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

Thanks for visiting.”

– Owen

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
Breaking Up With An Investment Advisor Is Hard To Do

Breaking Up With An Investment Advisor Is Hard To Do

Over the last few years the number of low-cost investment options has exploded in Canada. There are new and easy ways to create a low-cost diversified portfolio that isn’t dragged down by high investment fees.

There were always low-cost, do it yourself options, but they required a fair amount of manual work to make contributions, invest those contributions, and rebalance periodically (and let’s not forget, the stress of keeping yourself on course during a correction or recession).

But now there are new options available. In addition to a low-cost ETF portfolio or a low-cost mutual fund portfolio, there are options like low-cost “all-in-one” ETFs and low-cost robo-advisors.

These new options provide investors with new ways to invest in a low-cost portfolio without necessarily doing all the work themselves.

This has understandably put a lot of pressure on investment advisors who have historically charged extremely high fees on the investment products they sell.

The average investment fee on a mutual fund portfolio in Canada is around 2.3%. This can cause an enormous amount of drag on an investment portfolio. A $1,000,000 investment portfolio would experience a $23,000 annual drag from investment fees! That has a direct impact on how much retirement income you can create from your investment portfolio.

But switching from a high-priced mutual fund portfolio can be hard to do.

Even with the high fees, traditional investment options continue to dominate the investing landscape in Canada, but things are starting to change. For the first time ever, ETFs have outsold mutual funds. More money is flowing into ETFs than into mutual funds (bear in mind that you can also have high-priced ETFs, and low cost mutual funds, so this isn’t necessarily the best indicator).

But… if these low-cost investment options have been around for a while, why the slow change? Why aren’t more people switching?

There are three main risks people face when making a change of this kind, financial risk, emotional risk, and social risk. These risks can be difficult to overcome. Let’s understand each one and why they make breaking up with an investment advisor hard to do…

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...

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
Breaking Up With An Investment Advisor Is Hard To Do

Breaking Up With An Investment Advisor Is Hard To Do

Over the last few years the number of low-cost investment options has exploded in Canada. There are new and easy ways to create a low-cost diversified portfolio that isn’t dragged down by high investment fees.

There were always low-cost, do it yourself options, but they required a fair amount of manual work to make contributions, invest those contributions, and rebalance periodically (and let’s not forget, the stress of keeping yourself on course during a correction or recession).

But now there are new options available. In addition to a low-cost ETF portfolio or a low-cost mutual fund portfolio, there are options like low-cost “all-in-one” ETFs and low-cost robo-advisors.

These new options provide investors with new ways to invest in a low-cost portfolio without necessarily doing all the work themselves.

This has understandably put a lot of pressure on investment advisors who have historically charged extremely high fees on the investment products they sell.

The average investment fee on a mutual fund portfolio in Canada is around 2.3%. This can cause an enormous amount of drag on an investment portfolio. A $1,000,000 investment portfolio would experience a $23,000 annual drag from investment fees! That has a direct impact on how much retirement income you can create from your investment portfolio.

But switching from a high-priced mutual fund portfolio can be hard to do.

Even with the high fees, traditional investment options continue to dominate the investing landscape in Canada, but things are starting to change. For the first time ever, ETFs have outsold mutual funds. More money is flowing into ETFs than into mutual funds (bear in mind that you can also have high-priced ETFs, and low cost mutual funds, so this isn’t necessarily the best indicator).

But… if these low-cost investment options have been around for a while, why the slow change? Why aren’t more people switching?

There are three main risks people face when making a change of this kind, financial risk, emotional risk, and social risk. These risks can be difficult to overcome. Let’s understand each one and why they make breaking up with an investment advisor hard to do…

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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