I’m a dividend investor, My wife and I have invested in the S&P500, both through my TSP with the government, and through fidelity in her 401-k. Cashed out 270k from the S&P and invested with a Financial adviser, Jennifer Mackimm Wesley and we also bought Solana at the right time. Until around 3 years ago we were 100% in the s&p after over 30 years. I’m retiring at the end of this month at 52, while my wife will retire next year at 50. We currently have 3.7 million in our tax deferred savings. I am putting this out there for anyone looking for how to help themselves in this time of crisis.
Retiring in Canada with $1M is a dream for many. I remember visiting Vancouver last year, and the cost of living was high, but the quality of life was worth it. Great video!
Reducing the assumed 5.22% return by 1%, and raising the inflation rate from 3% to 4%; that was a gnarly tsunami. That means the real return on their savings was only 0.22%. I wonder if that is even realistic. If inflation is 4%, you can probably earn 5% just by buying GICs.
Hey Reece, I retired 3 years ago at 41 with about 685k in my portfolio, today Sept 11 2024 I'm happy to celebrate my account crossing the 900k mark! I've been taking 4% per year out to pay my living expenses and have doing some hobby / side work to keep me busy and some extra cash in my pocket. You have a great channel with loads of excellent information for us retirees. Thanks very much for your efforts!
Pay off your debts including your house if you have one. That's the best way to invest. Once you have a pile and the bills are all paid, then spread it out in tfsa, rrsp. etc. Borrow when you need to and use it as a tool, not a life raft.
I appreciate the conservative ROR that you factor in for this couple (especially their TFSA). Maintaining a dividend growth portfolio in their TFSAs would help them grow their assets more than the drawdown. I have a family member who has RSP, TFSA and pension from Embridge where she worked. She says she can’t spend what is available to her and her portfolio keeps growing. Our goal is similar: live comfortably, give generously and leave generational wealth for our children to do the same for theirs.
I like your video style. Please do a video about retiring single. And it would be great if you could do one about retiring single (let's say at 56) as a government employee... Thanks!
I’d be very interested to see this video for couples who are not planning to leave anything behind. If I understand it correctly they will end up leaving 2.1 mil? Is that what legacy is? That’s a lot of money to leave behind and would substantially increase their quality of life in retirement. There are plenty of people who don’t have kids, or family, or anyone to leave a fat inheritance to. How much sooner could they retire?
I think that legacy amount is the $!M house he included. He said it was worth $1M now, I assume the software builds in an annual increase on the homes value i.e. if they are 65 now and life expectancy is 90 that's 25 years. If the house goes up in value by 3%/year x 25 years i.e. inflation, the house would be worth just shy of $2.1M.
Why is 5% ROI? If you keep it with inflation, than 5% + 3% = 8%. Which is more realistic. One million is the good line... Out of all retired people 3% are above and 97% are below. I have heard it here on TH-cam. Must be true.
5% is an extremely conservative estimate. Accounting for 3% inflation the return is only 2%. In their "punch in the face" scenario they were doing 4% returns and 4% inflation (0% ROI), plus a 40% market crash immediately after retirement. In my opinion delaying your retirement to account for this unlikely scenario is not prudent.
When interest rates fall its due to inflation falling so naturally your rate of return falls. So 3 to 4 percent is closer to what people will earn in a year. The people who come up with this 6 percent figure are the ones with zilch in their bank accounts because in the real world a 6 percent return doesn't exist.
@parkerbohnn I did 23% last year and 18% the year before. Granted those were incredible returns but don't say above 6% doesn't exist. This year I'll be happy with 10% but we'll see.
I like that fact that you do not count the house outside of the amount. Your primary residence should not be considered as part of that $1 Mi. But I think $8K a month is too excessive - that's $96K after tax.
@@Yielar1 Disagree, I certainly count my paid off house because my cost of living is so much lower. I get it you need to make money off fees. We clued into that whole 'need 1 million to retire' scam years ago
Future scenario: Eddy & Betty Steddy where both retire at 60, but Betty is 5 years younger than Eddy. Both have RRSP’s, pensions, etc. I’m most interested in what/how much does Eddy drawdown while waiting for Betty to retire, CPP timing, etc. Love your channel. Thanks!
Well, that really does depend on how much Betty is still raking in while working. Do they need more income or would investment withdrawals be meant for more for managing tax liabilities? Lots to consider in that one :) Love the names 🤣
5 point something percent return for a balanced portfolio? That seems low, unless that number is real/adjusted for inflation return? The figure I've always heard is closer to 7-8% for a globally diversified 60-40 equities/bonds portfolio.
You’re right. But those are in line with what the regulators want us to use. Basically, it’s being conservative. But as mentioned I t he video, there are many Canadian law with balanced portfolios who haven’t even achieved this.
“They can’t access their house for income”. Nonsense! Owning a house and living in it is worth thousands of dollars a month in rent or mortgage they don’t have to pay. You can’t discount this.
Life expectancy is based on probability at birth - so if you're retirement age, you've already survived some risks and your life expectancy is actually greater than the commonly published expectancy - so 90 isn't too far off the mark.
That was excellent. You just mention it as an aside, but having a growth portfolio for funds you don't intend to touch for over a decade is a great idea.
I would like to see a scenario where if the market went south they cut their expenses for a couple of years to get by the rough patch. That seems to be a big weakness in the Monti Carlo scenarios is they don't allow for expense adjustment.
Went through that very (real-life) scenario myself. Took early retirement as the Covid market hit.... Ouch.... Fortunately, I was able to use Facebook to find odd jobs around the neighborhood; just enough to keep our emergency cash reserve from dwindling too quickly. I'll admit, I much prefer to rake leaves for someone than sit in an office again. We also took a camping vacations instead of a tropical island one. (We learned that we could camp for FREE all over Southern Florida!!!!) Pulling the trigger on retirement just before a major market crash did set us back financially, for many years. It was the worse possible time. Fortunately, the trade-off was having plenty of free time to explore my thrifty hobbies!!! ;)
its interesting that it becomes a topic as in this world, there are many billionaires who are very rich and when they retire, they have many billions, nothing strange indeed.
If one were to withdraw a healthy 3.5% of their portfolio year after year, a 1 million $ portfolio could net you $34,000.00 in the first year. If this amount is split between a couple, you would be close to paying zero in taxes. Considering that the average return on a growth portfolio has been around 9% (if we look at 120 years of historical market data and take ANY 30 year period average), that means that not only can you withdraw 3.5% for ever, but that year over year, your investments will grow and you would become richer over time. Most people don't believe that $34k is enough to retire on. For most families, the answer is simple and yet so very complex; spend less. (I know that this is easier said than done). Unfortunately, Canadians have become used to spending more than they make; from vacations, expensive clothing, expensive and non-fuel efficient vehicles, snow mobiles, furniture, expensive groceries etc. When I decided that I wanted to retire early, I spent 1.5 years learning how to cut ALL of our spending. We managed to cut our spending by approx. 50%. Suddenly, the math to early retirement made sense. The only thing that was getting in the way was constant superfluous spending. I've had this conversation with many a person; often, people get really angry with me. Subconsciously, this idea becomes a threat to their very way of living; to their existence. In short, 1 million is PLENTY to retire on; as long one learns that happiness does not lie in spending but in everyday life adventures; be they sitting with a friend for coffee, going on a hike, hosting friends over, going for a bike ride, going to trivia night etc. It's about priorities; our household preferred to cut our spending and win back our time from mandatory, 5 days a week labour. We preferred to invest our money for early retirement over spending it freely. Its all about priorities and how we spent (or didn't). Quote: "A man is rich in proportion to the number of things which he can afford to let alone."
@AlexCharron well said. Too much consumerism and "keep up with the Jones'" attitude; having said that, there are many people due to circumstances beyond their control that have not managed to build a healthy retirement chest - you can still enjoy the simpler things in life, so long as you have the greatest wealth ticket, your health!
@@parkerbohnn I prefer to invest in revenue generating assets (IE: over 10,000 companies, over most (all?) sectors such as housing, manufacturing, fintech and so on). I see gold in almost the same light as I see crypto; I see it as speculation. There's also the fact that I mitigate risk by investing across multiple factors, in multiple countries. Investing in gold means that you are placing all of your proverbial eggs in the same basket. What would happen to gold if we develop a new way of manufacturing chips that doesn't take gold? I remember days when a taxi license was worth hundreds of thousands; then technological development tanked their worth. Could the same happen to gold one day? If you''re mostly invested in gold, what happens if lab made gold becomes easier and easier to make? What if there's a breakthrough that allows us to cheaply manufacture gold? (like we do diamonds The price of diamonds is artificially kept high by a few large companies but those days are numbered). My point? Investing in 10 000+ revenue generating companies, across a multitude of factors is much safer than betting everything on a single, non-revenue generating asset; gold. And.... Don't you have to be a) over 65 and b) Poor? to receive GIS? For me, your plan would force me to work for another 16 years and place all of my accumulated wealth at risk. No thank you.
Wow.. The first Canadian retirement video that I 100% agree with; and I've spent several years consuming retirement/FIRE content like a fiend. It's as if you've taken a long hard look at my own excel spreadsheet. ;) I'll admit, your software tool seems sooooo much more powerful and well put together than my excel tables. Might I ask what software you're using? Great video. Thank you for making it; I truly enjoyed it!
A huge variable each persons standards .? If you want to maintain your lifestyle , or consider moving to a more affordable city and changing or lowering your standards .
They have 2 million dollars, of course they will downsize so their house should be included in their net wealth. The other thing I think you have wrong, is their net worth is 1 million each. You have to consider them as 2 individuals. How do you get 5.62% when the S&P consistently returns 10+%, requiring 0 work on the investors part.
Maybe you missed how we planned for both downsizing and not downsizing? And for tax and income splitting reasons, you want to plan as a couple, not as two individuals.
That house is a million dollar security blanket the guy with a million net worth doesn't have. Their cost no matter how you massage it will be still twice that of a single (that can be debated back and forth of course with taxes, split expenses, et al). None the less why would you not invest in the S&P with a 30 year time horizon. The 10 year on VTI is 11.6%
I was thinking along the lines of HELOC for say up to half of the value of the home (to mitigate the risk) for investing in high income dividend ETFs at 8-10% p.a. return and the interest (5-7%) would be tax deductible, this would still make them some passive income. 🤓
@@JohnHobbs-o3z It was the worst decision my mother ever made (talked into it by an older sibling with good intentions). Eventually, we all banded together and paid it back.
@DarrenX9 definitely and I plan to not retire until my house is paid off. I don't use the equity in my home as part of my retirement calculation like many others. I need to live somewhere and may just choose to age in place like my parents have done. If something serious happens with my health, I have a backup plan. Everyone's plan is different but that's mine
Hey Reece! Would be super interested in a video for the higher income young bachelors amongst us! Say single, < 30, annual pre-tax income north of 150K, trying to retire on a pre-tax salary of ~100k at age 55!
real inflation is between 5% and closer to 10% when you consider shrinkflation . Might I suggest asking some retirement homes what their rates have been every year for the last 10 or so years?
Their expenses are understated as they own their home and not paying any housing costs. This plan would not work if you don’t have a fully paid off property.
I've lost a lot of money since moving to Canada 10 years the amount of taxes I've paid is quite a lot I don't know if I will be able to retire even if I earn over a 100K maybe when I don't have to take care of my kids but at this point all of them in University me paying everything out of pocket even with OSAP it's very stressful
@BoBandits well, I was more going for the fact that I DO NOT trust the government when in 20 years I'll be 65, and since 1997, I have been diligently investing specifically because of my non-trust of them. Who better to prepare for the future than each of us individually? It's not necessarily a matter of if one can save $25,000 or more or less, it's specifically my non trust of the thieves in Ottawa. Everyone should invest in the stock market via the TFSA. Why $25,000 you may ask? Because the Trudeau government lowered the Conservative limit and inflation is rampant. A figure is needed to make up for the erosion.
For my household, it was a mater of priority; do we spend like our friends do and go eat out a dozen times a month, do we buy new expensive cars, do we buy a boat, snowmobiles, go on expensive trips, buy expensive clothing, expensive groceries and so on, or.... do we cut down costs on **everything** we can, save for 8 years and therefor accumulate a decent amount of wealth (decent for poor folk like us). In the end, we ended going with the FIRE route (saved every penny we could) and built our wealth to the point where we can now coast to retirement with no worries. In fact, we'll probably retire early; and this on a sub 100k household income. Most Canadians would never cut costs in order to have a better or earlier retirement; they like living in the moment way too much for that. I found that most Canadians have a YOLO style of life when it comes to finances. A question I've often heard: "Yeah, you're saving money to retire early but what if you die tomorrow?" We all have our priorities; our was to build up our wealth and retire early.
@@AlexCharron I live a frugal lifestyle and a decent paying job, but to put away a million is beyond my wildest dreams, and I know if no one who come close to this. There is an article in la Presse newspaper where a couple 2 years younger then myself have accumulated just over 3,000,000 dollars from RRSP contributions from m 1987 to 2010. The article states that as of 2024 their fund is worth 14 million and they are both 61. In 10 years when they are 71 they must transfer their RRSP’S into a RIF. Again as per the article, at 6% interest per year in 2034 it will be worth 30,000,000. The minimum withdraw from RRSPS is 5.4 %. That means they would need to withdraw 1,600,000 per year. I am somewhat skeptical after reading the article. If you can read in French, here is the link to the article. June 16,2024 lp.ca/b7W1bU?sharing=true&fbclid=IwZXh0bgNhZW0CMTEAAR1n8OZea1CkVWKMnQxnL28zjlNz8pDHt1xgqoPu7KOef4OoQCKNY-SWXMA_aem_ZmFrZWR1bW15MTZieXRlcw
Data shows that less than 4% of population retire with $1 million or more in savings. To provide a more realistic perspective, it would be beneficial to conduct an analysis based on more attainable figures, such as in 250k range. This approach would offer practical insights for the majority of retirees who are working with more modest savings
250 is not enough unless you move to Ecuador or something. Sorry to say, you should’ve thought about this sooner and it’s what I keep harping on my 30 year old brother about cuz he’s going to end up in a sh1tty situation like this if he doesn’t get on it soon. Most Canadians are screwed because they didn’t think ahead . And I’m worried about it because when they realize it, they will of course look to those responsible ones and say “the rich should pay their fair share”. Or vote in a government that will just print a bunch more money to “help”. Not trying to be ignorant but it’s the truth as I see it. 250k things will start snowballing but you still have some work to do.
I liked his figures and felt it was doable for most people if they work hard and save. He even played around with the numbers and gave a few different examples. Brilliant
All fine and dandy. However, unfortunately, long term care is not figured in. This can be very costly. As long as they both stay healthy, it could work out.
If they require long term care facility they no longer require their house. By that time that asset will be worth closer to 2 million dollars. That plus the 6K a month will more than cover them
In Canada, how much you pay for ltc is based on their personal income unless they are under 65 in which case it uses household income. So yes it will cut into the income the partner in the community has but they also then have lower house expenses as they won't be traveling and will be sticking close to home
@@nicklanfear4303 as someone who has been through this process, I assure you the government won't tell you to access maid. Furthermore, qualifying isn't as easy as you think, especially for age related illnesses. There are very strict protocols to ensure its the patients idea with no financial or outside pressure.
For heavens sake. If you have 1million dollars and you and your spouse get cpp and oas on top of that of course you will retire nicely. It’s insulting to even question if they can retire.
Thats a matter of perspective. They've worked and saved their way to the point at which they might retire, and they want to plan a scenario where they can hopefully live a similar lifestyle to what they're used to during the working days. They could sell off, buy a shack in a small town and live cheaply, but thats not the plan they saved up for.
@@davecarpenter4917 - As someone that is close to retirement and actually does have the $1M that this fictional couple the OP is 100% correct. It's the bullspit of the financial gurus that makes you think that if you don't replace 90% of your income (or whatever is the scariest number they can come up with) to have a comfortable retirement. This couple wouldn't have saved that money if they spent like the drunken sailors that the video suggests. Trust me $8K/month is a lot of money when you no longer need to save or pay down a mortgage.
There is a flip side. A lot of people think 1M is a lot. They can’t imagine having that much saved because they’ve never seen their bank account hit 6 figures much less 7, and savings.. what savings? 1M isn’t what it used to be, just imagine in a few decades. I personally think if you don’t have a 1M+ as a target (as a relatively younger person), you are being shortsighted and way underestimating your required savings rate for retirement… or like most, probably not even thinking about it tbh Edit: I’m not trying to offend anyone btw. I do realize not everyone has great head start, or had people around them at younger ages to push financial literacy, and just worked honestly without really thinking much about their retirement until the last minute. I got lucky. I actually wish this stuff would be taught in school instead of whatever it is they’re teaching these days..
Joey gets prostate cancer at 67 and they start spending 10k a month on his high tech meds and care? Do they have a drug plan for seniors without a plan in Canada? If not this plan is full of holes. They are going to go through tons of meds at their late ages if not before.
1) if i live to 90 ill have dimensia and someone will be stealing my money. 2) i dont need an estate fund to pay death tax to old JT. So i guess ill be good.
Awesome video. i have been following yr channel as i love planning about my retirement and love thinking about finances my retired Canadian-born husband is in 70’s. I am an immigrant who moved here 17 years ago and became a citizen and I am still enjoy working to build my defined benefit pension in health care for at least 10 years from now. We have no kids, and I plan to give the house in BC and $300,000 investment money to my 2 teenager nephews who are non-resident. Plus add them as my work pension beneficiaries when they turn 19th as my husband will waive his right given he has enough money to live on in case he outlive me. Our situation is complex but i learn every day from listening to your channel So thank you again 👍👏
@@davecarpenter4917 thank you. just checked now and i copied pasted it from the municipal pension page “ Overview If you are married or in a common-law relationship of more than two years, your spouse is automatically your beneficiary. You can also name an alternate beneficiary(ies). If you do not have a spouse, or your spouse gives up their beneficiary right to your pension benefit, you can name other people as your beneficiary(ies). These can include your children, other family members, friends or others. You can also name organizations, trusts or your estate as beneficiaries.”
*just buy good dividend stocks with good dividend growth rate and keep reinvesting the dividends and when you retire just live off the dividend income and never sell the stocks and you will never run out of money, problem solved*
@robertbruce1307 *not just stocks, REIT etfs,Utitites etfs and Canadian bank etfs etc.., your thinking short term, if people hold something like 20 years and keep reninvesting the dividends they will do well at the end*
Yep, also better tax advantage. Rrsp almost feel like a rip off. I’ve been wondering if it would make sense though to use the div income in working years to buy rrsp and cancel the div income out.. in a way free rrsp contributions? Over time you are still accumulating a dividend portfolio, you rrsp contributions will snowball bigger because of that. In the end you still have your dividends plus whatever compounded inside the rrsp (that you withdraw in the most tax favourable way you can) Is this flawed or what?
This was a great breakdown! In a biased request, would it be possible to do this kind of plan with a couple with a large age gap (12 years for example😅). Drew and Sue are at a loss on how to handle this (Sue is hoping to retire at 58 or earlier, which would make Drew 70.. both have reduced pensions. Thanks Rhys!
You can’t say they are retiring with $1 million if their net worth is $2 million including a house. They don’t have to pay rent in Canada! This is worth a several thousand dollar a month subsidy. Next time, use the net worth for the “retire with $x video”.
Another fantastic video Rhys!!! Mel and I will be in touch in the coming weeks to move ahead with our plan once we wind down our summer vaca!!! Cheers!!
I’m planning to retire at 57 and my wife at 55. Had a stem cell transplant is I don’t think I’ll live past 85. I will have about cad$1.2 million and my wife 1.5 million in our company plans We also only lived in Canada for 25 years. What our out come would be if we want $8000 per month with our house paid off($650,000)?
That would require a deep dive into your specific situation in order to give you a meaningful answer. You may want to check our service options at wellbuiltwealth.ca
Hello - thanks for the great content. I'd like to see you do a "Retire with $1M in TFSA series' - what this portfolio look like? How would you structure a retirement portfolio if someone had $1M in their TFSA?
Very professional,clean and clear presentation ❤, that helps with my personal situation. 58 years old -$800,000 house that is paid for. -$1,250,000 in rrsp’s -planning on working for 7 more years @ $200,000 gross income ( plan on putting $30,000 annually in our rrsp’s ) I have one question regarding the downsizing of the property,later in life ? -wouldn’t it be better to just unlock the equity out of the home you live in with a home equity loan and withdraw monthly income and pay off the interest only on the loan and leave the estate with a leveraged property to dispose of? -downsizing seems to me that you would be giving away $100,000 in real estate commissions,land transfer taxes and miscellaneous expenses unnecessarily?
I would think part of downsizing is also about things like, not climbing stairs, or having a smaller space to clean/maintain, etc. Sort of like not eating nearly as much as you did in your 20-40s, etc. But I would take that same approach you mentioned. The risk there is the interest rate, if you take a heloc then its prime +, if you refinance then every 3-5 years I assume you have to do a new rate, which affects the rate of returns, but if you are ok with managing the risk, definitely a good idea, I also believe the interest payments can be used to offset income taxes.
I totally hear you. Most people are not comfortable introducing debt during their retirement but I get what you’re saying. I plan to do a video on reverse mortgages in the near future and so will touch on this topic more there.
@@wellbuiltwealth you're right, I assume once you take out the equity from the mortgage/heloc you put it all in investments while spending the RRSP or other sources of income first?
My Question Is In Retirement Why Do You Need 7,000 Or 8,000 A Month Thats Alot Of Money As You Stated There House Is Paid Off. So That Being the Biggest Expense. Also They Are Not Travelling As Much For Work. Bet I Do Love How You Explain The Process, Great Video
Thank you! We do a ton of plans for people and 8k/month is not uncommon in the go-go phase. Not at all. But we definitely do plans for people who want less as well. It’s totally up to you and, of course, depends on where you live as well. Some areas are more expensive than others.
@@wellbuiltwealth Thank you for the quick response. I am looking for something that I manage and "punch it in the face" on an ongoing basis. Are you aware of any software allowing an end user to do that?
I'm using Adviice right now. Very similar software, just not quite as slick. i.e. there isn't an optimize button yet. But it's pretty comparable for only $9 per month, and can cancel anytime
Just because they maximize RIF withdrawal earlier, doesn't mean they have to spend every dollar withdrawn ? maximizing withdrawls, but still leaving in a brokerage cash trading account, ( in kind transfer ) ???
I dont understand how a million dollar home doesn't count. If they had a mortgage or rented that would deeply cut into their million. It is 2 mil not 1.
It’s a liability. In other words it COSTS them money it doesn’t make them any. It’s a net LOSS every month, that’s what a liability is. It’s not an asset, those MAKE you money. And home price appreciation doesn’t count, that’s just inflation with a different name. They still have to pay tax on it, insurance, water, heat, electricity, day-to-day maintenance, cap ex like roof, furnace, appliance, driveway these things don’t last forever. This house is not contributing at all to their retirement income. That’s why they don’t count it unless the plan is to sell and downsize as discussed in the video
Funding Retirement...The hardest equation in finance! Too many variables. I've been tracking my personal rate of inflation for a few years now. It has been surprisingly stable. Most recently, transportation costs have declined offsetting increases in Insurance and food. Q: How does your software address travel and vehicle replacement?
We can add those costs as a future goal to be funded or we can simply increase the retirement income needs throughout to offset ongoing large purchases. If we do the latter, the assumption is that excess income will simply accumulate in cash reserves (from which a vehicle or whatever can be purchased).
How about the families that only will have one ccp My wife and I believe lots of people only have one income, okay her income is very low but she was home for the kids.
@@morespinach9832you should be retiring early, move to a less shitty country, travel lots and have the time of your life. But most people won’t figure it out early enough
All these videos show people using up all their investments in retirement and seeing how long they will last (or how much more they can spend to make it run out in time). For younger people today I think it makes way more sense to max out their TFSA each year and invest that in the S&P500 for their entire life so at retirement they have 1-2 million tax free. Then move it into a high dividend ETF or maybe a covered calls ETF and live on that passive income for the rest of your life without touching the investments. It won't matter how long you live and when you die everything will still be there in your estate to pass on.
@@sandray7609 Fair enough. The thing is I don't see anyone making videos for people who came of age around the time of the TFSA or later with a better retirement strategy.
@@brandobond I think there are other channels covering that if you do a search - I know I've seen it discussed. General rule of thumb is $50k max TFSA and contribute to RRSP. But like you stated, if a young person maxes TFSA until age 65 and has in a growth ETF, they should have more than enough to live off in retirement. I still think a goal should be at least 20% of income saved, so if TFSA is filled then using RRSP will reduce taxes. The key is doing a retirement plan early enough to optimize taxes later - could be the best strategy is an RRSP meltdown so CPP/OAS aren't clawed back and retiring before 65 yrs.
@@brandobond what makes you think that the S&P500 will continue rising like that? Since 2008 it has increased 10 fold, that is not sustainable and a correction is inevitable.
@@Tugela60 Doesn't need to be the S&P500 specifically but any growth portfolio with an expected return of around 8%. Most growth portfolios like the one discussed in this video likely hold a lot of it. However, I expect the S&P500 to keep rising. Stocks go up in value when more people are buying then selling them. Each month millions (tens of millions?) of people invest automatically in the S&P500 automatically through payroll deductions or stock trading apps. It is highly likely to continue rising indefinitely. The only thing I could see stopping it is some apocalyptic event or the end of capitalism which I don't see going anywhere for a long time.
@@dragonfly1146 not really. Lease a nice car, payments plus insurance is easily $1500/mo. Renovation projects on house easily $1000 a month. Taxes on house, $350 a month increasing at 20% a year. Two or three grandkids need tuition and support, another $2000 a month. A couple of cruises a year, $1000 a month. Food and booze, $1000. Electricity, gas, water, etc, $1000/ mo. And there is $8000 per month, before income taxes, medical premiums, copays, clothing, movies, cable, pet food, vet bills, replace worn out or obsolete furnishings, birthday and anniversary presents, and the list goes on. We didn’t come this far to scrimp and save, and life is not a rehearsal.
Earlier this year, we renovated the master ensuite in my 18 year old house. Design, materials, fixtures, supplies and labor came to $103,000. Next year we repair the trim and paint the whole house. The year after that, it will time to reshingle the roof. Wife wants a greenhouse, $6000, and I want a sauna, $8000. The cost of living bites big time.
interesting. 1 mill seems like a lot. one question, is the rates of return you refer to around 12:30 for the portfolios after inflation? (you may have stated so, if so I missed it)
I’m a dividend investor, My wife and I have invested in the S&P500, both through my TSP with the government, and through fidelity in her 401-k. Cashed out 270k from the S&P and invested with a Financial adviser, Jennifer Mackimm Wesley and we also bought Solana at the right time. Until around 3 years ago we were 100% in the s&p after over 30 years. I’m retiring at the end of this month at 52, while my wife will retire next year at 50. We currently have 3.7 million in our tax deferred savings. I am putting this out there for anyone looking for how to help themselves in this time of crisis.
Best video on retirement planning for Canadians I have seen in years, thank you!
Retiring in Canada with $1M is a dream for many. I remember visiting Vancouver last year, and the cost of living was high, but the quality of life was worth it. Great video!
You can retire on way less if you're smart and still live fine. Owning a house is a big help.
I really love these videos. I love the different scenarios. It helps me to know what i need to aim for in retirement.
"Let's punch their plan in the face a few times..." 😂 Gotta love the humour and the word play.
Mike Tyson said "Everyone has a plan until they get punched in the mouth" or something like that. Its a suitable warning for retirement plans too
Superb explanation and most importantly:doable. Thank you.
You’re too funny with the names. Aside from the jokes, retirement planning is a serious matter. Good video again. Thanks.
Reducing the assumed 5.22% return by 1%, and raising the inflation rate from 3% to 4%; that was a gnarly tsunami. That means the real return on their savings was only 0.22%. I wonder if that is even realistic. If inflation is 4%, you can probably earn 5% just by buying GICs.
Agreed. Super gnarly.
The best 5 year rate with unlimited sums is 4.3 percent at Maxa Financial.
Today. Last year you could get 5%. 2 year treasuries were over 5% until a few months ago, too.
Hey Reece, I retired 3 years ago at 41 with about 685k in my portfolio, today Sept 11 2024 I'm happy to celebrate my account crossing the 900k mark! I've been taking 4% per year out to pay my living expenses and have doing some hobby / side work to keep me busy and some extra cash in my pocket. You have a great channel with loads of excellent information for us retirees. Thanks very much for your efforts!
Well done! And thank you 🤓
Pay off your debts including your house if you have one. That's the best way to invest. Once you have a pile and the bills are all paid, then spread it out in tfsa, rrsp. etc. Borrow when you need to and use it as a tool, not a life raft.
I appreciate the conservative ROR that you factor in for this couple (especially their TFSA). Maintaining a dividend growth portfolio in their TFSAs would help them grow their assets more than the drawdown. I have a family member who has RSP, TFSA and pension from Embridge where she worked. She says she can’t spend what is available to her and her portfolio keeps growing. Our goal is similar: live comfortably, give generously and leave generational wealth for our children to do the same for theirs.
“Live comfortably, give generously, and leave generational wealth.” Awesome.
I love your video. I am financial planner in Quebec. Your video are well made, simple and and well resume.It’s inspiring. continue your good job!
I like your video style. Please do a video about retiring single. And it would be great if you could do one about retiring single (let's say at 56) as a government employee...
Thanks!
I’d be very interested to see this video for couples who are not planning to leave anything behind. If I understand it correctly they will end up leaving 2.1 mil? Is that what legacy is? That’s a lot of money to leave behind and would substantially increase their quality of life in retirement. There are plenty of people who don’t have kids, or family, or anyone to leave a fat inheritance to. How much sooner could they retire?
I think that legacy amount is the $!M house he included. He said it was worth $1M now, I assume the software builds in an annual increase on the homes value i.e. if they are 65 now and life expectancy is 90 that's 25 years. If the house goes up in value by 3%/year x 25 years i.e. inflation, the house would be worth just shy of $2.1M.
Why is 5% ROI? If you keep it with inflation, than 5% + 3% = 8%. Which is more realistic. One million is the good line... Out of all retired people 3% are above and 97% are below. I have heard it here on TH-cam. Must be true.
5% is an extremely conservative estimate. Accounting for 3% inflation the return is only 2%. In their "punch in the face" scenario they were doing 4% returns and 4% inflation (0% ROI), plus a 40% market crash immediately after retirement. In my opinion delaying your retirement to account for this unlikely scenario is not prudent.
When interest rates fall its due to inflation falling so naturally your rate of return falls. So 3 to 4 percent is closer to what people will earn in a year. The people who come up with this 6 percent figure are the ones with zilch in their bank accounts because in the real world a 6 percent return doesn't exist.
@@parkerbohnn Are you confident enough to bet $1mil dollars that a 6% return doesn't exist in the real world?
It's actually 4 and 96 but a million today is not enough to live on.
@parkerbohnn I did 23% last year and 18% the year before. Granted those were incredible returns but don't say above 6% doesn't exist. This year I'll be happy with 10% but we'll see.
I'm curious, what is the name of the program that you use? Is there any good one for a personal level?
I like that fact that you do not count the house outside of the amount. Your primary residence should not be considered as part of that $1 Mi. But I think $8K a month is too excessive - that's $96K after tax.
It's about right depending on where you live. In areas of BC it's definitely not too high especially if you want to do any travelling
@@Yielar1 Not if you own your house
@@Deb-y6z Disagree, I don't include my house in my retirement calculations either for good reason.
@@Yielar1 Disagree, I certainly count my paid off house because my cost of living is so much lower. I get it you need to make money off fees. We clued into that whole 'need 1 million to retire' scam years ago
Your house is just another disposable asset. You can live anywhere. Pocket the difference in prices.
Terrific video. Thank you.
"Money in the jeans". Love it!
Future scenario: Eddy & Betty Steddy where both retire at 60, but Betty is 5 years younger than Eddy. Both have RRSP’s, pensions, etc. I’m most interested in what/how much does Eddy drawdown while waiting for Betty to retire, CPP timing, etc. Love your channel. Thanks!
Well, that really does depend on how much Betty is still raking in while working. Do they need more income or would investment withdrawals be meant for more for managing tax liabilities? Lots to consider in that one :)
Love the names 🤣
5 point something percent return for a balanced portfolio? That seems low, unless that number is real/adjusted for inflation return? The figure I've always heard is closer to 7-8% for a globally diversified 60-40 equities/bonds portfolio.
You’re right. But those are in line with what the regulators want us to use. Basically, it’s being conservative. But as mentioned I t he video, there are many Canadian law with balanced portfolios who haven’t even achieved this.
“They can’t access their house for income”. Nonsense! Owning a house and living in it is worth thousands of dollars a month in rent or mortgage they don’t have to pay. You can’t discount this.
Reverse mortgages are also a thing.
Life expectancy is based on probability at birth - so if you're retirement age, you've already survived some risks and your life expectancy is actually greater than the commonly published expectancy - so 90 isn't too far off the mark.
That was excellent. You just mention it as an aside, but having a growth portfolio for funds you don't intend to touch for over a decade is a great idea.
I would like to see a scenario where if the market went south they cut their expenses for a couple of years to get by the rough patch. That seems to be a big weakness in the Monti Carlo scenarios is they don't allow for expense adjustment.
I’ve built out a similar idea of using cash reserves during a market crash in this video: th-cam.com/video/JNvycwWGUAU/w-d-xo.htmlsi=j3_pSwHdsZyfvIhs
Went through that very (real-life) scenario myself. Took early retirement as the Covid market hit.... Ouch.... Fortunately, I was able to use Facebook to find odd jobs around the neighborhood; just enough to keep our emergency cash reserve from dwindling too quickly. I'll admit, I much prefer to rake leaves for someone than sit in an office again. We also took a camping vacations instead of a tropical island one. (We learned that we could camp for FREE all over Southern Florida!!!!)
Pulling the trigger on retirement just before a major market crash did set us back financially, for many years. It was the worse possible time. Fortunately, the trade-off was having plenty of free time to explore my thrifty hobbies!!! ;)
its interesting that it becomes a topic as in this world, there are many billionaires who are very rich and when they retire, they have many billions, nothing strange indeed.
I have been retired with a generous pension.
My pension over 15 years is approximately $750,000 after taxes and Morgage free.
The current FU number is USD $2.5 M per person in Vancouver.
Awesome video, Loved the transparency
$1,000,000 $CAD and retirement don't go hand in hand, unless you can live not in Canada
If one were to withdraw a healthy 3.5% of their portfolio year after year, a 1 million $ portfolio could net you $34,000.00 in the first year. If this amount is split between a couple, you would be close to paying zero in taxes.
Considering that the average return on a growth portfolio has been around 9% (if we look at 120 years of historical market data and take ANY 30 year period average), that means that not only can you withdraw 3.5% for ever, but that year over year, your investments will grow and you would become richer over time.
Most people don't believe that $34k is enough to retire on. For most families, the answer is simple and yet so very complex; spend less. (I know that this is easier said than done). Unfortunately, Canadians have become used to spending more than they make; from vacations, expensive clothing, expensive and non-fuel efficient vehicles, snow mobiles, furniture, expensive groceries etc. When I decided that I wanted to retire early, I spent 1.5 years learning how to cut ALL of our spending. We managed to cut our spending by approx. 50%. Suddenly, the math to early retirement made sense. The only thing that was getting in the way was constant superfluous spending. I've had this conversation with many a person; often, people get really angry with me. Subconsciously, this idea becomes a threat to their very way of living; to their existence.
In short, 1 million is PLENTY to retire on; as long one learns that happiness does not lie in spending but in everyday life adventures; be they sitting with a friend for coffee, going on a hike, hosting friends over, going for a bike ride, going to trivia night etc. It's about priorities; our household preferred to cut our spending and win back our time from mandatory, 5 days a week labour. We preferred to invest our money for early retirement over spending it freely. Its all about priorities and how we spent (or didn't). Quote: "A man is rich in proportion to the number of things which he can afford to let alone."
@AlexCharron well said. Too much consumerism and "keep up with the Jones'" attitude; having said that, there are many people due to circumstances beyond their control that have not managed to build a healthy retirement chest - you can still enjoy the simpler things in life, so long as you have the greatest wealth ticket, your health!
A million isn't much today.
@@AlexCharron Or you could put most of it into gold and live off of GIS. This by far would be the smarter choice.
@@parkerbohnn I prefer to invest in revenue generating assets (IE: over 10,000 companies, over most (all?) sectors such as housing, manufacturing, fintech and so on). I see gold in almost the same light as I see crypto; I see it as speculation. There's also the fact that I mitigate risk by investing across multiple factors, in multiple countries. Investing in gold means that you are placing all of your proverbial eggs in the same basket. What would happen to gold if we develop a new way of manufacturing chips that doesn't take gold? I remember days when a taxi license was worth hundreds of thousands; then technological development tanked their worth. Could the same happen to gold one day? If you''re mostly invested in gold, what happens if lab made gold becomes easier and easier to make? What if there's a breakthrough that allows us to cheaply manufacture gold? (like we do diamonds The price of diamonds is artificially kept high by a few large companies but those days are numbered).
My point? Investing in 10 000+ revenue generating companies, across a multitude of factors is much safer than betting everything on a single, non-revenue generating asset; gold.
And.... Don't you have to be a) over 65 and b) Poor? to receive GIS?
For me, your plan would force me to work for another 16 years and place all of my accumulated wealth at risk. No thank you.
Can you do a single with 1MM took CPP at 60, excluding house Retire at 63.
60 YO, ETD 75.
Equity in house $400k
No dependants so use it up
Wow.. The first Canadian retirement video that I 100% agree with; and I've spent several years consuming retirement/FIRE content like a fiend. It's as if you've taken a long hard look at my own excel spreadsheet. ;) I'll admit, your software tool seems sooooo much more powerful and well put together than my excel tables. Might I ask what software you're using? Great video. Thank you for making it; I truly enjoyed it!
Thanks :)
It’s called Conquest. There’s a link to their website in the description.
Cheers
Great video. Watched & liked! I really enjoy watching!
I did the same
That's good
I know, same thing here
A huge variable each persons standards .? If you want to maintain your lifestyle , or consider moving to a more affordable city and changing or lowering your standards .
Very helpful to help understand my own situation.
They have 2 million dollars, of course they will downsize so their house should be included in their net wealth. The other thing I think you have wrong, is their net worth is 1 million each. You have to consider them as 2 individuals. How do you get 5.62% when the S&P consistently returns 10+%, requiring 0 work on the investors part.
Maybe you missed how we planned for both downsizing and not downsizing?
And for tax and income splitting reasons, you want to plan as a couple, not as two individuals.
That house is a million dollar security blanket the guy with a million net worth doesn't have. Their cost no matter how you massage it will be still twice that of a single (that can be debated back and forth of course with taxes, split expenses, et al). None the less why would you not invest in the S&P with a 30 year time horizon. The 10 year on VTI is 11.6%
used all my savings to pay off the mortgage never been happier...retired 15 yrs now
This video is worth a million. 👍🙏
Now you can retire 😅
They can’t access the home equity unless they sell the house? Why not use a reverse mortgage? Perhaps a topic for a future video?
Definitely a video topic on the near horizon :)
I was thinking along the lines of HELOC for say up to half of the value of the home (to mitigate the risk) for investing in high income dividend ETFs at 8-10% p.a. return and the interest (5-7%) would be tax deductible, this would still make them some passive income. 🤓
Then you have to factor interest in which cuts into the amount available to them for income
Stay away from reverse mortgage if possible,should be last resort.
@@JohnHobbs-o3z It was the worst decision my mother ever made (talked into it by an older sibling with good intentions). Eventually, we all banded together and paid it back.
There's a night and day difference between retiring with a paid-off house and retiring without a house.
Indeed
@DarrenX9 definitely and I plan to not retire until my house is paid off. I don't use the equity in my home as part of my retirement calculation like many others. I need to live somewhere and may just choose to age in place like my parents have done. If something serious happens with my health, I have a backup plan. Everyone's plan is different but that's mine
Hey Reece! Would be super interested in a video for the higher income young bachelors amongst us!
Say single, < 30, annual pre-tax income north of 150K, trying to retire on a pre-tax salary of ~100k at age 55!
real inflation is between 5% and closer to 10% when you consider shrinkflation . Might I suggest asking some retirement homes what their rates have been every year for the last 10 or so years?
This is how I want to see it covered.
I’m digging the software… What platform you are using?
No kids. Who cares about a legacy? Spend the money. Keep the house until the nogo phase and then sell it off for comfort.
Their expenses are understated as they own their home and not paying any housing costs. This plan would not work if you don’t have a fully paid off property.
You should not be retiring with a mortgage...
Sub-par returns and way too expensive? Yup, the TD funds are exactly that.
great job. love this channel.
I've lost a lot of money since moving to Canada 10 years the amount of taxes I've paid is quite a lot I don't know if I will be able to retire even if I earn over a 100K maybe when I don't have to take care of my kids but at this point all of them in University me paying everything out of pocket even with OSAP it's very stressful
Great video! It would be nice to factor in the legacy amount. It will affect the plan a lot.
Thanks! It’s factored in a bit with the downsize but certainly wasn’t the focus of this particular vid.
Why are you not considering delaying CPP to age 70.
They did delay it to 70.
We need a new annual TFSA limit starting at $25,000 because the way Canada is going...
@BoBandits well, I was more going for the fact that I DO NOT trust the government when in 20 years I'll be 65, and since 1997, I have been diligently investing specifically because of my non-trust of them. Who better to prepare for the future than each of us individually?
It's not necessarily a matter of if one can save $25,000 or more or less, it's specifically my non trust of the thieves in Ottawa. Everyone should invest in the stock market via the TFSA.
Why $25,000 you may ask? Because the Trudeau government lowered the Conservative limit and inflation is rampant. A figure is needed to make up for the erosion.
Trudeau chopped it in half.
Thanks this was a helpful video.
Very informative video, thanks for sharing. Sadly most Canadians will not come close to retiring with this amount.
You’re welcome! And you’re right.
For my household, it was a mater of priority; do we spend like our friends do and go eat out a dozen times a month, do we buy new expensive cars, do we buy a boat, snowmobiles, go on expensive trips, buy expensive clothing, expensive groceries and so on, or.... do we cut down costs on **everything** we can, save for 8 years and therefor accumulate a decent amount of wealth (decent for poor folk like us). In the end, we ended going with the FIRE route (saved every penny we could) and built our wealth to the point where we can now coast to retirement with no worries. In fact, we'll probably retire early; and this on a sub 100k household income.
Most Canadians would never cut costs in order to have a better or earlier retirement; they like living in the moment way too much for that. I found that most Canadians have a YOLO style of life when it comes to finances. A question I've often heard: "Yeah, you're saving money to retire early but what if you die tomorrow?" We all have our priorities; our was to build up our wealth and retire early.
@@AlexCharron I live a frugal lifestyle and a decent paying job, but to put away a million is beyond my wildest dreams, and I know if no one who come close to this.
There is an article in la Presse newspaper where a couple 2 years younger then myself have accumulated just over 3,000,000 dollars from RRSP contributions from m 1987 to 2010. The article states that as of 2024 their fund is worth 14 million and they are both 61. In 10 years when they are 71 they must transfer their RRSP’S into a RIF. Again as per the article, at 6% interest per year in 2034 it will be worth 30,000,000. The minimum withdraw from RRSPS is 5.4 %.
That means they would need to withdraw 1,600,000 per year.
I am somewhat skeptical after reading the article. If you can read in French, here is the link to the article. June 16,2024
lp.ca/b7W1bU?sharing=true&fbclid=IwZXh0bgNhZW0CMTEAAR1n8OZea1CkVWKMnQxnL28zjlNz8pDHt1xgqoPu7KOef4OoQCKNY-SWXMA_aem_ZmFrZWR1bW15MTZieXRlcw
Is that drawdown optimizer proprietary or is it available online?
Really wish you did more videos. They are so informative and easy to understand. Do you do fee for service for people in Ontario.
Thanks
Well, thank you! I appreciate that :)
And I’m working on it!
And yes, we do feel-for-service work all across Canada.
WellBuiltWealth.ca
Cheers
misleading video title, they retired with two million instead and calculations omitted the living costs
Data shows that less than 4% of population retire with $1 million or more in savings. To provide a more realistic perspective, it would be beneficial to conduct an analysis based on more attainable figures, such as in 250k range. This approach would offer practical insights for the majority of retirees who are working with more modest savings
250 is not enough unless you move to Ecuador or something.
Sorry to say, you should’ve thought about this sooner and it’s what I keep harping on my 30 year old brother about cuz he’s going to end up in a sh1tty situation like this if he doesn’t get on it soon.
Most Canadians are screwed because they didn’t think ahead . And I’m worried about it because when they realize it, they will of course look to those responsible ones and say “the rich should pay their fair share”.
Or vote in a government that will just print a bunch more money to “help”.
Not trying to be ignorant but it’s the truth as I see it.
250k things will start snowballing but you still have some work to do.
@@jakeh2049 agreed
A million is poverty in most of Canada.
I liked his figures and felt it was doable for most people if they work hard and save. He even played around with the numbers and gave a few different examples. Brilliant
All fine and dandy. However, unfortunately, long term care is not figured in. This can be very costly. As long as they both stay healthy, it could work out.
If they require long term care facility they no longer require their house. By that time that asset will be worth closer to 2 million dollars. That plus the 6K a month will more than cover them
They still have house to draw on. Even for the downsize scenario, at 85 it'll be worth over $1M and growing, assuming it grows only with inflation.
In Canada, how much you pay for ltc is based on their personal income unless they are under 65 in which case it uses household income. So yes it will cut into the income the partner in the community has but they also then have lower house expenses as they won't be traveling and will be sticking close to home
Govt will offer MAID
@@nicklanfear4303 as someone who has been through this process, I assure you the government won't tell you to access maid. Furthermore, qualifying isn't as easy as you think, especially for age related illnesses. There are very strict protocols to ensure its the patients idea with no financial or outside pressure.
All you have to do is invest for income in pass thru entities: pipelines, REITs, BDCs. Discounted. Option wiriting CEFs out of favor big oill...
At least it’s a million each with the home
For heavens sake. If you have 1million dollars and you and your spouse get cpp and oas on top of that of course you will retire nicely. It’s insulting to even question if they can retire.
Thats a matter of perspective. They've worked and saved their way to the point at which they might retire, and they want to plan a scenario where they can hopefully live a similar lifestyle to what they're used to during the working days. They could sell off, buy a shack in a small town and live cheaply, but thats not the plan they saved up for.
I agree.
@@davecarpenter4917 - As someone that is close to retirement and actually does have the $1M that this fictional couple the OP is 100% correct. It's the bullspit of the financial gurus that makes you think that if you don't replace 90% of your income (or whatever is the scariest number they can come up with) to have a comfortable retirement. This couple wouldn't have saved that money if they spent like the drunken sailors that the video suggests. Trust me $8K/month is a lot of money when you no longer need to save or pay down a mortgage.
There is a flip side.
A lot of people think 1M is a lot. They can’t imagine having that much saved because they’ve never seen their bank account hit 6 figures much less 7, and savings.. what savings?
1M isn’t what it used to be, just imagine in a few decades.
I personally think if you don’t have a 1M+ as a target (as a relatively younger person), you are being shortsighted and way underestimating your required savings rate for retirement… or like most, probably not even thinking about it tbh
Edit: I’m not trying to offend anyone btw. I do realize not everyone has great head start, or had people around them at younger ages to push financial literacy, and just worked honestly without really thinking much about their retirement until the last minute. I got lucky. I actually wish this stuff would be taught in school instead of whatever it is they’re teaching these days..
Joey gets prostate cancer at 67 and they start spending 10k a month on his high tech meds and care? Do they have a drug plan for seniors without a plan in Canada? If not this plan is full of holes. They are going to go through tons of meds at their late ages if not before.
Why in the wide, wide world of sports would anyone care about people who have this money to retire with...
1) if i live to 90 ill have dimensia and someone will be stealing my money. 2) i dont need an estate fund to pay death tax to old JT. So i guess ill be good.
Awesome video. i have been following yr channel as i love planning about my retirement and love thinking about finances
my retired Canadian-born husband is in 70’s. I am an immigrant who moved here 17 years ago and became a citizen and I am still enjoy working to build my defined benefit pension in health care for at least 10 years from now. We have no kids, and I plan to give the house in BC and $300,000 investment money to my 2 teenager nephews who are non-resident. Plus add them as my work pension beneficiaries when they turn 19th as my husband will waive his right given he has enough money to live on in case he outlive me.
Our situation is complex but i learn every day from listening to your channel
So thank you again 👍👏
Check on the fine print of your db plan, you may not be able to add people who are not children or dependants.
@@davecarpenter4917 thank you. just checked now and i copied pasted it from the municipal pension page
“ Overview
If you are married or in a common-law relationship of more than two years, your spouse is automatically your beneficiary.
You can also name an alternate beneficiary(ies).
If you do not have a spouse, or your spouse gives up their beneficiary right to your pension benefit, you can name other people as your beneficiary(ies). These can include your children, other family members, friends or others. You can also name organizations, trusts or your estate as beneficiaries.”
*just buy good dividend stocks with good dividend growth rate and keep reinvesting the dividends and when you retire just live off the dividend income and never sell the stocks and you will never run out of money, problem solved*
Ya like Bell 😅 biggest dog of the last 2 years
@robertbruce1307 *not just stocks, REIT etfs,Utitites etfs and Canadian bank etfs etc.., your thinking short term, if people hold something like 20 years and keep reninvesting the dividends they will do well at the end*
@robertbruce1307 *BCE bell stock was at $5 in year 2000*
Yep, also better tax advantage. Rrsp almost feel like a rip off.
I’ve been wondering if it would make sense though to use the div income in working years to buy rrsp and cancel the div income out.. in a way free rrsp contributions?
Over time you are still accumulating a dividend portfolio, you rrsp contributions will snowball bigger because of that. In the end you still have your dividends plus whatever compounded inside the rrsp (that you withdraw in the most tax favourable way you can)
Is this flawed or what?
@jakeh2049 *yes,I use some of my non registered portfolio dividend income to fund my FHSA account every year*
Is the "Monthly Need" figure, the average of all of the monthly amounts during the 'go-go, slow-go, no-go' years?
Yup!
This was a great breakdown! In a biased request, would it be possible to do this kind of plan with a couple with a large age gap (12 years for example😅). Drew and Sue are at a loss on how to handle this (Sue is hoping to retire at 58 or earlier, which would make Drew 70.. both have reduced pensions. Thanks Rhys!
Thanks! Drew and Sue sound like awesome people :)
I’ll put the big age gap scenario in the queue!
You can’t say they are retiring with $1 million if their net worth is $2 million including a house. They don’t have to pay rent in Canada! This is worth a several thousand dollar a month subsidy. Next time, use the net worth for the “retire with $x video”.
Pay off your house, invest to $1 million before you retire. And most of all, stay married. Divorce will destroy you financially.
Another fantastic video Rhys!!! Mel and I will be in touch in the coming weeks to move ahead with our plan once we wind down our summer vaca!!! Cheers!!
Sounds great! 😊
I’m planning to retire at 57 and my wife at 55. Had a stem cell transplant is I don’t think I’ll live past 85. I will have about cad$1.2 million and my wife 1.5 million in our company plans We also only lived in Canada for 25 years. What our out come would be if we want $8000 per month with our house paid off($650,000)?
That would require a deep dive into your specific situation in order to give you a meaningful answer. You may want to check our service options at wellbuiltwealth.ca
Hello - thanks for the great content. I'd like to see you do a "Retire with $1M in TFSA series' - what this portfolio look like? How would you structure a retirement portfolio if someone had $1M in their TFSA?
You’re welcome! And that sounds like an interesting idea. But spoiler alert: it would look like a ton of delicious, tax-free income 🤓
My brother ran his to over 100 million and is afraid Revenue Canada will knock him up for business income.
Very professional,clean and clear presentation ❤, that helps with my personal situation.
58 years old
-$800,000 house that is paid for.
-$1,250,000 in rrsp’s
-planning on working for 7 more years @ $200,000 gross income ( plan on putting $30,000 annually in our rrsp’s )
I have one question regarding the downsizing of the property,later in life ?
-wouldn’t it be better to just unlock the equity out of the home you live in with a home equity loan and withdraw monthly income and pay off the interest only on the loan and leave the estate with a leveraged property to dispose of?
-downsizing seems to me that you would be giving away $100,000 in real estate commissions,land transfer taxes and miscellaneous expenses unnecessarily?
I would think part of downsizing is also about things like, not climbing stairs, or having a smaller space to clean/maintain, etc. Sort of like not eating nearly as much as you did in your 20-40s, etc. But I would take that same approach you mentioned. The risk there is the interest rate, if you take a heloc then its prime +, if you refinance then every 3-5 years I assume you have to do a new rate, which affects the rate of returns, but if you are ok with managing the risk, definitely a good idea, I also believe the interest payments can be used to offset income taxes.
I totally hear you. Most people are not comfortable introducing debt during their retirement but I get what you’re saying. I plan to do a video on reverse mortgages in the near future and so will touch on this topic more there.
Well said. Though I’m not sure you’d be able to write off the interest on that loan unless you used the borrowed money for the purpose of investing.
@@wellbuiltwealth you're right, I assume once you take out the equity from the mortgage/heloc you put it all in investments while spending the RRSP or other sources of income first?
Totally depends on the situation :)
1 million in canada is 2 million in lower tax countries due to double tax rates. that's depressing.
My Question Is In Retirement Why Do You Need 7,000 Or 8,000 A Month Thats Alot Of Money As You Stated There House Is Paid Off. So That Being the Biggest Expense. Also They Are Not Travelling As Much For Work. Bet I Do Love How You Explain The Process, Great Video
Thank you!
We do a ton of plans for people and 8k/month is not uncommon in the go-go phase. Not at all. But we definitely do plans for people who want less as well. It’s totally up to you and, of course, depends on where you live as well. Some areas are more expensive than others.
Great channel, i am a fan 😎
Awesome, thank you! 😊
Thanks for the video Good information. Question: What software do you use? Is it available to end users?
You’re welcome. It’s called Conquest (link in the description). But it is only available via advisors.
@@wellbuiltwealth Thank you for the quick response. I am looking for something that I manage and "punch it in the face" on an ongoing basis. Are you aware of any software allowing an end user to do that?
Sorry, I’m not.
I'm using Adviice right now. Very similar software, just not quite as slick. i.e. there isn't an optimize button yet. But it's pretty comparable for only $9 per month, and can cancel anytime
@@alvey9907 Thank you. I'll check it out.
What software do you use for your modeling? Is it a retail application or do you offer a subscription if it is a tool you developped?
It’s called Conquest (there’s a link in the description). It is only available via advisors.
Just because they maximize RIF withdrawal earlier, doesn't mean they have to spend every dollar withdrawn ? maximizing withdrawls, but still leaving in a brokerage cash trading account, ( in kind transfer ) ???
I dont understand how a million dollar home doesn't count. If they had a mortgage or rented that would deeply cut into their million. It is 2 mil not 1.
It’s a liability. In other words it COSTS them money it doesn’t make them any. It’s a net LOSS every month, that’s what a liability is. It’s not an asset, those MAKE you money.
And home price appreciation doesn’t count, that’s just inflation with a different name.
They still have to pay tax on it, insurance, water, heat, electricity, day-to-day maintenance, cap ex like roof, furnace, appliance, driveway these things don’t last forever.
This house is not contributing at all to their retirement income. That’s why they don’t count it unless the plan is to sell and downsize as discussed in the video
@@jakeh2049 thanks...
Funding Retirement...The hardest equation in finance! Too many variables. I've been tracking my personal rate of inflation for a few years now. It has been surprisingly stable. Most recently, transportation costs have declined offsetting increases in Insurance and food. Q: How does your software address travel and vehicle replacement?
We can add those costs as a future goal to be funded or we can simply increase the retirement income needs throughout to offset ongoing large purchases. If we do the latter, the assumption is that excess income will simply accumulate in cash reserves (from which a vehicle or whatever can be purchased).
This is terrible !! you’ve made me realize how broke I am. 😮😢. Great video though 👍🏻
😬
How about the families that only will have one ccp
My wife and I believe lots of people only have one income, okay her income is very low but she was home for the kids.
What software did you used for this?
I really enjoy your videos, when you speak of amounts couples want to have for income, is this before taxes? Please confirm!
Thank you!
It’s after tax. So I’m referring to the amount they can spend :)
A million to retire seems pretty low.
It is, if you have no idea what you are doing. Otherwise, no problem
@@mactravel112 what should we be doing? Eating sandwiches once a day and not doing anything fun? Sure. Works for some.
@@morespinach9832you should be retiring early, move to a less shitty country, travel lots and have the time of your life. But most people won’t figure it out early enough
A million at 65 is not enough? In Canada? 😂
@@derekcox6531 a million at 65 should be more than adequate but I would definitely move to a nicer country!!!
Can a single person with no house who is renting at $2,000.00 a month with a pension of $1,200.00 a month retire with $1,000,000.00 at age 65 ?
Thanks for this video. what is this software / interface used at 7:10 ?
You’re welcome! It’s called Conquest.
Well done
Your pessimistic plan with 40% crash does not consider a market recovery from what I can see which is unrealistic…
It sure does.
you do not need 1 million but you need 3 paid condos minimum to retire
Is that always a Bible on your desk?
Indeed :)
nice work and rhymes
Good stuff
All these videos show people using up all their investments in retirement and seeing how long they will last (or how much more they can spend to make it run out in time). For younger people today I think it makes way more sense to max out their TFSA each year and invest that in the S&P500 for their entire life so at retirement they have 1-2 million tax free. Then move it into a high dividend ETF or maybe a covered calls ETF and live on that passive income for the rest of your life without touching the investments. It won't matter how long you live and when you die everything will still be there in your estate to pass on.
Wasn't an option for us older folks. TFSA didn't exist and with employer matching, we have a lot in RRSP
@@sandray7609 Fair enough. The thing is I don't see anyone making videos for people who came of age around the time of the TFSA or later with a better retirement strategy.
@@brandobond I think there are other channels covering that if you do a search - I know I've seen it discussed. General rule of thumb is $50k max TFSA and contribute to RRSP. But like you stated, if a young person maxes TFSA until age 65 and has in a growth ETF, they should have more than enough to live off in retirement. I still think a goal should be at least 20% of income saved, so if TFSA is filled then using RRSP will reduce taxes. The key is doing a retirement plan early enough to optimize taxes later - could be the best strategy is an RRSP meltdown so CPP/OAS aren't clawed back and retiring before 65 yrs.
@@brandobond what makes you think that the S&P500 will continue rising like that? Since 2008 it has increased 10 fold, that is not sustainable and a correction is inevitable.
@@Tugela60 Doesn't need to be the S&P500 specifically but any growth portfolio with an expected return of around 8%. Most growth portfolios like the one discussed in this video likely hold a lot of it.
However, I expect the S&P500 to keep rising. Stocks go up in value when more people are buying then selling them. Each month millions (tens of millions?) of people invest automatically in the S&P500 automatically through payroll deductions or stock trading apps. It is highly likely to continue rising indefinitely. The only thing I could see stopping it is some apocalyptic event or the end of capitalism which I don't see going anywhere for a long time.
With no mortgage and in your 60’s why would someone need $8500 a month?
They have a very expensive curling habit.
@@wellbuiltwealth So their Go-Go phase is really HURRY-HARD phase
Wow! What are they spending 8k a month on?
Gourmet Kraft Dinner.
We dont spend 8k a month. Actually 8k is a lot to spend in a month
@@dragonfly1146I agree.
@@dragonfly1146 not really. Lease a nice car, payments plus insurance is easily $1500/mo. Renovation projects on house easily $1000 a month. Taxes on house, $350 a month increasing at 20% a year. Two or three grandkids need tuition and support, another $2000 a month. A couple of cruises a year, $1000 a month. Food and booze, $1000. Electricity, gas, water, etc, $1000/ mo. And there is $8000 per month, before income taxes, medical premiums, copays, clothing, movies, cable, pet food, vet bills, replace worn out or obsolete furnishings, birthday and anniversary presents, and the list goes on. We didn’t come this far to scrimp and save, and life is not a rehearsal.
Earlier this year, we renovated the master ensuite in my 18 year old house. Design, materials, fixtures, supplies and labor came to $103,000. Next year we repair the trim and paint the whole house. The year after that, it will time to reshingle the roof. Wife wants a greenhouse, $6000, and I want a sauna, $8000. The cost of living bites big time.
How about $45
interesting. 1 mill seems like a lot. one question, is the rates of return you refer to around 12:30 for the portfolios after inflation? (you may have stated so, if so I missed it)
Nope! Those are pre inflation. So if the rate or return is 5.22% but inflation is 3%, then you’re left with 2.22%.
Cheers
@@wellbuiltwealth oof. ok, thanks!
8 grand a month wow or even 6 that’s a lot
$1 million Canadian money?