Increasingly consumers in major Canadian cities such as Calgary, Edmonton, Vancouver or Toronto, are faced with a dilemma of how to best manage their cash flow in the face of record mortgage and consumer debt.
Over the last one hundred years, every new generation of Canadians has enjoyed the benefit of a longer life expectancy. With dramatic improvements in health care, the human life span has never been longer. Additionally, some have set their sights on early retirement. The combination of living longer and retiring earlier creates a serious cash crunch because that greatly expands your time in retirement. A financial advisor can help you develop a plan to solve this critical problem.
Gordon and Anne lived in the same house for over 30 years. Now that their children are grown and it was becoming more difficult for them to manage the house, they decided to downsize. Here is what Gordon and Anne did to get the best price they could when they sold their home:
With the RRSP contribution deadline of March 2nd fast approaching many people will reflexively make a deposit to their RRSP. Many will use online banking to throw money into the RRSP at the last minute vowing to figure out how to invest it later. But life gets in the way and later never happens and the contribution sits in daily interest account earning little or no interest.
In this, the final installment of the series, Financial Strategies Simplified, we take a look at how to stretch your retirement income no matter how modest the starting balance.
There is a common misconception amongst clients that the day they retire their approach to investing and managing their RRSPs etc. has to change. But the reality is that today's Seniors are in many cases living until age 90 or more and the motherhood rules of investing - buy only safe fixed-income investments - may no longer apply.
The so-called RRSP Season is on its way. TV, newspapers and magazines will soon be full of advertising to get you to make your last-minute RRSP deposits. And then RRSPs and retirement planning are often forgotten until the next deadline. But a little advance planning will get you more from your RRSP.
It is that time of year again when attention turns to RRSPs and tax planning. This year's contribution deadline is March 3rd, 2014 if you want to deduct the contribution against your 2013 income tax return.
The purpose for making an RRSP contribution, from a financial strategy perspective, is to build savings and assets over time so that you can replace earned employment income with passive or investment income for your retirement years. In other words you can sleep in and still have the lifestyle you want without going to work!
In our previous article, we looked at how seniors generally wish to invest their money to feel safe while in reality their expenses rise throughout their retirement years as the cost of various services, such as hydro and property taxes, typically increase annually. ( See graph at bottom )
Your choices are to either decrease your spending or deplete your savings or some combination of the two in order to make ends meet. The challenge is to make sure you don't run out of money before you run of time!
In the mid - 1960s conventional wisdom or motherhood for retirement planning said that you should take all of your investments and put them into government bonds or fixed income type products. The thinking was that you could not afford to take any 'risk' in your retirement years. Thus it was believed that guaranteed investing was the best approach to retirement planning and they were correct at that time.
In the aftermath of the US housing market bust and the ensuing financial meltdown that led to global stock market declines of 2008, people are getting back to the basics as far as their retirement planning goes. Although the stock market has recovered, many pre-retirees have lost a lot of ground in their retirement accounts and are facing a new reality. Retirement may not be what they had originally envisioned; but with some retirement income 101 basics, most people should be able to get back on track.
Start with Realistic Assumptions
