Tag: Retirement Planning

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Canadians are Postponing Retirement to Help Their Adult Children

Couple-postponing-retirementHalf of Canadians surveyed are willing to postpone retirement for their children according to a study by BMO Wealth Management. Even more worrying is that 24 per cent said they’d be willing to go into debt to help their children succeed. Ironically, one of the top reasons parents cited for their financial concern about their children is that they will incur debt that they can’t manage.

According to Statistics Canada, today’s youth are more educated, staying at home longer and putting off their entry into a treacherous labour market where unemployment rates for young adults are twice the national average. This is daunting information but not insurmountable. Parents and their children can find a way through the morass by learning about how to manage their money better.

Continue reading “Canadians are Postponing Retirement to Help Their Adult Children”

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Seniors: Are Caregivers Caring When it Comes to Money?

Seniors-and-Money

We all know that seniors can be among society’s most vulnerable. Often they spend a great deal of time alone, and criminals are quick to pounce on their naiveté when it comes to technology in their efforts to entrap them in email, internet, investment, and utility bill scams.

The greatest threat to a senior citizen’s financial well-being isn’t always some fast-talking huckster or a far-off oil sheik looking to dispense with some of the family fortune if only they’ll send them a small advance for “administrative fees”. Often, it’s the very people that they have come to trust who are stealing their money.

Financial abuse and fraud are among the most common types of elder abuse, and with the population base aging, crimes against seniors by their caregivers are on the rise. Joint banking accounts and Powers of Attorney are tools that are to be used by seniors to empower their caregivers, whom they entrust to look out for their affairs. Unfortunately, they are often used as blank cheques by caregivers. Common forms of financial abuse of seniors by their caregivers include:

  • Misuse or theft of a senior’s property or money, often from joint bank accounts.
  • Forging a senior’s signature, or changing documents to dispose of their profits.
  • Threatening a senior physically or otherwise to get them to do things that aren’t in their best interest – like giving “gifts” of money or property to the caregiver, taking out a loan, or co-signing a loan for he caregiver.
  • Sharing a senior’s home without paying expenses or rent when requested.

The list of opportunities for financial abuse of a vulnerable senior is long. If you suspect that someone you know is being taken advantage of by their caregiver, please don’t hesitate to contact their family, or the police.

Elder abuse is a growing problem. Seniors have worked hard their entire lives to get where they are, and they don’t deserve to be defrauded of their money by the people they’re led to believe they can trust. For more information, visit seniors.gc.ca to find a series of publications on financial abuse and fraud, including “What every older Canadian should know about Financial Abuse.”

Creditaid is a local credit and insolvency counselling firm who has been helping Manitobans get out of debt since 1992. Contact Crediaid anytime, online or by telephone at (204) 987-6890.

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Boomer Exodus Interrupted

The topic in this great article by Barbara Bowes is something that is sure to have already affected many lives, with many more affected parties to come!

What are your thoughts, do you anticipate the opportunities, or dread the skills gap that’s sure to result?

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No matter your stage in life, it’s important to keep the stats in mind: many are living from pay cheque to pay cheque now, when they could be taking action and planning accurately to avoid having to work through the retirement years.

Is it time for you to take action?

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Peace of Mind at Retirement

For those who are approaching retirement in the next few decades, the recent recession has changed many goals when it comes to retirement saving. While building a substantial savings for retirement through high earning investments was once the goal of many of baby boomers, a new value has been placed on the peace of mind that comes from stable, safe ways to ensure income for their retirement years.

Security Builds Peace Of Mind
The recession hit many hard, shrinking the size of their accumulated wealth and taking away the financial security that they thought was already theirs. This shock to the economy has made retirement investors more focused on keeping what they have, versus building a monumental retirement savings through higher risk investments. The change has lead to more baby boomers considering fixed rate annuities and other guaranteed investments that will protect their assets and slowly grow their retirement savings.

The quick reduction in investment values in the past decade has changed the entire mindset of those both young and old.For those approaching retirement age, there is no longer the illusion that money lost in high-risk investments can be quickly recouped. Protecting savings to ensure a steady and reliable income for retirement is more important to many than trying to grow nest eggs quickly for a more comfortable lifestyle. Younger generations have seen the backlash that has happened to their parents and grandparents, and many will proceed more cautiously when planning their own investments.

Although the lesson was financially painful for many, it was a valuable lesson to be learned for all investors. High-risk investments can be lucrative and have their place within an investment portfolio; however, the peace of mind that comes from having stability and security for retirement can be even more valuable.

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Spending in Your First Year of Retirement

Your first year of retirement is full of anticipation and excitement for what’s to come. You suddenly have more freedom than you have had in years, which means endless opportunities to spend time and money on the things that you love. There is a catch, though – how do you determine whether you are spending too much? Unfortunately, while most retirees are well versed on how to generate an income for their retirement years, they often have trouble working out when and how to spend it.

While it may seem like you have a huge amount of income stashed away, you still need to budget. It is difficult to accurately predict what you will spend before you actually enter retirement, as there are too many unknown variables yet to be discovered. Your first year presents the ideal opportunity to set the bar, so that you can live comfortable for the rest of your retirement.

A good starting point is to estimate your expenditure for each year. This will provide you with the basis for your initial budget. Once you enter retirement it is important to keep track of your spending, and then compare it to your projected budget. It is also important to recognize lavish spending habits as soon as possible. Review your spending every three months to evaluate whether you are on track.

You need to allow for unexpected costs, too. A particular concern for many retirees is sudden health problems. However, anything that could derail your budget needs to be given consideration. It is for this reason that financial advisors suggest formulating a number of budgets. By doing so you can funnel contingency funds to where they are needed, with minimum impact on future retirement years.

Once you are over your first year of retirement, review your budget again. If you were under target, consider whether it was due to careful spending or adequate assets. Conversely, if you overspent on your budget, look at how you used your income and think about re-evaluating your lifestyle.

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Ways to Downsize During Retirement


Downsizing during retirement, for many of us, isn’t so much of option as a necessity. Reasons for downsizing are not always financial, either; mobility and convenience also factor into the decision. Living within your means doesn’t have to be a struggle. In fact, being frugal with your money, time and energy will enhance your life during retirement. By working smart, there are a lot of cross over benefits from downsizing, too, so it is important to consider how every decision impacts on the rest of your lifestyle.

Home and Community

The size of home you live in and where it is located can determine how well you are set up financially for your retirement. Retirees can save around 25% on their
mortgage with a smaller property in a more affordable area, and greatly reduce tax and insurance payments, too. A smaller property also means less upkeep; saving precious time and energy for doing the things that you actually enjoy.

Transport

Although most retirees opt to keep their car, at the very least, do consider downsizing to a more cost efficient model. An area with reliable public transport or convenient facilities within walking distance is another option to reduce travel costs, for retirees who do decide to get rid of their car altogether.

Garage Sale

A garage or lawn sale will take care of a lot of unwanted possessions; including items such as paintings, small to medium furnishings and electronics. If you are selling a car, this is also a great way to draw attention from perspective buyers.

Donating

Donating to local charities or free recycling services is the quickest and most efficient way to de-clutter. Charities will take clothes, furniture and some electronics. A recycle service will take damaged furniture, clothes, electronics and other materials. Check with your local charities first, so that they can benefit from any items you can give them.

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Prepare Your Retirement Budget


There is no hard and fast rule for when you can begin preparing for your retirement. However, it makes sense to start preparations sooner rather than later. Keep in mind that, on average, retirees spend the equivalent of 70 to 80 percent of their work-life salary per year; all of which is income that you must start generating before retirement.

Saving and investments are the two main ways to generate an income for retirement. You could work overtime or take a second job to earn the initial money you will need for investments. Or, when buying your home, consider it as an investment that you can use to fund your retirement in the future. Your investments in your formative years will pay off in the long run, too, so make sure that you keep that in mind with every major purchase.

The bottom line is, if you want to live the good life when you retire, you are going to have to make some smart investments. Of course, if it was that easy, everyone would be doing it. Before you start investing in every plan that promises to deliver huge pay-outs, speak to a professional advisor that you trust.

Invest in a Registered Retirement Savings Plan (RRSP) as early as possible. If you are going to invest in equity and stocks, do so earlier in life so that you can make your money and quit while you are ahead. Remember, this is about securing a comfortable future in your retirement years. While not the greatest investment option for a return, Guaranteed Investment Certificates (GICs), is a good place to keep money in between better investments.

Plan in such a way that when you get closer to reaching retirement, you are thinking about downsizing your home and car. Make sure that you are on track to clear all your credit cards and other outgoings, so that you have as much disposable income as possible. Take the time to think about the type of retirement you want; and decide which aspects of your life will help or hinder you in achieving that lifestyle.

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Planning for Early Retirement


There is nothing quite as appealing in life as the prospect of retiring early. However, it is not a decision that you should make on a whim. Remember, while you will gain additional years in retirement, you will lose the income you would have generated in those years, had you continued to work. This leaves you with two choices; living on a smaller budget and making sacrifices in your lifestyle, or, finding other ways of generating an income that will allow you to have a long and happy retirement.

First of all you need to determine how your current income stacks up against your chosen retirement age. The earlier you retire the less time you have to save. With improvements in lifestyles and healthcare you should anticipate living into your nineties, which means more retirement years, too. So begin by calculating how much assets you will have per year, based on your current income.

If you really want to enjoy your early retirement, make the sacrifices while you are young. Take a second job to offset the income you will lose in your retirement years. You should also consider easing into your early retirement, by continuing part time work to support yourself. Many retirees start their own small business, drawing from life skills to do something that they enjoy and earn an income as well. Start planning your second career or business now, so that you are well prepared for your retirement.

Higher growth investments are a good strategy for generating retirement income, provided that you start early. Taking risks with equities can pay huge dividends if you allow yourself the time to recover from dips in the market. Potentially, you could end up making up your shortfall without having to work a single day longer than you want to. When you get closer to your retirement age, you can then move to more secure investments. Don’t leave it too late to get in on investments that will work for you, organize your retirement portfolio today.