The 5 Biggest Retirement Mistakes To Avoid In 2024
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- เผยแพร่เมื่อ 22 พ.ค. 2024
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In this video we'll discuss the 5 biggest retirement mistakes I saw in 2023.
If you have any further questions about this video's topic or any financial planning questions in general, I encourage you to find a certified financial planner in your area or book a consultation with us to get your retirement plan on track. You can learn more about our services at www.parallelwealth.com/planning
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0:00 - Intro
0:38 - Mistake 1
1:59 - Mistake 2
4:01- Mistake 3
6:06 - Mistake 4
7:28 - Mistake 5
This presentation is intended for information purposes only and does not constitute an offer to buy or sell our products or services nor is it intended as investment and/or financial advice on any subject matter. Every effort has been made to ensure the accuracy of its contents. Certain of the statements made may contain forward-looking statements, which involve known and unknown risk, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Returns are not guaranteed and past performance may not be repeated.
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DISCLAIMER: The videos and opinions on this channel are for informational and educational purposes only and do not constitute investment advice. Adam Bornn is not registered to provide investment advice and as such does not provide recommendations - those looking for investment advice should seek out a registered professional. Adam is not responsible for investment actions taken by viewers and his content should not be used as a basis for investment trades.
I took mine as soon as I could. It’s in my pocket instead of the government’s.
CPP is not in the gov’ts pocket! It’s in the CPP fund!
Government has little to do with it. You and your employer contributed to it.
I was lucky enough to retire early with a pension, but I still have to hustle a little on the side. Taking my cpp this year at 60. I want to live now not later!
The second the Government can send you money….. take it.
Very good points . From my perspective, retirement or figuring your way out of working starts on day one . Keep it simple and spend less than what you bring in , always . For us who never planned more than that but had a good grasp on the tax system ( it’s not what you make , it’s what you keep and where you keep it ) it has sort of worked out . Also the more diverse your retirement income streams can be the better…. as markets fluctuate , interest rates fluctuate , annuities vary , withdrawal rates change , sheltering options decrease and on and on AND tax’s never go down . Nothing is perfect at any one time . Build your own COLA as best you can. Everything is easier said than accomplished . Enjoy the last phase as it may last longer than the plan . Cheers RS .
Excellent advice, as always
I'm glad I will never fully retire. I'm self employed and I am luckily already smoothly drawing down my assignments. In my 30's I said yes to as many clients as possible. Now I'm in my 50's and I'm taking on less clients. In my 60's I will take even less. In my 70's I will still have a few clients because I enjoy my work. When I'm dead, my business will be closed.
I took the steady corporate job route and can't imagine working past 65 given how they try to squeeze as much as possible out of their workers. I hope to get a freelance income going by the time I'm 60 so I can ease into retirement
@@tseek001 based on his other posts, he's a professional gambler.
I was lucky and was fairly successful in business and “mostly” retired at 46. Now at 53… still with kids at home, bored out of my mind but because I moved to warmer area at retirement, I have no connections to easily get work and do something. Not sure I’m 100% interested in putting the full grind it takes to get a new business up and running.
Good day Adam!!!
You just explain things so clearly!! Thanks for being there!!! All the way from Northern Ontario Canada!!!
My pleasure!
Thanks Adam. A great list to start the year.
My pleasure!!
Good point about the difference of investment professional versus financial planner - it didn’t occur to me ! But it makes sense !
Very good advice about not paying next to no taxes in any one year. It's an opportunity to withdraw from my RRIF at a lower tax bracket.
Being once divorced, I knew that I would be losing some CPP. Since she is 5 years younger, I took CPP at 60 and eventually a recalculation was made after she applied for CPP when she turned 60.
My break even point is 78 years old. I would prefer to have that money when I can still enjoy it. Also, retiring at 55 would give me less contributory years between 55-65.
integrate with the assets... yup good phrase
I love that lamp...just saying.
All good stuff Adam. I‘ll be needing your services in about 3-4 yrs from now at the point I’ll be retired and spouse is finishing off last couple of years of work.
We will be here - reach out when the time is right.
Just subscribed to your channel, Of course looking to retire at 60 in Five years.
Problem with taking cpp at 60 if you have a work pension is the minute you get cpp your pension drops what's called the bridge that goes until you are 65 which can be a 10000 to 20000 a year drop in income. Because the bridge drops away when you receive cpp.
Wrong!! Bridges don’t drop until 65.
I took mine at 60. Because I am still working full time I take my CPP and invest it. Math worked for me.
Well if you’re still working, you’re still contributing to CPP.
Taking CPP at 60. If i wait until 65 it will not be until 74 that I make up the difference and who knows what my health will be like then. Enjoy the $ while you can.
Agreed, I took mine at 60, quality of life over extra money. Lots can happen between 60 and 65, like death
Taking mine at 63. It's 1000 per month
If you took Trudeaus mandated Tea take it at 60.Cheers
If you need the cash flow, take it at 60. Our financial plan has it kicking in at 70 and we get a lot more, plus at that age onward I want to ensure I have some $$ coming in.
@@tanyaldutton I have a hard time delaying anytime past 65 as the cumulative amount of extra money per month in todays dollars isn't really that significant versus cumulative age 86 amount. If age 65 benefit amount is $1,228/mth and you wait to age 70 the benefit amount is $1,744 on a per month basis. Problem I have is if I live to average life expectancy of age 86 I would only be giving up from a cumulative perspective 65 to age 86 about $100/mth gross (because I missed out on about $73,700 from age 65 to 70). So missing out on about $75 net per month. That amount of money isn't going to significantly change my life between the ages of 65 and 86 for the better or worse.
If I exceeded life expectancy and lived to the ripe old age of 90, the cumulative amount per month in today's dollar would be $165/mth. Again not making my life significantly better or worse with an extra $124/mth net in my pocket. I believe at some point in time you have to say this is enough and protect a little of the downside risk of you passing earlier than life expectancy too. Age 65 will definitely do that for me, maybe even just like @garth217 age 63.
I retired at 57 ( after 37 years in service ) and intergraded my work pension with my CPP and OAS. When I turned 60 my work pension dropped slightly…then will drop again when getting the OAS. It’s the best way to go……
Odd. Never seen a pension that is intergrated with OAS (my guess is you’re mistaken). Many pensions are intergrated with CPP and your contributions to your pension are adjusted up to YMPE. OAS you don’t contribute anything towards (just comes out of tax revenues) so I doubt that there is any pensions in Canada that are intergrated with it.
If you retire before 65, most places will brigde you until 65 (because the plan is intergrated with CPP) and then drop to your lifetime pension.
Good timing for this video. My RRSPs were down during Covid. they have only just returned to their previous value. Because of market conditions I'm considering changing them to a RIF now at age 60. An RRSP meltdown doesn't make a lot of sense in my situation because I have a good pension and bridge benefit. Meltdown would just increase my taxes, so the increasing % of withdrawal makes sense to me. CPP delay would give everyone more money..but a 42% at 70 only means more money in taxes as it would also keep me in a higher bracket and as you age you travel less, drive less etc.
I'm not the kind of person to travel the world, so no $25,000 holidays are expected. I'm a slow burn kind of person. Lastly if you get more money in your later years and need LTC..the homes costs are tied to your income. So why pay more than your neighbors?
Great point on the income-tied variable cost of LTC!
@@D0NKY one comment on the income tested LTC homes -- they are not all the best ones to be living at so you may still want to have extra money to live in the place (maybe private type care home) you want to live at if you still have your senses.
And / or you may want to age in place and hire caregivers to come in for care instead of having to be in an institutional setting.
You go ahead and
My wife and I have been watching Adam's videos for a couple of years knowing our advisor is not very helpful. My wife and I are 1-2 years within retirement and are looking for better financial planning.
Thanks for sharing!
Get rid of your advisor then.
This is likely because your financial "advisor" is really a financial product salesperson.
Nice video. Were those charts from PlanPlus?
Snap
This video just confirmed why our advisor isn't going to be the go to guy to help us with retirement planning. We'll be reaching out to you for fee for service support.
We are here to help when the time is right for you.
55 sounds good
LIRA withdrawal starts at 50 for Alberta, but your charts say 55. The Alberta documents I can find show it is 50. Am I missing something?
It would be nice to see a financial planner post a video that is not self serving.
So like all of our videos - that tell you to empty your accounts early and delay government benefits?!
Hey Adam, another great video, thanks. Wondering one thing. If a LIRA is unlocked and converted to an RRIF instead of a LIF, is the income from it allowed to be split for taxation with a spouse?
Depends on your age. If you are 65 or over, you can split the RRIF income with your spouse
Any chance that BC will allow larger unlocking options in the near future for LIRA's? Would be so helpful some of us!
I sure hope so
Great content! If a person has already started drawing an income on their LIF, can it still be unlocked? Thank you
No. Has to be done when you do the conversion.
Good info there . I have a loose plan of retirement in 10 years. When should I get a retirement plan put together ? Should I wait till I'm about 5 years away or soo er the better? Sorry if this has been answered in other videos .
My 2 cents. Know what you have now. Have an idea where you want to be in 10 years. What will your sources of income be in retirement. Do you have a pension, investments and government benefits. Take those numbers the figure out what tax bracket you will be in...GET RID OF ALL DEBT if you can..at least 5 years before you retire.
If you get informed you're halfway there!
@@garth217 your 2 cents is gold!
@Drunkenmagus maybe not Gold..I just retired for the 3rd time.. I went back to work because I was bored and the money offered to good for what I had to do.
Don't retire because you reach a number ( I'm now 60) . retire because you are ready. It's 50% financial and 60% mental ( don't criticize my math)
All the best
@garth217 I'll be 47 with 30 years pension . Your right do t retire just because I get my 30 . It's when I'm ready in all ways . Thanks for your Comments.
Unless you know how long you're going to live take it while you can
If I’m not contributing to CPP doesn’t it make sense to start collecting? My last work contract ends when I turn 63- 18 months from now. Am I wrong?
It depends on far too many other factors. Having a significant amount of registered funds in your portfolio (a good problem to have) and tax efficiency during portfolio drawdown are big reasons to defer (another good problem). If you need the money to live at 63, it's beneficial to take ASAP, and reevaluate whether OAS deferment is prudent. Meet with a professional sooner rather than later to discuss your options!
Many confused about who to see.. is there a Financial Planner association or organization to find a local Financial planner..... business such as Edward Jones, what are they? how do we search for a Financial Planner cause I seem to get the banks and companies who want to sell you things.. Thanks.
Ask your friends who they use and if they are happy with their advisor. I would look for a CFP at a minimum and quiz them.
Easy question. Ask them how much CPP you’ll get and when you should apply. If they don’t ask and show you how to get your CPP statement of contributions and can’t tell you what % you’ll likely get… they are not qualified to help you.
Another great video; thanks for all the valuable tips. Question: If you unlock the portion of your LIRA you're allowed to under your specific provincial legislation, do you also have to have the corresponding available RRSP 'room' in order to make that move into the RRSP? Thanks again and keep up the great work!
You do not need RSP room to unlock your LIRA but the rules vary from province to province.
No you don't.
For clarity, I meant the rules on how much you can unlock vary from province to province.
What if you missed unlocking the lira @ 55 Or does it happen when you decide to flip it to a lif
…. Does It only happen when u retire or anytime after age 55 depending on your province but the cash portion is then added to income correct ?
As Adam said, each province has its own rules, but generally you transfer the unlocked portion to an RRSP (no RRSP limits apply) so there are no taxes at the unlocking, unless you take it as cash.
@@larry2142 what? He’s talking about the unlocking of a LIRA when you convert it to a LIF. Nothing to do with RRSPs.
How the unlocking works is when you move your LIRA to a LIF, you have a 1 time option to convert up to 50% of those funds into a RRIF. This will not in-itself cause any taxation. Its a rollover. The taxation would be the income (amount) you take out for income from your RRIF and/or LIF.
This can happen at any time you decide to execute the unlocking portion (subject to pension rules), but you don’t necessarily have to be retired to execute an unlocking of your LIRA.
@@user-md3ij9oc9q Actually, when you unlock your LIRA, the unlocked portion goes to your RIF (not RRSP- sorry, my bad), and the remaining unlocked funds go into your LIF. Regarding the time you have to unlock, typically you only have a short window to unlock. Your institution that did the transfer can confirm what that time frame is in your province.
Question about new CCP guidelines.
56yo, intend to work as long as possible but less often as I age (nurse, took out DB pension and switched to LIRA)
Now with CPP payments going up should I start collecting at 60 even though I may still work a bit until 65?
What are you really looking for here... If you have pensionable employment earnings between the ages of 60 & 65 you will continue to be require to contribute to the CPP (doesn't matter if you are receiving CPP benefits or not). . Only after the age of 65 do you currently have the option of not contributing to the plan.
If you were collecting CPP between 60- 65 and in receipts of pensionable earnings you would get an additional post retirement benefit (PRB) adjustment on your CPP benefit each year for your contributions.
Depends on your income. If you don’t need the money, I would suggest to defer the CPP (unless health is an issue) until you fully retire or 70 (which ever comes first)
Can you talk about cpp if you retire early say 58...and no long contributing to cpp. Is it still strategic to delay cpp?
Get your CPP estimate done. First
Much depends on how soon after age 18 you started earning decent money / contributed to CPP.
I’m retiring at age 60, but I’ll end up with roughly 90% of max pension. Delaying will work great for me, and that is my plan unless there are any health issues.
Adam has done a few videos on this... check out his channel and look for - "What happens to CPP if You Retire Early? (When To Take It)" or "How To Plan for CPP If You're Retiring Early"
Your info on B.C. lira withdrawal is wrong.
What about the case when a spouse is receiving CPP survivor say at age 60. Should the surviving apply for early CPP then since my understanding is at 65, you can only get the maximum CPP and therefore could possibly lose all my survivor benefit?
Usually not, but have someone liked our Runchey run yhe scenario for you
Yes. If your combined CPP and survivor pension will be at or close to max when you turn 60 there is no benefit to waiting until 65 because you can't possibly earn more
@@Rockfish911 I know, I told him the right answer, I guess my reply got deleted when he realized I knew more than he did
You can only have a retirement plan if you have a steady job. The days of steady jobs are long gone. People get laid off jobs numerous times during their lifetime (esp here in AB with the boom and bust cycles of the oil industry), and end up having to go back to school, or taking min. wage jobs, or being unemployed, or homeless, etc. for many periods.
I had to take out my CPP early at 60 because otherwise I couldn't afford to live. This was due to a lifetime of struggling to find work during the bust cycles.
I think the absence of a steady job puts more the onus on you to have a plan… obviously you have to care of your basic needs first.
Hello Adam, very good video as always. May I ask, how much are the fees for preparing your financial retirement plan? Is it based on the value of my assets or the same fee applies to any client? I just had my retirement plan prepared by my professional financial adviser and I was wondering........?????? Thank you for your response, I greatly appreciate it.
Flat fee. You can learn more and all the pricing at www.parallelwealth.com/planning
@@ParallelWealth Around $3500 to start? I thought I read that
My brother made a very rational decision. Decided to wait. Died suddenly 63. Very rational for the federal government.
It’s sad he died early but it makes no difference to him now.
@catherinemori4496 no doubt about that. He'd likely be doing cartwheels in his grave, knowing he donated to federal government coffers. They are so reliable with the dollars we entrusted them.
@@francoisbouvier7861 but CPP doesn’t go to the govt. it’s in a discrete fund. It will go to other subscribers. Also, people can’t dance when they’re dead. 😇
What type of services would you recommend for financial planning before retirement ?
I am 40, looking to buy a house. I have capital in my TFSA and RRSP, also slowly building FHSA since last year.
I am also looking at the Smith Maneuver.
I feel like I would need some sort of financial advice at this point.
Any ideas ?
Without knowing your whole situation, tough for anyone to give advice.
Net Worth?
Income?
Spouse?
Their income?
Their Net Worth?
Purchase price?
Timeline?
Pension?
Cash flow?
Lots of questions before a qualified financial advisor could answer. All those questions will help give direction to some of your questions?
there is a new law in quebec that will take in effect in july 2024. LIF will no longer have a maximum amount of withdrawal.
Wow I wished Manitoba hd that.
Manitoba has 100% unlocking. Even better!
@@ParallelWealth true but at 65. I am spoiled. I converted my lira to a lif 3 months ago at age 60 ... got to covert 50% to a prif.
Is it true that federal government employees can't also get cpp even though they contributed their whole life to cpp?
Nope, that is not correct
I only have the government pensions, none of the rest of them. So I guess it doesn't really matter.
Most people have no concept of how much it will cost to have a financial planner create a plan. What’s the ball park range of cost?
$3k - $6k for a single/couple would be the range you are looking at.
@@ParallelWealthThats basically all the interest earned on your investment 😂😂
Depends who you use. Many advisors will help manage your money for you and so the plan itself may not cost your anything.
If you’re a DIY investor than the $3-$6k is probably accurate. If the advisor can’t save you more than $3-$6K in other ways, they ain’t worth the money.
Where r u guys located and how to find you ?
So I can get more information to plan I have an investment advisor Edward Jones but want sound advice on goals townkrk at least till age of 70 71
More on us at www.parallelwealth.com/planning
We serve Canadians Coast to Coast.
what age is a good time to reach out to a planner to get started 50 -60? 63
5-10 years before retirement gives a little more runway in case adjustments need to be made. That said, most of our clients would be within 3-5 years of retirement or already in retirement.
Everyone needs some gambling money for slot machines and bottles of booze. That's what the CPP was intended for.
Ya, and the return is much better than the interest today
I was a seasonal worker for 45 yr. My CPP $197 -15% tax ....I'm on EI at the moment and they take an additional $45 off my CPP......it doesn't leave much left.....$100 or so for the month..... Not great eh!
@@bossman-yk9ji never had a summer off, .......
@@bossman-yk9jior worked for Cash😂. Probably a British Colombian
I suppose time will tell, but I’m gonna have a hard time not taking my cpp at 60. With Alberta taking 50% of it (or so they think) there will be nothing left for the rest of us. It seems the goal is to keep people working as long as possible and never take cpp.
Alberta hater spotted, 95% Albertans don’t support the Idea (Albertans here). It’s just Smith’s political ploy to stay in power because she is walking the thin ice 😂
Yes generally it makes sense to not begin cpp withdrawals until 65 because its an assured 36% growth of income (6% per year), if your retirement portfolio is generating greater than 6% / yr then its better to take it at 60 and reduce the withdrawals from your higher annual return portfolio. That is my case.
You might want to do the calculations IE 6% per year. The drop from age 65 amount is 36% however that is based on the higher age 65 value so the increases of waiting one year going from 60 to 65 is more than the 36% increase because the increases year over year are based on smaller values.
Say your age 65 benefit is $1000/mth - then age 60 benefit is $640, age 61 $712, age 62 $784, age 63 $856, Age 64 $928, and age 65 $1000. So the increase by waiting one year over the previous year percentages work out to: age 61 11.25% increase vs age 60 amount, age 62 increase 10.11% vs age 61 amount, age 63 increase 9.18%, age 64 increase 8.41% and even age 65 increase is 7.76%. So your growth in the investments has to be considerably higher than 6%.
@@DoneByD im a bit lost on your math 640/1000 = .64 mean 37% increase in monthly payments and thus annual return over the 60 to 65 period. Less of course the net drop of other retirement income lost because the cpp did not offset. In fact it was my rbc planner that stated the same number of ~ 6% growth per year missed if I took my cpp at 60.
That being said, my current annual yield is 26% before taxes (~ 17% after tax). So cpp at 60 for me was no Brainer.
@@slabsetters 712/640 = 11.25% increase, 784/712= 10.11% increase, 856/784 = 9.18% increase and so on ... $1000/640 = 56.25% increase. So in essense by waiting to take CPP to age 65 your age 65 benefit amount is 56.25% higher than age 60 benefit amount of $640.
Your ~17% after tax still looks like it would be better for you as it'll end up being more than 85% after tax return over the same 5 year period assuming you can get the 17% going forward. Also CPP will get inflationary enhancements that will increase the 56.25% however really doubt it would completely close the 29% gap.
Hi@@slabsetters --- not sure what happened to my response seems to have disappeared. Anyway 1000/640 = 56.25% increase. So the percentage increases needed going from 640 to $1000 is more than the decreases needed to get from $1000 to 640. 712/640 = 11.25%, 784/712 = 10.11%, 856/784 = 9.18% and so on ...
Since CPP is also increasing each year by the average wage rates in Canada (for those that haven't started collecting CPP) the percentages above do not reflect that increase. This all being said if you are getting ~17% return after tax and can continue that going forward it might be pretty hard for the CPP increase to close the roughly 29% gap (85% vs 56.25%).
One note is Doug Runchey has demonstrated why taking CPP as of your 65th birthday is usually the least effective (there are other factors especially if your birthday comes late in the year)
I am turning 62 in twice months. I am desperately contributing each month in an effort to try and get $200k saved by the time I’m 70 when I retire. I do have around 34k in that locked in account…groan
I do like a lot of your content and have recommended you to others. I am a bit surprised by the lack of diversity on the team that you profiled. Perhaps there are others, it just really stood out to me… as in, I’m not sure any of these people would relate to me/my experiences/my priorities.
Cat, here is our whole team www.parallelwealth.com/ourteam We have done plans for people in every walk and stage of life and have been able to deliver sound financial advice to all. Happy to help you as well.
This is for Canadian retirees/pensioners. In the US, most folks can anticipate working until their 80s.
Do you want fries with that?
@@garth217 sweet potato fries, sir!
Better hurry and get your CPP before Alberta gets their 56% of it back.
Yes we are coming for it.
Cpp Oas at 65. A bird in the hand is worth two in the bush.
I’ll take the bird that’s 42% bigger and indexed for life.
Agree. Don’t take it if you don’t have to and if you think you’ll have a long life. I’m glad I waited until age 66 to take it. I get a bit more than the top amount you would get at 65.
@James_48 the biggest issue with waiting is...taxes..at 65 I'll get 1200/ month at 70 - 1700. I'm taking mine at 63..just over $1000. A $7000 bump sounds very good. .but it's also taxed more, may push you into OAS clawback. And lastly. .you may not get it for too long
@@garth217 That could be a problem for some, but by 70 my only income will be Canadian eligible dividends outside of OAS and CPP - I will not have to worry about OAS clawback. Even if this were an issue the delta on the tax between 65 and 70 isn't going to be anywhere near 42% + the increase for inflation. Yes, some might experience a bit more tax, and even some minor OAS clawback, but it's the overall taxation and income that have to be evaluated using the entire situation
I was able to transfer my LIRA into my defined pension plan as a "buy back". Sweet. I also used the CRA website retirement calculator to pick the best time for me to 1) start CPP and 2) retire. I took CPP at 62, will retire at 63. In the meantime I'm putting my CPP payments into a TFSA.
Can't take . They screwed me . Changed to 67 . Bastards.
DON'T DELAY: Average Men Die = 55 Years Old.
Save Some Money and Early Retirement.
I would check your stats!
You must live in a poor Country.
Not even one woman on your team?
3
Well they want to to die before you get that money back so take that risk
I retired at 45. In British Columbia you can start taking your company pension at 50. 👍🏻
So I'm self employed and worked until 67. Took CPP at 67 because my income was substantial enough to make any additional income like CPP taxed at a much higher rate. Didn't make sense to me to take a lesser amount early and paying more tax. At the end of day I end up with a bit more money in my pocket.