My parents are in their 60s, and they both never had a retirement plan, they grew up thinking pension was gonna be enough, my dad is still working and mom isn't but wants to, it shows banks never helped them over the years, to try build something for retirement, now i don't want to build a life for myself because i want to give my money towards them...
How much you need depends on how much you were making in your working life and how long. Above all, how much your investments made progress during this period. For simple math no one need a financial planner, little math and logic will do. What we need is someone who tells use which stock to invest and where to invest so that a steady rise in the portfolio. It is like a athlete is asking what is the timing to stay in the race, the winner always asks himself I need to run as fast as possible to win the race. This is same..
Thanks for your comment and for watching the video. Coaches don't make athletes better by simply telling them to run faster. Telling you which investments to buy is about 25% of what goes into a successful retirement.
Well that was humbling. At 61 with only 400,000 I’m not ever going to be able to retire. Even invested with decent dividend stocks it sounds like rice and rhubarb in retirement every day. At least the house is almost paid for but that doesn’t help much as it’s not liquid. And I’m not taking no heloc.
Hi Gary, It's never great hearing situations where retirees have to consider living with less. Have you considered brainstorming on developing an alternative income source? Have you watched this video? ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-nauGVc9fDNI.html
The science of making money? Application of maths does not make what you do a science. I think it would be more accurate to describe what you do as research and management. I’m not diminishing the importance of what you do. As you showed, the majority of Canadians need help. On the other hand, I can’t remember a single time “money management” was a topic of learning during my government provided education.
Thanks for the video. One thing I don't understand in your 4% explanation is the table on the left. Fundamental to the 4% rule is that you make at least 4% on your investments and if you only draw down 4% annually, you will actually experience no decumulation. In your chart on the left, you show only draw down but no annual investment return to offset the draw down? Am I missing something?
Hi Martin, Thanks for your comment. If you can let me know the timestamp of the table that would be great as there were several tables. I was making reference to the fact that a RRIF minimum withdrawal after age 65 is greater than 4% and increases with each passing year, forcing one to withdraw more than 4% per year.
@@martinzeddy Got it. 5.25% return. Withdrawals are adjusted for inflation. The 4% rule is a guide so as to not run out of money vs. a goal of lifestyle funding needs.
@@martinzeddy I think you aren't withdrawing 4% annually. Ok, I am not good with math, and am just some guy on the internet, so I am going to simplify for my benefit. Let's say you have a million dollars. Year one you withdraw 40K. Year two: your one million (1M) became: 1M - 40K (what you took out) + 52.5K (what you made on the million) = 1.0125M. In year two, we aren't withdrawing 4%. We are withdrawing 4% plus whatever inflation is. So say inflation is 5% then in year two we are withdrawing 42K to maintain our purchasing power (40K x 1.05 = 42K). That's about 4.15% of our nest egg of 1.0125M. Inflation will continue to compound the amount we need to take out over the years, and eventually the inflation will make it more than 5.25% of the egg, and the total invested amount will start dropping. Again, I'm just some guy on the internet and my math is probably not totally accurate, but hopefully it's in the ballpark. :) P.S. I think maybe second to health expenses, inflation is the biggest potential killer of retirements.
You explain it so simply. I wrote down all my bills and expenses devided by 12, Wow no money left for anything else with my pension. I have to continue working ...Thank you so much for the eye-opening info. Thank you!.
Great content, concise advice! 👊 There was no youtube in the mid-80s, I somehow believed in the magic of cutting your spending and budgeting your money definitely increases your income without sacrificing a great deal. I love the quote" you rather have a 5 dollar wallet with 100$ in it, than a 100$ wallet with only 5 dollars" mental accounting has to do with how we make financial decisions based on our associations with money. Cheers!
Hi! Well done!! Very clear and easy to understand. I just wanted to say that I have heard so much about Index investing and how there is really no need for financial advisors because of the fees they charge. Could you please do a video on Index funds vs Financial advisors please. I think a lot of people including myself who have had a financial advisor for years are feeling a little disillusioned with the results. I would just like your opinion.
Thanks for watching the video and for your comment. I like your video suggestion as it is an excellent example of how people don't fully understand the role and value of what a Financial Advisor does for their clients. Your comment suggests you see the role of an advisor is to manage a rate of return. I'll do a video on this because there is so much I can say on this subject such as minimizing taxes, estate planning, which accounts to use first in retirement. Helping clients with their concerns about having enough money to retire. Looking forward to your comments on the video.
I was never able to get idea how much was going to be until I got it. I was suprised it was better than I expected and I think the amount related to year out raising kids helped.
Hi Maria, thank you for your question. In Canada, a $300 pension doesn't go far which is why we have retirement benefits offered by the Canadian government. Without these retirement benefits (Canada Pension Plan - CPP, Old Age Security - OAS & the Guaranteed Income Supplement - GIS) many low income families would not be able to afford the basic necessities to live.
Thanks for the video, I now know I don't have a written financial plan, a projected income at retirement or a tax plan, things that I have to look into, though I have made up a expense budget for a moderate retirement, thanks again.... great insight!
If I could go back in time I would of told my 25 year old self to start saving. It wasn't until I was 35 I started to save. Fortunately I buckled down and turned it around. But if I started earlier I would be retired now instead of a couple of years from now.
I disagree that you need 70-75% of your pre-retirement income to retire comfortably. We have been retired for over 6 years and I find that while our income is much LESS than when we were working (about 40% of our working income) we have MORE to spend now than we did before retirement. Firstly when you are retired you don't have to save for retirement. I can tell you that NOT saving 18% of my income into an RRSP every year (I've never had any carry forward) and NOT maxing out our TFSAs really frees up a lot of money. Add to that the house is now paid off, the kids are grown and gone, and my tax rate has fallen from a marginal rate of 50% to an overall rate of 15%. So much of your working "income" is absorbed by taxes, saving for retirement, paying off the house and raising kids that you never really had it to spend in the first place. On 40% of our pre-retirement income we are quite comfortable, we winter in Mexico and have an annual trip to Europe (pre-Covid). If we had 75% of our pre-retirement income I think we'd have more money than we'd know what to do with. Personally I think that most people can be quite comfortable on 40-50% of their pre-retirement income.
@@ddavidson5 That section of the video is about rules of thumb. They're starting points and everyone's situation is different. There are all sorts of rules of thumb from mortgage affordability to wedding ring costs. Again, they are designed to help one someone who has not planned to get an idea of costs
@@AaronWealthManagement I understand your video content was general. Really I was replying to johnnyboyvan about my experience that most people don't need near that amount, among those that I know 50% is closer to the mark.
Great video and thorough! I have watched lots of retirement videos during the Pandemic. I wish yours was available a year ago! I hope to retire in 2025 so I am preparing now with the detailed questions that you touch on here. Well done, thank you for sharing your knowledge
The first 2 years after you retired, no doubt you will spend more ri explore the world, but the expense will drop afterwards. No, you dont need 75% of your pre-retirement income to live comfortably based on my experiences.
These numbers the industry throws out are only there to help someone who hasn't planned. Everyone's situation is unique. Having a financial plan created is the 1st step. Thanks for following and for commenting 😀
I am 65 and don’t have a plan. I have tried many time, but have always been disappointed with financial advisors not helping me. You are the first one that sees to be helpful. Thank you. I would love to talk with you about our plan. I have zero debt. But would love a plan.
Just found your RU-vid videos. Super helpful in understanding all the different income sources against tax liabilities and benefits. Thank you. You mention acquiring a financial plan to prepare for retirement. Are there any reliable financial planning tools for Canadians to get started before approaching a financial adviser ?
Your greatest source of creating wealth is your income. And don’t go into debt. The average stupid car payment is over $700 a month! Invested wisely that car payment is over $2 million dollars in 30 years. Be an owner not a loaner.
Even simpler check out Bonnie Jean Macdonald. What will be your expense in retirement then you plan what income income streams To be greater then your expense including inflation. This is an excellent video.
