Author Topic: Money Sense and a Silly Retirement Article  (Read 1528 times)

Stasher

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Money Sense and a Silly Retirement Article
« on: August 15, 2017, 09:07:34 AM »
Another article from MoneySense
At least this time the couple has enough sense to use a Couch Potato Model
http://www.moneysense.ca/save/investing/am-i-on-track-to-retire-in-10-years-randy-and-sandra-luke/

First thing, theu have no mortgage and are only putting $2000/month into savings? Wow what are they wasting money on?
They have a paid off house and $1.2 million in assets...they want to work 10 more years??
The advisor wants them to use their TFSA first?
They want to have $6500/month to spend !!

So much craziness in this article
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Prairie Stash

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Re: Money Sense and a Silly Retirement Article
« Reply #1 on: August 15, 2017, 10:13:05 AM »
Yes, taking CPP at 61. Lets keep a bond portfolio but give up a payment stream that's guaranteed to grow 7.2%/year! Keeping your own funds and locking in a loss...oops!

Then saving all the RRSP to take out at once, virtually guaranteeing them to be in the higher bracket. If you spread it out you can guarantee its all taken out in the lower bracket.


Stasher

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Re: Money Sense and a Silly Retirement Article
« Reply #2 on: August 15, 2017, 11:16:55 AM »
As MMM said it's the shockingly simple math that the mainstream doesnt want to share
Plus they will be forced to pull that RRSP money out at a higher level right away because of their late retirement ages (RIF)
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sieben

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Re: Money Sense and a Silly Retirement Article
« Reply #3 on: August 16, 2017, 09:02:43 PM »
I read that article and it blew my mind.
I have a hard time even comprehending the amount of money that they are talking about.
I'll be out of the work force way before I have that kind of money kicking around.

GettingThere

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Re: Money Sense and a Silly Retirement Article
« Reply #4 on: August 24, 2017, 08:17:19 PM »
I have never found an article where a reader asks for advice to a "financial planner" where they say you have enough based on the 25X rule.  They always assume 3-5% return, and will invariably tell the reader that they must work an extra 10 years, retire between 63 and 67 and put their money in mutual funds where by the way the FP  may get commisson on. They use fear and it works.

Stasher

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Re: Money Sense and a Silly Retirement Article
« Reply #5 on: August 25, 2017, 09:09:23 AM »
Blogs we get good information where the writer doesn't typically need to make an income. Moneysense needs advertising dollars so they need to play nice to investment firms and planners maybe ?
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daverobev

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Re: Money Sense and a Silly Retirement Article
« Reply #6 on: August 25, 2017, 10:03:25 AM »
"All of our investments are in low-fee ETFs or index funds in a couch potato portfolio split 20% U.S. equities, 20% international equities, 20% Canadian equities, and 20% fixed income."

Um.

*Edit* Jesus Christ, take money out of the TFSA before RRSP... before OAS? Oh for *fuck's* sake.

Yeah terrible advice. They should pull the plug a few years sooner.
« Last Edit: August 25, 2017, 10:06:35 AM by daverobev »
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SwordGuy

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Re: Money Sense and a Silly Retirement Article
« Reply #7 on: August 25, 2017, 10:56:29 AM »
"All of our investments are in low-fee ETFs or index funds in a couch potato portfolio split 20% U.S. equities, 20% international equities, 20% Canadian equities, and 20% fixed income."

Um.

*Edit* Jesus Christ, take money out of the TFSA before RRSP... before OAS? Oh for *fuck's* sake.

Yeah terrible advice. They should pull the plug a few years sooner.

wonder where the other 20% is?  Maybe they could retire sooner if they found it...

Gin1984

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Re: Money Sense and a Silly Retirement Article
« Reply #8 on: August 25, 2017, 11:03:18 AM »
Another article from MoneySense
At least this time the couple has enough sense to use a Couch Potato Model
http://www.moneysense.ca/save/investing/am-i-on-track-to-retire-in-10-years-randy-and-sandra-luke/

First thing, theu have no mortgage and are only putting $2000/month into savings? Wow what are they wasting money on?
They have a paid off house and $1.2 million in assets...they want to work 10 more years??
The advisor wants them to use their TFSA first?
They want to have $6500/month to spend !!

So much craziness in this article

They don't have 1.2 million in assets AND a paid off house.  The house is part of that 1.2 million.

daverobev

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Re: Money Sense and a Silly Retirement Article
« Reply #9 on: August 25, 2017, 12:18:54 PM »
Another article from MoneySense
At least this time the couple has enough sense to use a Couch Potato Model
http://www.moneysense.ca/save/investing/am-i-on-track-to-retire-in-10-years-randy-and-sandra-luke/

First thing, theu have no mortgage and are only putting $2000/month into savings? Wow what are they wasting money on?
They have a paid off house and $1.2 million in assets...they want to work 10 more years??
The advisor wants them to use their TFSA first?
They want to have $6500/month to spend !!

So much craziness in this article

They don't have 1.2 million in assets AND a paid off house.  The house is part of that 1.2 million.

And of course the amount inside RRSPs should be discounted by the expected tax rate when withdrawing. Tricky to do accurately though, especially when you think that someone with $500k unregistered might have $200k, $300k taxable as cap gains...
Amex Cobalt - 10x points at grocery stores in December!! This is amazing!

Great Canadian Rebates good extra sign up bonuses on credit cards, among other things.

Tangerine Orange Key: 48322202S1. I prefer Simplii (was PC Financial) to Tangerine, but you get $50 for signing up (and so do I).

PayTM - pay bills with your credit card. Like Plastiq, but currently a lot of stuff that Plastiq charges for is free. My code is PTM9691063, pay a $50 bill and we both get $10 in PayTM cash which you can use on the next bill. Good for min spend, at least.

Goldielocks

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Re: Money Sense and a Silly Retirement Article
« Reply #10 on: September 01, 2017, 10:50:02 AM »
ARGH!

They want to retire at a average age of 60, 10 years from now.

To fund their gap until age 65, they would need approx $405k saved up to spend down over 5 years (assuming 20% net tax, and they put it all into a cash savings account at age 59/61).   (Sandy's pension starts at age 59)
Then at age 65, they take full CPP and pension, and pull the remaining $2k (approx) gap from their RRSPs.

From age 65 on, using 4% rule, (And assuming an average tax rate of 20% on the whole thing).. and their need of $24k per year to cover the diffeence, they will need $750k starting at age 65 to fund $24k per year...

Total needed:  $405k at age 60 and $750k at age 65; 4% interest. == $1.125 M at age 60 is needed.

Without saving any more money, their current $720k, at 4% growth net of inflation and using the article's rate, will be worth $1.065M at age 60.     Their gap is about $60k and they have 10 years to save this, while working two incomes with no mortgage.  They are set!!  No need to look at selling property in their 80's except to buy something very expensive.


--- I used 20% taxes because I assume that the investments are in both names to allow income splitting.   If so, and they only want $6500 per month together, then the OAS clawback is not a factor...but being strategic about TFSA withdrawals is always preferred, they should definitely take the first $40k of income, each, from RRSP's starting at age 59/61 ----

Stasher

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Re: Money Sense and a Silly Retirement Article
« Reply #11 on: September 09, 2017, 02:42:27 PM »
But wait you're not an investment advisor that wants to make another 10 years of fees off them.
amazing how simple it is when you look at, great analysis GoldieLocks
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