I came across this video right after discussing retirement challenges in Canada with my friends. gotta admit how important it is to find the right financial advisor early i was initially worried i have waited too long to start financial planning. with the varied scenarios mentioned. Trust is key, and I've been fortunate to find someone truly reliable.
Trust really makes all the difference when it comes to financial advice. Ive been working with Emily ava milligan, a financial advisor in the U.S., her personalized approach for me as an M.D has truly impacted my retirement planning in a positive way. Her expertise in understanding individual needs is unmatched, I'm meeting my goals. as an Independent broker-dealer she offers a lot of options that suite me. its been a good 8 years, fun-fact: rarely does anyone start financial planning on time
A lot of it depends on what your pre-retirement income was but I've found that no longer putting 18% of my income into an RRSP and no more maxing out the TSFAs every year frees up a lot of cash. Now at a much lower income tax rate plus the mortgage paid off and the kids out on their own means we are living better now on 50% of our pre-retirement income than we ever did while we were working. Retired 9 years, age 70 now, we are still in the go-go stage and on 50% of our pre-retirement income we have regular month-long overseas trips and winter in a warm climate. Life is good.
This was what I was going to say as well. The 70% number is probably accurate for modest income earners but for me, our costs right now are sky high as I'm aggressively saving to make up for lost time, aggressively paying off the mortgage, still supporting 2 of our 3 kids because they're still in university, still paying car payments to get those paid off, etc., etc....All of that adds up to well over 10K per month in expenses that evaporate at retirement (or well before). Our expenses will likely be 1/3 of what they are today at retirement...maybe even less.
This is simple and accurate. I appreciate the detail vs others throw up numbers and wonder the specific situations. I have been obsessed with this for 30 years and I can say this is a good video.
I am 34 and terrified of running out of money when/if I retire. A lot can change in the next 30/35 years but this was a very helpful video to set the right attitude towards retirement savings.
Hello! Just wanted to give a heartfelt thanks for your video series. Husband’s employer shutting down his place of employment and we’ve been so busy with life and raising kids we’ve neglected our retirement planning. Some RRSPs that we don’t pay much attention to and both of us have DB pensions so been complacent. He’s 7 months short of his earliest unreduced date for his DB pension and has a severance and retirement allowance that we had to make some fast decisions on. Your videos have been extremely valuable! I know so much more because of your videos. I’ve watched a lot of them and will continue to as we head into retirement planning. THANK YOU!
I'm a long way off retirement, and have saved annually for that day but never really had an idea if I was in the ball park for what I needed. You sir have answered that question. Excellent content and delivery. cheers
You should sell a monthly subscription to this software. $3500-$4000 +tax is a lot of money for someone who is hoping to make $3000/month in retirement.
Brilliant post Adam. Totally debunks the idea that millions are needed to retire. I love the strategic modelling. Really insightful and educational. Thank you! 🙏
There are two reasons why I am planning for my retirement budget to be higher than my current (pre-retirement) budget. First, while I am working, my employer's health and dental benefits cover the majority of our supplemental health expenses. In retirement, these will have to be paid by us and us alone. Second, I feel a need to have an annual conservative cushion for unexpected things. If you are still working, and something big comes up, you might have the opportunity to work more (e.g. overtime) in order to make up for the shortfall. But in retirement, there is no longer necessarily a way to generate new cash. It's important to compare apples to apples. If you are 40, have a big mortgage payment, kids in school, and are aggressively saving for retirement, then your retirement budget is going to be substantially less than your current situation. But if you are 57, don't have a mortgage, the kids have left home, and you have stopped saving for retirement, then your retirement budget may be much more than your current situation.
In my area utilities, property taxes, insurance vehicle/home, alarm monitoring, one cell phone. Yearly cost for 2023 will be $19,257.00 Utilities count for $10,212.00 of the yearly cost and a large part of that is carbon taxes and GST being charged on top of carbon tax and as carbon keeps getting increased it will become more expensive. This cost doesn’t include fuel, maintenance and expenses for vehicle, now you add in groceries which also have gotten more expensive. As of September 30, my low risk RRSP/DPSP is down $42,000. 2028 my income will be lower by ~$1,700 because of enhanced CPP deduction and I am sure tax rate will also be higher if Liberal/NDP coalition remains in power in Canada.
Where the heck do you live? Our utilities in metro Van are 4500/yr for gas/elec/water/sewer/insurance/phones/internet and 12k for everything else including taxes, and groceries!
the GST has been around for more than 30 years, don’t make this political, governments come and go, you could have 6 different governments between retiring and death.
@martik778 utilities in my part of Alberta have jumped drastically in the past year. 75% is the transmission lines and carbon tax so usage hasn't changed too much. For power and heat only.... $ 350 per month. Water and sewer cheap at 65/month compared to Edmonton. Insurance went crazy in recent years... house and vehicle is about 250/ month... taxes another 250.... internet and phone etc.... annual total over 14,000
Yes, but we don't know what the future holds and where we might need those funds. I just don't think I can comfortably dig into my RRSPS and tfsa like that.
This was a fantastic presentation! Where can I get the calculator? I'm planning on retiring within 20 years and would like to forward plan to ensure I'm putting savings in the right place. Keep up the great channel!
Hi Adam, Another informative video. Would you be able to clarify if a person's home equity would be included in the required equity? Home equity comes into play once a person is in their later years and downsizes into a condo or rental unit. Also clarification on gross vs net income would be helpful. Is the x25 scenario based on net income being that the current and future budgeted expenses are net $? Thanks
Just plugged P-W in the comments field of a Globe and Mail article about how challenging it is to find a knowledgeable decumulation advisor. Adam, I hope your website gets swamped and your email is filled with requests for help! Happy Thanksgiving.
There is a huge fear (and rightfully so) that you will be elderly living in poverty. That terrifies me. Because of that fear, I have become very smart about having a plan, smart about spending/saving, having a financial planner and knowing that even in retirement I can have GICs, and other investments that can roll along during retirement. These will be my nest eggs for over 80 (if I live that long). However, I also know I am very lucky because I have a good job with a pension plan which most people don't have. My plan includes indexes for inflation, insurances I will need to pay for, small side investments etc...a good plan, the earlier the better, will help people get rid of some of the anxiety and fears. Where you live also matters - you will pay about 5% more tax on the east coast vs the west coast etc... Not only do you need to plan financially, you need to plan your expected lifestyle.
The fear is real but not rational. There are enough government handouts that everyone survives. By the time you hit that age, IF you are lucky to get there, there is no point in having large amounts of money left.
I found this video while looking for information on how much to retire in Canada (as an American) looking to move there. I have 2 properties, 3 homes that will generate approx 5-6k a month plus (being conservative) I’ll be collecting ss which who knows if it will be around at the time of retirement. This is very interesting. I’ll look into it more. I don’t understand the abreviations.
Looking forward to my plan soon, Adam. I read 55k a year after tax for a single person maintains an Upper Middle class lifestyle. What do you think? If no debts.
We want/project a total of ~$100k from OAS and government/company pensions. In addition to that, my goal is $2-3 million in RRSPs in the next 8-10 years with today's purchasing power. All with no mortgage and a paid off car. Not Bill Gates, lol, but definitely a sweet retirement where we want for nothing IMO.
Hi Adam love you're videos very informative. My question to you is where can find a software similar to the one shown in this video so that I can do several scenarios, I am already retired. I already have a financial advisor. Thanks.
To calculate your suggested 80%-85% of current pre-retirement spending, we would exclude our current spending on mortgage, RRSP, TFSA, & RESP’s? Given that these will not exist for us in retirement. Thanks Adam.
These rules of thumb, of taking a percentage of current income, are generally designed to reflect both a reduction in costs (typically a mortgage, and costs associated with employment such as travel and attire) but also the elimination of retirement savings. But, it varies from situation to situation. This can be especially true if retirement saving wasn’t prioritized until near the end ( meaning a higher percentage of income was being saved near retirement).
Thanks for the video. Are there any resources out there to help calculate costs of retirement based on desired/projected lifestyle, rather than current spending? We want to live a completely different lifestyle in retirement, so basing how much we need based on what we spend now (as frugal folks who save well) will not be accurate for us.
I maintain a current list of monthly expenses, including variable things like car and home maintenance. I started a retirement plan with these values, then updated things like eliminating the mortgage, continue maxing TFSA but dropping RSP contributions. I also think we can consider dropping life insurance. Then I added things like “two months in Arizona”, “buying a boat”, etc. I tend to over estimate everything to start and then focus in on getting additional details. I start running numbers and maybe it becomes one month in Arizona and not two. My perspective is “the devil is in the details”. For instance, one of my assumptions is moving to an area with lower property taxes, and potentially a smaller home where heating and power costs will likely be lower. There’s a wide range of levers that I can pull to test different scenarios and outcomes. Being handy with Excel or Google Sheets really helps.
@@martik778 my entire point is that i CAN project my desired lifestyle, but because I do not live that way in the savings era of my life, it is very difficult for me to know the cost of that future lifestysle. Whereas, someone who deals with people who retire at all lifestyle levels, COULD be better equipped to know approximate costs of a lifestyle. For me personally, and many others who are good savers, this information would be far more useful than whether or not we will have enough money to live like we already do at our current lifetstlye -- we live on less than we make, we are good at budgeting, and we already KNOW we can afford our current lifestyle, both now and in retirement.
He said in another reply that it's for industry only. Puzzling since the software company could sell many more. Protects the financial planners' business.
Hey Adam: I have question on Total Tax & Premiums section of this Video, I noticed for this individual during his employment he was paying 12,493 tax on 70K, during his retirement year @ 65 he was paying $ 143 on 55K income. Is Taxes are lower in retirement. OR CPP/OAS payment wash out for basic tax exemption $ 15000 for CPP and age tax credit $ 8000 for OAS. Anythng over and above will be tax ? I hope this make sense
We have a saying in emergency services, "fail to plan, plan to fail." It has merit in many of our life decisions. I submit, if you are watching Adam's work, you are investing in your knowledge, most don't bother. I have been watching his videos, and several others to get a rounded approach - I like to find a middle ground. I retired at 51, and had worked a full-time and part-time time business for both careers - still "work" my own business, but at my pace and rules - a gift if you can make money at something you absolutley love doing! Good luck with your financial journey, from someone who had to use overdraft and credit cards, to now...checking the investment returns - hang in there!! And watch his videos😊
So this is true but it is also not the reality finance wise for probably 99% of people in their 80's and 90's. Income tests calculate funding for programs to help seniors.
4% rule and 25 times rule are exactly the same (25*4%=100%) Great video but what I am missing is that there are 25 year between 65 and 90. Why not be save for just the first say five years? Put the required needs for the first five years in GIC’s. The rest you can put in a nice S&P 500 which makes on average 11%. You can track your investments in the S&P 500 every year. Is there a good year you can take out for the next year and put it that in a GIC. If the return is not that great you just leave it. You have a buffer of five years
Investing in just the S&P 500 index alone could very well be a winning strategy, and for the past 25 years any investor would have done well with this approach. But some would argue such an approach lacks diversification and therefore unnecessary risk. No doubt the S&P can be the cornerstone of a solid retirement savings plan but relying on it solely may not be an optimal strategy.
The timing here matters...A LOT. The S&P returns over the long haul have averaged 11% BUT as an example, for the period of December 31, 1999 through December 31, 2009, the S&P 500 index had an annualized simple price return of -2.72%...If you retired in January of 2000 and deployed your strategy you'd be in big trouble.
@@JayandSarah what? Insane how? Life expectancy is going to continue to trend up, outside of the pandemic anomaly. My own parents, born in 1930 lived to age 89. Absolutely, in my opinion planning to 90 is a minimum. I have no intention of managing the risk of running out of money. Delaying both CPP and OAS will be big factors in ensuring that.
@@James_48 you can plan to whatever, it could be 100... we know 2 people who have hit that one lately and one that is heading to 101. When they all ran out of money, they were still take care of just fine by the government, all over and above whatever was taken from their income to provide care. Plan for the quality years. Havings hundreds of thousands in reserve at 90 is silly. Spend the majority of your funds in the years that count.
Someone needs a reality check here - cost of living rapidly increasing faster than many seniors especially those living on their own - can keep up - divorce rates among seniors these days throws another curve ball - you may once have had more. Than enough saved only to find out life changes in a way you might not have been prepared for -
He said that he knows seniors living on less than $2000 a month. I don't see how anyone can live on that today, let alone in 20-30 years at the rate costs are going up!
I am not resident of canada for tax purpose . I have 200.000 in LIF in Ontario I am thinking of unlocked my plan and pay 25 % for tax Is this good idea I live in Dubai Thank you
Do these numbers take into account inflation? If I need $3000 a month for expenses at 70, won’t that number go up incrementally each year due to inflation? Also if I am 40 now and need $3000 a month to live today, if plan to retire at 70, how much of today’s money do I have to save to make sure I have the equivalent of $3000 in 2053? I get thrown off with inflation adjusted calculations…
Yes inflation is built in. The Real income amounts inflation adjusted. The Nominal amount is what you will actually receive when you look at the spreadsheet.
These calculations don't seem to be taking taxation into account though. If someone wants $4k/mo, that means they want to have $4K/mo TO SPEND, so need to pull out $4K + 20% tax (or whatever rate) per month. Doesn't that mean you need more money than you have stated here?
Agree. Would be really nice to see the details & breakdown; $ from TFSA, $ from RRSP, $ OAS, etc. and then see the total amount that is taken each month in order to have "$x" net amount.
It's all in there, just not the focus of this video. If you pause it you can see gross drawn from each account, taxes etc. The 4k is NET and adjusted to inflation.
I love all these people throwing huge numbers around. They are WRONG. I retired 10 years ago at age 46. I had a grand total of $730,000. I have No pension or any income whatsoever outside of what I take out of my RRSP which the government has deemed income when it isn't at all. My house took $355,000 of that money but is now worth north of 800K. I give myself 20K a year to live on. That is $1666.66 per month. I've been doing just fine. In 4 years I get to start collecting CPP which will be a small amount considering I'll be taking it early and I screwed the government out of 21 years of work that they'd have preferred I slaved for them to rape me with their tax system. Then at 65 I'll get my OAS and GIS which will total more than the 20K per year I allow myself. So realistically, I should have retired several years earlier than I did! And, if I ever do run out of money, I sell my house, down size, and pocket well more than I'll need to see me to the end of my days. Everyone has been brainwashed to believe bullshit. Even worse, they've been tricked into massive debt which keeps them slaves to the system forever. I feel exactly ZERO sympathy for anyone who has put themselves into that situation of debt. I saw through all the BS and played my cards as well as I could have with the exception of losing 160K in the crash of 08 which was out of my control. Common sense will let you retire early, but common sense is FAR from common. Maybe 1 out of every 100,000 people have it. And if you think you are one who does....you're probably wrong.
How does one account for one time expenses like a new car, home renovation/repair, new appliances (may be) in the retirement planning. This video does not talk about this scenario.
You can do it in 2 ways - build in the larger expense in the expected years they will happen. Or you budget monthly and put money aside (much like you did pre-retirement
In an ideal world, you buy a car in your final couple years leading into retirement - that will last you for your retirement. You won't drive forever and a car should easily last 20. This really is about what you envision retirement to look like. Having the expenses of cars, homes etc is a big drag on income. In Canada cars do seem to be a prerequisite to live unfortunately. We are retiring early overseas. We won't need a car, we won't have to maintain a house we own. It's very liberating to say the least to go through that experience. Plus costs of living will be a fraction of what it is in Canada.
Some of these people who spend 15k a month are extremely wealthy to begin with. Everyone is different. We do extremely well on much less. Also inheritance comes into this, part time work, etc. My wife and I are extremely lucky….I am not concerned at all.
"Awesome video! I have a question regarding investing with a limited budget. If someone has less than $200,000 to invest, what would be your recommendation for entering the stock market? Instead of investing on my own and potentially experiencing emotional losses, I'm considering studying successful traders and replicating their strategies. I'm interested in hearing the public's opinion on this approach."
3 different ways of investing, ranked from easiest to most difficult (or time consuming) : 1. Invest through a robo-advisor 2. Invest in a one ETF 3. Invest in more than one and/or many ETF and/or invest in individual companies. Note that they aren't ranked by performance. It's impossible to rank because it all depends on what you do in solution 2 and 3. I tell all my friends to do solution 1. It WORKS. Mostly because it's automatic and it's immune to bad emotional irrational impatient decisions. For Solution 1 to work : set it to auto invest a set amount automatically every month. No matter what's happening in the news, invest every month. Wars, pandemic, economic downturns, they don't matter short term.
@@jovicrazed totally. You are also into the phase where so many people DONT have any money and government programs exist to support. We don't have 90 year olds out on the street starving. Financial planners would be best served to not put this irrational fear into clients that they need money saved "forever". Only in such a rich western country would this even become a thing. Most people in Canada will retire with very little savings that is how it has always been, and will continue to be.
It's amazing to see AMC doing well after all the doomsday analyses from naysayers. The stock market is a device for transferring money from the impatient to the patient - warren buffet. It's good to remind people of this right now; you buy on fear and sell on greed or just hold through it all for the long term. It’s easy but lots of people forget.
The title of your video is clearly stating that it is about retiring in Canada. Then you proceed with giving an example of a person who is retiring at 60 and has CPP of 1000 and OAS of 500. First of all OAS in Canada starts at 65. So any OAS numbers are not applicable here. The CPP of 1000 is theoretically possible, although I personally do not know anybody who gets such amount in CPP. Personally I have been contributing into CPP every year since 1994, having what was considered high paying jobs. But now after 60 I am getting way below 1000 in CPP.
I'll take a % hit in income from retirement funds when I move to Dallas when i retire soon but I want out of this woke hellhole that canada has become.
I came across this video right after discussing retirement challenges in Canada with my friends. gotta admit how important it is to find the right financial advisor early i was initially worried i have waited too long to start financial planning. with the varied scenarios mentioned. Trust is key, and I've been fortunate to find someone truly reliable.
Trust really makes all the difference when it comes to financial advice. Ive been working with Emily ava milligan, a financial advisor in the U.S., her personalized approach for me as an M.D has truly impacted my retirement planning in a positive way. Her expertise in understanding individual needs is unmatched, I'm meeting my goals. as an Independent broker-dealer she offers a lot of options that suite me. its been a good 8 years, fun-fact: rarely does anyone start financial planning on time
@@MaryWalker-kc5bc I wouldn't mind exploring your path. I need to get my retirement plan in order
A lot of it depends on what your pre-retirement income was but I've found that no longer putting 18% of my income into an RRSP and no more maxing out the TSFAs every year frees up a lot of cash. Now at a much lower income tax rate plus the mortgage paid off and the kids out on their own means we are living better now on 50% of our pre-retirement income than we ever did while we were working. Retired 9 years, age 70 now, we are still in the go-go stage and on 50% of our pre-retirement income we have regular month-long overseas trips and winter in a warm climate. Life is good.
This is the way 😉
This was what I was going to say as well. The 70% number is probably accurate for modest income earners but for me, our costs right now are sky high as I'm aggressively saving to make up for lost time, aggressively paying off the mortgage, still supporting 2 of our 3 kids because they're still in university, still paying car payments to get those paid off, etc., etc....All of that adds up to well over 10K per month in expenses that evaporate at retirement (or well before). Our expenses will likely be 1/3 of what they are today at retirement...maybe even less.
All of it depends of your understanding of the economy and the dollar and what they’ve been doing to it over the decades.
Adam, you are absolutely fantastic! You understand the poor the rich and everything in between. You come across as kind and sincere. Thank you Adam.
Wow, thank you! Appreciate the kind words. We try to help everyone in different ways here, so glad it is coming through.
This is simple and accurate. I appreciate the detail vs others throw up numbers and wonder the specific situations. I have been obsessed with this for 30 years and I can say this is a good video.
I am 34 and terrified of running out of money when/if I retire. A lot can change in the next 30/35 years but this was a very helpful video to set the right attitude towards retirement savings.
Hello! Just wanted to give a heartfelt thanks for your video series. Husband’s employer shutting down his place of employment and we’ve been so busy with life and raising kids we’ve neglected our retirement planning. Some RRSPs that we don’t pay much attention to and both of us have DB pensions so been complacent. He’s 7 months short of his earliest unreduced date for his DB pension and has a severance and retirement allowance that we had to make some fast decisions on. Your videos have been extremely valuable! I know so much more because of your videos. I’ve watched a lot of them and will continue to as we head into retirement planning. THANK YOU!
You are so welcome. Sorry to hear about your husband's job. Hang in there and keep educating yourself - it will make a difference.
Excellent visual presentations. A variety of examples. Well done Adam and team! 👍
When I hear those random figures, I never know if they mean per person or per couple . So thanks for specifying.
Thank you very much for your recommendation for my concerns and your honesty and professionalism thank you very much
My pleasure Diego. Wishing you all the best as you go into retirement.
I'm a long way off retirement, and have saved annually for that day but never really had an idea if I was in the ball park for what I needed. You sir have answered that question. Excellent content and delivery. cheers
Great video thank you. Very informative as always.
You should sell a monthly subscription to this software. $3500-$4000 +tax is a lot of money for someone who is hoping to make $3000/month in retirement.
Brilliant post Adam. Totally debunks the idea that millions are needed to retire. I love the strategic modelling. Really insightful and educational. Thank you! 🙏
Was ready on my early fifties. And did.
Very well done....Thanks for the information.
Wow! Fantastic video ..once again!
Glad you liked it!
Really great post. A budget is essential to determine needs before and during retirement 🇨🇦
There are two reasons why I am planning for my retirement budget to be higher than my current (pre-retirement) budget. First, while I am working, my employer's health and dental benefits cover the majority of our supplemental health expenses. In retirement, these will have to be paid by us and us alone. Second, I feel a need to have an annual conservative cushion for unexpected things. If you are still working, and something big comes up, you might have the opportunity to work more (e.g. overtime) in order to make up for the shortfall. But in retirement, there is no longer necessarily a way to generate new cash.
It's important to compare apples to apples. If you are 40, have a big mortgage payment, kids in school, and are aggressively saving for retirement, then your retirement budget is going to be substantially less than your current situation. But if you are 57, don't have a mortgage, the kids have left home, and you have stopped saving for retirement, then your retirement budget may be much more than your current situation.
I'm a newly landed immigrant from the Philippines in Canada, I have a pension from the Philippines.
The 25x annual income need and withdrawing 4% of your portfolio value to meet annual income needs are mathematically the same thing.
In my area utilities, property taxes, insurance vehicle/home, alarm monitoring, one cell phone. Yearly cost for 2023 will be $19,257.00 Utilities count for $10,212.00 of the yearly cost and a large part of that is carbon taxes and GST being charged on top of carbon tax and as carbon keeps getting increased it will become more expensive. This cost doesn’t include fuel, maintenance and expenses for vehicle, now you add in groceries which also have gotten more expensive. As of September 30, my low risk RRSP/DPSP is down $42,000. 2028 my income will be lower by ~$1,700 because of enhanced CPP deduction and I am sure tax rate will also be higher if Liberal/NDP coalition remains in power in Canada.
Where the heck do you live? Our utilities in metro Van are 4500/yr for gas/elec/water/sewer/insurance/phones/internet and 12k for everything else including taxes, and groceries!
@@martik778 Edmonton, Alberta
the GST has been around for more than 30 years, don’t make this political, governments come and go, you could have 6 different governments between retiring and death.
@@waffles1ca it is wrong to be taxing a tax. Carbon tax is tax so why pay GST. Carbon tax is neither goods or service,
@martik778 utilities in my part of Alberta have jumped drastically in the past year. 75% is the transmission lines and carbon tax so usage hasn't changed too much. For power and heat only.... $ 350 per month. Water and sewer cheap at 65/month compared to Edmonton. Insurance went crazy in recent years... house and vehicle is about 250/ month... taxes another 250.... internet and phone etc.... annual total over 14,000
Yes, but we don't know what the future holds and where we might need those funds.
I just don't think I can comfortably dig into my RRSPS and tfsa like that.
This was a fantastic presentation! Where can I get the calculator? I'm planning on retiring within 20 years and would like to forward plan to ensure I'm putting savings in the right place. Keep up the great channel!
Thanks, the software we use is industry use only unfortunately.
Hi Adam, Another informative video. Would you be able to clarify if a person's home equity would be included in the required equity? Home equity comes into play once a person is in their later years and downsizes into a condo or rental unit. Also clarification on gross vs net income would be helpful. Is the x25 scenario based on net income being that the current and future budgeted expenses are net $? Thanks
Yes it's based on net income
Thanks.
You're welcome
Adam. Once again you explained finance in simple terms.
Do you have a representative in Ottawa??
We have a plannerin the GTA, but do everything remotely. We have many clients in Ottawa.
Hi Adam what is your view on Reverse mortgages in canada alot of us baby boomers are house rich
Just plugged P-W in the comments field of a Globe and Mail article about how challenging it is to find a knowledgeable decumulation advisor. Adam, I hope your website gets swamped and your email is filled with requests for help! Happy Thanksgiving.
thank u for useful information. btw: r u on poscast?
I'm not
There is a huge fear (and rightfully so) that you will be elderly living in poverty. That terrifies me. Because of that fear, I have become very smart about having a plan, smart about spending/saving, having a financial planner and knowing that even in retirement I can have GICs, and other investments that can roll along during retirement. These will be my nest eggs for over 80 (if I live that long). However, I also know I am very lucky because I have a good job with a pension plan which most people don't have. My plan includes indexes for inflation, insurances I will need to pay for, small side investments etc...a good plan, the earlier the better, will help people get rid of some of the anxiety and fears. Where you live also matters - you will pay about 5% more tax on the east coast vs the west coast etc... Not only do you need to plan financially, you need to plan your expected lifestyle.
The fear is real but not rational. There are enough government handouts that everyone survives. By the time you hit that age, IF you are lucky to get there, there is no point in having large amounts of money left.
I'm living 6 pack to 6 pack.
I found this video while looking for information on how much to retire in Canada (as an American) looking to move there. I have 2 properties, 3 homes that will generate approx 5-6k a month plus (being conservative) I’ll be collecting ss which who knows if it will be around at the time of retirement. This is very interesting. I’ll look into it more. I don’t understand the abreviations.
I think 1.5 millions Canadian dollars
Great content. If I can ask, what financial planning software are you using in this video?
Snap Projections
@@ParallelWealth thanks for replying. Appreciate it! Enjoying a lot of your great content. Thanks for sharing.
Looking forward to my plan soon, Adam. I read 55k a year after tax for a single person maintains an Upper Middle class lifestyle. What do you think? If no debts.
Would be a great income
We want/project a total of ~$100k from OAS and government/company pensions. In addition to that, my goal is $2-3 million in RRSPs in the next 8-10 years with today's purchasing power. All with no mortgage and a paid off car. Not Bill Gates, lol, but definitely a sweet retirement where we want for nothing IMO.
Hi Adam love you're videos very informative. My question to you is where can find a software similar to the one shown in this video so that I can do several scenarios, I am already retired. I already have a financial advisor. Thanks.
If you have an advisor, you are paying them - have him/her run some scenarios.
To calculate your suggested 80%-85% of current pre-retirement spending, we would exclude our current spending on mortgage, RRSP, TFSA, & RESP’s? Given that these will not exist for us in retirement. Thanks Adam.
These rules of thumb, of taking a percentage of current income, are generally designed to reflect both a reduction in costs (typically a mortgage, and costs associated with employment such as travel and attire) but also the elimination of retirement savings. But, it varies from situation to situation. This can be especially true if retirement saving wasn’t prioritized until near the end ( meaning a higher percentage of income was being saved near retirement).
Thanks for the video.
Are there any resources out there to help calculate costs of retirement based on desired/projected lifestyle, rather than current spending?
We want to live a completely different lifestyle in retirement, so basing how much we need based on what we spend now (as frugal folks who save well) will not be accurate for us.
No one can do that but you because no software can guess your lifestyle. 3k or 30k per month who knows?
I maintain a current list of monthly expenses, including variable things like car and home maintenance. I started a retirement plan with these values, then updated things like eliminating the mortgage, continue maxing TFSA but dropping RSP contributions. I also think we can consider dropping life insurance. Then I added things like “two months in Arizona”, “buying a boat”, etc. I tend to over estimate everything to start and then focus in on getting additional details. I start running numbers and maybe it becomes one month in Arizona and not two.
My perspective is “the devil is in the details”. For instance, one of my assumptions is moving to an area with lower property taxes, and potentially a smaller home where heating and power costs will likely be lower. There’s a wide range of levers that I can pull to test different scenarios and outcomes. Being handy with Excel or Google Sheets really helps.
@@martik778 my entire point is that i CAN project my desired lifestyle, but because I do not live that way in the savings era of my life, it is very difficult for me to know the cost of that future lifestysle. Whereas, someone who deals with people who retire at all lifestyle levels, COULD be better equipped to know approximate costs of a lifestyle. For me personally, and many others who are good savers, this information would be far more useful than whether or not we will have enough money to live like we already do at our current lifetstlye -- we live on less than we make, we are good at budgeting, and we already KNOW we can afford our current lifestyle, both now and in retirement.
@@James_48 I love this approach. Thank you kindly for your thoughtful and detailed response!
Hi, Where can we find a similar software for retirement planning?
may be customized ?
He said in another reply that it's for industry only. Puzzling since the software company could sell many more. Protects the financial planners' business.
At least a million
Adam do you have staff in Calgary, thank you
We have a remote office there.
Of course the 4% rule and the 25x rule produce the same number, because 1/0.04=25. It's the same rule.
Hey Adam: I have question on Total Tax & Premiums section of this Video, I noticed for this individual during his employment he was paying 12,493 tax on 70K, during his retirement year @ 65 he was paying $ 143 on 55K income. Is Taxes are lower in retirement. OR CPP/OAS payment wash out for basic tax exemption $ 15000 for CPP and age tax credit $ 8000 for OAS. Anythng over and above will be tax ? I hope this make sense
How does a single, retiring early get $500 in OAS? 2:50
Oas based on years in Canada past age 18. 40 years maxes it.
@@Roof_Pizza you need to educate yourself
Do you have a video on what to do if you don’t have enough to retire?
1 buy a tent, 2 find a nice park
People saving for retirement... is there house even paid off yet?
Does the 4% rule include the cost of a home or not? My assumption is not. Renting in late life is increasingly stressful.
We have a saying in emergency services, "fail to plan, plan to fail."
It has merit in many of our life decisions.
I submit, if you are watching Adam's work, you are investing in your knowledge, most don't bother.
I have been watching his videos, and several others to get a rounded approach - I like to find a middle ground.
I retired at 51, and had worked a full-time and part-time time business for both careers - still "work" my own business, but at my pace and rules - a gift if you can make money at something you absolutley love doing!
Good luck with your financial journey, from someone who had to use overdraft and credit cards, to now...checking the investment returns - hang in there!! And watch his videos😊
were can I get this Software?
Join the industry!
The thing is you can require tons of cash as you age into the 80s and 90s if you are not healthy.
So this is true but it is also not the reality finance wise for probably 99% of people in their 80's and 90's. Income tests calculate funding for programs to help seniors.
4% rule and 25 times rule are exactly the same (25*4%=100%)
Great video but what I am missing is that there are 25 year between 65 and 90. Why not be save for just the first say five years? Put the required needs for the first five years in GIC’s. The rest you can put in a nice S&P 500 which makes on average 11%. You can track your investments in the S&P 500 every year. Is there a good year you can take out for the next year and put it that in a GIC. If the return is not that great you just leave it. You have a buffer of five years
Investing in just the S&P 500 index alone could very well be a winning strategy, and for the past 25 years any investor would have done well with this approach. But some would argue such an approach lacks diversification and therefore unnecessary risk. No doubt the S&P can be the cornerstone of a solid retirement savings plan but relying on it solely may not be an optimal strategy.
The timing here matters...A LOT. The S&P returns over the long haul have averaged 11% BUT as an example, for the period of December 31, 1999 through December 31, 2009, the S&P 500 index had an annualized simple price return of -2.72%...If you retired in January of 2000 and deployed your strategy you'd be in big trouble.
There is no need to plan for 90 that is just insane.
@@JayandSarah what? Insane how? Life expectancy is going to continue to trend up, outside of the pandemic anomaly. My own parents, born in 1930 lived to age 89. Absolutely, in my opinion planning to 90 is a minimum. I have no intention of managing the risk of running out of money. Delaying both CPP and OAS will be big factors in ensuring that.
@@James_48 you can plan to whatever, it could be 100... we know 2 people who have hit that one lately and one that is heading to 101.
When they all ran out of money, they were still take care of just fine by the government, all over and above whatever was taken from their income to provide care.
Plan for the quality years. Havings hundreds of thousands in reserve at 90 is silly. Spend the majority of your funds in the years that count.
Someone needs a reality check here - cost of living rapidly increasing faster than many seniors especially those living on their own - can keep up - divorce rates among seniors these days throws another curve ball - you may once have had more. Than enough saved only to find out life changes in a way you might not have been prepared for -
He said that he knows seniors living on less than $2000 a month. I don't see how anyone can live on that today, let alone in 20-30 years at the rate costs are going up!
With inflation that 50k will be very hard to survive
I suppose that if divide by 4% or multipied by 25 you should end up at the same place most of the time 😂
I am not resident of canada for tax purpose . I have 200.000 in LIF in Ontario
I am thinking of unlocked my plan and pay 25 % for tax
Is this good idea I live in Dubai
Thank you
Do these numbers take into account inflation? If I need $3000 a month for expenses at 70, won’t that number go up incrementally each year due to inflation? Also if I am 40 now and need $3000 a month to live today, if plan to retire at 70, how much of today’s money do I have to save to make sure I have the equivalent of $3000 in 2053? I get thrown off with inflation adjusted calculations…
Yes inflation is built in. The Real income amounts inflation adjusted. The Nominal amount is what you will actually receive when you look at the spreadsheet.
Are you a fee based financial planner?
These calculations don't seem to be taking taxation into account though. If someone wants $4k/mo, that means they want to have $4K/mo TO SPEND, so need to pull out $4K + 20% tax (or whatever rate) per month. Doesn't that mean you need more money than you have stated here?
Agree. Would be really nice to see the details & breakdown; $ from TFSA, $ from RRSP, $ OAS, etc. and then see the total amount that is taken each month in order to have "$x" net amount.
It's all in there, just not the focus of this video. If you pause it you can see gross drawn from each account, taxes etc. The 4k is NET and adjusted to inflation.
I love all these people throwing huge numbers around. They are WRONG. I retired 10 years ago at age 46. I had a grand total of $730,000. I have No pension or any income whatsoever outside of what I take out of my RRSP which the government has deemed income when it isn't at all. My house took $355,000 of that money but is now worth north of 800K. I give myself 20K a year to live on. That is $1666.66 per month. I've been doing just fine. In 4 years I get to start collecting CPP which will be a small amount considering I'll be taking it early and I screwed the government out of 21 years of work that they'd have preferred I slaved for them to rape me with their tax system. Then at 65 I'll get my OAS and GIS which will total more than the 20K per year I allow myself. So realistically, I should have retired several years earlier than I did! And, if I ever do run out of money, I sell my house, down size, and pocket well more than I'll need to see me to the end of my days. Everyone has been brainwashed to believe bullshit. Even worse, they've been tricked into massive debt which keeps them slaves to the system forever. I feel exactly ZERO sympathy for anyone who has put themselves into that situation of debt. I saw through all the BS and played my cards as well as I could have with the exception of losing 160K in the crash of 08 which was out of my control. Common sense will let you retire early, but common sense is FAR from common. Maybe 1 out of every 100,000 people have it. And if you think you are one who does....you're probably wrong.
How does one account for one time expenses like a new car, home renovation/repair, new appliances (may be) in the retirement planning. This video does not talk about this scenario.
You can do it in 2 ways - build in the larger expense in the expected years they will happen. Or you budget monthly and put money aside (much like you did pre-retirement
@@ParallelWealth Appreciate your response, Adam. Love your videos. I learn a lot from them.
In an ideal world, you buy a car in your final couple years leading into retirement - that will last you for your retirement. You won't drive forever and a car should easily last 20.
This really is about what you envision retirement to look like. Having the expenses of cars, homes etc is a big drag on income. In Canada cars do seem to be a prerequisite to live unfortunately.
We are retiring early overseas. We won't need a car, we won't have to maintain a house we own. It's very liberating to say the least to go through that experience. Plus costs of living will be a fraction of what it is in Canada.
I'm planning on using my TFSA for those big expenses. Then it doesn't expose me to more taxes.
@@njcanuck how does tha make sense?
Some of these people who spend 15k a month are extremely wealthy to begin with. Everyone is different. We do extremely well on much less. Also inheritance comes into this, part time work, etc. My wife and I are extremely lucky….I am not concerned at all.
But everybody has money to put on a house and work until they're 75 to die in it 😂
I’m sorry to be critical, but why do you run these retirement scenarios or somebody thinks they can live on $27,000 a year.
Lots of people do...
Don't forget you probavly have a house to sell as well.
With a paid off house and car I need 10k per month 😢
Lavish!
Sad :(
"Awesome video! I have a question regarding investing with a limited budget. If someone has less than $200,000 to invest, what would be your recommendation for entering the stock market? Instead of investing on my own and potentially experiencing emotional losses, I'm considering studying successful traders and replicating their strategies. I'm interested in hearing the public's opinion on this approach."
3 different ways of investing, ranked from easiest to most difficult (or time consuming) :
1. Invest through a robo-advisor
2. Invest in a one ETF
3. Invest in more than one and/or many ETF and/or invest in individual companies.
Note that they aren't ranked by performance. It's impossible to rank because it all depends on what you do in solution 2 and 3. I tell all my friends to do solution 1. It WORKS. Mostly because it's automatic and it's immune to bad emotional irrational impatient decisions.
For Solution 1 to work : set it to auto invest a set amount automatically every month. No matter what's happening in the news, invest every month. Wars, pandemic, economic downturns, they don't matter short term.
90 years old is no longer a realistic end point. Financial planners should tell their clients that they will most likely have to plan for longer.
I'm shootin' for 💯
At that point one is probably far into the no-go phase and not spending very much and, for homeowners, can access the equity in one's home.
@@jovicrazed totally. You are also into the phase where so many people DONT have any money and government programs exist to support. We don't have 90 year olds out on the street starving. Financial planners would be best served to not put this irrational fear into clients that they need money saved "forever". Only in such a rich western country would this even become a thing. Most people in Canada will retire with very little savings that is how it has always been, and will continue to be.
Goes up every day, inflation anyone?
It's amazing to see AMC doing well after all the doomsday analyses from naysayers. The stock market is a device for transferring money from the impatient to the patient - warren buffet. It's good to remind people of this right now; you buy on fear and sell on greed or just hold through it all for the long term. It’s easy but lots of people forget.
🇨🇦🇨🇦🇨🇦🇨🇦🇨🇦🇨🇦🇨🇦🇨🇦🇨🇦
25x and 4% are the *exact* same calculation. There's no reason to make a distinction - they aren't different approaches.
100%/4% == 25
Correct. But 99% don't catch on to this so that's why we do both....I know 🤷🏻♂️
aka reciprocals
Its a trick question. You can never have enough money.
Sure, we can always spend more, but the question is about need, not want.
The title of your video is clearly stating that it is about retiring in Canada. Then you proceed with giving an example of a person who is retiring at 60 and has CPP of 1000 and OAS of 500. First of all OAS in Canada starts at 65. So any OAS numbers are not applicable here. The CPP of 1000 is theoretically possible, although I personally do not know anybody who gets such amount in CPP. Personally I have been contributing into CPP every year since 1994, having what was considered high paying jobs. But now after 60 I am getting way below 1000 in CPP.
The CPP and OAS referenced are rounded numbers at age 65.
CPP of $1000 is common, OAS for most will be higher than $500.
I'll take a % hit in income from retirement funds when I move to Dallas when i retire soon but I want out of this woke hellhole that canada has become.
Im 43, have two young children and investing in bitcoin cause its the only way I will be able to retire at all.
Only one third of Canadians can afford to retire. I'm hoping the Communist Liberal Party of Canada will support me.