What Age Should You Retire?

Are You Ready to Retire?

First Published Date : August 14, 2010 ADawnJournal.com

Everyone knows that the general retirement age is 65, which is when people feel they will retire. However, for some retiring at the age of 65 is too late, while retiring at that age is just too early. So, how do you know when the best year of your life is to retire? It is a tricky balance. You want retire in time so that you can enjoy your remaining years because no one wants to retire at 85. However, you also want to make sure that when you do retire, you have the money to enjoy yourself. You can’t live on $10,000 a year if that is all you have to sustain you for the next 20 years if you retire at 65.

When looking at if you are psychologically ready to retire, see if any of these match what you feel:

1.   You find that work interferes with the things that you want to do with your life.

2.   You want more freedom with your life.

3.   You want to retire when you can still enjoy your retirement and still have your health.

4.   You are prepared to lower your costs in order to save more in your retirement.

5.   You are not fulfilled or happy in your job anymore.

6.   You have plans and goals you want to fulfill with your extra time.

The next thing you need to do is look at whether or not you are ready to retire financially. This can be harder to determine because there are so many variables. Do the following to determine if you are ready to retire:

1.   Look at how much you pay out for expenses now, and determine what you can cut back on. Then, look at your expenses at that point and how much money you need to live on for the next 30 years.

2.   Look at how much you have in your savings and retirement fund and divide it by 30. If it gives you enough to live on, you may be ready to retire.

3.   Determine how much money you have in spare in case of disaster. As you get older, medical costs can come up and that will cause severe problems with your finances.

4.   When you retire at 65, you should have enough money to last you for at least 25 years living just on pensions, retirement income and retirement savings. It is important to remember though that if you retire at 55, you need to have 35 years of savings and retirement income at your disposal. The sooner you retire, the more money you need to live off of because there are more years before you reach the end of your life, statistically speaking.

If you match these criteria, and you are ready for retirement, then you should seriously look at retiring. Retirement is something that you will look forward to, but if you retire too late, or too early, you will not be able to enjoy it as you would want to.

Saving For Your Retirement

Retirement Planning

First Published: June 11, 2010 ADawnJournal.com

We all want to save for our retirement and we all know that hoping to win the lottery is a fool’s quest that should not be relied upon. You want to save as much money for your retirement because the more you save, the easier you will be able to live without an income. For example, if you save $100,000 for your retirement, that may seem like a lot but if your yearly expenses after 65 are $20,000 per year, then you end up only having enough money for five years. Likewise, if you save $1,000,000 for your retirement and you only spend $20,000 per year in expenses, you then have enough money for 50 more years. That doesn’t mean that you won’t have to pay out money suddenly for a large expense, but it does give you more breathing room.

Until the age you are 71, you can make a contribution to your Registered Retirement Savings Plan to a total of 18 percent of your earned income or $13,500 a year less your pension adjustments. This can give you more money for your retirement because your RRSP can grow by as much as eight percent per year. The thing is not a lot of people actually contribute everything they can for their retirement into an RRSP. In 2000, Canadians between the age of 24 and 64 put in $27.8 billion into their RRSPs, but that was only 10 percent of the total contribution amount available.

If you want to make sure you put money into your RRSP, then you should do an automatic withdrawal so that the money automatically comes out of your bank each month, or you can set up for an employer plan.

Another important way to save for your retirement is to get insurance. Critical illness insurance, disability insurance and life insurance can all ensure that you and your family have money if disaster strikes. Insurance is like a safety net for you that protects you from the worst. Remember the adage “Hope for the best, prepare for the worst” because that is how insurance works. Long-term care insurance can protect your finances if you suffer a disability or illness that causes you to need home care. This lowers the financial burden that you would have had to deal with.

You can also look at home equity plans through the Canadian Home Income Plan. The CHIP program comes from the government and it registers a mortgage on your title and you receive a lump-sum payment of 10 to 40 percent of the appraised value of your home. You own your home and when you sell your home the mortgage is repaid. Most banks offer CHIPs and you typically pay the cost of administration and the cost of the appraisal.

Planning for your retirement is very important because you do not want to be like the grasshopper that goes through life without planning for the winter. You want to be like the ant that works hard and enjoys what they have accomplished in their golden years.

Always consult a qualified financial/legal professional before making financial/legal decisions.

The Joy of Not Working

The Joy of Not Working

First Published: Aug 19, 2008 ADawnJournal.com

Imagine that an undergraduate engineering student is doing the following:

• Taking a year off

• Quitting school not once, but twice

• Skipping 85% of his classes

• Failing first-year English three times

If he is in a class of 250 students, what would you expect him to rank? The last possible rank (the 250th) or maybe the 150th?

This is not an imaginary story. This student is now the world famous author Ernie Zelinski. He did graduate, ranking 7th among those 250 students. Zelinski’s international bestseller The Joy of Not Working has sold over 250,000 copies and has been translated into 17 languages in 21 countries.

I just finished reading this book, and was greatly inspired by it. While reading The Joy of Not Working, I had the feeling it was I, not Ernie who wrote it. I could not have agreed more with everything he said, each paragraph, every sentence, and every word. It was such a feeling … it was just like reading my own thoughts expressed eloquently by someone else. Perhaps this is because I am going through a phase in my life in which I desire to live on my own terms, and that is what Zelinski talks about in this book.

I am happy to announce that Ernie Zelinski has agreed to an interview request.  The interview will be conducted sometime next week, and I would like to offer my readers the opportunity to ask him some questions.  Please email me your submissions over the next few days.  I will pick a few of the best ones and include them in the interview. Also, I will be doing a review of The Joy of Not Working shortly.To submit your questions, you can email me through contact page, or you can leave a comment right underneath my postings.

Twenty- five summers ago, Ernie Zelinski asked for two months off work. His boss declined, but Ernie decided to take two months off anyway. He was fired upon his return. That was his last job and he has not worked since then.

Free E-Book - Download the preface, Chapter 1, and Appendix from The Joy of Not Working.

Buy the full version here

Save For Retirement - Never Too Late

Retirement Saving Tips

If you are in the workforce for a while or just started working but never thought of saving money for your retirement - follow these simple tips to kick start your future.

It's Never Late - It's never late to start saving. Start now if you already haven't started. The most important thing is to start. Don't wait any more. Don't listen to your self-made excuses.

Small Is Great - Don't be afraid to start with a small amount such as $25 per week or $25 per month. Start with something small and gradually increase your contributions. Small amounts will turn into big things in the long run.

Be Regular - Use automatic deductions from you paychecks or bank accounts to invest regularly. Make this a lifetime habit. The main advantage of automatic investing is that you will never feel you are investing. Keep investing and never withdraw money from your retirement account.

First Published: July 31, 2007 ADawnJournal.com

Minor RRSP - Advantages & Restrictions

Early Age RRSP

There is no minimum age requirement to open an RRSP account. Children with earned income can open an RRSP account. The following are required in order to do so:

• A SIN (Social Insurance Number) is required for minors.
• Income has to be legitimate
• Income has to be recorded with proper receipts or documents
• T1 tax return has to be filed

There are many advantages of opening an early age RRSP. The followings are a few to mention:

• No actual contributions have to be made in the RRSP. Contributions can be made anytime later on. There is no time limit.
• Accumulates RRSP room for several years, which can be carried forward indefinitely and increases lifetime contribution limits.
• Allows a minor to contribute in RRSP right after entering work force. Someone who did not contribute at an early age wont be able to contribute right after entering work force because there will be no contribution room.
• RRSP deduction can be used anytime later on, when there is enough taxable income to use the deduction. There is no time limit to claim deduction.
• Gives income-splitting opportunity for parents who own business. Parents can hire their own children as employees and can pay then accordingly. Salary given to a child is a tax deductible business expense and it will create contribution room for the child.
• Contributions made in the RRSP will start growing and compounding tax free inside the plan.
• A great way to give children practical lessons about money management and personal finance at an early age.

Not all financial institutions allow minors to have RRSP. Most of the banks and big fund companies (like CI Funds) will allow minors to open an RRSP. Some institutions might put restrictions on minor accounts such as:

a co-signer is required (fund companies can do this)

can’t invest in mutual funds (banks can do this)

can only invest in GICs or savings accounts(banks can do this)

If you happen to face one of these or any other restrictions, do not get discouraged and shop for the best one. Minor RRSP is a great investment vehicle for kids and can provide lifelong benefits.
First Published: May 2007 ADawnJournal.com