Putting in a life long discipline of living below your means as soon as you can, cleanses the body and mind. That said ! At 49, I had a life altering medical event. So...At the exact moment when I thought I was going to enter my maximum earning years...I earned exactly zero for 4 years. Not only that ! I had to re-start at the very bottom of the totem poll at 55. Life has a way of humbling you. Keep up the good work. You have a great podcast.
Thank you! And wow, yes, we’ve seen this happen to clients as well. Life can throw a lot at you. We have way less control (of pretty much everything) than we think!
We’ve watched a number of videos on retiring and yours are the best! Thank you. Would love to see a video like this for those of us looking to retire early.
I am single and don’t spend anywhere near 7000 a month and I’m living comfortably. I have a condo paid off and no debts. I have a pension geared to inflation. So I receive my pension, CPP and mow started to receive delayed OAS. I will not be drawing down from my RRSP until 1 year from now. So it all depends on your lifestyle for you to need all that money to live on.
Interesting, are you aware that any remaining RRSP or RRIF at death is all taxed at your marginal tax rate? Say you have 100K left at death in those accounts that’s close to a 50% marginal tax rate and the Govt will get half before any goes to beneficiaries.
Marginal tax rate for $100K in BC is currently 31%. You have to reach ~$250K to get to 49.8%. But your point is taken. All funds in a RRSP have never been taxed and are only taxed upon withdrawal at your current marginal tax rate. @@marcelmed4574
@@marcelmed4574 If you withdraw it you are paying at your marginal tax rate anyways. People need to focus on their money for them while they are alive. You can live longer than you think and money growing without tax is why you should have lots of money in your RRSP. When you are dead, you are dead, Who cares what the beneficiaries get. They'll get a lot more than if you burn it down and spend it, which is what would likely happen anyways.
@@marcelmed4574it’s true that it is not a good idea to keep RRSP till death, but average tax is about 26-27% for 100k depends on where you live. I would personally retire early and live off RRSP, use it up before the age of 65.
What you don't take into account is if one of the two individual passes away in there early to mid 70's. The changing of the CPP and OAS to after 70 will have a larger negative impact and now the RRSP money or other investments have been lowered because of delaying. The remaining person does not get both CPP's and OAS of the husband and or wife....
I work in the financial industry and I have seen it numerous times. When a company offers a benefits package if people voluntarily leave it’s normally directed at older workers. There is pressure to accept it, usually indirectly. So most people take it.
Like your perspective and the content. I am happy to say I planned for this exact scenario and by sticking to a five year plan we have exceeded this amount. No mortgage, no debt other than small car loan of $400. Most important thing I learned is have a plan (budget) and stick to it. Extra was regularly put into mortgage and spousal RRSP. It just takes determination. In our mid /late 50’s and can retire this year. Nice feeling and worth the effort.
It also takes luck. The older I get the luckier I realize I am: no workplace accidents, no car accidents, no debilitating disease, no lawsuits, no divorce, no kids to bail out of jail. So many things can go wrong and I don’t intend to demean your diligence, just an add-on that things can go sideways so badly, and, in the end, it always goes “sideways” for all of us. 🎉 ❤
Or sell that $1.3mil house, move out of the bone-chilling cold wet weather that southern BC is, and move to a warm country like Philippines 😊 With your company pension, CPP, RRSP meltdown, interest income you can enjoy warm sunshine, fresh meats and veg, minimal taxes, and explore a few new SEA countries. Great video by the way!
Great video….as always. I’m nearing retirement and spending way to much time looking at retirement videos across the Web. Yours are by far the best one out there. Love the scenarios, clear and concise language with a nice mixture of wisdom and wit. Looking forward to your next video.
Love your videos. Would like to see an example of regular salaries under 100k with minimum TFSA around 50k with only 150k in RRSP. Most people won’t qualify for maximum CPP
This is the first video i watched of yours. You explained things super well. Answered questions i had. I wasnt sure where to begin of which would be better. Whats really good is the numbers you had for your couples were very reachable. Im super excited to have found a new resource.
I’m so glad I found your channel! Very well done 😃👏🏻. You’re a great presenter and articulate speaker. Wonderful, clear, concise, and valuable content - no fluff! I’m diving in for more! 🙂
I have followed several of these types of videos and the thing that never gets mentioned is the cost of long term care in the "no-go" phase. Have you ever looked at this, it makes a huge difference. Tony
I'm about to finally be out of bad debt this month after years of being in it, learned my lesson and have been bringing up my financial knowledge over the years, still learning everyday, I can't wait to properly use my money for investing and retirement, loving your videos!
Another great video 👍, wondering if could do similar video where one of the spouses passes away around 72-78 years old. How would CPP and OAS look like with only one (survivor) government benefit coming in for income.
Great video! I appreciate the multiple scenarios. I have scanned the comments and have not seen anyone else ask - so here goes: in scenario 4 (downsizing/downpricing) you mention selling house at $1.3M and buying a new one at $900K - leaving $400K to invest. HOWEVER - in BC, they would lose $42,000 in real estate commission, plus an additional $2,100 in GST. Then when they purchase house at $900K they lose $16,000 in property transfer tax. Let's assume $2,000 in legal fees on each transaction (reasonable I think). Then maybe $2,000 in moving expenses which is probably low even if all they do is rent a truck and get volunteers since they will probably need to replace at least one major piece of furniture or appliance. So a minimum of $66K evaporated, leaving $334K to invest (a loss of 16.5% of the initial amount stated). Does your scenario/software account for this? In the end you show them purchasing a house for $750K, so we can lower the PTT to $13K but all other costs remain the same. Thank you for any clarification.
Thanks! This was a simplified scenario so that the video didn’t take all day. But yeah, we can and do build closing costs etc into our real life planning.
The moment you start to think about downsizing, I think you should start looking at renting. Dumping those kind of sums of capital into non income producing assets at that stage in life.- I believe is a mistake. We retired overseas at a very early age. The cost of living in Canada gives you the impression the world is very expensive, when in fact - there are many places where those sums of money you will never outspend.
It’s interesting to see people here mad with the $7500 used. I was thinking thats too low for the lifestyle I want. There is a difference on getting by and enjoying retirement on your terms. Don’t say it’s unrealistic 7500, because to some of us thats low. In my case I will still have kids at home when I retire. I had them late in life. I am plainning for $8700 after taxes. My wife and I both have DB pensions. Great video, I like to understand what these incomes are taxed at in BC used in this example.
I agree with you 7500 Cdn is low... a car loan is $1000 a month these days unless you are cool with driving a 10 year old Honda Civic...(queue the new car haters...), a 10 day cruise for two is north of $15000 all in... and a night at the theatre with dinner is well north of $500... my property taxes alone are 9000 a year ! My paid for house costs me $3000 a month in taxes, utilities, insurance and repairs !!! I am looking at a budget of well north of double what this presenter is using for an example.
Unfortunately, it costs way more since couples are able to “share” a ton of the expenses. Plus, they often have double the CPP and OAS. So to get to the same retirement income numbers, singles have to have far more assets.
going thru all these scenarios and complications don’t make sense when you have 930k in savings. Investing at 5.19%, you could withdraw 66k per year for 25 years. Add another 40k for the couple in CPP and OAS combined and you end up with 106k/year, or about 8k a month after tax; all these without using any fancy software
Inflation is a factor though and you also can't guarantee 5.19% every year. The software he uses runs simulations to mirror real world market fluctuations to arrive at the chance the plan will work. For example, what if in the first 3 years the returns on the portfolio is actually negative...
@@wellbuiltwealth if you pull out the last few years, outside of real estate costs, actual inflation has been very low in Canada over 20 years. And inflation does not affect everyone the same. When you retire, your spending declines significantly in many cases.
@@JayandSarah I think 'huge' is subjective. To some people $40K per year may be huge. To others it's poverty. Even modest inflation can compound fast over time depleting the value of cash. At modest inflation of 2.5% $40K today would require $58K in 15 years to maintain the same standard of living.
Great video thank you… Love the different mishmashes- so helpful for younger ppl - will share with my kids. I would love something similar for an earlier scenario (retirement at mid 50s). If you need more name ideas how about Ben and Jenn Wren. 😂
I like your contents. I watch Azul, Dave Ramsey (man aint he grumpy) and the money guys, and learned a lot about retirement planning, however to have you specifically talk about our scenarios in Canada can factor in CPP and OAS, which is slightly different from social security in the US, can be helpful. Overall 7.5K a month doesn't require a lot if you retire at 65.
I think closer to 1%. You can work until you are 65 in Canada, retire and then face an expensive retirement, and 4 years to travel with travel medical insurance before they stop underwriting you. No thanks. We retired very early 50's overseas, and live a way better life for way less money... and will not lose those best years to working, but instead seeing the world.
Brilliant, I am just confused why these easy but meaningful found the representative from our bank don't know about it? Thanks for sharing. my follow up question is: what the 7500/mon's retirement life looks like?
Love the practical and real scenarios! Not sure if this has been answered in a previous video. What does the Retirement Score (e.g. 100%) actually measure? Is it 100% the plan will work no matter the sequence of returns? Or 100% of not running out of money with 95% confidence interval? Understanding this would really help as it is part of many of your videos.
Good question! It means that you have 100% of the liquid assets and other sources of retirement income needed to reach your retirement income goal. If you’re above 100%, you have buffer. If you’re below, you’ll need to reduce your income goal (or sell your house, etc…).
There are just soooo many variables involved as we all progress forward. No one would have predicted 12 years of interest rates close to or under 1% and suddenly, boom, up to 4.5% + in less than a year and a half. No guarantees folks. Get some enjoyment along the way ! There is no such thing as purchasing time credits at humanity's customer service counter. Thanks for the content.
As informative AND entertaining as ever. I love this channel. An interesting (in a bad way) situation that is currently developing for us is the possibility that we have to move to MORE expensive housing as we age. We live an hour outside of Toronto. As we start to require specialized health care, we're finding that specialists in Toronto are declining referrals from outside of the region, because their waiting lists are already long. This implies that we may actually have to move INTO Toronto to be able to get in to see them.
Has it been your experience with clients that inflation protected pensions actually increase to match inflation? I have a former coworker who retired 10 years ago with a provincial government pension. They say it is inflation protected and reviewed every 5 years. After 10 years, he says he gets the EXACT dollar amount today as his first pension cheque 10 years ago
Fantastic video! Cant believe I didn't find your channel sooner! Would love to see Ray and Kay May's scenario (with DB pension) if they were to retire early at 55 with same amount and distribution in portfolio but with $55K for go-go years, instead of $70K! Also, do you provide fee-only financial planning services?
Is the $7500 gross income per month? It they will be taxed for the $90k per year, it will bring down their monthly income by almost 40% in BC netting $4500 per month. If they are living in BC feel like that will be too low. Thoughts?
How about taking CPP OAS at 65 and invest this amount to a point in time you want or need to bring it into your monthly income? How does that compare to the increase you will get waiting to age 70? The risk is waiting to 70 means you will live to that age.
Why do so many videos mention a pension. It’s not 1975. Very very few people have a defined pension plan anymore. 7500 after tax a month is massive. Must be a lot of wealthy Canadians
I totally agree with you, but the fact is most Canadians don’t have pensions anymore. You only have a pension if you’re a civil servant. Most Canadians have a job with the company that provides RRSP support. So stop doing videos assuming that everyone has a pension.
Sadly, I think the truth is that a greater percentage of the CDN workforce are public servants (including teachers). In those roles, defined benefit pensions are the norm. It’s kind of a messed up economy.
There are many people who may have defined contribution plans. I agree that defined benefit plans are becoming rare. However both are considered "pensions".
Sorry, are you complaining on the video that gave scenarios without pension and without a defined benefit pension? This gave a wide range of scenarios and you still complain.
What about increased medical costs in later years, when you no longer have corporate health insurance. Was that factored in? Also the gogo, logo and nogo phases didnt look like it on the graphs, it just looked like the income anticipated was the same and always growing. Or did I miss something
Really enjoy your videos and have recommended a few to others to watch! Question: at around the 13min mark you mention for scenario 3 that you generally like to see a bigger buffer than the 103% this couple is at. Just wondering how large a buffer do you prefer to see?
Thank you!! We love to see it between the 110% to 120% range. But that said, each situation is different. For instance, people with more indexed pension income don’t need as much buffer.
I'm developing a mix of accounts to fund my retirement (about 15-20 years away). One of my fears is significant changes to taxation rules. Case in point is the planned changes to capital gains inclusion rates. Grrr. Who knows what things will be like when I'm ready to hang up my slide rule, but my hope is that having diverse accounts will mitigate risks.
No go phase at $5000 per month. Have you looked around at the price retirement homes charge. I live in Ottawa, $5000 per month is on the low side for retirement homes. The scenario you have here in the no go phase is 20-25 years out. With inflation rates no way would $5000 work.
Your graphs indicated 6.78K as the needs per month with all of your scenarios. Maybe I’m miss understanding but that is not 7.5k as what your stating was the goal. Can you clarify this a bit more as suspect 7.5K is at gogo stage and how much at slow go and no go stages?
The section you’re looking at is actually describing the average need throughout retirement which includes the amounts stated in the go-go, slow-go, and no-go (those amounts are discussed in the video).
Trying to figure out the best time to retire and still get my CPP and no claw back on my OAS. If I work the first three months of the year I can keep my income just under 80,000. but if I work longer in the new year 2025 I get big time claw back. So much to figure out. TY for the video helps lots.
Yes, rental income is an option too. For sure. If you’re cool with dealing with all the things that come with rentals during your retirement, it can be a great way to generate some income.
I am not sure but did you take in to account that their OAS will be clawed back if they target 7800 after tax income. All your graphs shows OAS is always there.
I really like your videos. Do you recommend reverse mortgages to supplement later retirement years? Pros / Cons , have you done a video on this subject? Cheers
Thank you! I do plan on doing a vid on this I just haven’t had the time yet. I think these have become a better option than they used to be. Some appealing things about them for sure… But I’ll make the vid and do a deep dive :)
Fantastic scenario breakdown - thank you. Just so I’m reading the chart correctly, is the $150K on the left side indicating total combined household income from both jobs while they are working?
Great video as always Reese, but I am skeptical. Most of the online planner videos I watch trim expenses down in the final years dramatically, but that doesn’t square with my firsthand knowledge of what my mother is paying for one smallish room in a care facility. It’s certainly more than $5000 a month, and if she didn’t have my dad’s gov’t health care plan (thanks fellow taxpayers!) she would be out of pocket even more. If she came to live with me, full time live-in care would be no cheaper. Where do you draw your numbers from for No Go Years expenses? 30+% of Canadians live in Ontario, and retirement homes are not cheap here, unless you enjoy squalor.
I do hear you. Especially if you do not own a home as a backup asset. There is risk in planning for less at that stage. And some people don’t like to. But we see a lot of situations and have older clients as well. And many simply spend very little. But when we build plans we always build them with as much buffer as possible to account for more being potentially needed. And again, as noted in the video, we always always always recommend you build a solid “war chest” for retirement as well. You will always need backup cash. Always.
Or, in our case, my father died and my mother is alive in an Alzheimer’s facility in BC that has been constantly raising their fees and is now just over $10k per month. My mom and dad were not rich by any means and had just my dad’s government job. But they saved a ton and managed to accumulate a portfolio of approx 1.5m in mutual funds and a few blue chip Canadian stocks. Dad’s pension, coupled with dividend and interest from investments covers about $8k per month and the balance is melting down the principal of the investments unfortunately. Now I know that there are other, ,cheaper options for facilities, but it was my dad’s wish that all funds that were saved be used for my mom’s comfort and care first and foremost. My point is that yes, retirement in the later years does not necessarily get cheaper, as noted by the poster above. It can maintain or even exceed levels from earlier years, and one has to assume that with inflation and high care costs that the annual expenditures will likely not decrease.
For sure. We do factor in inflation, but healthcare costs could easily exceed regular inflation. When we do custom plans, people get to pick whatever they want for spend levels. And if an expensive option for a care facility is desired, we build that in. Absolutely. Every situation is unique.
I could be wrong on this, but I feel people who have money set aside pay for their elderly healthcare, but if there are no funds, the government absorbs the cost? Am I wrong?
@@Pkeats817 I could be wrong but you are not likely to be able to select where you go if you are not paying. Thats a big deal for me. My plan has no differentiation between the 3 stages in terms of spending. Indeed I fully expect life to get *more* expensive as I age and will adjust early spending accordingly. Worst thing that happens I read more books, take more walks and my kids inherit some money. With the demographics of an aging population and people living into their 90s commonly, I am planning to self-finance the whole thing and not rely on government.
Just out of curiosity, 60/40 portfolio is the most common model portfolio in retirement and you said that you don’t recommend it, I wonder why and what a better option would be ?
I have a few videos on investing that summarize my philosophy on the long term consequences of owning (the 60% sleeve of a balanced portfolio) and loaning (the 40% sleeve). It’s too lengthy to write here but essentially, a balanced portfolio is easy to stomach for most people, but leads to mediocre results over the long-run. More equity in a portfolio leads to a more volatile journey, but better results. Everyone is different and has to use what they can stomach, but if they can learn to put up with a bit more volatility, it can lead to profoundly better outcomes. More to say on all this, of course, such as making sure you also have a solid war chest, making sure you’re appropriately diversified, etc.
@@wellbuiltwealth When we compare 60/40 portfolio to 80/20 since Dec.31, 2007, the annualized return of 60/40 is 5.6% and 5.1% of 80/20. Standard deviation of 60/40 is 8.1% and 11.6% of 80/20 portfolio, also max. drawdown is -23.8% and -40.9% respectively making a 60/40 portfolio clearly a better choice in retirement.
Another thought provoking video. Really enjoy the what-if analysis. What software do you use? Is it a commercial or proprietary package? I have been hearing recently about "bare trusts" and how the CRA may treat the joint account that I have with my 93 year old mother as such and hence require me to file a T3 return. Any insight on this?
Thanks! Software details are in the description. As for bare trusts, this is an excessively lame development. I won’t have time to put out a video on this but I do recommend you search for one or two on the topic. It’s now, unfortunately, an important thing to understand.
In other words, if you plan on spending $7500/month(65-75) you better have +$900k $aved up :) I appreciate you showing us the different scenarios, however truly not a fan of the pushing back CPP to age 70(but I get why you did it). I have a question for you concerning cashing out some shares and putting these in my TFSA, how can I reach you?
Thanks! And I hear you. Practically, for many of our clients, it doesn’t happen. Case by case though. As for how to get in touch, just shoot over to our website @ www.wellbuiltwealth.ca
I love all of your videos. I am currently collecting CPP ,OAS and GIS . Last month i was informed by a company i used to work with that i am going to receive about $20/000 as a pension benefit from them. If i invest this money into TFSA , how does it affect relating to my GIS earning ? if so, how much deduction ?
Income earned inside a TFSA is tax free. But you can contribute to a TFSA the full $20K only if you have room, otherwise it's only $7.5K/yr of contribution room. It is possible that the $20K pension benefit could disqualify your for GIS if your total income is pushed too high.
The reality is everyone should have a defined benefit pension and would make everyone's retirement life easier. There is no reason why a government can't set up a defined benefit pension moving forward for its citizenry.
Thanks for the great video. Worth considering: downsizing from $1.3m to $900k results in $65k in JUST taxes, commissions and fees! And... in the spirit of other comments on here, I nominate Mit and Kit Schitt for your next hypothetical family...
My wife and I currently live on approx. $3800 a month. (paid off house and cottage). We go on a couple trips a year, nothing exotic, usually to east & west coasts. We buy quality, often organic food, and too many meals from caterers. We'd have to double our spending to use up $7500 a month. (we're 65) As far as waiting until 70 to claim CPP/OAS, it's not a slam dunk by any means. One thing not mentioned is the compound effect of inflation on the buying power of that CPP/OAS, waiting from 65 to 70. And you both need to live past 83 or so (break even point, considering interest and inflation) to make more overall than you would taking at 65. But generally good information here as always, regardless.
Putting in a life long discipline of living below your means as soon as you can, cleanses the body and mind. That said ! At 49, I had a life altering medical event. So...At the exact moment when I thought I was going to enter my maximum earning years...I earned exactly zero for 4 years. Not only that ! I had to re-start at the very bottom of the totem poll at 55. Life has a way of humbling you. Keep up the good work. You have a great podcast.
Thank you! And wow, yes, we’ve seen this happen to clients as well. Life can throw a lot at you. We have way less control (of pretty much everything) than we think!
@@wellbuiltwealthHow is it said, .. life is what happens while we are making other plans
We’ve watched a number of videos on retiring and yours are the best! Thank you. Would love to see a video like this for those of us looking to retire early.
Thank you! And that’s actually the next topic coming out :)
@@wellbuiltwealthCould you also consider doing videos for single people who are looking at retiring? Thanks!
I am single and don’t spend anywhere near 7000 a month and I’m living comfortably. I have a condo paid off and no debts. I have a pension geared to inflation. So I receive my pension, CPP and mow started to receive delayed OAS. I will not be drawing down from my RRSP until 1 year from now. So it all depends on your lifestyle for you to need all that money to live on.
Interesting, are you aware that any remaining RRSP or RRIF at death is all taxed at your marginal tax rate? Say you have 100K left at death in those accounts that’s close to a 50% marginal tax rate and the Govt will get half before any goes to beneficiaries.
Marginal tax rate for $100K in BC is currently 31%. You have to reach ~$250K to get to 49.8%. But your point is taken. All funds in a RRSP have never been taxed and are only taxed upon withdrawal at your current marginal tax rate. @@marcelmed4574
@@marcelmed4574 If you withdraw it you are paying at your marginal tax rate anyways. People need to focus on their money for them while they are alive. You can live longer than you think and money growing without tax is why you should have lots of money in your RRSP. When you are dead, you are dead, Who cares what the beneficiaries get. They'll get a lot more than if you burn it down and spend it, which is what would likely happen anyways.
@@marcelmed4574it’s true that it is not a good idea to keep RRSP till death, but average tax is about 26-27% for 100k depends on where you live. I would personally retire early and live off RRSP, use it up before the age of 65.
What you don't take into account is if one of the two individual passes away in there early to mid 70's. The changing of the CPP and OAS to after 70 will have a larger negative impact and now the RRSP money or other investments have been lowered because of delaying. The remaining person does not get both CPP's and OAS of the husband and or wife....
I work in the financial industry and I have seen it numerous times. When a company offers a benefits package if people voluntarily leave it’s normally directed at older workers. There is pressure to accept it, usually indirectly. So most people take it.
Like your perspective and the content. I am happy to say I planned for this exact scenario and by sticking to a five year plan we have exceeded this amount. No mortgage, no debt other than small car loan of $400. Most important thing I learned is have a plan (budget) and stick to it. Extra was regularly put into mortgage and spousal RRSP. It just takes determination. In our mid /late 50’s and can retire this year. Nice feeling and worth the effort.
I can only imagine how nice that feels
It also takes luck. The older I get the luckier I realize I am: no workplace accidents, no car accidents, no debilitating disease, no lawsuits, no divorce, no kids to bail out of jail. So many things can go wrong and I don’t intend to demean your diligence, just an add-on that things can go sideways so badly, and, in the end, it always goes “sideways” for all of us. 🎉 ❤
No debt is a massive advantage. Way to go.
Or sell that $1.3mil house, move out of the bone-chilling cold wet weather that southern BC is, and move to a warm country like Philippines 😊 With your company pension, CPP, RRSP meltdown, interest income you can enjoy warm sunshine, fresh meats and veg, minimal taxes, and explore a few new SEA countries.
Great video by the way!
What are new SEA countries ?
@@philc824I’m guessing South East Asian…
Thailand as well. Those would be my goal. Probably Thailand.
Serious question - what health care coverage do you use/suggest?
Yes 👍 I am in PH and living quite well with my wife and spend 900-1000 per month CDN
I love the way you give us different scenarios - thank you🎉
Great video….as always. I’m nearing retirement and spending way to much time looking at retirement videos across the Web. Yours are by far the best one out there. Love the scenarios, clear and concise language with a nice mixture of wisdom and wit. Looking forward to your next video.
Wow! Thank you 🤓
Love your videos! Thank you for providing such valuable information. Would love to see more scenarios for single folks ☺️
Great video, nice to hear someone who understands retirement planning. Thank you.
Love your videos. Would like to see an example of regular salaries under 100k with minimum TFSA around 50k with only 150k in RRSP. Most people won’t qualify for maximum CPP
This is the first video i watched of yours. You explained things super well. Answered questions i had. I wasnt sure where to begin of which would be better. Whats really good is the numbers you had for your couples were very reachable. Im super excited to have found a new resource.
I’m so glad I found your channel! Very well done 😃👏🏻. You’re a great presenter and articulate speaker. Wonderful, clear, concise, and valuable content - no fluff! I’m diving in for more! 🙂
Thank you so much! 🤓
Your content is always top-notch.
I have followed several of these types of videos and the thing that never gets mentioned is the cost of long term care in the "no-go" phase. Have you ever looked at this, it makes a huge difference. Tony
You betcha. And I touch on it sometimes. And when we do custom plans for clients, we always discuss it.
Great video & presentation to demonstrate various scenarios. Thanks!
Love your videos, great content! Could you possibly do a video for people that would like to retire at 55. With 7,500 per month? Thanks
Yes and for singles!
Awesome video Rhys. This is why we invest with you! You know your stuff and you take care of us!
Well, thank you kindly :)
I'm about to finally be out of bad debt this month after years of being in it, learned my lesson and have been bringing up my financial knowledge over the years, still learning everyday, I can't wait to properly use my money for investing and retirement, loving your videos!
Don't forget that private home care can cost between $5,000 and $20,000 a month. I just went through over 9yrs with my mother
Great job! You've successfully documented all of the factors for retirement income planning in a concise and well thought out presentation.
Another great video 👍, wondering if could do similar video where one of the spouses passes away around 72-78 years old. How would CPP and OAS look like with only one (survivor) government benefit coming in for income.
came across your channel and had to say it is very well done!
Thank you :)
Thank you so much for this. I'm much clearer where I'm at and super pumped!
Great video! I appreciate the multiple scenarios. I have scanned the comments and have not seen anyone else ask - so here goes: in scenario 4 (downsizing/downpricing) you mention selling house at $1.3M and buying a new one at $900K - leaving $400K to invest. HOWEVER - in BC, they would lose $42,000 in real estate commission, plus an additional $2,100 in GST. Then when they purchase house at $900K they lose $16,000 in property transfer tax. Let's assume $2,000 in legal fees on each transaction (reasonable I think). Then maybe $2,000 in moving expenses which is probably low even if all they do is rent a truck and get volunteers since they will probably need to replace at least one major piece of furniture or appliance. So a minimum of $66K evaporated, leaving $334K to invest (a loss of 16.5% of the initial amount stated). Does your scenario/software account for this? In the end you show them purchasing a house for $750K, so we can lower the PTT to $13K but all other costs remain the same. Thank you for any clarification.
Thanks!
This was a simplified scenario so that the video didn’t take all day. But yeah, we can and do build closing costs etc into our real life planning.
The moment you start to think about downsizing, I think you should start looking at renting. Dumping those kind of sums of capital into non income producing assets at that stage in life.- I believe is a mistake. We retired overseas at a very early age. The cost of living in Canada gives you the impression the world is very expensive, when in fact - there are many places where those sums of money you will never outspend.
@@JayandSarah Good idea ... unless you have kid(s) you want to leave hard asset (property/home) for, then renting is not a good idea in my opinion.
It’s interesting to see people here mad with the $7500 used. I was thinking thats too low for the lifestyle I want. There is a difference on getting by and enjoying retirement on your terms. Don’t say it’s unrealistic 7500, because to some of us thats low. In my case I will still have kids at home when I retire. I had them late in life. I am plainning for $8700 after taxes. My wife and I both have DB pensions. Great video, I like to understand what these incomes are taxed at in BC used in this example.
I agree with you 7500 Cdn is low... a car loan is $1000 a month these days unless you are cool with driving a 10 year old Honda Civic...(queue the new car haters...), a 10 day cruise for two is north of $15000 all in... and a night at the theatre with dinner is well north of $500... my property taxes alone are 9000 a year ! My paid for house costs me $3000 a month in taxes, utilities, insurance and repairs !!! I am looking at a budget of well north of double what this presenter is using for an example.
What do you suggest for a single person retiring?
What is the $7,500 equivalent for a single person?
Unfortunately, it costs way more since couples are able to “share” a ton of the expenses. Plus, they often have double the CPP and OAS. So to get to the same retirement income numbers, singles have to have far more assets.
@@wellbuiltwealthplease do a similar video for us “singles” using similar numbers!?
going thru all these scenarios and complications don’t make sense when you have 930k in savings. Investing at 5.19%, you could withdraw 66k per year for 25 years. Add another 40k for the couple in CPP and OAS combined and you end up with 106k/year, or about 8k a month after tax; all these without using any fancy software
Don’t forget about inflation.
Inflation is a factor though and you also can't guarantee 5.19% every year. The software he uses runs simulations to mirror real world market fluctuations to arrive at the chance the plan will work. For example, what if in the first 3 years the returns on the portfolio is actually negative...
@@mozerm even if it sits in cash at zero return, $930k taken over 25 years from 65 is a huge amount of monthly income.
@@wellbuiltwealth if you pull out the last few years, outside of real estate costs, actual inflation has been very low in Canada over 20 years. And inflation does not affect everyone the same. When you retire, your spending declines significantly in many cases.
@@JayandSarah I think 'huge' is subjective. To some people $40K per year may be huge. To others it's poverty. Even modest inflation can compound fast over time depleting the value of cash. At modest inflation of 2.5% $40K today would require $58K in 15 years to maintain the same standard of living.
Great video thank you… Love the different mishmashes- so helpful for younger ppl - will share with my kids. I would love something similar for an earlier scenario (retirement at mid 50s). If you need more name ideas how about Ben and Jenn Wren. 😂
It’s on the list!!!
I like your contents. I watch Azul, Dave Ramsey (man aint he grumpy) and the money guys, and learned a lot about retirement planning, however to have you specifically talk about our scenarios in Canada can factor in CPP and OAS, which is slightly different from social security in the US, can be helpful. Overall 7.5K a month doesn't require a lot if you retire at 65.
Best video by far I’ve found. Throw in “move to other country half time… “ that’d be interesting.
Why only half time?
@@JayandSarahNot sure I'd want to live out of canada more than half
90K after taxes is closer to the top 20% of seniors and is somewhat unrealistic for average viewers.
That's based on a couple, so not entirely unrealistic.
pretty easy for couples with DB's , ie teachers, nurses/healthcare, cops , fireman etc
I think closer to 1%. You can work until you are 65 in Canada, retire and then face an expensive retirement, and 4 years to travel with travel medical insurance before they stop underwriting you. No thanks. We retired very early 50's overseas, and live a way better life for way less money... and will not lose those best years to working, but instead seeing the world.
Brilliant, I am just confused why these easy but meaningful found the representative from our bank don't know about it? Thanks for sharing. my follow up question is: what the 7500/mon's retirement life looks like?
Love the practical and real scenarios! Not sure if this has been answered in a previous video. What does the Retirement Score (e.g. 100%) actually measure? Is it 100% the plan will work no matter the sequence of returns? Or 100% of not running out of money with 95% confidence interval? Understanding this would really help as it is part of many of your videos.
Good question! It means that you have 100% of the liquid assets and other sources of retirement income needed to reach your retirement income goal. If you’re above 100%, you have buffer. If you’re below, you’ll need to reduce your income goal (or sell your house, etc…).
There are just soooo many variables involved as we all progress forward. No one would have predicted 12 years of interest rates close to or under 1% and suddenly, boom, up to 4.5% + in less than a year and a half. No guarantees folks. Get some enjoyment along the way ! There is no such thing as purchasing time credits at humanity's customer service counter. Thanks for the content.
@ Well Built Wealth, need a video for many DO NOT own a home applying to this issue!!! Not everyone also owns RRIFS!
Really well described options/ ideas!
Enjoyed your video. Thanks! Can I ask what software program you use? I liked the visual simplicity and the ease of running scenarios.
Thanks!
Conquest
Yes would love to know this as well please
As informative AND entertaining as ever. I love this channel.
An interesting (in a bad way) situation that is currently developing for us is the possibility that we have to move to MORE expensive housing as we age. We live an hour outside of Toronto. As we start to require specialized health care, we're finding that specialists in Toronto are declining referrals from outside of the region, because their waiting lists are already long. This implies that we may actually have to move INTO Toronto to be able to get in to see them.
Thank you!
And I’m sorry to hear this. This could be a case where you actually need more in your no-go stage 😳
what software are you using? is it available to non-professionals?
btw i don;t think 450K is a large RRSP, i only been here 15 years RRSP is over that amount.
Has it been your experience with clients that inflation protected pensions actually increase to match inflation? I have a former coworker who retired 10 years ago with a provincial government pension. They say it is inflation protected and reviewed every 5 years. After 10 years, he says he gets the EXACT dollar amount today as his first pension cheque 10 years ago
Fantastic video! Cant believe I didn't find your channel sooner! Would love to see Ray and Kay May's scenario (with DB pension) if they were to retire early at 55 with same amount and distribution in portfolio but with $55K for go-go years, instead of $70K! Also, do you provide fee-only financial planning services?
Thank you! And yes we do :)
Is the $7500 gross income per month? It they will be taxed for the $90k per year, it will bring down their monthly income by almost 40% in BC netting $4500 per month. If they are living in BC feel like that will be too low. Thoughts?
Its net.
How about taking CPP OAS at 65 and invest this amount to a point in time you want or need to bring it into your monthly income? How does that compare to the increase you will get waiting to age 70? The risk is waiting to 70 means you will live to that age.
What software is that?
Great video. What software do you use?
Conquest!
Why do so many videos mention a pension. It’s not 1975. Very very few people have a defined pension plan anymore. 7500 after tax a month is massive. Must be a lot of wealthy Canadians
I totally agree with you, but the fact is most Canadians don’t have pensions anymore. You only have a pension if you’re a civil servant. Most Canadians have a job with the company that provides RRSP support. So stop doing videos assuming that everyone has a pension.
Sadly, I think the truth is that a greater percentage of the CDN workforce are public servants (including teachers). In those roles, defined benefit pensions are the norm. It’s kind of a messed up economy.
Because a quarter of the population works for the government.
There are many people who may have defined contribution plans. I agree that defined benefit plans are becoming rare. However both are considered "pensions".
Sorry, are you complaining on the video that gave scenarios without pension and without a defined benefit pension? This gave a wide range of scenarios and you still complain.
Love your videos. You make it very enjoyable to watch and learn so much.
Thank you very much!
What about increased medical costs in later years, when you no longer have corporate health insurance. Was that factored in? Also the gogo, logo and nogo phases didnt look like it on the graphs, it just looked like the income anticipated was the same and always growing. Or did I miss something
Really enjoy your videos and have recommended a few to others to watch! Question: at around the 13min mark you mention for scenario 3 that you generally like to see a bigger buffer than the 103% this couple is at. Just wondering how large a buffer do you prefer to see?
Thank you!!
We love to see it between the 110% to 120% range. But that said, each situation is different. For instance, people with more indexed pension income don’t need as much buffer.
Great video as always
I'm developing a mix of accounts to fund my retirement (about 15-20 years away). One of my fears is significant changes to taxation rules. Case in point is the planned changes to capital gains inclusion rates. Grrr. Who knows what things will be like when I'm ready to hang up my slide rule, but my hope is that having diverse accounts will mitigate risks.
When you say "pension" (in the 2nd portfolio), are you referring to Defined Contribution Benefit Plan or Defined Benefit Pension Plan?
No go phase at $5000 per month. Have you looked around at the price retirement homes charge. I live in Ottawa, $5000 per month is on the low side for retirement homes. The scenario you have here in the no go phase is 20-25 years out. With inflation rates no way would $5000 work.
Which is why we build inflation into the plan. That 5k is in today’s dollars.
Your graphs indicated 6.78K as the needs per month with all of your scenarios. Maybe I’m miss understanding but that is not 7.5k as what your stating was the goal. Can you clarify this a bit more as suspect 7.5K is at gogo stage and how much at slow go and no go stages?
The section you’re looking at is actually describing the average need throughout retirement which includes the amounts stated in the go-go, slow-go, and no-go (those amounts are discussed in the video).
Amazing video. You are really the Best!
Thank you! 🤓
Trying to figure out the best time to retire and still get my CPP and no claw back on my OAS. If I work the first three months of the year I can keep my income just under 80,000. but if I work longer in the new year 2025 I get big time claw back. So much to figure out. TY for the video helps lots.
Excellent presentation!
Can you do a FIRE simulation? 50 year retirement, $3m portfolio for Lane and Jane Kane, spending $10k per month with a 100% etf equity account
You couldn’t tell me what software you use, could you
No prob. It’s linked in the description.
How about for singles? Can you make a video for this please? Thanks.
I'm doing it on a 3rd of that single!! Where so you get these numbers from?!?!
Excellent video, new subscriber
Or have real estate. Buy every little fixer upper in a good neighborhood you hear about over the years. $1.2M in held mortgages will do it.
Yes, rental income is an option too. For sure. If you’re cool with dealing with all the things that come with rentals during your retirement, it can be a great way to generate some income.
Does an ownership of investment property disqualifies from GIS?
Thank you!
Rental income certainly could.
I am not sure but did you take in to account that their OAS will be clawed back if they target 7800 after tax income. All your graphs shows OAS is always there.
It’s income between two people so they are each well below clawback.
@@wellbuiltwealth ha yes. I rember that. Thanks.
Great video Rhys... Your content is so easy to follow and understand - except for remembering the names... LOL
😂
Do you do plans where the goal is to only get the optimal mix of buckets for decumulation where cpp and oas are already being collected?
Yup. We do all sorts of scenarios.
Amazing video. Thank you!
That's a very low rate of return
This is a fantastic video.
7.5 per month? Did I hear weekly?
How much should your war chest funds be?
You gotta watch the war chest video for that answer ;)
I really like your videos. Do you recommend reverse mortgages to supplement later retirement years? Pros / Cons , have you done a video on this subject? Cheers
Thank you!
I do plan on doing a vid on this I just haven’t had the time yet. I think these have become a better option than they used to be. Some appealing things about them for sure… But I’ll make the vid and do a deep dive :)
@@wellbuiltwealth looking forward to the reverse mortgage video. It would be very helpful if you could discuss HELOCs as well
Where are they living? West Vancouver?
Fantastic scenario breakdown - thank you. Just so I’m reading the chart correctly, is the $150K on the left side indicating total combined household income from both jobs while they are working?
Yup! And that dollar axis indicates the spending each year (gross value) after they retire throughout the go-go, slow-go, and no-go stages.
awesome video, thanks for sharing
Nice and informative video as well as collection of books. Hope it's not background wall paper 🙂
Thanks! And they’re real :)
Great video as always Reese, but I am skeptical. Most of the online planner videos I watch trim expenses down in the final years dramatically, but that doesn’t square with my firsthand knowledge of what my mother is paying for one smallish room in a care facility. It’s certainly more than $5000 a month, and if she didn’t have my dad’s gov’t health care plan (thanks fellow taxpayers!) she would be out of pocket even more. If she came to live with me, full time live-in care would be no cheaper. Where do you draw your numbers from for No Go Years expenses? 30+% of Canadians live in Ontario, and retirement homes are not cheap here, unless you enjoy squalor.
I do hear you. Especially if you do not own a home as a backup asset. There is risk in planning for less at that stage. And some people don’t like to. But we see a lot of situations and have older clients as well. And many simply spend very little. But when we build plans we always build them with as much buffer as possible to account for more being potentially needed. And again, as noted in the video, we always always always recommend you build a solid “war chest” for retirement as well. You will always need backup cash. Always.
Or, in our case, my father died and my mother is alive in an Alzheimer’s facility in BC that has been constantly raising their fees and is now just over $10k per month. My mom and dad were not rich by any means and had just my dad’s government job. But they saved a ton and managed to accumulate a portfolio of approx 1.5m in mutual funds and a few blue chip Canadian stocks. Dad’s pension, coupled with dividend and interest from investments covers about $8k per month and the balance is melting down the principal of the investments unfortunately. Now I know that there are other, ,cheaper options for facilities, but it was my dad’s wish that all funds that were saved be used for my mom’s comfort and care first and foremost. My point is that yes, retirement in the later years does not necessarily get cheaper, as noted by the poster above. It can maintain or even exceed levels from earlier years, and one has to assume that with inflation and high care costs that the annual expenditures will likely not decrease.
For sure. We do factor in inflation, but healthcare costs could easily exceed regular inflation. When we do custom plans, people get to pick whatever they want for spend levels. And if an expensive option for a care facility is desired, we build that in. Absolutely. Every situation is unique.
I could be wrong on this, but I feel people who have money set aside pay for their elderly healthcare, but if there are no funds, the government absorbs the cost? Am I wrong?
@@Pkeats817 I could be wrong but you are not likely to be able to select where you go if you are not paying. Thats a big deal for me. My plan has no differentiation between the 3 stages in terms of spending. Indeed I fully expect life to get *more* expensive as I age and will adjust early spending accordingly. Worst thing that happens I read more books, take more walks and my kids inherit some money. With the demographics of an aging population and people living into their 90s commonly, I am planning to self-finance the whole thing and not rely on government.
It only takes $7500 if you die a month after your retire. $7500 a month is more than average people gross when still working.
Just out of curiosity, 60/40 portfolio is the most common model portfolio in retirement and you said that you don’t recommend it, I wonder why and what a better option would be ?
I have a few videos on investing that summarize my philosophy on the long term consequences of owning (the 60% sleeve of a balanced portfolio) and loaning (the 40% sleeve). It’s too lengthy to write here but essentially, a balanced portfolio is easy to stomach for most people, but leads to mediocre results over the long-run. More equity in a portfolio leads to a more volatile journey, but better results. Everyone is different and has to use what they can stomach, but if they can learn to put up with a bit more volatility, it can lead to profoundly better outcomes. More to say on all this, of course, such as making sure you also have a solid war chest, making sure you’re appropriately diversified, etc.
@@wellbuiltwealth When we compare 60/40 portfolio to 80/20 since Dec.31, 2007, the annualized return of 60/40 is 5.6% and 5.1% of 80/20. Standard deviation of 60/40 is 8.1% and 11.6% of 80/20 portfolio, also max. drawdown is -23.8% and -40.9% respectively making a 60/40 portfolio clearly a better choice in retirement.
Another thought provoking video. Really enjoy the what-if analysis. What software do you use? Is it a commercial or proprietary package? I have been hearing recently about "bare trusts" and how the CRA may treat the joint account that I have with my 93 year old mother as such and hence require me to file a T3 return. Any insight on this?
Thanks! Software details are in the description. As for bare trusts, this is an excessively lame development. I won’t have time to put out a video on this but I do recommend you search for one or two on the topic. It’s now, unfortunately, an important thing to understand.
In other words, if you plan on spending $7500/month(65-75) you better have +$900k $aved up :) I appreciate you showing us the different scenarios, however truly not a fan of the pushing back CPP to age 70(but I get why you did it). I have a question for you concerning cashing out some shares and putting these in my TFSA, how can I reach you?
Thanks! And I hear you. Practically, for many of our clients, it doesn’t happen. Case by case though. As for how to get in touch, just shoot over to our website @ www.wellbuiltwealth.ca
I love all of your videos. I am currently collecting CPP ,OAS and GIS . Last month i was informed by a company i used to work with that i am going to receive about $20/000 as a pension benefit from them. If i invest this money into TFSA , how does it affect relating to my GIS earning ? if so, how much deduction ?
Thanks! TFSAs won’t mess with your GIS at all :)
Income earned inside a TFSA is tax free. But you can contribute to a TFSA the full $20K only if you have room, otherwise it's only $7.5K/yr of contribution room.
It is possible that the $20K pension benefit could disqualify your for GIS if your total income is pushed too high.
The reality is everyone should have a defined benefit pension and would make everyone's retirement life easier.
There is no reason why a government can't set up a defined benefit pension moving forward for its citizenry.
30% of Canadians are single. Do you have videos for retiring single?
Great info thank you
Thanks for the great video. Worth considering: downsizing from $1.3m to $900k results in $65k in JUST taxes, commissions and fees! And... in the spirit of other comments on here, I nominate Mit and Kit Schitt for your next hypothetical family...
They’re on the list!!
How much would it take to do this retiring at 51
Well, that would require a custom build. And we definitely do those for people all the time :)
Great video
Amazing analysis, soon you will have no customers, they way you are going at it. Giving away everthing for free. Thanks for sharing different cases
Thanks! But that’s ok, I’m thinking of switching careers to become a puppeteer anyway, so it’s all good!! 😂
🤣
Me looking at the title...A LOT OF TD banks shares!!!! :D
Where can I get my hands on your forecasting model? Great video
Thanks! There’s a link in the description to the software. You can only access via an advisor who pays for the subscription though.
Awesome!
Wait... you barely ever recommend a balanced portfolio even in retirement? Would love to be directed to a video where you are talking about this...
$5000...would be a more realistic number to go off with
For 2 people? They will have to pay real estate taxes right? With a 1.3 million home, that’s like 8000 a year? If. They eat out and travel…
That is more than enough for a couple with no mortgage
My wife and I currently live on approx. $3800 a month. (paid off house and cottage). We go on a couple trips a year, nothing exotic, usually to east & west coasts. We buy quality, often organic food, and too many meals from caterers. We'd have to double our spending to use up $7500 a month. (we're 65) As far as waiting until 70 to claim CPP/OAS, it's not a slam dunk by any means. One thing not mentioned is the compound effect of inflation on the buying power of that CPP/OAS, waiting from 65 to 70. And you both need to live past 83 or so (break even point, considering interest and inflation) to make more overall than you would taking at 65. But generally good information here as always, regardless.