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

Thanks for visiting.”

– Owen

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
Types Of Pension Plans And Their Pros And Cons

Types Of Pension Plans And Their Pros And Cons

There are three main pension arrangements in Canada and most people, if they have a pension plan, have one of these three main types. There are defined benefit pensions, defined contribution pensions, and group-RRSPs. Each of these have their pros and cons. (There are also some unique pension plans but these are typically intended for high income executives or business owners.)

Having an employer pension plan can be a huge benefit for retirement. An employer pension makes saving for retirement easier by taking deductions directly off your income, plus it also typically comes with employer matching. This employer matching can be worth anywhere from a few percent of your salary all the way up to 18% of your salary (depending on the plan and the retirement benefits provided).

The automatic nature of pension contributions make them a great way to save for retirement. This “forced savings” is a huge benefit in itself, regardless of the employer matching.

Depending on the type of pension you have, this money gets paid out in different ways at retirement. Some plans cannot start before a certain age while others can be accessed earlier. Depending on your retirement goals this flexibility (or lack of flexibility) is an important consideration in your financial plan.

Some pensions, specifically defined benefit pensions, may also come with health benefits, travel benefits, or life insurance benefits after retirement. This can be another important benefit of a defined benefit pension plan, one that shouldn’t be ignored (especially when deciding between a defined benefit pension and a commuted value option).

It pretty much always makes sense to participate in an employer pension plan, but the different plans do have their pros and cons. Let’s explore the three main types of plans in Canada and their pros and cons.

read more
How To Invest A Large Sum Of Money

How To Invest A Large Sum Of Money

At some point in their life many investors are faced with deciding how to invest a large sum of money. This large sum of money could be from something like an unexpected bonus, or the proceeds from downsizing a home, or from something unfortunate like the passing of a family member.

Investing a lump-sum can be a daunting experience for even the most experienced investor. There can be a lot of fear and worry when it comes to investing a large lump-sum. Fear of what could happen if the market drops right after you invest.

Often this fear and worry can cause delays. Sometimes these delays can extend for months or even years, with large piles of cash sitting in a savings account waiting for the “right time” to invest.

These fears are understandable. There is a fairly good chance when investing a lump-sum that you could see the balance drop in the future. In the example below you’ll see that during approximately 67.3% of historical periods investing all at once is the better financial decision, but that means 32.7% of the time it is not.

There are two main methods when it comes to investing a lump-sum. Which method you choose will depend on how you’re feeling. Are you worried about what might happen if you invest a lump-sum all at once? Or are you ok with the risk because there is a good chance of higher financial gain?

When deciding how to invest a large lump-sum there are two common methods. One method is to invest the entire lump-sum all at once. This is mathematically the best option. The other is to dollar cost average smaller amounts into the market over time. This is psychologically often the best option.

Psychology is one consideration when choosing how to invest a large sum of money. Probability and expected return is another consideration. These are two important considerations when choosing how to invest a lump-sum.

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...

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
Types Of Pension Plans And Their Pros And Cons

Types Of Pension Plans And Their Pros And Cons

There are three main pension arrangements in Canada and most people, if they have a pension plan, have one of these three main types. There are defined benefit pensions, defined contribution pensions, and group-RRSPs. Each of these have their pros and cons. (There are also some unique pension plans but these are typically intended for high income executives or business owners.)

Having an employer pension plan can be a huge benefit for retirement. An employer pension makes saving for retirement easier by taking deductions directly off your income, plus it also typically comes with employer matching. This employer matching can be worth anywhere from a few percent of your salary all the way up to 18% of your salary (depending on the plan and the retirement benefits provided).

The automatic nature of pension contributions make them a great way to save for retirement. This “forced savings” is a huge benefit in itself, regardless of the employer matching.

Depending on the type of pension you have, this money gets paid out in different ways at retirement. Some plans cannot start before a certain age while others can be accessed earlier. Depending on your retirement goals this flexibility (or lack of flexibility) is an important consideration in your financial plan.

Some pensions, specifically defined benefit pensions, may also come with health benefits, travel benefits, or life insurance benefits after retirement. This can be another important benefit of a defined benefit pension plan, one that shouldn’t be ignored (especially when deciding between a defined benefit pension and a commuted value option).

It pretty much always makes sense to participate in an employer pension plan, but the different plans do have their pros and cons. Let’s explore the three main types of plans in Canada and their pros and cons.

read more
How To Invest A Large Sum Of Money

How To Invest A Large Sum Of Money

At some point in their life many investors are faced with deciding how to invest a large sum of money. This large sum of money could be from something like an unexpected bonus, or the proceeds from downsizing a home, or from something unfortunate like the passing of a family member.

Investing a lump-sum can be a daunting experience for even the most experienced investor. There can be a lot of fear and worry when it comes to investing a large lump-sum. Fear of what could happen if the market drops right after you invest.

Often this fear and worry can cause delays. Sometimes these delays can extend for months or even years, with large piles of cash sitting in a savings account waiting for the “right time” to invest.

These fears are understandable. There is a fairly good chance when investing a lump-sum that you could see the balance drop in the future. In the example below you’ll see that during approximately 67.3% of historical periods investing all at once is the better financial decision, but that means 32.7% of the time it is not.

There are two main methods when it comes to investing a lump-sum. Which method you choose will depend on how you’re feeling. Are you worried about what might happen if you invest a lump-sum all at once? Or are you ok with the risk because there is a good chance of higher financial gain?

When deciding how to invest a large lump-sum there are two common methods. One method is to invest the entire lump-sum all at once. This is mathematically the best option. The other is to dollar cost average smaller amounts into the market over time. This is psychologically often the best option.

Psychology is one consideration when choosing how to invest a large sum of money. Probability and expected return is another consideration. These are two important considerations when choosing how to invest a lump-sum.

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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