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

Thanks for visiting.”

– Owen

How Much Money Do You Need To Retire? Three Real Life Examples

How Much Money Do You Need To Retire? Three Real Life Examples

How much money do you need to retire? Well that depends, the more appropriate question might be how much do you want to spend? In this post we’re going to look at three real life retirement examples, one high spending around $200,000 per year, one moderate spending around $70,000 per year, and one low spending at $30,000 per year.

Retirement planning is always driven by spending assumptions in retirement. Spending levels have an enormous impact on how we can plan draw down, how we can manage taxes, and most importantly… how successful the plan is during periods of low investment returns. This is why it’s so important to accurately estimate spending when doing a retirement plan.

Spending doesn’t just include your regular day to day spending, it should also include things like one-time expenses for children’s weddings or once-in-a-lifetime trips. And it should always include an estimate for infrequent expenses like home repairs, vehicle repairs, and vehicle upgrades.

Determining how much money you want to spend in retirement will go a long way to helping to determine how much money you need to retire.

That being said, spending is important, but it isn’t everything…

Other income sources like government pensions, private pensions, and government benefits are also an important factor to consider. Income from government pensions can easily represent 25% to 50% of a retirees spending goal in retirement. Government benefits like GIS and GAINS in Ontario can easily add up to $10,000+ per year for low-income retirees.

The other factor to consider is how much income tax you’ll be paying in retirement. Not all income sources are created equal. Income from a defined benefit pension can be split between partners before age 65, a huge tax planning advantage. Income from CPP, OAS, RRSPs etc are all fully taxable whereas income from TFSAs or non-registered accounts are not. In some provinces non-registered eligible dividends from a Canadian company can actually have a negative tax rate, a big advantage when determining how to best draw down assets in retirement.

To determine how much money you need in retirement often requires a very custom financial plan. This retirement plan looks specifically at your income sources, your financial assets, and your spending goals to determine how much you actually need to retire (and often it’s less than you think!).

In this post we’re going to look at three real life retirement planning examples. These examples are from case studies that we’ve done in the past with the Financial Post or other personal finance websites. We’ve chosen three in particular. One high income retirement planning example. One moderate income retirement planning example. And one low income retirement planning example.

read more
The New TFSA Contribution Limit! How Big Could Your TFSA Get If You Contribute The Max Each Year?

The New TFSA Contribution Limit! How Big Could Your TFSA Get If You Contribute The Max Each Year?

The TFSA is an amazing account and it just got a little bit better. The contribution limit for 2020 is an additional $6,000. This means that as of January 1st 2020, anyone over the age of 18 in 2009 will have $69,500 of TFSA contribution room if they’ve never contributed before!

What makes the TFSA so amazing is the tax free compounding and when this compounding starts to take hold the results are incredible (just take a look at some of the projections below).

It’s reasonable to expect that many of us with TFSAs will see them reach $1,000,000+ at some point in the future. It’s just a matter of time. We’ll share some projections below but its pretty reasonable to expect that TFSAs could reach $5M, $7M or even $10M+ (in future dollars).

In fact, having TFSAs that reach $1,000,000+ is pretty common in many retirement projections that we do at PlanEasy.

Often, from an income tax and estate planning perspective, we want to draw down TFSAs last in retirement (or sometimes they’re also draw down strategically to avoid higher marginal tax brackets). We’re also strategically shifting assets from RRSPs/RRIFs into TFSAs over time. This leads to some very large TFSA balances and very little tax on the estate (depending on future investment returns of course).

read more
Investing After Retirement… What Should Change?

Investing After Retirement… What Should Change?

Should anything change when investing after retirement? Are there specific investment options for after retirement? Should you change your asset allocation after you’ve retired?

For the average retiree their investment portfolio will make up a significant portion of their retirement income. Most of us will receive some government pension from CPP and OAS. Some of us may also receive retirement income from a defined benefit pension as well. But even in those situations we’re probably still creating some retirement income from an investment portfolio each year and this income is critical to help us reach our spending goals.

Given investment income is such an important part of most retirement plans, should anything change when investing after retirement?

For some people the answer might be yes. But for most of us the answer is probably no.

There are a few important factors to consider when investing after retirement and the three big ones are asset allocation, investment fees, and complexity.

These three factors are important to consider when investing after retirement. Depending on how your investment portfolio currently stands against these three factors it may warrant making some changes before entering retirement.

read more

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...

How Much Money Do You Need To Retire? Three Real Life Examples

How Much Money Do You Need To Retire? Three Real Life Examples

How much money do you need to retire? Well that depends, the more appropriate question might be how much do you want to spend? In this post we’re going to look at three real life retirement examples, one high spending around $200,000 per year, one moderate spending around $70,000 per year, and one low spending at $30,000 per year.

Retirement planning is always driven by spending assumptions in retirement. Spending levels have an enormous impact on how we can plan draw down, how we can manage taxes, and most importantly… how successful the plan is during periods of low investment returns. This is why it’s so important to accurately estimate spending when doing a retirement plan.

Spending doesn’t just include your regular day to day spending, it should also include things like one-time expenses for children’s weddings or once-in-a-lifetime trips. And it should always include an estimate for infrequent expenses like home repairs, vehicle repairs, and vehicle upgrades.

Determining how much money you want to spend in retirement will go a long way to helping to determine how much money you need to retire.

That being said, spending is important, but it isn’t everything…

Other income sources like government pensions, private pensions, and government benefits are also an important factor to consider. Income from government pensions can easily represent 25% to 50% of a retirees spending goal in retirement. Government benefits like GIS and GAINS in Ontario can easily add up to $10,000+ per year for low-income retirees.

The other factor to consider is how much income tax you’ll be paying in retirement. Not all income sources are created equal. Income from a defined benefit pension can be split between partners before age 65, a huge tax planning advantage. Income from CPP, OAS, RRSPs etc are all fully taxable whereas income from TFSAs or non-registered accounts are not. In some provinces non-registered eligible dividends from a Canadian company can actually have a negative tax rate, a big advantage when determining how to best draw down assets in retirement.

To determine how much money you need in retirement often requires a very custom financial plan. This retirement plan looks specifically at your income sources, your financial assets, and your spending goals to determine how much you actually need to retire (and often it’s less than you think!).

In this post we’re going to look at three real life retirement planning examples. These examples are from case studies that we’ve done in the past with the Financial Post or other personal finance websites. We’ve chosen three in particular. One high income retirement planning example. One moderate income retirement planning example. And one low income retirement planning example.

read more
The New TFSA Contribution Limit! How Big Could Your TFSA Get If You Contribute The Max Each Year?

The New TFSA Contribution Limit! How Big Could Your TFSA Get If You Contribute The Max Each Year?

The TFSA is an amazing account and it just got a little bit better. The contribution limit for 2020 is an additional $6,000. This means that as of January 1st 2020, anyone over the age of 18 in 2009 will have $69,500 of TFSA contribution room if they’ve never contributed before!

What makes the TFSA so amazing is the tax free compounding and when this compounding starts to take hold the results are incredible (just take a look at some of the projections below).

It’s reasonable to expect that many of us with TFSAs will see them reach $1,000,000+ at some point in the future. It’s just a matter of time. We’ll share some projections below but its pretty reasonable to expect that TFSAs could reach $5M, $7M or even $10M+ (in future dollars).

In fact, having TFSAs that reach $1,000,000+ is pretty common in many retirement projections that we do at PlanEasy.

Often, from an income tax and estate planning perspective, we want to draw down TFSAs last in retirement (or sometimes they’re also draw down strategically to avoid higher marginal tax brackets). We’re also strategically shifting assets from RRSPs/RRIFs into TFSAs over time. This leads to some very large TFSA balances and very little tax on the estate (depending on future investment returns of course).

read more
Investing After Retirement… What Should Change?

Investing After Retirement… What Should Change?

Should anything change when investing after retirement? Are there specific investment options for after retirement? Should you change your asset allocation after you’ve retired?

For the average retiree their investment portfolio will make up a significant portion of their retirement income. Most of us will receive some government pension from CPP and OAS. Some of us may also receive retirement income from a defined benefit pension as well. But even in those situations we’re probably still creating some retirement income from an investment portfolio each year and this income is critical to help us reach our spending goals.

Given investment income is such an important part of most retirement plans, should anything change when investing after retirement?

For some people the answer might be yes. But for most of us the answer is probably no.

There are a few important factors to consider when investing after retirement and the three big ones are asset allocation, investment fees, and complexity.

These three factors are important to consider when investing after retirement. Depending on how your investment portfolio currently stands against these three factors it may warrant making some changes before entering retirement.

read more

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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