“Welcome to the PlanEasy blog! We make personal finance easy.

Thanks for visiting.”

– Owen

Being Too Conservative Can Increase The Risk Of Running Out Of Money In Retirement

Being Too Conservative Can Increase The Risk Of Running Out Of Money In Retirement

When it comes to retirement planning, one of the biggest fears is often the risk of running out of money. It can be worrisome to think about what could happen if you’re unable to support your expenses in the future.

Sometimes these fears can lead to people choosing a more conservative risk profile, or holding a lot of cash, but taking these defensive measures can often increase the risk of running out of money in the future.

A more conservative asset allocation decreases market risk, the risk we take on when we invest in the stock market. But a conservative asset allocation actually increases other types of risk, like the risk of running out of money, or the risk of being impacted by high inflation rates.

A more conservative asset allocation can actually increase risk in retirement, especially for longer retirement periods. Your typical 30-40 something couple has a very good chance of either one making it to age 100+ in the future. There is a 25% chance that one of them will make it to age 98 and a 10% chance that one of them will make it to age 101!

Without making other changes, like a lower withdrawal rate, more flexibility with spending, part-time income etc, being more conservative can actually lead to a much higher probability of running out of money before age 100.

Let’s explore why this is the case and what you need to consider when creating your retirement plan…

read more
Low Income Retirement Planning

Low Income Retirement Planning

Low-income retirement planning requires a very different set of tools than your average retirement plan and this can sometimes lead to trouble when a soon-to-be low-income retiree gets advice that has been tailored for someone with a much higher income.

What we need to consider for a low-income retiree is very different than for your average retiree and the recommendations in a low-income retirement plan can sometimes be the opposite of a regular retirement plan.

The drawdown of investment assets, the timing of CPP and the timing of OAS are among many factors that differ in a low-income retirement plan.

When it comes to low-income retirement planning we’re primarily concerned with one thing, government benefits. We want to ensure that the way we save pre-retirement and the way we create income after retirement does not impact the amount of government benefits received.

This can be very tricky and can often lead to some less than obvious recommendations.

Before we get into some ideas to consider around low-income retirement planning lets look at why government benefits are the main consideration.

read more
Are Most People Taking CPP Early Or Late? Some Real Numbers From Real Retirees

Are Most People Taking CPP Early Or Late? Some Real Numbers From Real Retirees

Are most people taking CPP early or late? Delaying CPP can have many advantages (and a few downsides). Delaying CPP to age 70 can see monthly CPP benefits increase by over 220% vs benefits taken at age 60.

Delaying CPP provides a lifelong inflation adjusted pension, and for those with no defined benefit pension this can be very appealing.

But as it turns out, very few people choose to delay CPP to age 70.

So, if delaying CPP has so much appeal, why aren’t more people choosing to delay?

In the analysis below we’ll see that the vast majority of people are taking CPP at or before the age of 65. Using these statistics for CPP starting age we’ll see that very few people choose to delay CPP past age 65 and only a very small percentage choose to delay all the way until age 70.

If delaying CPP to age 70 has so many advantages, why are most people choosing to take CPP early?

read more
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Owen Winkelmolen

Fee-for-service financial planner and founder of PlanEasy.ca

“Welcome to the PlanEasy blog! We make personal finance easy.

Thanks for visiting.”

– Owen

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

Being Too Conservative Can Increase The Risk Of Running Out Of Money In Retirement

Being Too Conservative Can Increase The Risk Of Running Out Of Money In Retirement

When it comes to retirement planning, one of the biggest fears is often the risk of running out of money. It can be worrisome to think about what could happen if you’re unable to support your expenses in the future.

Sometimes these fears can lead to people choosing a more conservative risk profile, or holding a lot of cash, but taking these defensive measures can often increase the risk of running out of money in the future.

A more conservative asset allocation decreases market risk, the risk we take on when we invest in the stock market. But a conservative asset allocation actually increases other types of risk, like the risk of running out of money, or the risk of being impacted by high inflation rates.

A more conservative asset allocation can actually increase risk in retirement, especially for longer retirement periods. Your typical 30-40 something couple has a very good chance of either one making it to age 100+ in the future. There is a 25% chance that one of them will make it to age 98 and a 10% chance that one of them will make it to age 101!

Without making other changes, like a lower withdrawal rate, more flexibility with spending, part-time income etc, being more conservative can actually lead to a much higher probability of running out of money before age 100.

Let’s explore why this is the case and what you need to consider when creating your retirement plan…

read more
Low Income Retirement Planning

Low Income Retirement Planning

Low-income retirement planning requires a very different set of tools than your average retirement plan and this can sometimes lead to trouble when a soon-to-be low-income retiree gets advice that has been tailored for someone with a much higher income.

What we need to consider for a low-income retiree is very different than for your average retiree and the recommendations in a low-income retirement plan can sometimes be the opposite of a regular retirement plan.

The drawdown of investment assets, the timing of CPP and the timing of OAS are among many factors that differ in a low-income retirement plan.

When it comes to low-income retirement planning we’re primarily concerned with one thing, government benefits. We want to ensure that the way we save pre-retirement and the way we create income after retirement does not impact the amount of government benefits received.

This can be very tricky and can often lead to some less than obvious recommendations.

Before we get into some ideas to consider around low-income retirement planning lets look at why government benefits are the main consideration.

read more
Are Most People Taking CPP Early Or Late? Some Real Numbers From Real Retirees

Are Most People Taking CPP Early Or Late? Some Real Numbers From Real Retirees

Are most people taking CPP early or late? Delaying CPP can have many advantages (and a few downsides). Delaying CPP to age 70 can see monthly CPP benefits increase by over 220% vs benefits taken at age 60.

Delaying CPP provides a lifelong inflation adjusted pension, and for those with no defined benefit pension this can be very appealing.

But as it turns out, very few people choose to delay CPP to age 70.

So, if delaying CPP has so much appeal, why aren’t more people choosing to delay?

In the analysis below we’ll see that the vast majority of people are taking CPP at or before the age of 65. Using these statistics for CPP starting age we’ll see that very few people choose to delay CPP past age 65 and only a very small percentage choose to delay all the way until age 70.

If delaying CPP to age 70 has so many advantages, why are most people choosing to take CPP early?

read more
Page 1 of 4512345...

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

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