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Bucket lists in semi-retirement

Bucket lists in semi-retirement. Can you afford them? Should you spend the money? I am still working. For myself, mind you – but creating some income. Should we take a plunge on something really special, something that you have wanted to do for a while – OR do what you are supposed to do – live cheap and save for “retirement”. The guy on my left shoulder screams “Do it! You might get sick and won’t be able to do anything – except count all the money you have saved when you could do stuff.” The guy on my right shoulder fights back: “Nooo… you are healthy and you will live for a long time. You need the money to afford a good lifestyle.” What an epic battle. In this case, guess who won? Here’s my over-60-bucket-list #1 story. Ever since I was a boy I loved airplanes and flying. Back in high school in Norway I got to fly in a small plane. Then when I moved to Montreal in 1971 I took lessons. Then some moves happened, but in 1976 I finally got my private license. For the next 15 years I flew a lot. Total fun. Then work, life, transfers and a whole bunch of other things happened and I dropped it. But I always said: “one day I will fly again”. The urge got stronger, and pushed away my right shoulder guard. One thing that held me back was the fear of the dreaded aviation medical. Being 64, something must be wrong. Of course, I haven’t seen a doctor in years. And I hate being rejected. However, I feel great, no pains no indications of anything wrong. Sure, a few pounds in reserve… anyway, I went and got a 100% clean bill of health. 2 year Class III medical. Nice. No more excuses. Headed over to the flying school and signed up for refresher lessons and the written/verbal tests. 3 lessons later – much less that I had hoped for – plus some old-fashion studying I passed the flight test and the written/verbal tests with flying colors. Pun intended. So yeah, I am now a 64 1/2 year old with a Private Pilot’s License. And checked out on two different airplanes at the flying club. Now I will fly as much as can afford and will totally enjoy it. Crazy? Sure. Satisfying? Absolutely. Irresponsible? No comment. The purpose here is not to brag (oh well, I am pretty pleased with myself) but to tell a story that might inspire you to do something crazy –...

Canada Pension Plan (CPP) Retirement Pension

Canada Pension Plan (CPP) Retirement Pension The Canada Pension Plan (CPP) Retirement pension is a taxable income. The amount retirees receive from this plan is not affected by any other income derived from any other sources. A person who has contributed to the plan and aged 60 years or older is eligible to receive Pension from the CPP. This pension plan can be received as early as age 60 and can be delayed up to the age of 70. When early CPP pension is taken prior to 2012, the pension is reduced for each month of pension before or after you turn 65. This means that if you start availing of your pension at 60, it will be less than when you avail of it at the age of 65. While you may receive less than the amount you can get when you avail of the pension at 65, starting early could be a more practical and advantageous move as you cannot predict how long you will live to begin with. The exact amount of your CPP will depend on the number of years you have contributed to this fund, though a CPP pension is calculated as 25% of the average pensionable earnings of the retiree during his contributory period. This period starts when the retiree turns 18, or in 1996, whichever is later. The period ends when he starts collecting his pension. Your Statement of Contribution is accessible online via Service Canada, allowing you to estimate how much your CPP retirement pension will be. You may also request to have the Statement mailed to you. On the other hand, The Québec Pension Plan (QPP) statement of contributions is called the Statement of Participation, which can also be accessed online, or can be mailed to you. It is advised that you apply for your CPP retirement pension 6 months before you would like to start receiving pension or you can apply up to a year before you would like it to start.  According to Service Canada, it takes about 8 weeks to receive your first payment from the time they receive your application. The CPP Retirement Pension may not be received with CPP disability benefit at the same tie. Retirees under 65 receiving a CPP retirement pension for less than 15 months are eligible for the disability benefit.  ...

US Social Security vs. Canada’s Old Age Security

US Social Security vs. Canada’s Old Age Security They say that only two things are certain in this world: Death, and Taxes. As these two things are inevitable, there are means by which we can all prepare for the former, while making sure we become responsible citizens by taking care of the latter. Both in the US and Canada, there are retirement funds, taxes, and schemes to be educated on to be able to maximize the benefits each government can provide for its retirees. Retirement financial planning and funding in the United States is known as Social Security, while Canada have Old Age Security, otherwise known as OAS as its equivalent. These two schemes have their similarities as much as they both have their contrasts. OAS is offered to eligible citizens aged 65 years or older. OAS pension payment is usually determined by complex rules, though generally, a person who has been living in Canada for 40 years, after turning 18, is eligible to receive the full payment of $533.70 per month. Apart from the OAS, Canada also has a retirement savings plan known as the Canadian Pension Plan. On top of this, OAS benefits also include Guaranteed Income Supplements ($732.65) and Allowances ($1,013.54) that are given to pensioners making less than $29,904 and $38,784 annually. OAS benefits are considered taxable income though. On the other hand, US have Social Security. Compared with OAS, Social Security does not focus solely on providing retirement benefits; rather, it caters to other areas such as disability income, retirement income, Medicare, and Medicaid. Social Security poses more complex income tax repercussions compared with OAS. There are many different factors considered under Social Security such as marital status of the recipient, plus income from other sources. Upon turning 62, individuals become eligible for Social Security and full benefits of $2,346 per month upon reaching the age of 67. This eligibility is also determined through a credit system. Generally, the retirement program of Canada is considered safer as there have been continuous debates that the Social Security funds of the U.S. will eventually be depleted. Though we sure all hope not!...

Canada vs. US Retirement Funds

Canada vs. US Retirement Funds Retirement planning involves a wide array of considerations. From determining the best type of investment and accounts to be included in your retirement plan, to budgeting for your future endeavors, sure bring about a lot of challenges that you must prepare for head-on. Whether you are born and about to retire in Canada or in the United States, both these government offer incentive and investment plans for their retirees. Let’s take a look and compare at the US and Canada retirement benefits: RRSP vs. Traditional IRA Canada offers a number of alternatives that its citizens can take advantage of to avoid paying excessive taxes. One of which is the Registered Retirement Savings Plans (RRSP) which allows its investors to receive tax deductions on their yearly contributions which result in time value of money advantages, giving them the benefits of compounded returns. Contribution to this fund can be made until the age of 71, and the government sets aside for the individual an amount subject to a maximum limit. Withdrawals to the RRSP can be made at any time, but are classified as taxable income subject to withholding taxes. On the other hand, American retirees contribute to the Traditional IRA that is structured to provide them with benefits, making contributions tax-deductible and capital gains are tax deferred until distributions out of the account are realized. Age stipulations to both RRSP and IRA are similar, allowing them to contribute to their respective funds until at the age of 70 ½ , at which point mandatory distribution of funds is require. Maximum contribution to the Traditional or Roth IRA is the smaller of $5000 or the amount of your taxable compensation for the taxable year; while RRSP allows up to $20,000. TFSA vs. Roth IRA The Tax-Free Savings Account (TFSA) of Canada is similar to the Roth IRA of U.S. Both of these retirement funds are tax-exempt accounts as they are funded with after-tax money, providing growth tax-free even when funds are withdrawn. TFSAs foster for long-term retirement planning; in fact, Canadian residents over the age of 18 can contribute $5,000 annually to this account. While Roth IRA allows for contribution regardless of age though, maximum contribution remains at $5,000; and $6,000 for those over the age of 50. Regardless of where you will be retiring and the kind of contributions you can make, experts suggest that the sooner you save for the future, the better; however, when you deem it a bit late, aim for at least the age of 50 to start taking saving really...

Retirement Planning Myths Part II (US)

Retirement Planning Myths: What You Need to Know Retirement planning is financial planning. As a retiree approaching the time in your life when you have to rely solely on your savings and investments, it is important to know more about your benefits, finances, and how you can reconcile your limited resources with your needs. There are also a lot of misconceptions regarding retirement funds; and this article is intended to give you some clarity regarding the same: Myth 1: You are required to take money out of your 401(k) every year after you turn 70 ½ years. This is not correct. In fact, should you decide to work after your retirement, you need not take out money from this fund until you actually retire. This also holds to be inaccurate in the event that you have multiple IRA accounts. There is, in fact, a special rule allowing you to calculate the amount required of you to take out from each of your IRA and take a lump sum from just one account. You can also take the total from several IRAs in the amount of your choice. Myth 2: Your beneficiary call roll over your 401(k) funds to their own when you die. If your beneficiary is your spouse, then he/she may roll over your retirement plan into his or her own IRA. No other beneficiary may benefit from this, even your children. Myth 3: Your children must take all the money out of your IRA and pay taxes on it. With careful planning, you children or any other IRA beneficiary may spread the distribution out over their life expectancies. Myth 3: You are not required to distribute from a Roth IRA. Though you are not required to get distributions from your Roth IRA during your lifetime, all of your beneficiaries, except your spouse, should start taking distributions after you die. Myth 4: When you convert your traditional IRA to a Roth IRA, those amounts could be subject to income tax. Converted amounts are not subject to income tax after the year of conversion as you already paid the tax. Nevertheless, these amount may be subject to early withdrawal penalty if you take your money out too soon after the conversion, and you are younger than 59 ½ years. Myth 5: Once you reach the age of 70 ½, you are require to take a specific amount out of your IRA each year. There is a minimum amount required of you to take out of your IRA. While you can take more than that, you may not take less than...

Retirement Myths (US)

 (US) Retirement Myths: Debunked Many misconceptions arise before or during your retirement. And it’s about time you debunk these retirement myths to begin with: Myth 1: You are not allowed to take money out of your 401(k) plan until your retirement. Wrong. The rule is that any money you take out of this plan before you reach the age of 59 1/2 is considered as an early distribution. This means that you are required to pay a penalty and income tax for on it. Many plans have exception to this rule though, however, allowing you to take your money out early and penalty free; for instance, to cover medical expenses. There are also plans that allow you to borrow money without penalty. Myth 2: Taking money out of your traditional IRA before reaching the age of 59 ½ always imply a penalty. Wrong. There are ways by which you can get money out of your IRA without having to pay for penalty. For instance, you can the money in installments over your life expectancy regardless of how young you may yet be. You can also even take money out for certain college expenses or as you require some funds to acquire a new home. Keep in mind though that as you are allowed to take money out of your traditional IRA without paying a penalty, you are nevertheless required to pay income tax on the money. Myth 3: IRA withdrawals are always in the form of cash Wrong. You are permitted to take “property” ranging from stocks, corporate bonds, or certifications of deposit out of your IRA instead of selling them first and taking the cash. This is helpful for those who want to continue to hold certain securities. Myth 4: It’s a great choice to name your “estate” as your beneficiary. Wrong. Naming your estate as beneficiary for your 401(k) or other retirement plan could yield more disadvantage than advantages. For instance, naming your estate as your beneficiary can limit your heirs’ options for taking money out of your retirement plan upon your death. Myth 5: You cannot change your IRA beneficiary after you turn 70 ½. Wrong. In fact, you can always change your beneficiary. It’s always up to you to decide who benefits from your money upon your...

Planning Your Finances

What NOT To Do When Planning Your Finances During Retirement Preparing for your retirement entails preparation in many different aspects of your life. Be it adjusting to a new schedule, budgeting, or making the most out of your social security or retirement fund—everything about retirement requires planning. On top of getting acquainted with the means to which you can maximize your current, limited financial resources, you should also be in the know about what NOT to do to complement your retirement financial structure. Making your savings last through your retirement may not be as easy as you think it is. As you retire, you will have more time to spend on things like entertainment and food—which means more expenditure on your end. However, knowing about the financial pitfalls that could entrap you will definitely help. Do Not Assume a Conventional Retirement. The kind of life you lead after your own retirement could be far too different from what you imagine it to be. With this, it is important to actually think about what you want out of your retirement years. Think about what you really opt to do during your retirement so you can better plan your finances ahead. Do Not Buy Funds with Low Expected Returns or High Level of Risk. Examples of this include commodities, technology, and gold stocks. More so, it will be good to steer clear of pure growth funds, including U.S. funds and International funds. Do Not But Actively Managed Funds. These funds incur higher expenses than index funds while not yielding returns that are higher than the latter. Do Not Get Stuck Up with a Funds Guru. Note that no one knows for sure how the market is supposed to perform in a few weeks/months or even days from now. With this, it’s important to not trust and invest all your funds with a single professional/entity. Do Not Gamble With Your Portfolio. It will be best to have a diversified portfolio to maximize the opportunities in the market. Playing the market will most likely reduce your long-term returns. In the event that you are the type who likes to gamble though, try your luck on nothing more than a lottery ticket instead.    ...

Financial Planning for Retirement

Financial Planning for Retirement: The Basics Invest in the Stock Market. As you get pension, retirement income, or Social Security benefits after retirement without any other steady source of income apart from it, you need to be financial wise. Investing in the stock market may go up and down, but over time it grows at a definitely higher rate than inflation. You need not be stock market savvy to benefit from this, as there are a lot of investment companies that are willing to put in the work for you and all you have to do is to invest. Own Bonds. While interest rates may always be minimal, the price of bonds—including Treasury bonds, corporate bonds, and municipal bonds are always historically expensive. In general, bonds offer for a safer investment scheme. It will be a prudent move for you to set apart some of your retirement funds for bonds, more specifically through low-cost mutual funds or ETF’s sponsored by major financial institutions. Have a Lump Sum in Cash. You never know when you’ll need a bundle, so it’s imperative that you keep a stash at home. Could be under your mattress, in a safe, or anywhere else you deem it safe. While incurring debt during your retirement is an option, thinking about the retirement money you get periodically, this should be the last option. Think long and hard before taking a debt, and if you have already, make sure you plan ahead to live within your current means. Note that retirement means having no job, and no raise, and the 1.5% increase in Social Security is really not something that matters enough. Do Not Gamble. On your retirement, you will most likely be lured or tempted into engaging in various investment schemes that will look like sugar-coated financial packages that, sadly, may not be as sweet as it seems. For instance, Internet Stocks always looks as inviting, when in reality, they may even be more risky than established companies offering stocks in the market. Note that your retirement is not the best time to take risk at all.  ...

Teaching after retirement

Are you a retired teacher? If you want to teach – here are some tips: Teaching is tough. But for most teachers, it is a passion and a mission. To teach, before or after retirement takes a lot out of you. So if you are considering teaching after retirement, make sure you still have the passion. And you really want to continue teaching. The good part is of course that you will do it part-time, as needed and working with your schedule. There might be some rules pending on the school board you are retiring from. It changes from country to country, and often from county to county. In some you can only work 100 days a year while keeping your full teacher’s pension. What will you do with the money? That’s the easy part. Enjoy. Travel more. Prop up your savings for later when you don’t want to work any more.  ...

The evolving retirement

“Retirement” is a bit of an old-fashioned word today. For many people it is an evolving process of trying to enjoy as much as possible and also be challenged and stimulated. Keep your interests alive. Be social. Meet people. It is not “over” by a long stretch of imagination.  After I started this site I am finding the study of retirement very interesting. When I was younger, I too always looked at retirement as something old people had to do when they were too old to work. Nothing for me to worry about. If found my hiring sheet from NCR the other day, and it said right there on top “Hired 1976 – Retiring in 2016”. That could have been me. Still working for the company and getting the gold watch next April with a good pension. This is not how it worked out. I left the world of paychecks in 1988. Do I regret it? One part of me says yes, because I don’t have any pension coming. The other part says no – because I have done so many crazy and fun stuff during the past 27 years. Could I have been stimulated and had as much fun had I stayed with a corporation? Maybe. Probably. My old boss always told me that I always needed a challenge. I guess I had to go out and find that myself. And I did. I have met people who stayed around the company just to get to 65 and retire. Not having much fun at work. To me, and that is just the way I think – that is such a waste of time....