$1.7 million needed to retire!!!!!

[DRhunter]

Originally Posted by Dean2

There is on this thread, as there is so often on social media, some good points and some decent advice, but also some stuff that is really incomplete and lots of other stuff that is just dead wrong.

The lifetime TFSA contribution limit for someone who is now 65 is 91,000 dollars. It is a good savings vehicle going forward, tax effective and very well suited to anyone earning less than $60,000 a year. Even if you earn over 60,000, you should make your full annual contribution, however, over $60,000, your marginal tax rate makes RRSPs more tax effective, especially as your income goes up. RRSPs were first introduced in 1957 and since 1991 the max contribution limit has been 18% of income to a max of $11,500 in 1991. The max has increased every year and now stands at $31,560 (so you need an income of 175,000 to hit max).

Thus, the lifetime contribution limit for that same person in RRSPs, assuming no company funded pension, is well over 600,000 if he started working at 18. If he qualified for the maximum RRSP contribution limit, he got almost half the money he contributed back in tax refunds, which is enough to max out your TFSA limit every year and have more than half left over. If he put the full max in every year, yes he is going to have a pot load of money in RRSPs at age 65. Yes, there are tax implications to that, including OAS claw back, subsidies you don’t get, rebates that aren’t yours, no subsidy for extended care homes etc. What you don’t worry about when you have 3 million in RRSPs are all of those tax implications. You don’t need OAS, you don’t need heat and family subsidies, you can afford to pay the full price of a private room in a concierge service level extended care facility. You also have enough money to do pretty much whatever you want till you have to move into the home. If you croak early with 3 million in your RRSP and no spouse, oh well, your kids only get the net of tax amount, still a pretty good bequest, and your TFSA balance will likely take care of at least part of the tax bill, with the rest coming out of RRSP funds.

Don’t feel sorry for the people with too much money in RRSPs. There is NO downside to having more money in retirement than you need, and if you were making enough money to afford the max contribution limits, you still had more than enough income to live REALLY well on the way to retirement. The folks that have the far more difficult balancing act are those that are nowhere near making the money to do max RRSP contributions. Those are the folks that need quality financial advice (also the ones least likely to get it) and need to really study how they can maximize their savings while also living well during their working and child rearing years. If you have a kid that is 16 and earning income, give him a copy of the wealthy Barber and get them started on a savings program.

Dean, I have missed your commonsense posts over the last several months as you have taken some time away from posting and appreciate you taking the time to add in some sound financial advice to this thread!

Enjoy your life as you live it, but extremely important to make sure you can afford basic necessities as you age. It is a scary time right now for a number of seniors who were not able to put away enough money and are facing the choice of homelessness or groceries with what little income they have coming in. That is a burden I will not be putting on my kids to fund my food or shelter when I am in retirement.

DR

[Jim Blake]

Dean, glad to see you posting a bit. I hope you decide to return as the regular contributor you were.

Retirement is a scary thought for many people who have not prepared themselves, or fell into bad circumstances not of their control.

I am glad I listened to my Father and put away savings on a regular basis. In addition I bought land and the bonus was the aggregate under it.

Retired at 50 and still enjoy it.

[sns2]

Dean, many of us miss you as a regular poster.

[58thecat]

Originally Posted by sns2

Dean, many of us miss you as a regular poster.

Agree!


Sent from my iPhone using Tapatalk

[Dean2]

All is wonderful for Nina and I and having a great time. Appreciate your comments and miss interacting with a bunch of you guys too, but I am not going back to regularly posting on AO . My one exception is the financial planning threads. It is a subject I am very passionate about.

I spend a lot of time working Pro Bono helping guys that never got good advice before. When I see the absolute mess many of their finances are in, and many are close to retirement, it scares the crap out of me. Their lives will be markedly better with my help, but 20 or 30 years earlier and they would of had much better retirements.

Luckily, also working with some who have many years to go and they are very committed to turning things around. If they stay the course they will be far better off when they retire and will actually live fuller lives getting there too. Not a single one had a detailed budget. No idea at all how much they spent a month and on what. Also had no idea what it would cost to live when they retire. Doing the budgets was a massive eye opener for everyone of them.

I am just touching a few of the people that really need help. High school and post secondary really need to get their poop in a group and start teaching this stuff as a mandatory subject.

I will continue to try and offer whatever help I can on the financial threads because I truly believe that done right every single person will benefit from a good financial plan and increased financial literacy.

Stay well all.

[HVA7mm]

This is an interesting thread for sure. I'll be 53 next month and was planning on working in my current role until 57, then collecting my pension (which would be really close to my current take home pay) and working elsewhere. I do have a corporate, defined benefit pension plan that I can collect at 55. If I were to leave at 53/54 and defer my pension until 55, I would give up ~ $400/month compared to staying until 57. However, there's a real chance that there may be some early retirement incentives coming in the next few months, typically around $125k for someone in my shoes. So I "may" have to make some important decisions this year. The job has also been a bit of a strain in the last couple of years, so I would have no problem seeing it disappear in my rear-view mirror. I do have a diverse marketable skill-set that I can put forth as well, if I choose to leave my corporation.

There are two obvious options, plus a few others.

1. I stick it out for a few more years and collect my un-reduced pension, then continue to work elsewhere for a while, albeit at my discretion.

2. Leave early with an extra $120k (minus applicable taxation) that I can put to work for me while I work elsewhere, then at 55 collect a reduced pension while double dipping working elsewhere for a while.

My spouse works full time, we have one kid that will be graduating this year (RESP is there for them), a house that's paid for, zero debt and a decent amount in our RRSP/TFSA.

It may not be $1.7 mil, but with our retirement plans to downsize our home and to only own one vehicle it should be doable.

We're planning to begin heading to Latin America/Southeast Asia in the winter (where we enjoy going and our dollar stretches much further), starting with one month next year then for two or three months as we wind down our careers. We'd obviously want to do this as much as we can while still active and in good health and before health insurance gets prohibitively expensive.

If only I could order a crystal ball off Amazon, lol.