Are you ready?

RYAN  By Guest Blogger Ryan Lewenza

This week we look at some of the factors critical to a stress-free and fulfilling retirement. Now you millennials that just rolled your eyes thinking that this is an eternity away and therefore don’t need to keep reading, think again. I thought the same thing in my 20s (to my detriment), but now after what seems like one long weekend, I’m in my 40s and soon enough I’ll be knockin’ on retirement’s door (hopefully well before I’m knockin’ on heaven’s door). So it’s never too early to be giving some serious thought to retirement planning.

The starting point for retirement planning is determining how much you will need in retirement. An easy calculation to determine this is to divide your desired annual income in retirement by 4%. The “four percent rule” is a common financial planning rule-of-thumb that estimates the amount you can safely withdraw from the portfolio in retirement. We actually believe you can use a 5% withdrawal rate with a high degree of confidence, but let’s start with the more conservative 4%. Below we provide a table showing the results. For example, if you want $50,000 of income in retirement you should have $1.25 million in savings. For $70,000 you would need $1.75 million, etc. So this helps set our retirement goal. The next step is to determine how do we get there?

How Much You Need To Save For Retirement

Source: Turner Investments

You get there by having and sticking to a financial plan. This is probably the most critical factor to having a rewarding and confident retirement. According to a recent study by the Financial Planning Standards Council, 79% of Canadians don’t have strong confidence that they’ll achieve their financial goals. However, those with a financial plan feel a lot better about their future than those without out a plan. Based on a survey of 8,500 Canadians, those with financial plans scored 62% higher on emotional well-being than those without, also ranking 85% higher on financial well-being and 45% higher in overall contentment. So having a financial plan can lead to increased happiness. Who knew!

A financial plan basically looks at where you are and where you want to be in the future. It’s a comprehensive assessment of one’s financial assets, future cash flows, and provides a schedule for how these assets will be drawn down to fund retirement spending needs, while minimizing taxes and maximizing government benefits. For our clients in or nearing retirement we provide this detailed financial plan as part of our services.

Generally we recommend a mix of income from the three different main accounts (TFSAs, RSPs, non-registered) such that you minimize reported income at tax time. Recall RSP/RIF withdrawals are included as income on your tax return while withdrawals from TFSAs and non-registered accounts are not (you do however get tax slips for dividends and interest income on non-registered investments accounts so don’t forget to account for that).

Our goal on structuring the retirement income stream is to try to stay below certain income thresholds so that you don’t jump into a higher marginal tax rate, pushing up your average tax rate. Using an Ontario resident as an example, key income levels are $42,201, $45,916, $74,313, etc. Additionally, you would strive to keep your income below $73,756, which is the level of income when Old Age Security (OAS) begins to be clawed back.

In determining the annual income stream we first start with the different pension income one will receive in retirement. Then we draw down on RSP assets trying to keep the income level below those key tax levels. Finally, we look to the non-registered and TFSA accounts if more income is needed. These accounts are great since the withdrawals are not taxable.

Combined Federal and Provincial Tax Rates for Ontario Resident

Source: Tax Tips.ca

Now for you young folks, who still think retirement is so far away and that you don’t need to worry about it right now, why not meet me halfway and set up a reasonable monthly savings plan which ensures you’re saving for retirement while not impacting your ability to buy another pair of skinny jeans, or eat out at some new organic hipster restaurant. If you save just $250/month from age 30 to 65 in a balanced portfolio returning 6%, you’ll have $358,000 in retirement. Or if you bump it up to $500/month, you’ll have $716,000 in retirement.

Using the $716,000 estimate and a 4% withdrawal rate, that equates to $29,000/year in income. Adding that to a maximum $6,936/year in OAS and $13,104 in CPP, equates to total income of $49,000/year. We of course would want all of our clients to be able to pull out much more from their accounts to have a great retirement but this is not a bad starting point.

How Much You Would Have At Age 65

Source: Turner Investments

My final thoughts on the topic are: 1) don’t forget about the importance of TFSAs; and 2) be prepared for a significant ramp-up in health care costs in your later years. Sure the current TFSA maximum room is only $52,000, with allowable annual contributions of $5,500/year, but if you compound this at 6% over 20 years you’ll have over $380,000 at the end.

For future health care costs, be sure you’re prepared for the escalating costs as you get older. Based on recent data from the Canadian Institute for Health Information, one should expect to spend roughly $5,000 in their 60s, with this jumping up dramatically to roughly $20,000/year in their 80s. And given we’re living a lot longer these days we need to be prepared for any eventuality.

Ryan Lewenza, CFA,CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Vice President, Private Client Group, of Raymond James Ltd.

130 comments ↓

#1 For those about to flop... on 08.05.17 at 2:40 pm

Pink Lemonade stand in Richmond.

Them other guys in Richmond got some competition to sell their lemonade.

Once again going with the shock price reduction,these guys are on the hook for 1.8 million for this 77 build that needs Botox.

We are roughly the same age ,but even though I have a head on me like a monkey’s bum ,when I was single I dated better looking fireplaces than that…

M43BC

11140 Granville Avenue, Richmond

May 30:$2,488,000
Aug 3: $1,588,000
Change: – 900000.00 -36%

https://www.zolo.ca/index.php?sarea=11140%20Granville%20Avenue,%20Richmond&ptype_house=1&max_price=1300000&min_price=600000&filter=1

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDA1V0haVA==

#2 Rexx Rock on 08.05.17 at 2:52 pm

A 6% annual return is a fairy tale.Yes if the central banks continue to prop up the market with trillions of printed dollars.A flash crash or another 2009 event can wipe out your principle.

#3 Andrewski on 08.05.17 at 3:23 pm

Sage advice Ryan! I am lucky to have both my parents living in to their 90’s, (celebrating 65 years of marriage!), yet they have to live separately due to different levels of health care needs & their monthly costs of living are far higher than when they lived together. Planning ahead for a worst case scenario will hold us in a much better mental frame, than sticking our heads in the sand. “People don’t plan to fail, they fail to plan”!

#4 JSS on 08.05.17 at 3:24 pm

No discussion about rental properties as income sources in the calculations?

#5 Michele on 08.05.17 at 3:37 pm

Thank you for this. I’ve been looking forward to a discussion of this nature. It seemed like everywhere I looked (e.g. [email protected], bank people) the suggestion was to liquidate the RRSP last (non-registered accounts first, then TFSA, then RRSP). This didn’t make sense to me for minimizing taxes. In general, I would think contributing maximum to RRSP during working years, and then later (in semi- or full-retirement) moving RRSP amounts to TFSA and non-registered (the latter for capital gains and dividend tax credit) while staying in lower tax bracket would seem wiser. Maybe missing something. But I think we’re on a similar wavelength.

#6 Entrepreneur on 08.05.17 at 3:45 pm

Hard to save in this debt-driven environment but planting the seed of saving even for a rainy day is highly recommended. And no matter how small the amount. I like the 10% rule from the top of the paycheque but 4% sounds good too.

As for the health: On a daily basis try to regulate to sustain a healthy mind and body. Aim for a deep sleep, gentle sports, yoga breathing, healthy eating and less or gradually nil sugar, flour, alcohol, smoking (including marijuana). Enjoy life going forward not backwards and that includes thinking of healthy choices today. And hope for the best.

This week on the news Trudeau was speaking in B.C. saying that the Liberal party has to gather together to form against the NDP/Greens or on those lines. Did I catch that right? And that does not sit with me as a leader should be talking about how to improve the province/country, the people in it. And btw, the NDP/Greens have given more funds for the children’s school supplies in the rural areas. To me that is leadership.

#7 Bonhomme Carnaval on 08.05.17 at 3:51 pm

Hi Ryan,

Required reading for all the tail-end Gen-Xers, and Millennials blog dawgs :

-The Weathy Barber, by David Chilton
-The Millionaire Next Door, by Stanley / Danko
-En as-tu vraiment besoin ?, by Pierre-Yves McSween
-L’immobilier en 2025, by Martin Provencher

And for dessert :

-Emotional Intelligence, by Daniel Goleman
-Sex and Real estate, by Marjorie Garber
-The 4-Hour Workweek, by Timothy Ferriss

Peace,

BC

#8 FOUR FINGERS WATSON on 08.05.17 at 3:54 pm

Good post and good info. My retirement income was the same as my working income when I retired 8 years ago. I am lucky that I can give myself little raises from time to time to keep up with inflation…..When I was working I always had lots of extra money in the bank cuz I never had time to spend it. Now that I am retired I don’t have much to do and I have lots of time to spend it. And I do, cuz having fun costs money. In my case, and I imagine most people would be about the same, I need more spending money in retirement than I needed when I was working. Cuz boredom really sucks!

#9 Angry Migtow on 08.05.17 at 4:01 pm

What happens when Donald Trump is forced by the Deep State (TM) to antagonize North Korea & Russia into Nuclear War?

Will there be Smugglypuffs, SJWs and conceited gender rights activist confabulating a Canadian version of a communist revolution?

#10 Guy in Calgary on 08.05.17 at 4:03 pm

This is a solid sales pitch.

There are other things too like borrowing against CSV of a life insurance policy and receiving income tax free. Obviously not ideal.

Also, having too much money in RSP’s can in my opinion, pose tax challenges when you retire and start taking CPP.

For younger clients do you include OAS payments in their retirement projections? Just wondering because there is, I would say, a decent chance it will not be around in 25 years.

Happy long weekend all!

#11 Tony on 08.05.17 at 4:07 pm

Most Millennials assume the government will take care of them whether they have saved or not.

#12 Tony on 08.05.17 at 4:17 pm

Retirement was easy in the past now its all about dodging bank bail-ins and getting your “safety” deposit boxes pilfered. Have a plan because “your” money is not safe.

#13 Another Deckchair on 08.05.17 at 4:20 pm

Hi Ryan;

Like you say, time flies when you are having fun and before you know it, you are 50.

I *do* like Mr. Money Mustache and the Millennial-Freedom-ers; I think both are good resources for the 30-ish crowd, as they present an alternative-reality that certainly hits home with some circa-30 year olds I know.

Their use of the acronym FIRE (Fin. independence, retire early), “Retire” means having the money to do what you wish, and circa 30 year olds are active and do not want to sit around the pool all day long for the rest of their lives. So, they have the ability to follow their dreams.

A problem (or two) for the Millennials is that both parts of a couple have to be on the same page money-wise, and that takes effort to go against societal norms. But, if they can do it, they’ll have the world at their beck and call.

#14 Bezengy on 08.05.17 at 4:26 pm

What is really important to obtaining wealth is getting off to a good start and letting compound interest do its job. I really wonder if a home owner in Toronto will ever accumulate any wealth if they find themselves under water on their mortgage at a young age. If you lose 100k at 50 it’s no big deal, but to lose it at 30 literally kisses any chance of retirement goodbye. Young investors simply cannot make big mistakes.

#15 TurnerNation on 08.05.17 at 4:31 pm

Timberrr. Posted this last weekend. Was 219k, then 199k, now 179k.

Yet the media flushed with stores of Toronto area Millennials scooping up rec property as a nose thumb to the boomers selling overpriced chattels in the city.

Rec. Realtors in a Panic!

https://www.realtor.ca/Residential/Single-Family/18282257/ISLAND-H-ISL-LEONARD-LAKE-Ontario-P0B1J0

#16 Mark on 08.05.17 at 4:31 pm

“No discussion about rental properties as income sources in the calculations?”

Some exposure to RE certainly can be part of the calculations, but ‘rent’ as received from a rental property includes a return of capital on account of depreciation. Depreciation in RE is real, and over time, re-investment of such returned capital to maintain a viable asset is required.

In the long-term bull market in RE we’ve seen, depreciation might be mistaken for ‘free money’ as selling prices mostly have risen over the past few decades. But this was a function of falling bond yields, not assets magically avoiding depreciation.

Your typical retiree already will own their principal residence in Canada, and in most cases, this is quite enough direct RE exposure. Maybe add some REIT exposure if you want a bit more, but REITs are terribly expensive at the moment, and there’s really no reason to get crazy. As for directly owned rental RE, who wants to be retired and have to deal with that? Best to leave that to the ‘landlord families’ who have built an infrastructure for servicing large numbers of units efficiently and are sometimes willing to do rather unscrupulous things to keep the rent coming in. Little is more of a burden on a family as being a 75-year-old landlord who can no longer fully handle things, burdening the kids, hopefully in the prime of their careers, with taking care of rental units. Or being forced to sell in distress.

#17 Tony on 08.05.17 at 4:38 pm

Re: #4 JSS on 08.05.17 at 3:24 pm

Real estate in Canada will go the way of real estate in Japan. One of the worst long term investment choices. No one is supposed to talk about gold or silver that’s where I plowed a vast sum. Why because the central planners don’t want you to do that and when ponzi’s collapse or implode what was once worthless will be worth a king’s ransom. I plan on living that long.

#18 FOUR FINGERS WATSON on 08.05.17 at 4:45 pm

#5 Michele
In general, I would think contributing maximum to RRSP during working years, and then later (in semi- or full-retirement) moving RRSP amounts to TFSA and non-registered (the latter for capital gains and dividend tax credit) while staying in lower tax bracket would seem wiser.
……………………………
That is what I’ve been doing. I transfer shares in kind from RRSP to TFSA and pay the 15% tax from accumulated RRSP dividends. I reinvest the TFSA dividends into more shares cuz I don’t need the cash so it provides a small but growing tax free income stream.

#19 Penny Henny on 08.05.17 at 4:48 pm

The “four percent rule” is a common financial planning rule-of-thumb that estimates the amount you can safely withdraw from the portfolio in retirement.-Ryan
???????????????????

Questions for you Ryan. Does this 4 or 5 % rule apply no matter what age you retire?
And if so I would imagine that your estate would be left with that same amount at the time of passing.

#20 Penny Henny on 08.05.17 at 4:50 pm

To the rest of the dogs this is the best retirement calculator out there.

https://financialmentor.com/calculator/best-retirement-calculator

#21 boonerator on 08.05.17 at 4:59 pm

I dimly remember an article that said you could spend
6% in the early years of retirement because you are still active, traveling mostly.
As you age and become frailer and TV becomes your best buddy, then you spend way less so count on 2%.
The math works out the same, but psychologically you don’t feel as bad overspending the 4% in the first few years.

#22 NoName on 08.05.17 at 5:08 pm

#14 Bezengy on 08.05.17 at 4:26 pm

What is really important to obtaining wealth is getting off to a good start and letting compound interest do its job.

—-

what is really important is to be born to wealthy family and masquerade around like you didnt, and then let compound interest and accountants do the rest. Like 2Ts.

#23 Ray Skunk on 08.05.17 at 5:10 pm

Looking at the above table, the most sage retirement advice should be: “leave Ontario”.

52% top marginal tax rate. Simply staggering. The “lower” rates being not much more impressive.

What’s left after “we know best” Wynne and Trudeau have taken their slices is then whittled away with HST, capital gains taxes, property taxes, ridiculous hydro rates, “eco fees”, etc. etc.
The remainder you can then spend on food (with staple costs controlled by cartels), housing (we all know how cheap that is) and transportation (fuel taxes huge, carbon taxes, cap-and-trade, outrageous insurance premiums, and toll lanes coming soon).

After all this, if by any chance you have any left, then maybe – just maybe – you can consider your retirement savings.

In Ontario, either get a cushy government job with a nice DB indexed pension (paid for by all of the above), or GTFO.

#24 Curious on 08.05.17 at 5:12 pm

So if I understand this all correctly a person needs to have in place:

$250+/month in a savings plan at 8%+/year
$XXX/month in a life insurance plan
$XXX/month in a Critical Illness plan
$XXX/month in all vehicle and other insurances

then add groceries, and all other life’s expenses.

I know most CANNOT afford these plans! Anyone have any advice as to how people are going to manage to retire with a million dollars int he bank???

#25 daveyboy on 08.05.17 at 5:27 pm

Don’t you just buy a house and retire?

Thats what my mom says.

#26 Blobby on 08.05.17 at 5:29 pm

Considering how my doctor is always telling me how bad my health is.. maybe I should just spend my savings?

#27 Ronaldo on 08.05.17 at 5:31 pm

#1 Flop

Their asking price was totally wishful thinking and hoping to snag a sucker. They’ve simply realized that the greater fools have left town and now asking lower than the assessment. They bought the dump on July 29/16 for 1.8 million thinking they could flip it and cash in. Now they are asking 1.588 which is a loss of $212,000 just for a start not counting costs to dump it. That is not chicken feed. Don’t feel at all sorry for them.

#28 Curious on 08.05.17 at 5:33 pm

How does a person edit their comment??

#29 rainclouds on 08.05.17 at 5:37 pm

Andrew hallam “the millionaire teacher” is also a good read.

I concur with Ryan. started saving in early 20’s RRSP/Co Stock purchase plan/ Savings. Automatic deductions. Didn’t tap into it.

Now 59.

The bulk of the wealth came from above not the 3x profit on house sale.

Slow and steady. Eyes on the prize.think long term . stick with the plan. avoid following the herd.Time and compounding is your friend.

And don’t buy a shitty bungalow on the sunshine coast or Vancouver island thinking it’s an “investment ” the lemmings have already migrated there……..no upside now

#30 Curious on 08.05.17 at 5:39 pm

#25
That was the plan years ago. Most now a days are going to be in for a shock!

#26
That issue of health is always on people’s minds also. Many people are dying young so sometimes are these so called “master plans” aren’t worth anything.

I have found in my experience that Car salesmen, Investment Advisors, and realtors are all cut from the same cloth – anything too get your money!

#31 Wrk.dover on 08.05.17 at 5:39 pm

For example a segment of my portfolio, the US $ savings account I have at RBC contains about $20,000 and each month I glean $2.56 US$ interest to live on. You don’t have to save much to live well. I mean come on, if you add three zeros, and save 20 million you can add three zeros and collect $2560 a month to live like a king!

I can’t even make this stuff up! It is the way the world rolls since Goldamn Sachs pulled the coup in ’08.

#32 Hans on 08.05.17 at 5:40 pm

Question for Ryan….

I have always had a hard time with the idea of contributing to RRSP’s when you’re far away from retirement – say a timeline of 15+ years. Say you’re making $75K/yr in your working years. You contribute to the tax deferral RRSP and get some $ back. What’s the likelihood that in retirement (in 15+ yrs) that your income from all sources will be less than this? I assume that the tax rates and brackets don’t change and history has shown that this isn’t the case. In my humble opinion, with gov’t and personal debt levels being the way they are, with an aging population, with the potential for unanticipated decisions by leaders (think of Wynne’s socialist welfare lottery), that tax rates will increase. This could end up badly…..contributing into deferred savings at a lower rate and pulling it out when you’re at a higher rate. Why take the chance? Once you’re in your peak earning years, I think there’s less likelihood of this happening because you’re also closer to the time that you’re going to retire, so the political and fiscal landscape should (hopefully) be clearer. But for those who are further away – I’m not sure that it’s a good idea, at least with RRSPs.

#33 good read on 08.05.17 at 6:22 pm

. For example, if you want $50,000 of income in retirement you should have $1.25 million in savings

……….

how do you estimate the amount needed if one`s `pension`is in a corporation….

more taxes would be needed to pay to withdrawal the funds. Is there a ballpark number to add

#34 Alosaurus on 08.05.17 at 6:23 pm

Influenza the numbers man.

A few things: you mentioned non reg accounts are nor taxed. Wothdrawals are lot but capital gains and dividends are. Can’t ignore that.

And the biggie: $29,000 in income per year when saving for that 35 yr time span ignores inflation and is not adjusted for inflation meaning that $29,000 35 years from now won’t buy them much…maybe a new iPhone. The $29,000 might only be worth $12,000 in today’s dollars…which is peanuts.

So they need to save even more.

Less starbucks, less eating at restaurants and more saving.

I flati

#35 FLHTK on 08.05.17 at 6:32 pm

Beat post ive seen yet by Ryan. Very informative.
Good job

#36 @careeraftschool on 08.05.17 at 6:33 pm

Good post Ryan! I think one of the best things parents can do for their children is to open a TFSA account for them when they turn 19 and put $5,500 year to buy stocks and ETF’s.

Face it trying to talk to any 20 or 30 year olds about investing and retirement is pointless. If you let them party with the dividends generated from the TFSA then you will get their attention and that is where it begins.

#37 Ryan Lewenza on 08.05.17 at 6:43 pm

Penny Henny “Questions for you Ryan. Does this 4 or 5 % rule apply no matter what age you retire?”

It’s a starting point that can be used for all ages. Some years you might take a bit more if your planning say a big vacation. But you should try to stick with a 4 to 5% withdrawal rate since it ensures you won’t alive your savings. – Ryan L

#38 Silent the people on 08.05.17 at 6:57 pm

Yes, get a government job with a indexed DB pension and spend every penny you make! Besides, the medical/dental benefits will also be real good with a government job in retirement! Job security is also a guarantee for your entire career! This is all going to happen as long as the taxpayer doesn’t wake up! But then, government severance is second to none!

#39 rule on 08.05.17 at 7:09 pm

So, that 4% rule seems to apply if you want to die with full principle intact, leaving that $1.25M to your children.

That 4% you draw every year, would be replenished by investment on 1.25M gains easily.

But if you retire at age 65 and expect to die at age 85, you can burn your principle as you age, surely?
If you have only 700K, you can still draw 50K per yr, your kids just wont inherit much as you eat your retirement savings.

Statistically, you will run out of life before you run out of your 700K.

“You need $1.25M” sounds a bit alarmist?

#40 Timmy on 08.05.17 at 7:11 pm

There is a huge disconnect between what many advisors say in terms of how much you need for retirement. Most of us will not have near a million saved, especially with housing prices in Canada. A recent article in Moneysense showed that most people actually do get buy on far less than a million.

#41 MF on 08.05.17 at 7:11 pm

#11 Tony on 08.05.17 at 4:07 pm

100% incorrect.

And where did you hear this bs?

Most millennials (me included) expect all these government retirement programs to be insolvent and dried up when we retire. We know about the boomer bulge (you?) sucking it dry.

MF

#42 Fish on 08.05.17 at 7:13 pm

RE#8 FOUR FINGERS WATSON on 08.05.17 at 3:54 pm
Good post and good info. My retirement income was the same as my working income when I retired 8 years ago. I am lucky that I can give myself little raises from time to time to keep up with inflation…..When I was working I always had lots of extra money in the bank cuz I never had time to spend it. Now that I am retired I don’t have much to do and I have lots of time to spend it. And I do, cuz having fun costs money. In my case, and I imagine most people would be about the same, I need more spending money in retirement than I needed when I was working. Cuz boredom really sucks

Well, FOUR FINGERS WATSON
I here u, I’m looking for a place 2

#43 bigtowne on 08.05.17 at 7:15 pm

Men neglect their health until it’s too late.

It’s cheaper to eat right and take some light walking daily than to spend the $20,000 annually as an older worn out dude.

#44 MF on 08.05.17 at 7:17 pm

Reply from a few days ago:

#212 IHCTD9 on 08.02.17 at 3:44 pm

Am I better moving elsewhere? Might be able to land a better paying position if I look outside of the GTA…but I don’t want to. I enjoy the GTA. Love the hustle and noise. My family is here as well.

I would sacrifice a lower wage for happiness and enjoyment.

MF

#45 Dave on 08.05.17 at 7:18 pm

“I know most CANNOT afford these plans! Anyone have any advice as to how people are going to manage to retire with a million dollars int he bank???”

Yes, take six months and study to become a financial planner. You will make huge commissions, regardless of your performance. You will have a huge income.

#46 MF on 08.05.17 at 7:21 pm

#180 NoName on 08.02.17 at 12:25 pm

I know this little post was meant to insult but you are right. If I could buy in the GTA I would. And CPD is crap. Cannot wait to sell it away forever.

By the way, the guy who owns the business where I work at was complaining when his stocks crapped in 2008. Actually he looked like a ghost and he is a millionaire many times over.

Human emotion is predictable.

MF

#47 Tom on 08.05.17 at 7:23 pm

Ryan
What do these projeced retirement incomes mean?
If I am 30 an want a retirement income of 50k do I not need to factor inflation and change 50k to 90k or whatever inflation will do over the next 30 years?

#48 InvestorsFriend on 08.05.17 at 7:26 pm

Retirement Planning

“The starting point for retirement planning is determining how much you will need in retirement.”

**************************************
That is what most experts say and it has merit. But is it realistic?

Why not apply that while working and say the amount I need to earn is the amount I want to spend? Because it simply does not work that way. Instead while working the amount you can spend depends on what you earn and not the other way around.

Same should apply in retirement.

In retirement I would say the amount we would like to spend is as much as we can afford, just like while working. Why limit your retirement goal to some particular number?

So, my approach would be save a reasonable amount like 10% of pre-tax earnings. Then invest that to make as much as possible while not taking excessive risk. The goal is not to be merely comfortable but rather to be stinking rich.

Upon retirement at a normal age, say 60, you can spend at least 4% of the balance annually. Continue to invest to aim for as high a return as you can without excessive risk. Each year ramp your spending up or down to match whatever 4% of the portfolio is. Or over time ramp the 4% towards 6% since it is certainly safe for an 80 year old to spend at least 6%. In most cases with a 4% withdrawal the portfolio will continue to grow (i.e. if the return averages more than 4%)

This is just a rough guide. There is definitely NO one size fits all approach. Someone with a DB pension can take a totally different approach to their investment spending.

#49 InvestorsFriend on 08.05.17 at 7:38 pm

A common misconception regardsing RRSPs

#32 Hans on 08.05.17 at 5:40 pm asked:
Question for Ryan….

I have always had a hard time with the idea of contributing to RRSP’s when you’re far away from retirement – say a timeline of 15+ years. Say you’re making $75K/yr in your working years. You contribute to the tax deferral RRSP and get some $ back. What’s the likelihood that in retirement (in 15+ yrs) that your income from all sources will be less than this

************************************
Your concern reflects a very common misconception.

Look into the math off RRSPs and remember that when you contribute $1000 to an RRSP that only costs you say $600 or $700 net of the refund. Look at the math taking that into account and you will find that RRSPs allow a huge tax saving over decades even if your marginal tax rate is the same or even slightly higher in retirement. RRSP are far more than tax deferral mechanisms.

Garth recently said something in response to me about RRSPs being the biggest tax break of all. It’s true. The math shows that RRSPs even BEAT TFSA when the tax rate in retirement is less than at contribution. That means the RRSP must have had negative tax! (including the benefit of the refunds). When the tax rate in retirement is somewhat higher than at contribution then RRSP has some positive net tax. Check the math.

#50 InvestorsFriend on 08.05.17 at 7:40 pm

Retirement Planning

I know some people who in retirement, due to good portfolio returns, and/or other non-labour income have more money than they ever had while working. None of them have complained about it.

#51 ANON on 08.05.17 at 7:49 pm

If you save just $250/month from age 30 to 65 in a balanced portfolio returning 6%, you’ll have $358,000 in retirement.

Can we just skip the middleman and ask the guys who are returning 6% to send upfront ? I’m all for efficiency when investing, so I could do with 1%. Cash on the nail. :)
I am fully aware this will probably get deleted, but it is to make a point about impossible-to-keep promises.

#52 Ronaldo on 08.05.17 at 7:54 pm

Hey fellow boomers! Remember “Freedom 55”.

https://boomerrantz.wordpress.com/tag/freedom-55-myth/

#53 Stone on 08.05.17 at 7:55 pm

#20 Penny Henny

That’s a really fantastic calculator. Thanks for the link. Appreciate it. I’ve been doing everything manually on an excel spreadsheet and now I can confirm that I’m only a few thousand off calculating what my portfolio estimate would be at retirement (+/- a nominal percentage). The other calculators out there are complete garbage but this one is really great.

#54 TAX AND SPEND AGAIN on 08.05.17 at 7:56 pm

To get a real feel for retirement funds and chances of them
lasting check out Jim Otar. The retirement myth.

#55 AR on 08.05.17 at 8:00 pm

My final thoughts on the topic are: 1) don’t forget about the importance of TFSAs; and 2) be prepared for a significant ramp-up in health care costs in your later years. Sure the current TFSA maximum room is only $52,000, with allowable annual contributions of $5,500/year, but if you compound this at 6% over 20 years you’ll have over $380,000 at the end.

That is if you were over 18 when TFSA’s were first available.

Some readers may have less room, cause they young’uns.

#56 Nonplused on 08.05.17 at 8:03 pm

So, to have $50,000 income in retirement you need $1.25 million in savings but saving $500 a month (which is a stretch for people earning $50,000 a year) you’ll only have $716,000? No wonder so many people just give up. And no wonder everyone is so angry.

I think it is this inability to make ends meet that is driving so much of the angst in this country. It is also driving the “eat the rich” mentality that is so prevalent right now, even though the rich don’t have enough money to move the needle much even if the government took all their money. I guess it comes down to human nature. “If I have to be broke and in debt my whole life, damn straight so is everyone else!”

And that is where we are. The rich are rich but there really isn’t that many of them, government employees with defined benefit pension plans are golden, the 1% with financial planners have some hope, and everyone else is screwed and they know it. They will be living hand to mouth their whole lives. Another day gone and dollar deeper in debt.

All of this financial planning stuff is great if you are in a position to utilize it, but I am thinking most people are not. Therein lies the problem. We have a society where labor rates have been crushed (inflation adjusted) but the cost of living just goes up up up! Many factors contribute technology being one of them but outsourcing and globalization being others.

Technology and Globalization are and probably always were inevitable. But what they mean is that labor rates in Canada and the rest of the first world are under constant pressure to move towards labor rates in China plus transportation. It’s just how it works.

Moves like raising the minimum wage to $15 dollars an hour do not fix the reality to ways we would like. All they do is encourage more technology instead of people and where that doesn’t work more jobs overseas. It seems like a good idea at the time, but over longer time periods adjustments get made that totally negate the legislative effort. You can’t legislate economics. Even though economics is a very poorly understood science, we know something about it, and one thing we know is you can’t legislate it any more than you can slap an emissions limit on a forest fire.

Wages are like water, they find their level. If we have a globalized economy, truly globalized (we aren’t there yet), then people in the “first world” won’t be earning anymore than people in Uganda or China. Sure, you can say “technology” or “innovation”, or pull a Nutley and claim we will move to some sort of different economy, but do you really think the Chinese can’t do that too? Don’t forget that the iPhone is “Designed in California” but “Made in China”. And the Chinese now have all of the blueprints and are pretty crafty themselves.

But I don’t see how else it could work out. How to save yourself? I don’t know but working for the government seems like a good idea and so does buying farm land if you can afford it.

Most people risk a penurious retirement because they bought real estate they couldn’t actually afford, which negated their ability to save. Actions have consequences. BTW, buying farmland is a great way to ensure you run out of money. — Garth

#57 For those about to flop... on 08.05.17 at 8:05 pm

I have a small favour to ask of you guys.

In exactly one month from now , September 5th ,will mark the one year passing of my blog buddy Roy H. Stacey whom I affectionately nicknamed Boom.

It has gone quickly since we didn’t find out until Boxing Day ,but I had long suspected and written a few posts thinking that something had gone horribly wrong.

I was closer to him than most people on the blog, but I know a lot of people appreciated his efforts and his writing style and the thing I liked about him the most besides his sense of humour was his genuineness,yes he had a handle but he also had a huge heart.

What I was hoping to do to not only celebrate his life, but just in case his son Paul or wife Janet check in on the blog to see if we remembered as I promised to do as long as I too was sucking wind he would still have some sort of presence on the blog and not be forgotten.

To keep in the spirit of the blog on September 5th can you guys maybe write about a funny travel story, a trade that didn’t go so well or went really well or a real estate purchase or dream that didn’t quite work out in Boom’s native America and maybe just to cheer me up that day can you finish your posts with Boom’s retired GAP Code of M64WI

I give you guys a months notice so you can think about it write whatever comes natural.

My post will be b-grade as usual ,not too sure what I am going to write but I have been to the States a few times and something funny always happens.

Boom wouldn’t want me to sit around moping,I think about him most days when I log onto the blog ,but I always remember how much he made me laugh besides the educational value of his posts.

I am a man of my word ,I can’t change what happened to my friend, but I can keep my promise to his family…

M43BC
M64WI

#58 AB Boxster on 08.05.17 at 8:09 pm

#39 rule on 08.05.17 at 7:09 pm

——————————
Agreed.

Cash flow analysis is not too difficult to do.

On 1.25 million and 5% average return, draw down of principal yields about $63k income every year for 30 years.
Adding any other pension (CPP, OAS) will add to your annual income.

Suggesting that one needs $1.25 million in investments to retire with $50K income is not really accurate.
Only if you want to leave your estate with $1.25 million when you die, which makes no sense at all.

Spend it all, die broke.
Leave the kids the house.

#59 Old Dog on 08.05.17 at 8:09 pm

Been retired for many years now. Retirement is a long term plan that requires you to stick to the agenda. For the average working person that means no fancy house, no new cars, no out of country travel, and don’t buy a bunch of stuff you don’t need. Step two, get yourself a good broker and build a relationship with them. Put all the money you can into your investments, adding what you can over time. Sure there will be years when the markets are terrible, but there will also be years when the markets are awesome. You nor your broker can know when this will happen. After 35 + years you’ll have a nice portfolio. I would not suggest you retire until you can replace your take home household income. When you retire take out less than what your portfolio makes. I started with less than 50%, the rest went back into more investments. You’ll find that most good companies dividend increases over time are greater than inflation. Be careful of accumulating large RRSP’s if you think your income will be greater in the future. If you can do all these things you will have a much better old age than if you just sat on your ass and complained.
Retirement income and what you need in retirement is different for every person. Hopefully you will be one of those persons who complains about being in the top tax bracket. There are worse things that could happen, you could be in the bottom or pay no tax at all.

#60 mike from mtl on 08.05.17 at 8:12 pm

#46 MF on 08.05.17 at 7:21 pm
And CPD is crap. Cannot wait to sell it away forever.

/////////////////////////////////////////////////////

No it is not, either ZPR or XPF. Just terrible timing, any bond fund in the last year is clearly garbage as well.. just how it goes.

“retiring’ in Canaukastan with anything less than a paid off SFH and seven figures in the bank is planning for destitution.

#61 mike from mtl on 08.05.17 at 8:19 pm

#49 InvestorsFriend on 08.05.17 at 7:38 pm

Garth recently said something in response to me about RRSPs being the biggest tax break of all

////////////////////////////////////////////////////

That’s if you actually retire in Canada.

#62 TalkingPie on 08.05.17 at 8:20 pm

I also follow the Millennials and Mr. Money Moustache. Both have in common the simple concept of finding happiness living far below your means and finding a partner who shares your plan. Having those, I find that saving money isn’t that hard for this millennial.

I live in Canada’s second biggest city. Although my girlfriend and I share a 640 sq ft apartment, it’s a decent new concrete build (I’m the first tenant in my unit), has a great view, underground parking, and is well maintained.

Girlfriend is a translator and I’m a flight attendant working part-time on a business degree. We take a couple of trips per year (past trips include Barbados, Mexico, Miami, canoeing in Algonquin Park, Germany, Las Vegas). My fun car is an older convertible with upgraded suspension which I was running on the track for a while.

My savings rate over the past 2-3 years has been about 40% of my net income, not including my DB pension. Girlfriend is saving a bit less, but for being 26 and having done a masters, she’s also doing well.

You just have to cut out the expensive stuff that isn’t important to you and pay yourself first every month. Beyond how much I plan to put into savings every month, I don’t make a budget; it almost takes care of itself.

#63 Centre Wing on 08.05.17 at 8:21 pm

My wife and I (age 28 and 30) both contribute significant percentages of our incomes to defined benefit plans. Employers match 125% and 100% (I know we are fortunate)
We do not contribute to a TFSA because we have so much of our monthly income being put into these pension plans. Probably $800 or so plus the employer portions.
Thoughts?

#64 AB Boxster on 08.05.17 at 8:22 pm

Note that spending all $1.25 million over 30 years, $0 dollars remaining, at 5% annual return and 15% tax rate, gives an annual net income of around $63k. Pre-tax annual income is around $75K.
Not including CPP and OAS.

#65 Ronaldo on 08.05.17 at 8:22 pm

”Are you ready?” The hard truth is most aren’t.

http://www.cbc.ca/news/business/retirement-savings-broadbent-institute-1.3450084

#66 A Yank in BC on 08.05.17 at 8:28 pm

Three keys to retiring well. (and early, like me.)

1) Live below your means all your working life.
2) Save money like crazy and invest.
3) Remain married to the same spouse.

I’d say all are equally important.

#67 Spectacle on 08.05.17 at 8:31 pm

Hi Ryan, Flopper, Victoria Update and others ( crowded you know we love You too)

Great contributions all. Most interesting to see Richmond BC land based property tank so much soo fast. Yikes.

Soo many private “please take over my Leased vehicle” adds on Craigslist! I need a newer vehicle at some point ,so search begins. Until then just got a boat , been a while coming, time to do some life re-planning and re-balancing.

#68 espressobob on 08.05.17 at 8:31 pm

Retirement investing isn’t about retirement.

It’s about doing the things you enjoy on your own terms.

That’s freedom.

#69 dumpster fire on 08.05.17 at 8:37 pm

#32 Hans on 08.05.17 at 5:40 pm
* * *

If you grow your RRSP account enough then your effective tax rate would need to go up significantly to make an RRSP account a worse choice than a non-registered account.

This chart shows how much margin of safety there is for various gains based on your current effective (not marginal) tax rate:
https://i.imgur.com/QAwBOy7.jpg

For example, if you contribute while your effective tax rate is 30% then you can tolerate a future effective tax of up to 36% if your portfolio grows by 100%, or up to 42% if it grows by 400%. This margin becomes even more significant if the capital gains inclusion rate is increased.

Tl;dr: you can get a lot of safety margin by letting it grow for a long time, contributing while you are in a high tax bracket, and structuring your withdrawals.

~breathe deep

#70 Smoking Man on 08.05.17 at 8:39 pm

On a savage trip. CRA and T2. You’re getting nothing. Theis going to be nothing left but a disability check in my post office box.

It’s been such a long time
I think I should be goin’, yeah
And time doesn’t wait for me, it keeps on rollin’
Sail on, on a distant highway
I’ve got to keep on chasin’ a dream, yeah
I’ve gotta be on my way
Wish there was something I could say
Well, I’m takin’ my time, I’m just movin’ on
You’ll forget about me after I’ve been gone
And I take what I find, I don’t want no more
It’s just outside of your front door
Ah yeah, it’s been such a long time. it’s been such a long time
Well, I get so lonely when I am without you
But in my mind, deep in my mind
I can’t forget about you
Good times, and faces that remind me, yeah
I’m tryin’ to forget your name and leave it all behind me
You’re comin’ back to find me
Well I’m takin’ my time, I’m just movin’ on
You’ll forget…

#71 Wrk.dover on 08.05.17 at 8:58 pm

Buying woodland is a fail too. My SW Nova tri-county area has a new hemlock/spruce bug from…China, of all places, and once it is detected on my land, all species of tree will be banned from removal from my acreage.

Already happened to a fella I know, ten miles distant.

Just found out this week, not in the media yet. A Greater Fool exclusive!

Wrk.dover yet more worked over.

#72 Smoking Man on 08.05.17 at 9:04 pm

Dear judge.

I had 20 years of corp retained income playing a bit of forex and other bets.

I sold my house walked away with 900k

Last year in the spring I was hospitalized some kind of brain stroke. Could not even talk well. Got broomed from Vermillion shortly there after. Went back to RBC capital markets. Only lasted 4 months. Two previous gigs lasted 5 years billing 100 bones hour.

I’m un wanted now since the mental break down. Got a suite case full of loot and on a crazy casino road trip.

When it’s all gone I’ll show you judge my wife’s casino win lose ratio.

So we forgot to use our player cards on this last gambling trip.

To see the future grand kids.

I’ve done bankruptcy before. No big deal.

Never bet against a smoking man that sees the future like no other.

T2 your Dr tax. Bahaha

I’m Stoj and all the traders at cap markets know I always find a work around.

#73 Curious on 08.05.17 at 9:05 pm

#59 Old Dog

I agree with you mostly however one must live a little also. If a spouse were to get cancer or whatever, it can’t all be about work and no play. Many old farmers followed your plan and it didn’t always turn out rosey.

#74 NoName on 08.05.17 at 9:14 pm

#46 MF on 08.05.17 at 7:21 pm

No insult, just bit harsher words. As for cpd its not bad, but on another hand i dont know when you took your position 16+, maybe, probably. i would not have any fear to ditch my bonds for cpd now.

i compared CPD beta to my 2 favorite div paying etf, and cpd seems to be less volatile and of course yield less. Predictability and stability is what you aim for.

etf .beta (yield)
cpd .56 (dd 4.5)
fie .62 (dd 6.5)
pic.a 1.29 (dd 11.2)

in 2008 when market was $#!77!n6 a bed i talked to my doc, regarding same thing, he sad that’s what market does. few more thing were sad but you gonna have to bring your brother flop over and pay me a beer.

I told you already you worry to much.

#75 Ronaldo on 08.05.17 at 9:20 pm

Maybe we don’t need to save as much as we are told. According to this article anyway.

http://www.cbc.ca/news/business/rrsp/retirement-savings-goal-1.3406502

#76 Smoking Man on 08.05.17 at 9:30 pm

DELETED

#77 For those about to flop... on 08.05.17 at 9:39 pm

#74 NoName on 08.05.17 at 9:14 pm

in 2008 when market was $#!77!n6 a bed i talked to my doc, regarding same thing, he sad that’s what market does. few more thing were sad but you gonna have to bring your brother flop over and pay me a beer.

///////////////////////

The beer is much more valuable…

M43BC

#78 Stone on 08.05.17 at 9:49 pm

#56 Nonplused

At current age 41, I’ve grown my portfolio to $952,000 (all marketable securities). At age 18, I had $20,000 and that was because parents set aside some money for me for school. Instead of burning it on school, I worked part time and took no debt on so paid for post secondary while letting the money grow.

You are right. There are a lot of angry people out there. The problem is that their anger is misdirected. It should be at themselves for not thinking beyong their next meal. Most people only think about instant gratification. That includes millenials, gen x and boomers. Be responsible. Save your pay and if you need to, live with mom and dad a few years longer so you can grow your nestegg. I did till mid 20s and I’m not sorry. Freedom 55? I’ll be done well before then. $60,000 income in today’s dollars after retirement will do me fine. I didn’t make a 6 figure salary to get to where I am. Discipline. That’s all that’s needed. That, and keep your ears open when successful people let slip how they became successful. Collect those individuals – they’re priceless.

Oh, and one more thing. Rent! Owning is stupid – you don’t get dividends on that dead equity. And these days, that equity may not just be dead but vapourized.

#79 acdel on 08.05.17 at 10:06 pm

Great advice!

But the reality is that “although I love this country”, why would anybody want to retire here?? Spain, South of France, or where one prefers; regarding France or Spain one could retire in the country side and live comfortably with what we feel is just scrapping by and suffering in this country.

Canada is no longer affordable to the average; until things change look elsewhere with much better weather and just as safe (outside the big cities) as Canada.

We have a political system that are so biased on their own ideals and trying to sell all of us on how great it is here in which so many buy into that. There are so many options out there; again, as I said many times before, we are sheep, including me, but not for much longer, it is an absolute joke! Why does anybody pay as much as they do for a place to live in the second largest country in the world???? There is absolutely no reason for that!!
Pay five busks for a loaf of bread in a country that exports loads of wheat; pay whatever for a steak where cows are so abundant; it just goes on and on; you people get it, or some of you!!!

#80 NoName on 08.05.17 at 10:12 pm

#74 NoName on 08.05.17 at 9:14 pm

in 2008 when market was $#!77!n6 a bed i talked to my doc, regarding same thing, he sad that’s what market does. few more thing were sad but you gonna have to bring your brother flop over and pay me a beer.

///////////////////////

The beer is much more valuable…

M43BC

—-

no its not!

#81 Totalchaos on 08.05.17 at 10:34 pm

#36 – I disagree that it is a good idea to set your kids up with a TFSA and give them money.
I told my kids if they wanted access to their RESP money, they needed to open a TFSA and come up with $5000 per year. My first one is on track, my second has a maxed TFSA and a regular investment accound and kid 3 already has 10k socked away and can’t open an account for another 2 years.
The best part is listening to them talk about money. They get exasperated with friends buying coffee and lunches out then complain about not having cash. The bottom line is they know how hard they work for their money and they are not about to throw it away.

#82 Curious on 08.05.17 at 10:40 pm

#78

Are you married? Do you have kids?

#83 Ronaldo on 08.05.17 at 10:43 pm

I came across this posting on a blog some time ago which after reading seemed to make a lot of sense. It seems today that the fear of outliving your money seems to be the motivating factor for people to stash away most of their funds for those later years. The idea is really to save enough to generate an income from dividends, interest, etc. and then going to the pearly gates with your initial deposits intact. It would seem that the best idea would be to try and plan to save and then spend with the idea of getting to the end with a zero balance. At least this is what this fellow was trying to say in this blog post:

”Die Rich?

I was in the bookstore today just browsing book titles. I saw a book called “Die Rich.” I thought about that for a moment. I realized that “Dying rich,” is great, but wouldn’t it be better to die broke? It seems like dieing rich isnt quite maximizing your wealth. Bad planning actually. That’s like dying hungry with a fridge full of food. You can’t eat it after you are dead.

Unless you give it all to kids and stuff which is nice, but if you die broke it could mean you gave it to them before you died and at least had a chance to enjoy watching them use some of it. And that shouldn’t be the point of building wealth. You should hopefully have taught them well enough on how to build their own wealth, unless you don’t know how to do it yourself, and then you will undoubtedly die broke.

Just a thought.”

#84 crowdedelevatorfartz on 08.05.17 at 10:44 pm

@#155 Triplenet Realtor
“For a monthly fee, you can access any real estate board in Canada and download their stats package, current and historical sales, listings and associated data……..
The fees range from $2k to 5k per month but from an investor point of view – its almost like having insider information.’

*******
WHY does the public need to spend 2-5k PER MONTH to get “insider information”?

This should be FREE FOR ALL so that the REAL ESTATE CARTELS that have been controlling all the information will be legislated out of existance….

But since they spend millions lobbying both sides of the House…..I wont hold my breath…..unless , of course, I’m in an elevator

#85 crowdedelevatorfartz on 08.05.17 at 10:49 pm

@#63 Center Wing
“My wife and I (age 28 and 30) both contribute significant percentages of our incomes to defined benefit plans. Employers match 125% and 100% (I know we are fortunate).”
+++++

Well done! Keep up the good work. You’re waaaay ahead of the curve.
Retirement seems a long way away but …like the ad sez…..”Its closer than you think.”

You’ll do fine.

#86 Ronaldo on 08.05.17 at 10:56 pm

#81 Totalchaos on 08.05.17 at 10:34 pm

Good for you. Teaching them the value of money. They will thank you for it down the road.

#87 Smoking ManS on 08.05.17 at 10:58 pm

https://youtu.be/W5ueEVlUUgk

#88 crossbordershopper on 08.05.17 at 11:43 pm

whats the point of not enjoying your self today for the sake of possibly enjoying it tomorrow. Its a ponzi scheme with yourself. People should enjoy all their money, spend everything, save nothing, people have been doing it for 100 generations.
so what do you do when you are 70 years old, sure my dad has 1 million, he is still in the garden with his dumb tomatoes. what benefit was it to him, sure i guess its coming to me, someday when i am 65 , then what, i am too old to really enjoy it. what do i do, give it to my daughter, someone is going to enjoy it, and it gets farther away from the one that really did without to earn it.
we should all be like our native friends, save nothing , live well, die early. thats it. always have your hand out someone will put something in it.

#89 Nonplused on 08.05.17 at 11:46 pm

Most people risk a penurious retirement because they bought real estate they couldn’t actually afford, which negated their ability to save. Actions have consequences. BTW, buying farmland is a great way to ensure you run out of money. — Garth

Probably right again. That is your thing Garth you are either totally wrong (not very often) or totally right (most of the time).

Anyway I thought Ryan was supposed to moderate his posts? I like him, he’s good and talks sense.

You, Garth, of course, have been talking good sense for years. And you are right that people self destruct paying too much for real estate they cannot afford. You’ve been saying that for years and it’s always been right. But how did it get this way? My dad had a friend who was a dairy farmer and his small plot paid his way. Well of course he also had a quota, which is a weird thing but let’s not go into that now. Now he’s dead, all the cows are gone, the quota has been sold, and the barns are used to store boats and RV’s on a rental basis, and it’s making just as much money. Crazy.

#90 Nonplused on 08.05.17 at 11:50 pm

#78 Stone

I won’t begrudge your success, good for you. But it is not the course most people follow.

#91 Sir James on 08.06.17 at 12:08 am

The Deep State is toast.
There is a New Deep State in town.

#92 Topsy-Turvy on 08.06.17 at 12:09 am

All these “industry assumptions” are nonsensical of course, because future inflation rate and tax brackets are unknown.
Even with the target 2% inflation rate you would need $75K instead of $50K just to preserve this buying power.

#93 Dee on 08.06.17 at 12:17 am

My wife and I (age 28 and 30) both contribute significant percentages of our incomes to defined benefit plans. Employers match 125% and 100% (I know we are fortunate)
We do not contribute to a TFSA because we have so much of our monthly income being put into these pension plans. Probably $800 or so plus the employer portions.
Thoughts?

———————————–

Im sincerely happy for you but why stop at $800 a month? If you can do more, go for it.

I know mmm had a table showing savings rates, like, if you save 40% of household net, you can retire in X years. 30% in y years etc

At the end of the day, you need 25 times your annual expenses saved to retire. If you have that amount you are financial independant and can have a 4% withdrawal rate. Read ‘The Simple Path To Wealth” for more info.

Supposedly the only time a problem will occur is if you begin withdrawing process during a recession b/c you basically begin taking money out in a down market. Double whamy. Maybe the hosts here can explain better

#94 Oft deleted much maligned stock picker on 08.06.17 at 12:21 am

We need a change in government in or to achieve what Ryan is suggesting. Under the current Trudeau regime confiscation of assets and capital is a very real concern…..so says the smart money that is flooding out of Canada in a flight of capital never seen before in Canadian history.

Whoa…you say….that’s a radical statement…..but is it? Why is the TSX languishing as resource, banks and energy equities around the world gain in value? It’s because international fund managers have assessed the increasing risk around investing in an increasingly belligerent socialism in Canada AND NOT INVESTING IN CANADA WHICH IS KEEPING CANADIAN ISSUES DOWN.

If Millenials want to enjoy a retirement if any kind they must think about their vote and work to STOP the Trudeau Liberal march towards 100% taxation…..currently approaching 73% when direct and indirect taxation is taken together.

#95 yorkville renter on 08.06.17 at 12:28 am

#84 Fartz – because “they” paid for the infrastructure and ongoing maintenance, and “they” are an association where members pay to play.

TREB is not a government agency paid for with tax dollars

#96 Ace Goodheart on 08.06.17 at 12:32 am

So this one is called economic trends for those who cannot imagine life without a box.

There is no box.

Inflation and economic collapse are caused by unfortunately people getting what they want. Satisfy the masses, take away that ugly fear that makes babies and early rising starry eyed factory workers and the shelves become bare. Fear and desire create economies.

There is of course a flip side to this. People have to want things. Investoraly speaking this means if you want to put your money to work for you, purchase the means of production of the products consumed by the masses.

There is a multiplication factor to this. Basically any entity producing products consumed by the masses will be worth a multiple of what it is actually producing. This multiple is like the distance between galaxies ie it is frigging huge.

It can be upwards of 5000%. It has made millionaires out of the flat broke. Overnight.

So let’s all try to guess what the masses will be consuming next.

Hint : your teenagers know…..

#97 Keith in Calgary on 08.06.17 at 12:38 am

If you want to enjoy retirement DON’T DO IT IN KANADUH.

You can live the good life for 1/3 the money in a warmer climate, with less tax and an easier “way of doing things” wink, wink……..

Watch this socialist petri dish implode from 5,000 miles away.

#98 Nonplused on 08.06.17 at 12:53 am

So here is a weird idea. My wife has a brown friend (please Garth we can talk about colors because they are facts) who is married to a black guy. We are all friends and I couldn’t care less what color they are. They live just like me. They are our friends. Their kids are beautiful and well trained, no expense spared. But the dad’s history is from central america. I am pretty sure there was slavery involved, his ancestry has to be Africa. But he lives free in Canada now, and his relatives live free too, and they didn’t have a civil war.

#99 Triplenet on 08.06.17 at 3:07 am

#84 crowdedelevator

Yes everything in this world should be free however the sunny ways and days you voted for are a ways off yet.
Also, if something is free, it probably isn’t worth it.
……you know, like someone else’s real estate statistics.
Do diligence – get it?

And I’m not a Realtor.

#100 A Reply to #56 Nonplused on 08.06.17 at 7:50 am

“… [T]he rich don’t have enough money to move the needle much even if the government took all their money.”

Counterpoint: “… [T]he three wealthiest individuals in the world have assets that exceed those of the poorest 10 percent of the world’s population. Half of the world’s wealth belongs to the top 1%; the top 10% hold 85%, while the bottom 90% hold the remaining 15% of the world’s total wealth; and the top 30% hold 97% of the total wealth.”
https://en.m.wikipedia.org/wiki/Distribution_of_wealth
https://en.m.wikipedia.org/wiki/Distribution_(economics)
https://en.m.wikipedia.org/wiki/Gini_coefficient
https://en.m.wikipedia.org/wiki/Lorenz_curve
https://en.m.wikipedia.org/wiki/Pareto_distribution

“… [E]conomics is a very poorly understood science….

“… Wages are like water, they find their level….”

Economics is well understood by economists, just as brain surgery and rocket science is well understood by brain surgeons and rocket scientists, respectively. (Economics is poorly understood by you!)
https://en.m.wikipedia.org/wiki/Economics

If you don’t know something, look it up! Research, explore, investigate, examine, think! Educate yourself! You’re likely to become much happier and more resourceful with more education! Enrol in a college course (in a subject you’ve always wanted to learn). How about economics? It’ll do you a world of good! Do it now!

Oops, Flopster, I did it again. Another teaspoon! Why do I bother? :)

#101 haven't they taken enough on 08.06.17 at 8:05 am

Ryan what happens to someone that makes exactly $87 560 in taxable income. Is the entire amount taxed at 37.91 %. Or is just the $1 taxed at 37.91% and the rest at the lower 33.89 %. Knowing i worked an extra shift and it cost me an extra 4.02 % $3519 would crush my soul.

#102 conan on 08.06.17 at 8:52 am

#97 Keith in Calgary on 08.06.17 at 12:38 am

“If you want to enjoy retirement DON’T DO IT IN KANADUH.

You can live the good life for 1/3 the money in a warmer climate, with less tax and an easier “way of doing things” wink, wink……..

Watch this socialist petri dish implode from 5,000 miles away.”

That is easier said then done in today’s global environment. Yes, it can be done, but do it now. Choose your country wisely, because the tableau of suitable countries is dwindling rapidly.

The Philippines used to be the go to destination, but not any more. Those cheap countries in South America? Venezuela is imploding rapidly, and Brazil could go nutso, if they do not get their chit together.

The secret is to buy land that goes up in value. Everything hinges on that.

https://www.youtube.com/watch?v=OAFrfw8kSj8

#103 maxx on 08.06.17 at 9:02 am

#5 Michele on 08.05.17 at 3:37 pm

…”In general, I would think contributing maximum to RRSP during working years, and then later (in semi- or full-retirement) moving RRSP amounts to TFSA and non-registered…”

What works for us is similar: max out the RSPs, take the tax credit/refund and throw that into the TFSA, topping up if necessary.

HELOC and credit addicts need not apply.

#104 MF on 08.06.17 at 9:45 am

NoName,
flop:

“No it’s not!”

-I agree, it’s not!

MF

#105 MF on 08.06.17 at 9:49 am

#97 Keith in Calgary on 08.06.17 at 12:38 am

Disagree.

These socialist clowns in power will be gone soon.

My parents are both retired here in the GTA and enjoying life. They literally have zero stress, tons of hobbies, friends etc.

Looks pretty good to me.

conan:

What’s wrong with the Phillipines?

MF

#106 For those about to flop... on 08.06.17 at 9:59 am

#100 A Reply to #56 Nonplused on 08.06.17 at 7:50 am

Oops, Flopster, I did it again. Another teaspoon! Why do I bother? :)

/////////////////////////////////

Hey Pedantic Poster,yes you can’t change your gruff manner in which you post ,but I haven’t given up on you picking a handle and writing an original post in which you leave yourself exposed for people to correct or disagree with you for the sake of disagreement.

Anyway you might enjoy looking at this article I posted a while back that shows how the top eight richest people on the planet has the same as the bottom 50%

This post of mine probably has a few errors,no need to correct me as I am o.k with my flaws…

M43BC

https://howmuch.net/articles/the-worlds-wealth-inequality

#107 maxx on 08.06.17 at 10:04 am

#6 Entrepreneur on 08.05.17 at 3:45 pm

That artless and near-useless bunch never stopped campaigning at the expense of doing the actual work of governing a nation.

Hardly a day goes by without being entreated to funnel money towards it. The “personalized” emails are transparent and vapid in the extreme.

I’ve asked for the restoration of the previous TFSA limit of 10K. If it isn’t restored, the selfie-king machine can fish for votes elsewhere.

Furthermore, rather than selfie-king spending obscene amounts of time posing, that precious, TAXPAYER-funded time would be better spent actually showing up for work.

Enabling “the middle class” to become more aware of the benefits of the TFSA and saving for retirement as well as actually incentivizing it, rather than continuing to blather on about “helping” it would be a far better use of tax revenue.

We don’t need “help”, we need tools.

#108 Reddit0r_Anonymous on 08.06.17 at 10:13 am

What’s the chance of this bill being passed: http://www.ontla.on.ca/web/bills/bills_detail.do?locale=en&Intranet=&BillID=4959?

#109 conan on 08.06.17 at 10:20 am

What’s wrong with the Phillipines?

Lands that were deemed safe are now in danger of becoming ISIS domains. Is that enough? If not, they have a crazy dictator leader now, who sanctions murder in the street. He is an F nut class 5.

Still not enough? The geo political situation is powder keggy. China, North Korea, Japan, all screwing with each other. Not to mention the USA wanting a piece of the action.

#110 Ponzius Pilatus on 08.06.17 at 10:26 am

#107
we don’t need help, we need tools.
————
Agree.
Torches and pitch forks.

#111 crowdedelevatorfartz on 08.06.17 at 10:30 am

@#95 Yorkville renting realtor

“because “they” paid for the infrastructure and ongoing maintenance, and “they” are an association where members pay to play.

TREB is not a government agency paid for with tax dollars
++++++

“TREB isnt a govt agency”…..duh really? Thanks for the update….I’ll try and keep up…….yeesh

Wow. I wonder if the internal website cost more to set up than the endless advertising we see in one day and night on tv and in newspapers….

Fine. but when “their” stats are not made public.
When “their” stats are covered up, or worse, changed, obsfucated, spun, to benefit them to pump sales and sales commissions on the most expensive and important purchase of the average persons’ entire life……
Now your talking ‘Monopoly” and possible fraud.
An inexcusable, indefensible situation that has brought us to this financial meltdown.
Well done real estate sales people…. welllllll done.

TREB stats DO require strict govt observation and verifiable, auditted sales statistics….just to drag the sales commisioned realtors kicking and screaming into the sunlight ( I would say, to keep them honest but we’re talking about Realtors….and its 8am and I’m not drinking yet).

Realtors.
A hyped, trademarked name for glorified commissioned salesmen. Nothing more. Most will go back to flogging used cars or flea ridden consignment clothing in the next 12 months….good riddance.

P.S. If you’re really paying $2-5k per month for the REAL sales information updated daily on a clunky website……..TREB is burning you.

:)

#112 Ponzius Pilatus on 08.06.17 at 10:32 am

Just came back from my yearly check up and my doc told me I will live to 100.
The bad news is I only saved enough for 90, as per [email protected]
Time to start eating dog food, I guess.

#113 crowdedelevatorfartz on 08.06.17 at 10:49 am

@# 99 “(I swear I am not a realtor)” Triplenet

Well, normally I dont have a problem with a company holding all the info and charging a small fee to access it….but when that aforementioned company sues other companies into silence for releasing the same information for free and then ……knowingly publishes erronious information as the truth…… to make money…….

Yeah, THAT’s a problem that requires strict govt regulation and huge fines.
Or a free website maintained and posted by unpaid volunteers without a hidden financial agenda.
Due diligence? Absolutely.
As long as the information is accessable, verifiable and correct…..live long and prosper.

#114 Spock on 08.06.17 at 10:58 am

Response to #101 haven’t they taken enough on 08.06.17 at 8:05

There is the average tax rate and then there is the marginal tax rate. Average tax rate is the % of tax you paid over the total taxable income. Marginal tax rate is the tax % that you paid on the last dollar of taxable income.

So as the tax brackets move up, your marginal tax rate moves up.

The higher % applies on anything above that bracket. So you will pay a bit extra on that last $ you earned in overtime.

Hope that helps.

———————-

#101 haven’t they taken enough on 08.06.17 at 8:05 am
Ryan what happens to someone that makes exactly $87 560 in taxable income. Is the entire amount taxed at 37.91 %. Or is just the $1 taxed at 37.91% and the rest at the lower 33.89 %. Knowing i worked an extra shift and it cost me an extra 4.02 % $3519 would crush my soul.

#115 jess on 08.06.17 at 11:23 am

Round Tripping
http://www.nber.org/papers/w19019.pdf

https://qz.com/66944/the-brics-biggest-investment-sources-are-tax-havens-which-mos

Mar 26, 2013 – Each of the BRICs have big problems with tax dodging, which saps billions from … is that each country’s biggest source of outside investment is a tax haven. … This chart from the IMF shows how tiny BVI (total GDP of $1.1 billion) … As Quartz already noted, wealthy Indians use Mauritius as a base to stash .
=====
Elmer was an employee of Julius Bar, a private bank in Cayman Islands. He had described himself as a ‘whistleblower’ who is out to expose a system of offshore tax evasion.

12 years ago
Whistleblower Rudolf Elmer may soon release account data from Julius Baer bank
August 3, 2017 0 0 Blog, Secrecy, Tax Havens
https://www.taxjustice.net/2017/08/03/whistleblower-rudolf-elmer-may-soon-release-account-data-julius-baer-bank/

If Switzerland’s Federal Supreme Court rules in his favour in a case brought against him by Swiss prosecutors, Rudolf Elmer will release account data from Julius Baer bank that he still holds…This is data that he says contains the names of Indian politicians, film stars and cricketers.
https://thewire.in/164039/indian-poiticians-swiss-bank/

https://qz.com/66944/the-brics-biggest-investment-sources-are-tax-havens-which-mostly-shows-the-rich-stealing-from-the-poor/

http://www.theepochtimes.com/n3/3902-fake-foreign-investment-pushes-chinese-economy-to-brink/

http://www.nber.org/papers/w19019.pdf

https://www.dcreport.org/wp-content/uploads/2017/04/wilbur-ross-comes-to-d-c-with-a-long-and-profitable-history-of-russian-connections.pdf

#116 Saving Money on 08.06.17 at 11:42 am

Dear Mr. and Mrs. Millenial:

Saving money. Is it impossible?

Decades ago, when Canada Savings Bonds were the thing to purchase with payroll deduction, I ordered $4,000.00 of CSBs via a yearly ($$ taken off per paycheck) payroll deduction. That was about 10% of my gross salary.

First couple of pays: “How the he** are we going to survive on this puny little pay cheque?”

After a couple of months: “(no comments – no even on the horizon – forgotten about)”

After a year, work telephone rings :
Payroll: “Your CSBs are ready for pickup”.
Me: “My what??”
Payroll “Your CANADA SAVINGS BONDS ARE READY”

Lesson: adapting to about a 10% reduction in salary was initially very difficult. Then we forgot about it. We would have spent the 10% easily, but (after we got used to it and adapted to the lower take home $) it was just as easy to save it.

Can you find $5.00 a day savings? $10.00? one less coffee, maybe one less beer with the buddies after work? Less driving, more walking? Bringing a lunch to work, cooking dinner at home?? Cutting the cable or another subscription??

It’s hard to cut back (very easy to spend more, as we all know) but if you use the Wealthy Barbers’ “pay yourself first” and save that $2.00 or $5.00 or $10.00 a day, you’ll find out that you can indeed get by, and one day you’ll be floored at how easy it was to save.

Anyway, from an old geezer, for what it’s worth!

#117 Rainclouds on 08.06.17 at 11:52 am

#95″TREB is not a government agency paid for with tax dollars”

Correct, it is a cartel set up to fleece unsuspecting consumers and benefit their members.

An UNETHICAL collaboration of shysters benefiting shysters, while all the time claiming otherwise. Marginally lower than politicians and used car sales in the trust dept.

U Gonna defend Trump next?

#118 FOUR FINGERS WATSON on 08.06.17 at 12:03 pm

#109 conan on 08.06.17 at 10:20 am
What’s wrong with the Phillipines?

Lands that were deemed safe are now in danger of becoming ISIS domains. Is that enough? If not, they have a crazy dictator leader now, who sanctions murder in the street. He is an F nut class 5.

Still not enough? The geo political situation is powder keggy. China, North Korea, Japan, all screwing with each other. Not to mention the USA wanting a piece of the action.
………………………………….
I’ve been to the Philippines many times, i spent 13 months there in 2012/13. I will be returning in September.I have Canadian and American friends who have lived there full time for many years. If you stay away from Mindanao it is as safe as
anywhere else. And it is never cold there hahahaha.

#119 A Reply to #106 Flopster on 08.06.17 at 12:18 pm

“… I haven’t given up on you picking a handle and writing an original post in which you leave yourself exposed for people to correct or disagree with you for the sake of disagreement.”

How about Gravy Train for a handle (at least until I get bored of it)? Already taken?

Flopster, I welcome corrections to any errors in my thinking (because it increases my survival chances). Do you fathom that at all?

I like to point out nonsense in the comments, because naive and unsuspecting readers may come to rely on such nonsense when making financing or investment decisions.

Garth does all the heavy lifting of censuring bigots, but his rebukes more often than not are ignored, misunderstood, or disbelieved by said bigots. Which I find pathetic—and I suspect Garth does, too. But you, Flopster, seem to be perfectly okay with them all!

I don’t claim to be an expert in any field, but, if you insist on a writing sample, I’ll do my best to oblige. So, Flopster, what topic do you want me to write about? Pick one! (Keep it within the parameters of this blog.) Thanks.

#120 Tony on 08.06.17 at 12:29 pm

Re: #101 haven’t they taken enough on 08.06.17 at 8:05 am

Just donate one dollar to Revenue Canada on your tax form if you pay by the calendar year.

#121 macduff on 08.06.17 at 12:31 pm

Hi all,
As for Canadian online retirement calculators, I highly recommend the following: http://www.retirementadvisor.ca

#122 NoName on 08.06.17 at 1:05 pm

#95 yorkville renter on 08.06.17 at 12:28 am
#84 Fartz – because “they” paid for the infrastructure and ongoing maintenance, and “they” are an association where members pay to play.

TREB is not a government agency paid for with tax dollars

—-

But crown own all land here in canada just that reason should be good enough to ask for disclosure of transaction on that land.

Dude i grew up with have “small” broker-RE office in GA and he is not complaining about zilliow, in his words “it makes my job easier…” yest it will cut/guy sales force to half maybe more, but quality of service will increase, established RE agents will do just fine, but those mickey mouse one wont.

#123 Ryan Lewenza on 08.06.17 at 1:16 pm

Spock “Ryan what happens to someone that makes exactly $87 560 in taxable income. Is the entire amount taxed at 37.91 %. Or is just the $1 taxed at 37.91% and the rest at the lower 33.8 %.”

No just the $1 above that level is taxed at the 37.9%. We have a graduated tax system where the first amount is taxed at one rate, then the next level of income is taxed at the next higher rate. But we still try to keep income levels below key thresholds if we can. – Ryan L

#124 Ryan Lewenza on 08.06.17 at 1:26 pm

Tom “What do these projected retirement incomes mean?
If I am 30 an want a retirement income of 50k do I not need to factor inflation and change 50k to 90k or whatever inflation will do over the next 30 years?”

Yes you absolutely need to adjust for inflation. I should have included that. If you’re earning 6% on your portfolio, withdraw 4% at the start of the period, then adjust your annual withdrawal rate by 2%, your certain not to outlive your money. For some 4% is too low and need to take out more. That’s fine but you need to recognize that you’ll either need to reduce that amount in later years or be prepared to possibly outlive your money if you live into your late 80s, and 90s. – Ryan L

#125 TheDood on 08.06.17 at 4:01 pm

#102 conan on 08.06.17 at 8:52 am

“….The secret is to buy land that goes up in value. Everything hinges on that.”
_________________________________________________

The secret is to NOT buy real estate period. Rent and invest, until you reach your magic number. Then leave Canada. As for places to go, there are lots………………spin the globe and pick one!

#126 Linda on 08.06.17 at 4:26 pm

An excellent post regarding stuff to not only think about but action while you are decades from retirement. Because time IS money – you can’t gain or get back decades of growth. Yeah, growth is pitiful, why bother, blah, whine & blah some more. Stop making excuses not to save & then spend all your time complaining about how unfair life is & how you have been robbed because someone else has ‘a cushy DB plan’ or ‘inherited gobs of cash’ or whatever. Their success does not equate to your being entitled to the same w/o doing anything to get there (other than robbing those who you perceive to be the ‘haves’, that is).

All that having been said, unless you are completely unable to stop spending beyond your means regardless of circumstances a decent standard of living is possible in retirement. Not everyone wants to live the same lifestyle & thus not everyone will ‘need’ 1.25 million or more to be able to retire & live well.

#127 Spock on 08.06.17 at 5:57 pm

#123 Ryan Lewenza on 08.06.17 at 1:16 pm

Maybe I was not clear enough – that is the same what I meant to say. Last $ earned will be at highest marginal rate – as you move into higher brackets the monies in them will attract higher tax %.

#123 Ryan Lewenza on 08.06.17 at 1:16 pm
Spock “Ryan what happens to someone that makes exactly $87 560 in taxable income. Is the entire amount taxed at 37.91 %. Or is just the $1 taxed at 37.91% and the rest at the lower 33.8 %.”

No just the $1 above that level is taxed at the 37.9%. We have a graduated tax system where the first amount is taxed at one rate, then the next level of income is taxed at the next higher rate. But we still try to keep income levels below key thresholds if we can. – Ryan L

#128 conan on 08.06.17 at 7:44 pm

#125 TheDood on 08.06.17 at 4:01 pm

I am talking about buying land in other countries. Lands that are cheap to live in now. Try to follow along. Spin the globe, yeah ok………

#129 Millennial_86 on 08.06.17 at 11:32 pm

Hey Ryan, great post. Where does one find a retirement plan in which you can put away $250 or $500 a month and get an average of 6% return?

#130 FLHTK on 08.07.17 at 9:54 am

#63 center wing-
Thats great you have pensions but that might not be forever! You should still contribute to rrsp’s and tfsa’s. I would half what you put into your pensions and contribute to those 2 mentioned above. That way you don’t have all your eggs in one basket. I too have a pension and contribute extra to it….but still have rrsp’s and tfsa as well.
Hope this helps you. And as for being 28 and 30 you have lots of time for compounding Interest to help which is good