I just turned 54 and awfully late to investing with barely any portfolio except my 401k. I have a decent amount of cash saved up and with inflation currently soaring, I’m getting worried about retirement. How do I best optimize my savings of over $ 200k?
Retirement is a bit more dicey than it was in the past, it’s about balancing your risk tolerance with your long-term goals. Maybe consider speaking to an advisor to help in diversifying your portfolio to spread out the risk.
I think the market is likely at its best now, but I still believe having a financial advisor is crucial to navigate the market and moderate your risk especially if you’re planning for retirement. Their expertise can really help you make informed decisions.
Agreed, I’ve always delegated my excesses to an advisor, since suffering major portfolio loss early 2022. I’m now semi-retired and only work 7.5 hours a week with barely 25% short of my $1.5m retirement goal after subsequent investments to date.
Thanks for sharing your experience! I’ve been managing my portfolio myself, but it hasn’t been working out. Do you have any recommendations for a good investment advisor? I could really use some help.
We retired early (62 and 57) and live on much less, around $50,000/yr. No debt and a modest home with no mortgage. For decades we were paying for the kids, their activities and university. Now we have 1 adult child at home and he pays for himself. Life is so much cheaper. My husband has a work pension and collected CPP early. OAS hasn't started yet. We can generally live on $2400 per month and live in a city in Southern Ontario. The rest of the money each month goes into an account for municipal taxes, maintenance on the home, car repairs etc. In a few years, I'll collect CPP and we'll collect OAS. Enjoy your life!
The best advice be a saver , don't use an advisor ,take a stock market investment coarse and self direct. Used an advisor once lost me 100k that took 7 years to recope. I'm 60 will retire in 2 years and will be better off than when I worked and I make 125k a year
That’s almost 6k a month . The avg person wouldn’t spend that much I’m working as is my wife and we don’t spend that much . The key is to be happy doing things that are free and cheap and in Canada their is plenty of those things.
You have outlined this so well! We were in a meeting with a wealth management person last week, and they confused us with details. I guess we need to find someone who can plain speak these ideas to us! Thank you!
Thanks for your comment Marijane. Not sure I can help but why don't we have a brief discussion. There's no charge for the discussion. calendly.com/aaronwealthmanagement/discovery
The thing is about the “70% of gross income” is that it doesn’t make sense for savers. For people retiring early and saving 10, 20, or more percent of their income, they already live on a lot less. The other factor is that you spend less as you get older. The amount you need to live on is “it depends.”
So true wcg. This is the easy part of this equation. I think the biggest challenge for this scenario that too many people overlook is the bridge of five years before Medicare eligibility. For most people if their healthy it's not a big deal. One serious illness can have devastating consequences to this plan
I have a detached home, which has been paid off. I plan to finish my basement and let it out. I am assuming that at a minimum I will get $12,000/yr as additional income from that rental. Also, another option would be to rent out the entire house, and move to a rental condo using part of the rental income I get from my house. That way, I think the remaining rental income (after using part of it for condo rental), will add to the retirement income, and the house will remain when I pass on.
It takes -2- accomplished missions : - paid off home - $800,000 or more invested with dividend stocks / Dividend income is tax efficient - if possible / reinvest the dividends - rent out a room in your home - you've now achieved your mission - how do I know ? I've done this mission for myself
I agree many of these retirement plans way over estimate how much money you need because they don't factor in investment returns after retirement. A paid for home and $500K in investments I can live comfortably in retirement.
I cannot stand it when someone says “I have 3 million dollars” can I retire now? I mean come on wtf do you think. You know if you can do it or not. Do you live a modest life living in a modest home that’s paid off? If so yes you can. Or do you live in a multi million dollar home and lease a brand new BMW or Mercedes every other year? If not then maybe you can’t retire now. Again it’s all up to you to figure that one out.
Oh this is ridiculous. I am 64, been retired for 9 years. Zero savings. Zilch. I have a small private pension and looking forward to Canadian pension (CPP), plus old age security (OAS), should be about $2650. CDN per month. I plan to sail the med for the next 10 years. What more do you need?
Great incites and i appreciate the opportunity to sit in on your conversations. I do have a question as to why it is referred to as a government benefit when it is your money combined with the controbutions from your employer? Ive always wondered about this use of terminology.
Depends on what lifestyle you want in retirement, I retired with a lot less and adjusted my lifestyle to accommodate. But guess what? I am very happy and not obsessed by money. What about people that have to retire for health reasons without big savings?Sadly, you speak to an ever growing, smaller amount of retirees.
What if you are 60 yrs. single man with a pension and benefits (3K a month), 500K savings in 401K and Roth IRA, low investments in dividend stocks, and over a 120K in HYSA at 4.25%, and debt free with a paid off mortgage. Did a budget and I don't come even close to 6K to 8K month in expenses like some financial advisors calculate. Do more singles videos please, thank you.
What rate do you use for the investment part ($800k) for the duration of the plan .. you mentioned 2-3% for inflation on the expenses but not rate of return on investments .. and what would be does investments? GIC/Bonds/Stock dividends and in what proportion? Thanks
Many of these retirement plans factor cashing out all your investments at retirement. I certainly wouldn't do that. If you stay invested and earn a 5% dividend yield or bond coupon, you can withdraw 5% every year without touching principle and never run out of money. Also why would you plan to fund your retirement to 90. Very little chance of living that long, at least for me.
Maybe if the people handing out" financial advice" weren't` telling people to load up their rrsp like that guy did he wouldn't`t be screwed. You are just prolonging the pain to a time when you don't need it. Good video by the way .
If you make it past the age most people die, it isn't that bad living on government benefits. My 86 year old mother doesn't spend anywhere near her income. She has Maximum CPP (lots of drop out child rearing years), full OAS, her work pension, and her survivor benefit from my late father's pension. She's had a fully paid off house for close to 50 years now. Her bank account just grows. She could easily live on just the government amounts now. Not travwlling much anymore, etc.
the 70% rule is silly over simplification. Spend the small amount of effort to actually figure out your actual cost of living not some rule of thumb based on ones income. Also the issue with this hypothetical is what the heck is a simple older going on elderly person need a single family house for worth 1.5 million given this is 65% of their assets. Just sell the darn thing and their cost of living will go down a bunch plus all that profit can be much better used to work for you. I guess it has made since in the past decades as housing has boomed but we no longer know this is likely in the future. not worth the risk vs. can cash out and use the money to build off of. May well be the cash that then could live off of dividends without drawing down anything and not have to hope to die at the average mortality rate....
Great Video. I am 62, still working , salary in the $100,000 range. I think what needs to be done is to track your expenses for a few years so you can see exactly how much you actually need every year. I have done that and realize that $70,000 is way more than I need.
@@edhcb9359 Wants drive a lot more people to never be able to retire....judging from the abysmal retirement savings on average and the fact that over 50% of people making over $100,000 in the US are living pay check to pay check.
@@ariefraiser140 People making low or average livings are not ever going to be rich and to your point overspending makes it even worse. But seeking to fulfill basic needs doesn’t get you anywhere. Heck, our government will let you sit at home and be handed your basic needs through welfare programs.
Aren't condo fees expensive as well? I see them at $1,500 in my area and I know people who were hit with an unexpected $20,000 or $10,000 fee to repair the condo roof or something similar.
Why not invest it in a high dividend ETF or stock that have a good divident paying history, such as Canoe EIT Income Fund or Enbridge (or its closed end fund ENS)?
That's the strategy I took and the income being generated (thru dividends) will likely put me in a position where I'll be able to maintain, or possibly grow my retirement nest egg until I'm forced at 71 to turn my RRSP's into a RIF. If you're debt free, you can live pretty decently in retirement on $800K in savings plus CPP & OAS @ 65.
I retired at 52 with 1 million USD. I bought 300,000 USD in property in the Philippines, where my wife comes from. Seven years of rental has recouped the initial investment and the rest is pure profit. We invested 100,000 USD in stocks that, over the past 4 years have reaped a 12% p.a. profit. The value of our property has gone up by 66%, given the location/effect of the recent pandemic. We have around 200k in the bank, half of which is tied up in long-term (10 years) high interest bonds. We get a yearly dividend that we have, up to now, always re-invested. Our income is only around 30k USD per year but we have no debt so that 30k is cash in our pocket.
The question I have is about the impact of inflation. $70k at age 60 is much less money than at age 74; then the plan to drop income? Life did not become less expensive because you became older.
Assuming $800K in cash and investments and $1.5M equity (say $1.4M net of transaction costs) gives you $2.2M at 60, means you could never make another dime again and you could spend over $70K per year for the next thirty years. So yes, you can retire at 60 on $2.2M available assets if you are not an idiot about it. Throw in very modest interest, market gains and SS flows and it should be obvious that there is no need to pay this guy tens of thousands just to do that simple math.
Thanks for your comments. To be clear it's $70K after-tax per year annually increasing by 3% (CPI adjustment) That's the 1st goal. 2nd goal is not leaving any money behind in the RRIF account. So that income goal is not possible without selling the house.
I am 62 and beginning the second year of retirement. First off, have a really hard look at your actual living expenses; I think most of us in pre retirement over estimate what will need (outside of travel or other one time expenses). Second, don't ignore any opportunity to get money out of RRSP at a low tax rate. I just noticed we did not withdraw anything out of my wife's spousal account for 2022 despite her having no income; a costly miss step and my bad. Aaron's points are spot on though and it is all about how much you spend and how long you hang onto assets you don't necessarily need (home) if your numbers are near the thin side. Aaron, a video on reverse mortgage vs. selling and investing may be an idea if you are going to suggest selling the family home as a solution to filling a deficit situation.
I thought for sure that this video was heading in the direction of reverse mortgage. Literally could be the exact same video, but near the end when the guy downsizes he does a reverse mortgage instead. I am not fond of the idea, myself, but it could work for people who simply refuse to let their home go.
Yes. You only need 1200 a month $300 for property taxes $300 food $200 utilities $50 auto insurance $50 gasoline $300 health insurance Add 700 if rent or mortgage Subtract 150 if 65 on Medicare 1050 to 1900
People spend an entire life thinking about retirement, saving money and enjoy less their life: travel, restaurants, clothing...... and saving becomes a habit. Then they retire and start worrying about how long you may live. If they live another 40 years then they should not touch their savings..... My parents had no savings and they were very happy with the retirement money they got. They did not need much. at 75 we eat much less, we have only one car (if we are a couple) etc....30% of people die with a huge money in their bank accounts and some have either no one to inherit the money or they have children but become bitter towards the children who neglect them at their old age and they decide not to inherit the money. Guess who takes the money? The government. Actually, this information was given to me by someone who is a financial advisor to elderly.
yes in philippines thats around 40 million pesos. you can live for a year around 10 -12 k dollars per year with a good lifestyle, and you still earning if the money is time deposits
No way does the average person making $100k need $70k annually to retire. He won't be putting money into savings anymore (which he obviously has been doing a lot of with $800k saved). There are so many expenses if you don't have to work anymore. I make approximately $120k between my main job and a side job I do - and I spend about $3,300 per month. So,no way would I need anything even close to 70% of my income.
I’m 54 with a $62k indexed pension. At age 65 I will lose the bridge. I am curious as to how much I would have needed to save in RRSP/ TFSA to have this amount of income?
Thank you for the informative video. It seems that you did not take into account possibility of getting GIS after RRSP has been melt down. Can you please clarify this point?
For this situation I didn’t go that far. I’m not in favour of encouraging people to have an income below $21K, quite the opposite in fact. I like to see my clients with higher incomes, checking off bucket list items and maximizing their estate values. The RRSP meltdown simply moves money from and RRSP to a non registered portfolio where taxation may still be an issue to qualify for GIS.
Your various scenarios didn't contemplate the potential growth of a RRIF, i.e 4 or 5% per year. Or how the person could take a bit more than the minimum RRIF withdrawal and put some into their TFSA.
Actually, we did use 4% for the the rate of return and the point of the video is “get a financial plan” which would identify an increased withdrawal rate
Hi Lorraine, Yes a reverse mortgage is a possible option. I used the option of downsizing because of the maintenance of a 3 level house, mobility of a senior up and down stairs etc. Condo life seems easier.
If you are married and your wife is going to retire with you absolutely not. Add your wife's income and your income together and figure out how much you make and how much you spend. Are you going to do anything, buy anything or waste anything? Do you plan on living more than 13 years? Are you going to move overseas to Ecuador? Even if you stay at home, eat in all the time and live a frugal life it will be a tight squeeze. Your wife will still want to spend like it was the day before retirement. They will always be demanding money from you. Put it off at least until you are 70. I started with roughly 800k and at 73 I am scraping the bottom of the barrel. Wife will not go to Ecuador. According to Amelia and JP channel 2k = 5k in Ecuador. Then you have to worry about the flim flammers all over the world. You have to adjust to the slower pace. You have to learn spanish. There are at least 19 countries in the world that speak spanish. All the english language places are too expensive. Europe is too expensive. Do not keep a big house. Cut your expenses. One car. Do all the right things and you might make it. Move to a no income tax state before you move overseas. Sell everything. Take nothing. Buy what you need when you get there. A sofa, a chair, a big screen tv. Live frugal and enjoy a good life. Get your electronics before you go. Declare everything you take. Get your prescription drugs overseas if you can. Keep records of the prescriptions. Be careful taking drugs overseas. That is the best I have and maybe more than you wanted. You can't take car to Ecuador. You have to buy there unless you are a native.
That was a poll. There’s a difference between thinking and knowing how much you need for retirement. Having a financial plan and working with an advisor will get you headed in the right direction
That’s ridiculous, you don’t need anywhere near 1.7 million to retire, you just need the right income investments that kick off high monthly dividends/distributions.
@@paulsantori8920 Hi Paul, That may be true of a non-registered portfolio but in this example, there is only a large RRSP and small TFSA account. Withdrawals from an RRSP are treated as income irrespective of how the portfolio acquired the growth. There is no preferential tax treatment on dividend or capital gains in an RRSP. The $70K annual income goal is inflation adjusted as well. I agree with you about the 1.7 million comment though. Perhaps the question in the poll was an amount needed to produce enough income without touching the principal.
@@mjor6406 having a mortgage & HELOC debt doesn't mean they have negative asset unless their homes are now worth significantly less than what they purchased at, that may be the case for people who bought their houses within last few years only, that should not represent 90% of your customers unless you work in the collection Dept.....lol
I recently invested in a multiple sector cover call U.S. ETF - Symbol - HYLD - run by - Hamilton - 13.75% yield - paid monthly / The yield is high enough to cover the age factor of the RRIF - without eroding my asset base / So far - so good
It's all about discipline. I was taught from an early age to pay myself first. I'm in the trades and started working, saving and investing at 18. Now at 58 I have close to $900,000 saved and my house has been paid off for 13 years. I could have had more, but we raised 2 kids and took them on several vacations while they were growing up. My plan is to pack it in at 60. With Trudeau's inflation and his yearly carbon taxes, my wife and I still don't think we will have enough to enjoy the lifestyle we want and have considered moving out of Canada.
This is a fantastic video. It's scenario based and relatable. Either you have more or less than 800k and need to know your options. It's either relieving or terrifying. For those watching this early enough, it's a great tent-pole to understand any changes you can make. Well done.
Great Video as always. Just wondering if reverse mortgage might have worked out similar to downsizing to Condo, but I guess strategy-wise the outcome would be similar. (Don't know if you meant to but the last 2 minutes of your video is blank).
Hi Satinder, Thanks for letting me know about the ending, I've trimmed the end now. The reverse mortgage strategy could work if they were unwilling to leave the home during retirement. Many retirees live in areas where all their support is nearby their house and so moving is not a great option. Although in keeping the house a senior must still deal with maintenance of the home which can be costly on a fixed income. Thanks for your comment Satinder.
NO. One needs at least 2M to 3M to retire. I suggest you work till you drop dead. 800K will not even buy you a burger plus property taxes and other expenses in next 15 years considering current rate of inflation. I plan to work till I die too. You are not alone.
This may be out of scope for your channel and most of your audience, but another solution is to address the "needs" side of the equation; consider emigrating to a location where the cost of living is considerably lower. This is a huge subject, with lots of options and lots of pros and cons, but suffice it to say there are several extremely good (safe) options that can reduce your budget by 50% or more. I know many Canadians who worry about never being able to retire in Canada due to the extreme cost of living coupled with not having saved enough. Leaving might be their best option, and typically comes with much better climate and a more laid back lifestyle. This decision could mean the difference between retiring comfortably at 60 or 65 vs. staying in Canada and working till you die. If the guy in the example sold his home and moved to Portugal (for example), he'd live like a king!
I suppose it depends on how long you live. I am in 63 years old and I have no intention of retiring, because I see too many elderly people running out of money. If you are 60 and retire and if you make it to age 90, that is 30 years.
Wow 800k and wonder if you should retire at 60 !!! I am surviving on my state pension for which i worked 40 years in the uk, no work in the finance industry just a building labourer most of my life. Of an age where you used to go from site to site for the next job. never given or had the opportunities to invest what ever that is. Oh well roll on death lets get the hell out of it. 67 yrs old had enough of this crap life, good luck with your retirement.
A great Video David! Thanks for the insight. QUestion - what if they person doesnt make it a RRIF at 55 but just withdraws the cash from the RRSP instead? Is there a reason you 'have to or should' make it a RRIF as soon as you plan to take the cash from it?
I think that only RRIF withdrawals qualify for Pension Income Tax Credit of $2000. Direct RRSP withdrawals do not. So one would be paying more tax with direct RRSP withdrawals.
@@rupchand2177 Thank you for taking the time to share that insight with me. I will have a DB pension plan that I am taking money out of at the same time as the RRIF/RRSP. I dont think the difference will have an impact on the tax front, but that is great knowledge and something I did not know. I should check to see if there are other benefits on withdrawls when I get there. Have a great day!
Great question. A financial plan outlining your withdrawal strategy will help you determine the most efficient method of providing your retirement income. I know you're looking for a number but you really need a discussion with a planner.
Hi David, another great video. You noted that in scenario #2 (selling his house at age 72) he would have money left over after age 90. How much would that be?
Most of these people are just flexing not really asking if they can retire. Ex. I have 5 million saved, 3 paid off houses and 200k in passive income… can I retire. Lol
I'm not even going to watch this, with such stupid headlines as "I'm 60 years old with $800K in savings, Can I retire now? YES, you can retire, it such a stupid question, it's not about savings at all, it's about expenses. How do more than half the people in the USA retire on no savings? Well they do it. So ugh I hate these headlines, Can I retire on $1 million or whatever.
I just turned 54 and awfully late to investing with barely any portfolio except my 401k. I have a decent amount of cash saved up and with inflation currently soaring, I’m getting worried about retirement. How do I best optimize my savings of over $ 200k?
Retirement is a bit more dicey than it was in the past, it’s about balancing your risk tolerance with your long-term goals. Maybe consider speaking to an advisor to help in diversifying your portfolio to spread out the risk.
@@IanKemp-k4nis it?
I think the market is likely at its best now, but I still believe having a financial advisor is crucial to navigate the market and moderate your risk especially if you’re planning for retirement. Their expertise can really help you make informed decisions.
Agreed, I’ve always delegated my excesses to an advisor, since suffering major portfolio loss early 2022. I’m now semi-retired and only work 7.5 hours a week with barely 25% short of my $1.5m retirement goal after subsequent investments to date.
Thanks for sharing your experience! I’ve been managing my portfolio myself, but it hasn’t been working out. Do you have any recommendations for a good investment advisor? I could really use some help.
We retired early (62 and 57) and live on much less, around $50,000/yr. No debt and a modest home with no mortgage. For decades we were paying for the kids, their activities and university. Now we have 1 adult child at home and he pays for himself. Life is so much cheaper. My husband has a work pension and collected CPP early. OAS hasn't started yet. We can generally live on $2400 per month and live in a city in Southern Ontario. The rest of the money each month goes into an account for municipal taxes, maintenance on the home, car repairs etc. In a few years, I'll collect CPP and we'll collect OAS. Enjoy your life!
The best advice be a saver , don't use an advisor ,take a stock market investment coarse and self direct. Used an advisor once lost me 100k that took 7 years to recope. I'm 60 will retire in 2 years and will be better off than when I worked and I make 125k a year
That’s almost 6k a month . The avg person wouldn’t spend that much I’m working as is my wife and we don’t spend that much . The key is to be happy doing things that are free and cheap and in Canada their is plenty of those things.
I lived on my retirement budget goal for two years to decide if realistic and doable. A modest lifestyle does not require so much wealth.
You have outlined this so well! We were in a meeting with a wealth management person last week, and they confused us with details. I guess we need to find someone who can plain speak these ideas to us! Thank you!
Thanks for your comment Marijane. Not sure I can help but why don't we have a brief discussion. There's no charge for the discussion. calendly.com/aaronwealthmanagement/discovery
If your home is payed off (400k to over a million dollars in potential equity) and you have zero debt - then yes, you can.
The thing is about the “70% of gross income” is that it doesn’t make sense for savers. For people retiring early and saving 10, 20, or more percent of their income, they already live on a lot less. The other factor is that you spend less as you get older. The amount you need to live on is “it depends.”
So true wcg. This is the easy part of this equation. I think the biggest challenge for this scenario that too many people overlook is the bridge of five years before Medicare eligibility. For most people if their healthy it's not a big deal. One serious illness can have devastating consequences to this plan
Indeed. I make 160K but live on 62K. So, gross ~ 67K.
Exactly. No need to save or pay a mortgage. 5 K a month after taxes should be just fine unless you really like to party and high end cruises.
@@DaystarHiker162 before taxes after taxes ? About 75-80
$800k at 5% interest is $40k per year. After income tax and inflation the answer is no. What happens if you live until 90?
I have a detached home, which has been paid off. I plan to finish my basement and let it out. I am assuming that at a minimum I will get $12,000/yr as additional income from that rental.
Also, another option would be to rent out the entire house, and move to a rental condo using part of the rental income I get from my house. That way, I think the remaining rental income (after using part of it for condo rental), will add to the retirement income, and the house will remain when I pass on.
Thank you for posting this out for video
It takes -2- accomplished missions :
- paid off home
- $800,000 or more invested with dividend stocks /
Dividend income is tax efficient
- if possible / reinvest the dividends
- rent out a room in your home
- you've now achieved your mission
- how do I know ?
I've done this mission for myself
He can buy TransAlta Renewables stocks and get divs monthly.
I agree many of these retirement plans way over estimate how much money you need because they don't factor in investment returns after retirement. A paid for home and $500K in investments I can live comfortably in retirement.
I cannot stand it when someone says “I have 3 million dollars” can I retire now? I mean come on wtf do you think. You know if you can do it or not. Do you live a modest life living in a modest home that’s paid off? If so yes you can. Or do you live in a multi million dollar home and lease a brand new BMW or Mercedes every other year? If not then maybe you can’t retire now. Again it’s all up to you to figure that one out.
Oh this is ridiculous. I am 64, been retired for 9 years. Zero savings. Zilch. I have a small private pension and looking forward to Canadian pension (CPP), plus old age security (OAS), should be about $2650. CDN per month. I plan to sail the med for the next 10 years. What more do you need?
Age 75-90 could need 7-15k per month for private care...easily
Great incites and i appreciate the opportunity to sit in on your conversations.
I do have a question as to why it is referred to as a government benefit when it is your money combined with the controbutions from your employer? Ive always wondered about this use of terminology.
I’m still working and My biggest expense is my saving for retirement. It will be a relief to not have to max out the 401k.
Since you are referring to 401k, I am assuming your are in US. If that is the case, you has to also worry about health insurance costs.
In this kind of economic crisis, TAKE THE MONEY AND RUN MAN !
If you are happy living in a van down by the river you can retire any time you want.
Oh how I miss Chris Farley. Those skits are hilarious 😂
If I had $800,000, I would be outta here ;-)
Home ownership is COSTLY especially when you are at an age where you can't do a lot of maintenance yourself.
Being at the mercy of chaotic rental market is also very costly.
I'm 42 years old with - $80,000 in debt and no savings. And a one year old. Life's good
You’re about as ready to retire as that 61 year old with 800k.
If you have to rely on CPP, good luck to you. You’re already behind the 8-ball
Depends on what lifestyle you want in retirement, I retired with a lot less and adjusted my lifestyle to accommodate. But guess what? I am very happy and not obsessed by money. What about people that have to retire for health reasons without big savings?Sadly, you speak to an ever growing, smaller amount of retirees.
What if you are 60 yrs. single man with a pension and benefits (3K a month), 500K savings in 401K and Roth IRA, low investments in dividend stocks, and over a 120K in HYSA at 4.25%, and debt free with a paid off mortgage. Did a budget and I don't come even close to 6K to 8K month in expenses like some financial advisors calculate. Do more singles videos please, thank you.
A good pension along with a supplement plan of 800,000.00 and no dept is doable.
With that kind of savings, you can retire easily at 55 for crying out loud, people who have to ask these questions - it surprises me.
Me too. Wondering if it isn't a type of bragging...
I am 60 and I Have $ 80 dollars for retirement. Living the American dream.
Sounds like you did.
What rate do you use for the investment part ($800k) for the duration of the plan .. you mentioned 2-3% for inflation on the expenses but not rate of return on investments .. and what would be does investments? GIC/Bonds/Stock dividends and in what proportion? Thanks
Many of these retirement plans factor cashing out all your investments at retirement. I certainly wouldn't do that. If you stay invested and earn a 5% dividend yield or bond coupon, you can withdraw 5% every year without touching principle and never run out of money. Also why would you plan to fund your retirement to 90. Very little chance of living that long, at least for me.
I've noticed that also. You can get a Cd in the US at 5.5%. That's $44,000.00 yrl. On $800,000
Maybe if the people handing out" financial advice" weren't` telling people to load up their rrsp like that guy did he wouldn't`t be screwed. You are just prolonging the pain to a time when you don't need it. Good video by the way .
Other option: stay in the house and use the equity via a reverse mortgage or line of credit.
I would say-yep. With your stats, you can retire or you prefer re-fire. And go and free yourself of core hours.
If you make it past the age most people die, it isn't that bad living on government benefits. My 86 year old mother doesn't spend anywhere near her income. She has Maximum CPP (lots of drop out child rearing years), full OAS, her work pension, and her survivor benefit from my late father's pension. She's had a fully paid off house for close to 50 years now. Her bank account just grows. She could easily live on just the government amounts now. Not travwlling much anymore, etc.
the 70% rule is silly over simplification. Spend the small amount of effort to actually figure out your actual cost of living not some rule of thumb based on ones income. Also the issue with this hypothetical is what the heck is a simple older going on elderly person need a single family house for worth 1.5 million given this is 65% of their assets. Just sell the darn thing and their cost of living will go down a bunch plus all that profit can be much better used to work for you. I guess it has made since in the past decades as housing has boomed but we no longer know this is likely in the future. not worth the risk vs. can cash out and use the money to build off of. May well be the cash that then could live off of dividends without drawing down anything and not have to hope to die at the average mortality rate....
Great Video. I am 62, still working , salary in the $100,000 range. I think what needs to be done is to track your expenses for a few years so you can see exactly how much you actually need every year. I have done that and realize that $70,000 is way more than I need.
But is $70k way more than you want?
@@edhcb9359 When you're guided by wants instead of need that's when you never get to retire.
@@ariefraiser140 Needs don’t drive people to overachieve. Wants do.
@@edhcb9359 Wants drive a lot more people to never be able to retire....judging from the abysmal retirement savings on average and the fact that over 50% of people making over $100,000 in the US are living pay check to pay check.
@@ariefraiser140 People making low or average livings are not ever going to be rich and to your point overspending makes it even worse. But seeking to fulfill basic needs doesn’t get you anywhere. Heck, our government will let you sit at home and be handed your basic needs through welfare programs.
Wow only 2.2 million this breaks my heart poor guy hope he makes it.
Aren't condo fees expensive as well? I see them at $1,500 in my area and I know people who were hit with an unexpected $20,000 or $10,000 fee to repair the condo roof or something similar.
Why not invest it in a high dividend ETF or stock that have a good divident paying history, such as Canoe EIT Income Fund or Enbridge (or its closed end fund ENS)?
Agreed, there are many ways to make 10+% nowadays which could make that $800k go a long way.
That's the strategy I took and the income being generated (thru dividends) will likely put me in a position where I'll be able to maintain, or possibly grow my retirement nest egg until I'm forced at 71 to turn my RRSP's into a RIF. If you're debt free, you can live pretty decently in retirement on $800K in savings plus CPP & OAS @ 65.
@@acdatz6222 Like what?
Once you hit 65 all forms of taxation should STOP!
I retired at 52 with 1 million USD. I bought 300,000 USD in property in the Philippines, where my wife comes from. Seven years of rental has recouped the initial investment and the rest is pure profit. We invested 100,000 USD in stocks that, over the past 4 years have reaped a 12% p.a. profit. The value of our property has gone up by 66%, given the location/effect of the recent pandemic. We have around 200k in the bank, half of which is tied up in long-term (10 years) high interest bonds. We get a yearly dividend that we have, up to now, always re-invested. Our income is only around 30k USD per year but we have no debt so that 30k is cash in our pocket.
The question I have is about the impact of inflation. $70k at age 60 is much less money than at age 74; then the plan to drop income? Life did not become less expensive because you became older.
What about the folks who don't have a 1.5 million dollar paid off house?
Assuming $800K in cash and investments and $1.5M equity (say $1.4M net of transaction costs) gives you $2.2M at 60, means you could never make another dime again and you could spend over $70K per year for the next thirty years. So yes, you can retire at 60 on $2.2M available assets if you are not an idiot about it. Throw in very modest interest, market gains and SS flows and it should be obvious that there is no need to pay this guy tens of thousands just to do that simple math.
Thanks for your comments. To be clear it's $70K after-tax per year annually increasing by 3% (CPI adjustment) That's the 1st goal. 2nd goal is not leaving any money behind in the RRIF account. So that income goal is not possible without selling the house.
I am 62 and beginning the second year of retirement. First off, have a really hard look at your actual living expenses; I think most of us in pre retirement over estimate what will need (outside of travel or other one time expenses). Second, don't ignore any opportunity to get money out of RRSP at a low tax rate. I just noticed we did not withdraw anything out of my wife's spousal account for 2022 despite her having no income; a costly miss step and my bad. Aaron's points are spot on though and it is all about how much you spend and how long you hang onto assets you don't necessarily need (home) if your numbers are near the thin side. Aaron, a video on reverse mortgage vs. selling and investing may be an idea if you are going to suggest selling the family home as a solution to filling a deficit situation.
Great feedback Ted and thanks for the video suggestion. Will do a video on Reverse mortgages shortly
I thought for sure that this video was heading in the direction of reverse mortgage. Literally could be the exact same video, but near the end when the guy downsizes he does a reverse mortgage instead. I am not fond of the idea, myself, but it could work for people who simply refuse to let their home go.
Yes.
You only need 1200 a month
$300 for property taxes
$300 food
$200 utilities
$50 auto insurance
$50 gasoline
$300 health insurance
Add 700 if rent or mortgage
Subtract 150 if 65 on Medicare
1050 to 1900
Then what is the ideal number $$$ in this exact scenario he would require to retire at 60, not selling his house?
Why are you telling people that they must make a RRIF withdrawal at age 60?
If expectation = funds then always yes. Champagne tastes beer budget....always no
If you advise for him to sell his house then it is really 1.6 mil he has to retire the way he wants not 800k
People spend an entire life thinking about retirement, saving money and enjoy less their life: travel, restaurants, clothing...... and saving becomes a habit. Then they retire and start worrying about how long you may live. If they live another 40 years then they should not touch their savings..... My parents had no savings and they were very happy with the retirement money they got. They did not need much. at 75 we eat much less, we have only one car (if we are a couple) etc....30% of people die with a huge money in their bank accounts and some have either no one to inherit the money or they have children but become bitter towards the children who neglect them at their old age and they decide not to inherit the money. Guess who takes the money? The government. Actually, this information was given to me by someone who is a financial advisor to elderly.
Answer is yes he can. I just retired at 59 with a little bit less. No debt. Go enjoy life
What if you don't own a home?
yes in philippines thats around 40 million pesos. you can live for a year around 10 -12 k dollars per year with a good lifestyle, and you still earning if the money is time deposits
No way does the average person making $100k need $70k annually to retire. He won't be putting money into savings anymore (which he obviously has been doing a lot of with $800k saved). There are so many expenses if you don't have to work anymore. I make approximately $120k between my main job and a side job I do - and I spend about $3,300 per month. So,no way would I need anything even close to 70% of my income.
Hi Debbie, thanks for watching the video and for your comment. There are needs and wants.
72 with $250.00 in the bank, what are my options?
I’m 54 with a $62k indexed pension. At age 65 I will lose the bridge. I am curious as to how much I would have needed to save in RRSP/ TFSA to have this amount of income?
Great question. Here's a link to a very useful website www.getsmarteraboutmoney.ca/calculators/
Misleading.....he doesnt have 800k he has 2.3 million in practice.
Why do people ask questions like this
Did they fail simple math
If their passive income after taxs is greater than all expences. Thats your answer
$800K? You have a choice. You can retire or you can buy yourself a new compact car.
Thank you for the informative video. It seems that you did not take into account possibility of getting GIS after RRSP has been melt down. Can you please clarify this point?
For this situation I didn’t go that far. I’m not in favour of encouraging people to have an income below $21K, quite the opposite in fact. I like to see my clients with higher incomes, checking off bucket list items and maximizing their estate values.
The RRSP meltdown simply moves money from and RRSP to a non registered portfolio where taxation may still be an issue to qualify for GIS.
Your various scenarios didn't contemplate the potential growth of a RRIF, i.e 4 or 5% per year. Or how the person could take a bit more than the minimum RRIF withdrawal and put some into their TFSA.
Actually, we did use 4% for the the rate of return and the point of the video is “get a financial plan” which would identify an increased withdrawal rate
Hi David. In this case, if the guy want to keep his house, is there an option to go for a reverse mortgage at age 75-80 ? Thank you
Hi Lorraine, Yes a reverse mortgage is a possible option. I used the option of downsizing because of the maintenance of a 3 level house, mobility of a senior up and down stairs etc. Condo life seems easier.
You can have a wonderful retirement in Southeast Asia.
If you are married and your wife is going to retire with you absolutely not. Add your wife's income and your income together and figure out how much you make and how much you spend. Are you going to do anything, buy anything or waste anything? Do you plan on living more than 13 years? Are you going to move overseas to Ecuador? Even if you stay at home, eat in all the time and live a frugal life it will be a tight squeeze. Your wife will still want to spend like it was the day before retirement. They will always be demanding money from you. Put it off at least until you are 70. I started with roughly 800k and at 73 I am scraping the bottom of the barrel. Wife will not go to Ecuador. According to Amelia and JP channel 2k = 5k in Ecuador. Then you have to worry about the flim flammers all over the world. You have to adjust to the slower pace. You have to learn spanish. There are at least 19 countries in the world that speak spanish. All the english language places are too expensive. Europe is too expensive. Do not keep a big house. Cut your expenses. One car. Do all the right things and you might make it. Move to a no income tax state before you move overseas. Sell everything. Take nothing. Buy what you need when you get there. A sofa, a chair, a big screen tv. Live frugal and enjoy a good life. Get your electronics before you go. Declare everything you take. Get your prescription drugs overseas if you can. Keep records of the prescriptions. Be careful taking drugs overseas. That is the best I have and maybe more than you wanted. You can't take car to Ecuador. You have to buy there unless you are a native.
it says 1.7 million for each person is minimum in order to retire
That was a poll. There’s a difference between thinking and knowing how much you need for retirement. Having a financial plan and working with an advisor will get you headed in the right direction
That’s ridiculous, you don’t need anywhere near 1.7 million to retire, you just need the right income investments that kick off high monthly dividends/distributions.
@@paulsantori8920 Hi Paul, That may be true of a non-registered portfolio but in this example, there is only a large RRSP and small TFSA account. Withdrawals from an RRSP are treated as income irrespective of how the portfolio acquired the growth. There is no preferential tax treatment on dividend or capital gains in an RRSP. The $70K annual income goal is inflation adjusted as well.
I agree with you about the 1.7 million comment though. Perhaps the question in the poll was an amount needed to produce enough income without touching the principal.
I work for a bank. 90& of Canadians have negative assets. Most have mortgage and Heloc debts.
@@mjor6406 having a mortgage & HELOC debt doesn't mean they have negative asset unless their homes are now worth significantly less than what they purchased at, that may be the case for people who bought their houses within last few years only, that should not represent 90% of your customers unless you work in the collection Dept.....lol
Yes you can
You can retire with $800K if you leave Canada, that is my plan.
Departure tax...
Are there any free websites you can suggest for financial planning or retirement planning tools?
Desjardins has a superb retirement calculator
He needs 70k and you scare the shot of him with a graph telling him that's going to inflate to 140k. That's just utter nonsense.
You are projecting $70,000 before taxes in this example. Right?
After-tax
@@AaronWealthManagement Thanks for the quick response. That means he wans an income of approx 86,000/year before taxes (assuming a 20% tax pay)
@@eltraveluis the example is wanting $70k in his hands per year increasing at 3% per year
@@AaronWealthManagement Thanks. Good video.
If you buy 500K worth of stocks with dividends- He can get $3000 monthly income.
Which stocks?
Yes if you're single.
Thank you, you are so informative and your videos are really helping me think through things I have no knowledge on…
I recently invested in a multiple sector cover call U.S. ETF - Symbol - HYLD - run by - Hamilton - 13.75% yield - paid monthly /
The yield is high enough to cover the age factor of the RRIF - without eroding my asset base /
So far - so good
answer is
How much longer you plan to live ?
Damn 60 and only 800k saved?
Should have worked harder.
It's all about discipline. I was taught from an early age to pay myself first. I'm in the trades and started working, saving and investing at 18. Now at 58 I have close to $900,000 saved and my house has been paid off for 13 years. I could have had more, but we raised 2 kids and took them on several vacations while they were growing up. My plan is to pack it in at 60. With Trudeau's inflation and his yearly carbon taxes, my wife and I still don't think we will have enough to enjoy the lifestyle we want and have considered moving out of Canada.
This is a fantastic video. It's scenario based and relatable. Either you have more or less than 800k and need to know your options. It's either relieving or terrifying. For those watching this early enough, it's a great tent-pole to understand any changes you can make. Well done.
Mr RUclips, buy an annuity, it will pay you ~64K for the rest of your life.
Great Video as always. Just wondering if reverse mortgage might have worked out similar to downsizing to Condo, but I guess strategy-wise the outcome would be similar. (Don't know if you meant to but the last 2 minutes of your video is blank).
Hi Satinder, Thanks for letting me know about the ending, I've trimmed the end now.
The reverse mortgage strategy could work if they were unwilling to leave the home during retirement. Many retirees live in areas where all their support is nearby their house and so moving is not a great option. Although in keeping the house a senior must still deal with maintenance of the home which can be costly on a fixed income. Thanks for your comment Satinder.
Lifetime payout annuity.
NO. One needs at least 2M to 3M to retire. I suggest you work till you drop dead. 800K will not even buy you a burger plus property taxes and other expenses in next 15 years considering current rate of inflation. I plan to work till I die too. You are not alone.
This may be out of scope for your channel and most of your audience, but another solution is to address the "needs" side of the equation; consider emigrating to a location where the cost of living is considerably lower. This is a huge subject, with lots of options and lots of pros and cons, but suffice it to say there are several extremely good (safe) options that can reduce your budget by 50% or more. I know many Canadians who worry about never being able to retire in Canada due to the extreme cost of living coupled with not having saved enough. Leaving might be their best option, and typically comes with much better climate and a more laid back lifestyle. This decision could mean the difference between retiring comfortably at 60 or 65 vs. staying in Canada and working till you die. If the guy in the example sold his home and moved to Portugal (for example), he'd live like a king!
I suppose it depends on how long you live. I am in 63 years old and I have no intention of retiring, because I see too many elderly people running out of money. If you are 60 and retire and if you make it to age 90, that is 30 years.
Planning is most important.
Wow 800k and wonder if you should retire at 60 !!! I am surviving on my state pension for which i worked 40 years in the uk, no work in the finance industry just a building labourer most of my life. Of an age where you used to go from site to site for the next job. never given or had the opportunities to invest what ever that is. Oh well roll on death lets get the hell out of it. 67 yrs old had enough of this crap life, good luck with your retirement.
A great Video David! Thanks for the insight. QUestion - what if they person doesnt make it a RRIF at 55 but just withdraws the cash from the RRSP instead? Is there a reason you 'have to or should' make it a RRIF as soon as you plan to take the cash from it?
Great question. Maybe I wasn’t clear there. It is RRSP withdrawals so in effect an RRSP meltdown. The withdrawals vary between $56K to $70K
I think that only RRIF withdrawals qualify for Pension Income Tax Credit of $2000. Direct RRSP withdrawals do not. So one would be paying more tax with direct RRSP withdrawals.
@@rupchand2177 Thank you for taking the time to share that insight with me. I will have a DB pension plan that I am taking money out of at the same time as the RRIF/RRSP. I dont think the difference will have an impact on the tax front, but that is great knowledge and something I did not know. I should check to see if there are other benefits on withdrawls when I get there. Have a great day!
debt ?
I have 100% of my retirement savings in RSP. Is there a recommended percentage that should be in TFSA vs RSP?
Great question. A financial plan outlining your withdrawal strategy will help you determine the most efficient method of providing your retirement income. I know you're looking for a number but you really need a discussion with a planner.
Isn’t the maximum amount a person can have in their TFSA account as of January 1-2023 $88k?
@@elp2689 The maximum cumulative deposit from 2009 to 2023 is $88,000. What your balance grows to depends on how well your deposits are invested.
Gic’s at 5% are a safe bet
Hi David, another great video. You noted that in scenario #2 (selling his house at age 72) he would have money left over after age 90. How much would that be?
Hi Chris, at age 90: RRIF zero, NReg zero, TFSA $857K, Condo value $1.2 million. Great question and thanks for watching.
Simple answer NO
I retired at age 45, kick sand slackers
Most of these people are just flexing not really asking if they can retire. Ex. I have 5 million saved, 3 paid off houses and 200k in passive income… can I retire. Lol
Go have fun.
No
If you live in a tent and like pork and beans, go ahead and retire.
Wow I have retired at 61 with only 150k. i guess I have a much better fanatical than you have
Sure move to thiland
I'm not even going to watch this, with such stupid headlines as "I'm 60 years old with $800K in savings, Can I retire now? YES, you can retire, it such a stupid question, it's not about savings at all, it's about expenses. How do more than half the people in the USA retire on no savings? Well they do it. So ugh I hate these headlines, Can I retire on $1 million or whatever.
Well, appreciate the comment though
I'm 61 with a $2 Canadian bill .....................
60, 800k$, you do not know where your retirement is? you are scary!
What a joke! The vast majority have nowhere near this amount and this guy has nearly a million and is "worried"?
According to the latest no he can't...need at least 1.5 million. What a f...g joke.
Off course you can.
Find that rich widow.