strategy. Furthermore, three ways of assessing sequence risk are proposed, among them one that enables a retiree to monitor the sustainability of his withdrawal strategy periodically and to introduce adjustments when necessary. The ultimate message of this article is that retirees should be informed, but not obsess, about sequence risk."
|
| One-page plan |
| 11/08/20 | | Retirement |
"Going through the one-page plan process helps you shift your mind into this idea that it's about setting a course and having tools to course-correct."
|
| Enough |
| 10/18/20 | | Retirement |
"While I continue to invest for a retirement that grows ever closer, I am no longer focused on trying to increase my net worth. There is nothing more I want."
|
| The 5% Rule? |
| 10/18/20 | | Retirement |
"I wouldn't be recommending 4.5%, I'd probably be recommending 5.25%, 5.5%, something like that, which is even going to enrage people even more because it's higher than the 4.5%. But that's what history has demonstrated."
|
| The F-150 retirement crisis |
| 10/03/20 | | Retirement |
"The difference between the monthly payment on a $45,000 vehicle and a $20,000 vehicle is basically enough to max out your IRA in a given year. The monthly payment difference between a new $70,000 truck and a $20,000 used model would be enough to fund nearly 60% of the way towards maxing out your 401(k). And a new vehicle depreciates the minute you drive it off the lot while your retirement savings grow over the long-term."
|
| Wealth discipline |
| 08/09/20 | | Retirement |
"This is a measure of your financial discipline through both savings and investing. It's not just your savings rate, because it also incorporates how you use your savings to invest and increase your wealth."
|
| My four goals |
| 07/26/20 | | Retirement |
"I also want some income I'm guaranteed not to outlive. Research suggests our ability to manage money deteriorates as we age. Research also suggests that retirees with predictable income tend to be happier."
|
| Fred Vettese interview |
| 06/26/20 | | Retirement |
"Today, we get into a masterclass on retirement planning with a true expert in the field whose perspectives are distinctly evidence-based, Fred Vettese." [video]
|
| Michael Kitces on the 4 per cent rule |
| 06/06/20 | | Retirement |
"Michael Kitces on early retirement - and how the recent stock market movement affects the FIRE Community and the 4% rule." [video]
|
| Never retire |
| 03/15/20 | | Retirement |
"If you want to live a satisfying, long life, neuroscientist Daniel Levitin has some advice for you: Stay busy."
|
| Sequence risk |
| 02/15/20 | | Retirement |
"Sequence risk is the risk that investment returns happen in an unlucky order. It can make or break portfolios"
|
| Age-invariant asset allocation |
| 01/17/20 | | Retirement |
"In the present environment, the stock market is poised to deliver 2.52%/year over the next ten years. You can do better with an investment-grade portfolio of bonds."
|
| Count the cash |
| 11/26/19 | | Retirement |
"Once we have a handle on our cash situation, we're free to invest the rest of our portfolio as we wish - including potentially stashing much or all of our money in stocks."
|
| What number |
| 09/25/19 | | Retirement |
"In retrospect, I learned that the idea of a single number is compelling, even if it isn.t realistic. After my initial failure at communicating the results, I tried a different tack. I took a narrative approach. I explained to my wife that we were on track for a comfortable retirement."
|
| Get busy living, or get busy dying |
| 09/06/19 | | Retirement |
"Waiting for 75% of life to pass by before doing stuff you enjoy is a pretty dumb strategy."
|
| Inflexible spending rules |
| 07/31/19 | | Retirement |
"Moving from a rule-of-thumb to a dynamic model is like moving from analog to digital. While we may pine for the simplicity of the good old days, the fact is today we have much better tools to get the job done."
|
| Cash reserve strategies don't work |
| 06/21/19 | | Retirement |
"Cash reserve strategies that hold aside several years of spending to avoid liquidations during bear markets are a popular way to manage withdrawals for retirees. In theory, the strategy is presumed to enhance risk-adjusted returns by allowing retirees to spend down their cash during market declines and then replenish it after the recovery. Yet recent research in the Journal of Financial Planning reveals that the strategy actually results in more harm than good; while in some scenarios the cash reserves effectively allow the retiree to .time. the market by avoiding an untimely liquidation, more often the retiree simply ends out with less money due to the ongoing return drag of a significant portfolio position in cash."
|
| Retirement plans |
| 03/04/19 | | Retirement |
"Saving for retirement means navigating a potential minefield of high fees and bad advice." [video]
|
| Retiring on low income |
| 02/13/19 | | Retirement |
"Retirement savings advice doesn't always work for everyone, especially those living on low incomes. The Agenda discusses the reality of retirement for Ontario's low-income earners." [video]
|
| The retirement age is too low |
| 02/05/19 | | Retirement |
"When the Canada Pension Plan came into effect in 1965, life expectancy was just shy of 72 years. Canadians could thus expect six or seven years of public pension benefits before moving on to their greater reward. Since that time, however, tremendous improvements in health care and geriatric medicine have pushed life expectancy to 82 while the traditional retirement remains stuck at 65, creating an extra decade of leisure."
|
| Conventional retirement advice may fail |
| 01/22/19 | | Retirement |
"For many Canadians, retirement income planning is a bit like completing a jigsaw puzzle: the challenge is to fit all of the pieces together. But for those approaching retirement with fewer resources, the puzzle can be more difficult to complete."
|
| Retirement finance |
| 01/01/19 | | Retirement |
"If we were to over simplify and say that there are three types of retirees - the non-feasible, feasible but just barely, and really rich - only the middle cohort cares about this subject and the closer to the line the bigger deal it is. This is why I took up retirement finance: fear of the line."
|
| Risk and reward in public sector pensions |
| 12/10/18 | | Retirement |
"This paper questions whether Canada's public sector pension plans have discovered a formula that makes them a model for the world to emulate. The exceptional feature of Canada's public sector DB plans is not 'world-beating' investment strategies or good governance. It is the ability to enrich public employees by shifting large, undisclosed investment risks to taxpayers without fair compensation. By our estimate, this provides an unacknowledged $22 billion annual subsidy to Canada's public sector DB plans and, ultimately, to the members of these plans. This large public subsidy, not the virtues of the Canadian Pension Model, explains the plans. success. Without it, public sector DB plans would be no more viable than private sector DB plans."
|
| 5 million to retire |
| 12/03/18 | | Retirement |
"The overwhelming response: Are you nuts, rich lady?"
|
| Retiring at a stock market peak |
| 11/26/18 | | Retirement |
"Retiring just before a stock market peak could be ruinous to your financial health but it doesn't have to be. A balanced portfolio was able to hold up using a simple set of assumptions even when our hypothetical investors were extremely unlucky with the timing of their retirement."
|
| Retiring at a stock market peak 2 |
| 11/26/18 | | Retirement |
"We have absolutely no control over the timing of the next market peak, the returns the markets throw off or the sequence of those returns during our retirement years. But we can control how much money we spend so that will always be the biggest lever investors can use when trying to control their own financial destiny during retirement."
|
| How to retire in your 30s |
| 09/06/18 | | Retirement |
"Fed up with their high-pressure jobs, some millennials are quitting and embracing the FIRE movement."
|
| The worst time to retire |
| 05/07/18 | | Retirement |
"Market performance in the first few years of retirement determines financial security throughout one's golden years. Here's why the outlook for people retiring today is concerning"
|
| Deferring CPP |
| 04/02/18 | | Retirement |
"I believe deferring CPP is so unpopular because it forces people to withdraw more money from their savings early on to make up for the shortfall in income. The balance in their RRIF drops a lot faster as a result. I recognize that this phenomenon is hard for us to accept since so much of our self-worth and our sense of financial security are tied to the amount of wealth that we have accumulated. Even though it goes against the grain, you just need to have faith that this deferral strategy will pay off in the long run."
|
| Unraveling retirement strategies |
| 03/12/18 | | Retirement |
"The idea that we can spend an amount calculated at the beginning of retirement and continue spending it regardless of what happens to our financial situation over perhaps 30 years is not only risky but irrational."
|
| Second childhood |
| 02/05/18 | | Retirement |
"I use the strategy I recommend to others: Occasionally, I will take my portfolio and assume the stock portion loses 35%, which is the typical decline during a bear market. I'll then look at the resulting hit to my overall portfolio's value and ask myself, 'Would you be okay with that?' As the market has climbed over the past year, I've found myself answering 'no' - and that's prompted me to ease up somewhat on stocks."
|
| How Malcolm Hamilton prepared for his own retirement |
| 01/08/18 | | Retirement |
"I believe that Canadian governments are not well prepared for the retirement of the baby boom generation. They appear to have no coherent plan to address rising medical and custodial care costs in the 2030s and 2040s. Our governments have large debts. Their revenue may erode as heavily taxed working people retire and become lightly taxed pensioners. Most of their policy responses - raising the age at which government pensions start, income testing government benefits, holding interest rates down, encouraging inflation - will make it harder for people to retire comfortably at a reasonable age."
|
| Time to rethink the RRSP contribution limit |
| 11/12/17 | | Retirement |
"If you diligently maximize your RRSP contributions each and every year but have this nagging feeling that you may end up worse off in retirement than your neighbour, who is fortunate enough to belong to a well-funded defined benefit pension plan, you're probably correct."
|
| Safely withdraw funds in retirement |
| 10/07/17 | | Retirement |
"If you're planning to quit work in your early fifties and think there's a good chance that you or your spouse may make it into your nineties, all bets are off. In such a case, it makes sense to begin your retirement by being even more cautious than the 4 per cent rule would dictate. Conversely, if you're 90 and still have a hefty portfolio, it's not clear why you should stick to a 4-per-cent annual cap on your spending."
|
| Rule of 300 |
| 09/03/17 | | Retirement |
"Take your monthly expenditure. Multiply it by 300. The result is how much you'll need to have saved to keep living like you do today after you jack in your job."
|
| Retirement makes you miserable |
| 08/07/17 | | Retirement |
"Some people find that after trying retirement, it just doesn't agree with them. Here are three such stories of 'un-retirees' - people who crave returning to work after retiring or went back to work part-time, and not only for the money."
|
| 3 retirement planning tips |
| 07/23/17 | | Retirement |
"Based on what I know now, I have put an addendum on the retirement advice I give to people: 'And no matter how much money you think you are going to need, save another 15 percent, just in case.'"
|
| How to motivate yourself |
| 07/02/17 | | Retirement |
"Being rich is pointless if your mountain of cash has no purpose. Therefore, find a purpose bigger than yourself."
|
| The hardest problem in finance |
| 06/11/17 | | Retirement |
"Challenging as those may appear, none compare to what Nobel laureate William Sharpe, 82, calls 'decumulation,' or the use of savings in retirement. It is, he says, 'the nastiest, hardest problem in finance.'"
|
| Safe vs. optimal |
| 06/11/17 | | Retirement |
"In one case in the article we identify a 7 percent withdrawal rate as 'optimal.' That is not a 'safe' withdrawal rate. With the market assumptions in the article, the 7 percent withdrawal rate has a 57 percent chance of failure over a thirty-year retirement. Though it is not safe, it does maximize the overall expected lifetime satisfaction for a fairly flexible retired couple who has a secured income base of $20,000 from Social Security."
|
| Retirement without trepidation |
| 05/28/17 | | Retirement |
"The widespread contentment among Canada's seniors suggests that many of us are approaching retirement with needless trepidation" [$]
|
| Hope triumphing over experience |
| 05/07/17 | | Retirement |
"The return forecasts of US public pension plans offer another example of hope triumphing over experience. The average pension plan expects to generate 7.6 percent per year, even though the average plan only realized a 5.7 percent return per year from 2001-2015. The low levels of returns over this period reduced the funding status for many plans from 99 percent in 2001 to 74 percent in 2015. However, the plans with the largest shortfalls still tend to have the highest expected future returns and the lowest willingness to reduce those expectations."
|
| Work longer to retire earlier |
| 04/16/17 | | Retirement |
"In our experience, many continue to put up with the grind of Intel (or any other employer) simply because they are married to hitting a target portfolio number, when in reality they could step away from the routine, and take a pay cut no doubt, but still earn enough income that allows them financial freedom sooner than they may have envisioned - and this may have the dual benefit of allowing them to pursue an area of work they've been putting off for years but are passionate about getting involved in."
|
| Get serious about retirement ages |
| 03/19/17 | | Retirement |
"The Liberal government has declined to listen to the advice of its own economic advisory council on retirement age. Perhaps the Liberals might be more willing to listen to one of its ideological soul mates, someone who shares its views on the use of deficits to boost economic growth. Someone like Christine Lagarde, the managing director of the IMF."
|
| Rich or free |
| 02/26/17 | | Retirement |
"The best combination is to probably be rich and free. But even that lifestyle is not much better than that of a regular income earning person who is living a purposeful lifestyle. Appreciate what you have right now. Being rich is not an amazing panacea. Being free with the consistent ability to help other people is."
|
| The retirement spending smile |
| 02/05/17 | | Retirement |
"The following exhibit provides Blanchett's spending smile for a retiree that begins retirement with expenditures of $100,000. On average, this household can expect to experience declining real expenditures through age eighty-four, when real spending reaches a trough of $74,146. This reflects a nearly 26% drop in real expenditures. After this point, average real expenditures increase, though they do not necessarily exceed their initial retirement levels until retirees reach their mid-nineties."
|
| The global 4 per cent |
| 01/15/17 | | Retirement |
"With a 50/50 asset allocation, the 4% rule did not survive in any country, though it came very close in the U.S. (3.94%) and Canada (3.96%). Even allowing for a 10% failure rate, 4% made the cut only in Canada, the U.S., New Zealand, and Denmark."
|
| The pension warning bell |
| 01/01/17 | | Retirement |
"By the time Calpers gets that assumed rate of return down to 7 percent, as its CFO recommends, the fund may very well be thinking about lowering expectations even further."
|
| Retirement - golf |
| 12/17/16 | | Retirement |
"In all my years of working with clients, I can only think of two people who wanted to retire in the traditional sense. Even then, both stayed deeply committed to doing volunteer work, more or less full time, throughout their retirement. So, I have worked with precisely zero individuals who went from full-time work to full-time leisure at 65."
|
| Semi-retirement is more fun |
| 10/29/16 | | Retirement |
"I have described elsewhere that my vision of Semi-Retirement is to find a balance that's neither too busy and stressful nor too leisurely and boring: or as the subtitle of the book has it, Work while you play, Play while you work."
|
| The looming pension crisis |
| 10/16/16 | | Retirement |
"Guaranteeing pension returns - either before or after retirement, or both - is clearly a popular policy for both savers and sponsors. But the details are daunting, and the risks only grow as the scope of guarantees expands and more people take up the plans, testing the generosity of sponsors - and the taxpayers who back them."
|
| Retirement glidepath |
| 10/02/16 | | Retirement |
"After considering declining-equity, rising-equity, and static glidepaths, the comprehensive international evidence from 19 countries and the world market over 110 years considered here ultimately suggests that both an all-equity portfolio and a 60-40 stock-bond allocation are simple and very effective strategies for retirees to implement."
|
| Putting it all on red |
| 09/18/16 | | Retirement |
"Imagine two kinds of investment funds, both of which have the same aim: to provide pensions for their employees. You might think that they would invest in a similar way. But when it comes to American pension funds, you would be wrong. It turns out that public funds have a rather different, and more aggressive, approach to risk from private ones (and indeed from their counterparts in other countries)."
|
| Plenty of stocks |
| 09/11/16 | | Retirement |
"The prudent course for any retiree is to plan on a longer-than-normal life. Retirees typically liquidate only a small portion of their assets every year. Accordingly, the mere act of retiring should not prompt any change in your exposure to the financial asset - common stock - that is almost certain to produce the highest returns over the long run."
|
| Saving, investing and parting thoughts |
| 09/04/16 | | Retirement |
"Each crash was followed by a strong recovery and each recession by renewed economic growth. The lesson is that better things usually lie ahead."
|
| Most retirement accounts never run dry |
| 08/28/16 | | Retirement |
"Consequently, while most retirees accumulate a portfolio with the plans to spend it in retirement, when faced with the ever-open-ended potential of living many more years they may feel compelled to keep extra assets available, and never actually deplete the retirement portfolio, even in their later years. This isn't a sign of inefficient portfolio spending or a consumption gap, but merely a prudent response to an uncertain future."
|
| Re-evaluation of pension returns |
| 08/28/16 | | Retirement |
"In an April 2016 report, McKinsey & Co. forecast that under a slow growth scenario, U.S. stocks will return 4 percent over the next 20 years while government bonds won't make any money. Ten-year returns for Connecticut's teachers' and state employees' pensions is 5.25 percent and 5.14 percent, respectively, far short of the annual gains it currently expects."
|
| The reality of retirement |
| 08/21/16 | | Retirement |
"Lyndsay Green, sociologist and author of 'Ready To Retire? What You and Your Spouse Need to Know About the Reality of Retirement,' spoke with men over the age of 60 and their spouses, to learn about the anxieties and unexpected pleasures of retirement. Green joins The Agenda in the Summer to explore the worry and anticipation many feel toward the end of their careers." [video]
|
| New retiree withdrawal rate |
| 08/14/16 | | Retirement |
"Inglis' recommendation: Simply divide your age by 20 (for couples, use the younger spouse's age). So, for example, someone who is 70 could safely spend 3.5% (70 / 20 = 3.5) of their savings, while someone who is 80 could withdraw 4% (80 / 20 = 4) and someone 65 could withdraw 3.25%."
|
| Am I saving enough for retirement? |
| 07/31/16 | | Retirement |
"For me, the bottom line is that even though I was aware - on an intellectual level - that returns over the past few years had been lower, I was unprepared for how much lower they appear to have been."
|
| CPP Memo |
| 06/25/16 | | Retirement |
"It has come to our attention that you are not saving sufficiently for your retirement. This does not surprise us. We haven't saved sufficiently for our retirement either. Some of us have made enough money in the housing market to be relatively comfortable, and a good number of us have workplace pensions. Low-income Baby Boomers will be protected by Old Age Security, Guaranteed Income Supplement and the Canada Pension Plan. But middle-income Baby Boomers without workplace pensions - people making $60,000 or $80,000 a year - are facing a big drop of their standard of living upon retirement."
|
| Life of Riley Index |
| 06/25/16 | | Retirement |
"The S&P 500 now yields about 2.09 percent, and the five-year Treasury note now yields about 1.16 percent. Together in a 50/50 portfolio, you get a yield of 1.63 percent. That's down from last years. 1.75 percent."
|
| Fortunes you can't control |
| 06/11/16 | | Retirement |
"March 30, 2000 and September 30, 2007 would have been two of history's worst times to retire. Inflation would have beaten those who withdrew 4 percent per year from a balanced index fund. But there are silver linings. For starters, the race was pretty close. In both cases, the table still had plenty of money left."
|
| Many unhappy returns |
| 11/21/15 | | Retirement |
"Elroy Dimson, a professor at both the Cambridge and London Business Schools, is the co-author of a study of investment returns, covering 23 countries and more than a century of data. He thinks the likely future long-term real return on a balanced portfolio of equities and bonds will be 2-2.5%. AQR, a fund-management group, has come up with a remarkably similar figure, 2.4%, by assuming annual growth in dividends and profits of 1.5% for a portfolio priced at current valuations and split 60-40 between equities and bonds. It applied the same formula to valuations over the past century, and found that the current projected return is lower than at any time in the past"
|
| Retirement planning |
| 11/08/15 | | Retirement |
"The work I've done shows that with a zero capital-market return in real [inflation-adjusted] terms, you need to save close to 30% of your income."
|
| TFSAs and OAS |
| 09/20/15 | | Retirement |
"One of the most intriguing facets of last week's leaders. debate was the determination with which all candidates steered clear of two issues that directly affect your personal bottom line. Anyone listening to the debate would have no clue that ordinary folks feel at all attached to their tax-free savings accounts (TFSAs) or Old Age Security (OAS)."
|
| How has the 4% rule held up |
| 08/16/15 | | Retirement |
"The 4% rule has been much maligned lately, as recent market woes of the past 15 years - from the tech crash of 2000 to the global financial crisis of 2008 - have pressured both market returns and the portfolios of retirees. Yet a deeper look reveals that if a 2008 or even a 2000 retiree had been following the 4% rule since retirement, their portfolios would be no worse off than any of the other "terrible" historical market scenarios that created the 4% rule from retirement years like 1929, 1937, and 1966."
|
| False assumptions by Ontario pension planners |
| 06/06/15 | | Retirement |
"I believe that Canadians are reasonably well prepared for retirement. Most save more than the 5 percent household saving rate. Most can retire comfortably on less than the traditional 70 percent replacement target. The greatest challenges come early in their adult lives when the burdens of acquiring a home and supporting young children strain the family budget. After that, things get easier."
|
| New math for retirees |
| 05/09/15 | | Retirement |
"The big question now - difficult even for an aerospace engineer to answer - is whether a new worst case is beginning to play out, given the painfully low interest rate environment, which yields little for safer bond investments, where retirees often hold a big portion of their money."
|
| The paradox of success |
| 04/25/15 | | Retirement |
"The paradox of success is this: The mental wiring that enables a person to claw to the tippy-top of Corporate America or sports or entertainment or any other field that offers vast wealth is the same mental wiring that most of the time leads people not to retire before they have to - no matter what the diminishing marginal utility of money would suggest."
|
| The Financial Freedom Index |
| 02/20/15 | | Retirement |
"My adjustments suggest that a median Canadian family in 2015 has about $74,000 in annual after-tax income. I figure to generate that same income in a portfolio split evenly between Canadian stocks and Canadian five-year government bonds, you would need just under $4.5-million." [For those who want to party like Bertie Wooster.]
|
| Achievable retirement planning |
| 02/20/15 | | Retirement |
"Despite widespread warnings to the contrary, veteran financial planner and investment advisor Jonathan Pond believes no matter what your age or circumstances you can take steps to get your financial house in order and achieve a comfortable retirement." [video]
|
| Can't stay retired |
| 12/06/14 | | Retirement |
"The AARP research found that 55 percent of retirees are employed voluntarily, including the 25 percent who reported working because they wanted to be physically or mentally active."
|
| Managing money for retirement |
| 10/11/14 | | Retirement |
"There are not enough resources to give all of the Baby Boomers a lush retirement, without unduly harming younger age cohorts, and this is true over most of the developed world, not just the US."
|
| Dreaming of a cheap tropical retirement? |
| 09/19/14 | | Retirement |
"Moving to a low-cost, tropical paradise, where $30,000 a year can put a couple into the upper middle class, is fast becoming the dream du jour for fifty-somethings who find themselves short on retirement funds."
|
| Canadians can afford retirement |
| 09/05/13 | | Retirement |
"A recent study from Statistics Canada on 'The Adequacy of Household Savings' explicitly takes wealth into consideration. It found that two-thirds of Canadians exceed optimal savings for retirement; for the rest, the 'undersaving is small' at less than $30,000 on average and concentrated among low income earners, who already get substantial pension supplements from government. These arguments are validated by the OECD Report on pensions that found that Canada has one of the lowest rates of elder poverty in the world."
|
| The hidden DB in DC plans |
| 05/12/13 | | Retirement |
"The greatest attraction of a DB pension plan is the appearance of certainty in the levels of retirement income it promises to its members, which contrasts with the uncertainty of retirement income levels that a DC pension plan can provide to its members. Readers may be interested to discover, though, that their DC pension plan (or other retirement savings plan such as a group RRSP or deferred profit sharing plan) may have a minimum level of DB hidden within it; in fact, it.s highly likely to be the case for any Canadian DC arrangement."
|
| Meet the man who retired at 30 |
| 04/27/13 | | Retirement |
"But I didn't start saving and investing particularly early, I just maintained this desire not to waste anything. So I got through my engineering degree debt-free - by working a lot and not owning a car - and worked pretty hard early on to move up a bit in the career, relocating from Canada to the United States, attracted by the higher salaries and lower cost of living. Then my future wife and I moved in together and DIY-renovated a junky house into a nice one, kept old cars while our friends drove fancy ones, biked to work instead of driving, cooked at home and went out to restaurants less, and it all just added up to saving more than half of what we earned. We invested this surplus as we went, never inflating our already-luxurious lives, and eventually the passive income from stock dividends and a rental house was more than enough to pay for our needs"
|
| The retirement gamble |
| 04/27/13 | | Retirement |
"Retirement is big business in America, but is the system costing workers and retirees more than what they're getting in return?"
|
| Retirement is cheaper than you think |
| 03/17/13 | | Retirement |
"The Statistics Canada Survey of Household Spending for 2010 found senior couples on average spent a combined $53,100 a year (including money paid to income tax). From looking at that figure as well as talking to seniors and their advisers, I estimate that a retirement lifestyle that you might call middle class or a bit better costs about $40,000 to $70,000 per couple (also including income tax payments)."
|
| Small towns can offer big savings |
| 02/03/13 | | Retirement |
"Studies have shown that a majority of Canadians have thought about where they want to retire but only a small portion would actually leave the country. Some appear to be moving to smaller communities, according to 2011 census data which shows the population of people 65 and over growing in small towns."
|
| How spending declines with age |
| 06/12/12 | | Retirement |
"Most of us already have a hunch that consumption declines with advanced age. If you had a middle-class upbringing, you might have had a grandmother who regularly gave cash gifts to her grandchildren every so often because she no longer spent the money on herself. She probably hadn't bought a car nor had she travelled anywhere for years. Once people cross over into their 80s, they just seem to be less inclined to spend their money. But we can't rely on anecdotal evidence for something as important as this. Fortunately, some hard data exist."
|
| Earnings Assumptions and Century Bonds |
| 09/26/10 | | Retirement |
"So in an environment like this, where interest rates are low, and surpluses could not be built up in the past, pension funds are hurting. The truth is, they are worse off than their stated deficits imply. For economic and political reasons, the likely outcome resembles the riddle of how one eats an elephant: one bite at a time.So we will see investment earnings assumptions and discount rates fall slowly, far too slowly to be the economic truth, but slowly recognizing funding gaps as corporations eat the loss one bite at a time, as they can afford to."
|
| The cost of retiring at 66 |
| 06/27/10 | | Retirement |
"The state pension age looks set to rise to 66 in just six years' time, and may be extended far further -possibly to 70. Unions have condemned these "work till you drop" plans - but they shouldn't come as any surprise."
|
| Optimal withdrawal rates |
| 03/25/10 | | Retirement |
"Our main practical conclusion is that counseling retirees to set initial spending at constant 4% of their nest egg is consistent with lifecycle theory only under a limited set of mortality-risk aversion and time preference parameters. We show exactly how the optimal behavior in the face of personal longevity risk is a plan that adjusts consumption downward in proportion to survival probabilities - adjusted for pension income and risk aversion - as opposed to blindly withdrawing the same inflation-adjusted income for life."
|
| Low savings are the problem |
| 02/16/10 | | Retirement |
"The average contribution to a RRSP was $5,412 but the median contribution was only $2,780. The contributions used up just 6.0% of total contribution room available. The data suggests that the vast majority of Canadians have accumulated vast amounts of RRSP contribution room. Only a tiny fraction of Canadians have used up all their contribution room and would benefit from any boost in RRSP limits."
|
| RRSPs and the GIS don't mix well |
| 11/29/09 | | Retirement |
"Canadian seniors with low incomes receive a Guaranteed Income Supplement (GIS) from the government. Within a certain income range, each additional dollar of income reduces the GIS payments by 50 cents. This amounts to a 50% tax on this income. Combining this with the regular income taxes, the effective tax rate on RRSP withdrawals can be over 70%."
|
| The looming retirement crisis |
| 09/18/09 | | Retirement |
"Wilful neglect leading to inevitable disaster is quietly cascading across Canada's entire retirement savings system. Many haven't made sufficient provision, and a bailout seems neither feasible nor likely."
|
| Retirees need only 60% of working income |
| 09/23/08 | | Retirement |
"The Russell finding is closer to the 50 or 60% replacement ratio that actuary Malcolm Hamilton has often cited, and for similar reasons: "Certain living expenses tend to drop significantly during retirement as most retirees are mortgage-free and no longer incur employment costs such as daily transportation," says Irshaad Ahmad, president and managing director for Russell Canada"
|
| Spending safely |
| 07/10/08 | | Retirement |
"If you're getting ready to retire, you may already be familiar with "the 4% solution." For more than a decade, financial advisers have warned retirees that draining over 4% of their nest eggs in their inaugural retirement year could ultimately lead to financial ruin. The 4% mantra started with Bill Bengen, 60, a soft- spoken investment adviser in El Cajon, Calif., who has written a series of landmark research papers since 1994 on safe withdrawal rates. What most people don't realize, though, is that Bengen no longer recommends the 4% rate."
|
| Your post-subprime portfolio |
| 07/10/08 | | Retirement |
"Saving for retirement has never been easy, but the past year has made a complicated task all but overwhelming. The ongoing collapse of the credit markets, sparked initially by problems in subprime mortgages, has challenged some of investors' most cherished and reliable investment beliefs and strategies. Auction-rate securities sold as "cash equivalents" ended up sticking investors with huge losses, supposedly low-risk bond funds blew up, and for those who thought they'd pay for retirement by selling the house.well, need we say more?"
|
| Study finds pension-plan returns top 401(k)s |
| 06/21/08 | | Retirement |
"Pension-plan returns outperformed 401(k) retirement accounts from 2003 to 2006, the most recent bull market, according to a study. Pension plans beat 401(k) plans by 1.7 percent in 2003, 2 percent in 2004, 1.1 percent in 2005 and 1.6 percent in 2006, said the survey released today by Watson Wyatt Worldwide, a global consulting company based in Arlington, Virginia. Looking at a broader period, 1995 to 2006, pensions outperformed 401(k)s by 14 percent, the study said."
|
| Defined benefit vs. 401(k) plans |
| 06/21/08 | | Retirement |
"This most recent comparison finds that between 1995 and 2006, DB plans outperformed DC plans by an average of 1 percent per year. Earlier studies also found that, over time, DB plans attained higher returns than did 401(k) plans."
|
| How long will you live? |
| 06/10/08 | | Retirement |
"The hardest question in retirement planning is the first one: How long do you expect to live? I'm afraid recent developments are making that question even harder to answer. But it's unavoidable, so what's the smart way to think about it now?"
|
| Wealthy? Here's some good news |
| 05/27/08 | | Retirement |
"When wealthy Canadians look at how much money they'll need to save up for retirement, they can be in for a shock. The latest report from the mutual fund industry recommends that you replace 80% of your working income when you retire. That means if you make more than $100,000, you'll need to save up two or three million bucks. Luckily, says actuary Malcolm Hamilton, if you're wealthy, you don't need anything close to an 80% replacement ratio to maintain your standard of living." [The table at the bottom of the page is the interesting part of this mini-article.]
|
| Are you saying no to free money from your employer? |
| 02/17/07 | | Retirement |
"About that money your employer has ready to add to your retirement savings. You're not wasting it, are you? Lots of Canadians are. Some aren't participating in group registered retirement savings plans and thus missing out on matching employer contributions. Others are neglecting the money they and their bosses are putting into defined-benefit pension plans and thus hurting their returns. Pensions are complex, so we tend to ignore them and hope for the best. But for many people, pensions and group RRSPs will be as important to them after they leave the work force as the individual RRSPs everyone focuses on at this time of year. The cost of ignorance: Tens of thousands of dollars you might otherwise have had available when you retire."
|
| Destitute at 80 |
| 02/12/07 | | Retirement |
"A number of advocates and studies provide for 5% withdrawal rates: "I only want $50,000 from my million dollars" and have it last for 30 years. The calculated success rate for that rate of withdrawal is 73%. Pretty good odds...except when we consider the impact of valuation."
|
| Procrastination will cost you |
| 11/26/06 | | Retirement |
"I'm inspired to write about something as basic as starting your retirement savings sooner rather than later. You see, I was reminded once again that each generation has to be educated on the fundamental truth that time is your biggest ally when it comes to financial security. Make sure your kids understand this."
|
| A 'layer cake' plan for your retirement |
| 09/10/06 | | Retirement |
"The "conservative" client wants to leave a legacy and assumes a longer than 30-year lifespan, reducing her withdrawal rate to 4 percent. The "aggressive" client assumes a shorter than 30-year lifespan, a performance-based withdrawal approach, and other factors that boost his withdrawal rate to 7.6 percent."
|
| Bing's secrets to a happy retirement |
| 07/02/06 | | Retirement |
"The truth is, those who intend to have a happy retirement must deliver the goods on the human aspects of the issue as they do on the fiduciary ones. Unfortunately this takes the kind of cogitation that you, as a reader of this magazine, are no longer set up to do very well. You've been in business so long that your mind is accustomed to a fine blend of wishful thinking and can-do attitudinizing on subjective subjects. "It's gonna be great!" you tell yourself. "Wake up at noon every day like I did when I was a teenager! Have a bagel! Play 36 holes! Couple of drinks at the 19th green! Wake up and do it again the next day! That's what I call living!" Right. Have you thought about what 25 years of that will be like?"
|
| Life is less expensive for older couples |
| 06/07/06 | | Retirement |
"Imagine two couples. They live side by side in virtually identical houses. The Youngs have two children in their early teens. The Olds have lived there forever and are retired. Now guess the income the Olds would need to have the same standard of living as the Youngs"
|
| The spending question |
| 05/21/06 | | Retirement |
"What will you really shell out in retirement? Maybe not as much as financial planning calculators tell you."
|
| Stave off old-age poverty |
| 04/23/06 | | Retirement |
"Although few elderly Americans are officially poor, 75% live on less than $26,777 yearly. Even a tiny amount stashed in investments and savings make a difference in old age."
|
| Final paycheck gets ever farther away |
| 04/16/06 | | Retirement |
"It's getting harder to quit. By some measures, Americans are richer than ever before. Yet it is proving increasingly difficult to amass enough money to retire in comfort. What's the problem? We face a fistful of them -- including these seven."
|
| The best of the Internet calculators |
| 02/25/06 | | Retirement |
"There's a problem you should be aware of with some of those handy calculators available on the Internet to help ensure you're saving enough for retirement. They're kind of useless on the whole, especially the ones offered by companies selling financial products."
|
| Divorce can scramble nest eggs |
| 02/19/06 | | Retirement |
"Once the emotional wounds from a divorce start healing, newly single people begin to grapple with the other big aspect of the damage -- the financial trauma. Nothing underscores the new reality as much as RRSP season."
|
| The depressing truth |
| 02/18/06 | | Retirement |
"Ask a wage slave what he'd like to accomplish. Chances are the response will be something like "I'd start every day at the gym and work out for two hours until I was as buff as Brad Pitt. Then I'd practice the piano for three hours. I'd become fluent in Mandarin so that I could be prepared to understand the largest transformation of our time. I'd really learn how to handle a polo pony. I'd learn to fly a helicopter. I'd finish the screenplay that I've been writing and direct a production of it in HDTV."..."
|
| The myth of the $1 million retirement |
| 02/16/06 | | Retirement |
"Ignore the experts who say you'll need a vast sum to ever quit working. How much you need to retire is really entirely up to you."
|
| 3 rules for a happy retirement |
| 02/05/06 | | Retirement |
"Research reveals it's how you manage your time and money that counts, not just how much you've got."
|
| Caveat investor |
| 01/14/06 | | Retirement |
"Studies show that many people overestimate their knowledge of everything from inflation to risk diversification and compound interest. One survey in Australia found that 37% of people who owned investments did not know that they could fluctuate in value. In America 31% did not know that the finance charge on a credit-card statement is what they pay to use credit."
|
| Retirees: look out below |
| 01/09/06 | | Retirement |
"The number of private pension plans fell by 75% over the past two decades to 31,000 and now cover a mere 20% of workers. In 2004 alone, 11% of surviving plans were frozen to new contributions, according to Barclays Global Investors. All told, less than half of U.S. workers are now offered any pension plan at all"
|
| Healthy planning |
| 12/04/05 | | Retirement |
"Though the standard age for retirement is 65, only 64% of people age 55 to 64 are employed. The other 36%, not yet eligible for Medicare, either have to be married to someone with employer health insurance or have to scramble to find coverage. The scrambling is occasioned by two things. One is that, even for healthy people, medical insurance is fearsomely expensive. Employers have seen their costs climb 63% over the last four years, says personnel consultant Towers Perrin, and will spend an average of $14,500 next year on insurance for a family of four. The other is that individuals trying to buy insurance on their own confront a difficult marketplace whose providers don't particularly want their business, especially if they have a preexisting medical problem."
|
| In the future, you'll need less money |
| 07/19/05 | | Retirement |
"Has your financial planner told you to save more? He may be dead wrong. He isn't alone. Most of the models used for retirement planning may also be wrong for the same reason. How can this be? Easy. The models and their supporting software are based on an assumption that isn't supported by real data about our spending and how it changes as we age."
|
| S&L redux |
| 06/22/05 | | Retirement |
"Not so in America, where people are speaking openly of a taxpayer bail-out to rival the rescue of America's savings-and-loan (S&L) sector in the late 1980s. The pensions insured with the PBGC showed a shortfall of almost $354 billion at the end of the last fiscal year, compared with $279 billion a year earlier. If the deficits of less underfunded plans are rolled in, the total shortfall is more than $450 billion."
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| Reality retirement planning |
| 06/08/05 | | Retirement |
"Traditional retirement planning assumes that a household's expenditures will increase a certain amount each year throughout retirement. Yet data from the U.S. Bureau of Labor's Consumer Expenditure Survey show that household expenditures actually decline as retirees age. Consequently, under traditional retirement planning, consumers tend to oversave for retirement, underspend in their early years of retirement, or postpone retirement."
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| Confusion dogs foreign content change |
| 02/27/05 | | Retirement |
"This week's budget eliminated the 30-per-cent foreign content limit for registered retirement savings plans and pensions, effective immediately. However, a federal finance department official said yesterday that the budget must be passed in the House of Commons for its provisions to become law."
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| A tale of three options for your RRSP dollars |
| 02/27/05 | | Retirement |
"Let's suppose you have $7,500 after taxes available to invest each year. I want to compare three options for that money: 1) Contributing that amount to your registered retirement savings plan if you have the contribution room; 2) Investing that money in an open (non-registered) account; or 3) Using that money to cover the interest cost on an interest-only loan to invest outside an RRSP."
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| Eliminating foreign limit? It's about time |
| 02/27/05 | | Retirement |
"Finance Minister Ralph Goodale did investors a favour in yesterday's budget by ending the 30-per-cent limit on foreign assets for pension plans and RRSPs. What's less obvious, but more important, is that he placed the economy on a stronger footing by removing a crutch that served to help to prop up uncompetitive companies."
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| When not to buy an RRSP |
| 02/11/05 | | Retirement |
"about 80% of the time, the RRSP makes sense. So what happens the other 20% of the time? When does it not make sense to buy RRSPs?"
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| Making RRSP withdrawals is seldom a good idea |
| 02/11/05 | | Retirement |
"There seems to be some confusion about one of the top commandments in financial planning, which is to have an emergency fund containing ready cash. This money is supposed to sit in a money market fund or high-interest savings account. It's not supposed to come from your registered retirement savings plan."
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| Working retirement |
| 04/29/03 | | Retirement |
"New research shows many of tomorrow's retirees will be returning to work."
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| U.S. pension agency is sinking |
| 01/27/03 | | Retirement |
"The U.S. federal agency that insures the pensions of about 44 million Americans has been pounded by a succession of big corporate bankruptcies and has burned through its entire $8 billion surplus in one year."
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| How would you benefit from boost to the RRSP limit? |
| 01/23/03 | | Retirement |
"If your income is below $75,000 a year, then it means little to you that the federal government is looking at raising the contribution limit for registered retirement savings plans."
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| RRSPs at a glance |
| 01/22/03 | | Retirement |
Lots of quick points on RRSPs
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| Is international diversification good? |
| 01/20/03 | | Retirement |
"The results of the simulations of fixed monthly withdrawals and inflation-adjusted monthly withdrawals suggest that retirees who prefer portfolios of at least 50 percent equities benefit modestly from including EAFE stocks as 25 percent of the market value of their portfolios in spite of the inferior performance of the EAFE Index in the 1990s. It is clear from our analysis and from previous literature that international diversification has not been a panacea that can be relied on to offset U.S. bear markets. Nevertheless, the low correlation of EAFE returns with those of U.S. stocks, and EAFE's occasional superior returns, imply merit in international diversification for longer payout periods."
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| Pension managers ask Ottawa to end limit |
| 01/10/03 | | Retirement |
"Canada's pension managers are calling for the federal government to scrap the 30-per-cent foreign content limit on retirement savings plans in its new budget, saying the move would benefit ordinary Canadians and would not hurt the dollar or the stock market. The Association of Canadian Pension Management and the Pension Investment Association of Canada say a new study indicates that eliminating the limit would be equivalent to giving Canadians a tax cut worth between $1.5-billion and $3-billion a year."
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| RSPs losing favour: survey |
| 01/07/03 | | Retirement |
"Investors seem shell-shocked, Prof. Milevsky said, after opening one monthly statement after another showing that their retirement savings are shrinking. In the 1990s, people became accustomed to market downturns that seemed to reverse course by the time they received their next statement, he said. Prof. Milevsky was most surprised to see people rein in -- based on the short-term performance of the market -- their expectations for the amount they will need to live comfortably after retirement."
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| Portfolio risk in dollar cost averaging |
| 12/29/02 | | Retirement |
"In fact, volatility - or risk - is the enemy of any wealth accumulation program. And investors who take excessive risks, in pursuit of illusory gains, may only wind up broke in the long run. Forget that comfortable retirement."
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| Markets hurt DP plans |
| 11/22/02 | | Retirement |
"Dismal stock markets have left some companies with future funding shortfalls in their defined-benefit pension plans, but experts say that, in the vast majority of cases, employee pensions are secure."
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| On the edge of a credibility gap |
| 09/30/02 | | Retirement |
"Three years of falling equity prices have finally taken their toll on the US pensions industry. According to UBS Warburg, the Swiss banking giant, companies in the S&P 500 index are now in cumulative deficit on their pension funds for the first time since 1993. This means that S&P 500 companies will report aggregate pension costs - rather than income - for 2002: a swing that will adversely affect earnings by an average $0.95 per share."
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| Up against the pension headwind |
| 07/23/02 | | Retirement |
"As corporate earnings attempt to recover in 2002, they face a huge locked-in obstacle from lower pension returns -- no matter how well the market performs."
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| A new personal finance |
| 07/01/02 | | Retirement |
"Outlined in a recent working paper, "Life-Cycle Finance in Theory and in Practice," Bodie proposes that our common measure of personal welfare -- wealth -- is inadequate. Instead, he suggests we measure personal welfare by our lifetime access to goods, services and leisure."
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| Simple math of wealth creation |
| 06/24/02 | | Retirement |
"The Less You Spend, The More You Have. Write it on the front of your wallet, your cheque book, your conscience. That, and the corollary of The More You Spend, The Less You Have, are elemental economic observations, and ones that we all begin to make for ourselves at an early age."
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| Retirement: Ready or not, hear it comes! |
| 05/15/02 | | Retirement |
"Will you have enough? Study after study shows that Americans aren't saving enough for retirement."
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| Primer for Canadian Do-It-Yourself Investors |
| 01/04/02 | | Retirement |
"The purpose of this web document is to serve as a primer for Canadian do-it-yourself (DIY) investors who wish to manage their own investment portfolio. It is aimed particularly at individuals who will be using their investment portfolio as the main source of retirement income."
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| Retirees caught short by stocks return to work |
| 10/01/01 | | Retirement |
The real meaning of risk hits home as some retirees are forced back to work due to the evaporation of their stock portfolios.
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| The retirement calculator from hell, part III |
| 09/16/01 | | Retirement |
As the recent tragedy has shown, overly confident retirement planning is, regrettably, a fools errand.
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