Weekend Reading – Benefits of working, a $1-trillion Apple, savings goals by age and more #moneystuff
Welcome to my latest Weekend Reading edition – where I share some of my favourite articles from the week that was across the personal finance and investing blogosphere.
This was my article from the past week:
I was bold in sharing my financial freedom update here – targeting age 50 and beyond for some part-time work. I have no idea if we’ll realize this milestone but it will be great if we do!
Have a great weekend!
Mark
From the oldie but goodie file – the benefits of working longer:
- “Activation of the brain and activation of social networks may be critical…”
- “I’ve seen a number of teachers who retire and don’t do anything they think is of value, and they go into decline pretty fast…”
- “…the negative effects of retirement start to appear after the first few years of ceasing to work. The results, he found, do not differ by sex or between people with different educational and occupational backgrounds…”
- “Volunteering and paid work produces better physical and mental health…”
I will work as long as I am physically and mentally able to but my goal towards semi-retirement is to have more choice in that matter – hence my post this week.
Dividend Growth Investor updated the list of U.S. dividend champions.
Apple Inc. became the first U.S.-based company with a market value of $1 trillion, four decades after it was co-founded by Steve Jobs. I have to wonder what the next 40 years might be like for this company?
How would you manage a $1-million portfolio?
Here are some savings goals by age. While I’m not typically a fan of this stuff since everyone is different, this article suggested you should have twice your income saved by age 40. I think that’s a reasonable goal for many 40-somethings. How do you or did you measure up when you were 40?
Interesting article here – confirming something I’ve written about for us – how to draw down your portfolio. From the article touting various software (in a paid article I suspect?):
- “…the TFSA is generally the last mode the average retiree will want to tap.” Agreed, I wrote about my preferred draw down order here (RRSPs/RRIFs then non-registered then TFSAs) in some overlooked retirement income considerations.
Want to know how much income you can safely spend in retirement? Of course you do – check out some new tables on my retirement page and essays from some very successful retirees and how you can get there too.
Partnerships and Deals!
Thanks to my passion for personal finance and investing, some great companies want to offer deals. As a reader, you might as well take advantage of them although there is never an obligation.
Happy Investing!
Mark
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've surpassed my goal and now investing beyond the 7-figure portfolio to start semi-retirement with. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
Hi Mark,
It is great to hear what your goals are. I hope you can reach them soon. I am definitely envious of the defined benefit plans you have. I think you can retire just on the DB itself.
And thanks for the mention. I hope all is well!
I hope so too! All the best and keep up the good work on DGI.
I’m no longer concerned about drawdown so much. As long as there is sufficient assets to sustain us through our lifetimes then all is good. I have been withdrawing from the RRSP just to the point of hitting the $46 tax bracket threshold or there abouts not so much because we need it but I might as well pay the lower tax on it whilst I can. If there are assets left after our demise then the endowment funds we’ve set up will get an infusion of $$.
(is it just me that has to fill in name and email for every post now?)
Hey Lloyd,
I didn’t change any settings on my end…honest. re: is it just me that has to fill in name and email for every post now?
I wonder if that is something on your end? Saving passwords and/or other on your browser?
Sounds like you are set so to speak. Well done!
Mark:
I am surprised to find myself challenging one of your suggestions – the preferred priority in running down one ‘s capital in retirement ( Registered money/RRSp’s/RRIf’s first, unregistered money second, and TFSA’s last – if I understood you correctly.)
I would argue – spend Unregistered money first. The cost of spending Unregistered money is 100 cents on the dollar
(ignoring the lost income, whose loss can be reduced by one’s marginal rate of tax.)
In contrast to spend a Dollar withdrawn from Registered Funds one has to withdraw/reduce capital Two dollars (supposing a marginal Tax rate of 50%) since the Tax Man will scoop 50% of the witdrawal, leaving you the net Dollar to spend.
After which we align – conserve moneys in TFSA as long as possible – Ah!! the nirvana of tax-free income!!
I will be interested in your comments!
Thanks David. I’ll be honest, I haven’t run the detailed numbers for us yet so my thinking will and could very well change on the draw down order. I guess I’m simply thinking that the longer I defer the RRSP, and therefore not draw it down because of my pending workplace pension at age 65, the worse tax situation I will be in. This means if I don’t draw down my RRSP, first, I’ll have:
-non-reg. dividend income, plus
-workplace pension, plus,
-CPP and OAS, around age 65, plus
-RRSP and/or RRIF income.
Wouldn’t it make sense to reduce the highest tax liability that is my RRSP first? I could take advantage of the dividend tax credit for registered assets and/or defer capital gains accordingly since this is the least form of taxation (vs. RRSP withdrawals).
The TFSA is nirvana 🙂 I hope to max mine out again in another 5 months! Thanks for being a fan.
https://www.moneysense.ca/save/retirement/how-to-tap-your-rrsp/
It suggested draw down RRSP first. But each individual has unique situation and I think you have to run your own figure.
A good, comprehensive article. Thanks for sharing since it’s been some time since I read that one. This was important from the article:
“The bottom line is, it often makes more sense to withdraw some RRSP money before exhausting your non-registered accounts, even if you take a small hit, because it can help you avoid a much bigger tax bill later.” That’s always been my thinking as well.
I will see when I run the detailed numbers May, and David, but my thinking is to defer my workplace pension (~$30k or more per year at time of retirement), defer CPP and OAS until age 65 which means drawing down the RRSP beforehand to smooth out taxes and have money to live from.
Good find May. Have read that before along with Darrell diamonds book.
Everyone needs to consider all factors, current / future taxes and brackets.
I’m a prime example of chomping down registered now, reinvest some in Tfsa and might raise amounts to reinvest some in unregistered after considering future govt benefits & tax smoothing.
Big fan of that book. Here is my review and some plans I have associated with what I have learned:
https://www.myownadvisor.ca/daryl-diamond-your-retirement-income-blueprint-review/
https://www.myownadvisor.ca/cash-wedge-opening-investment-taps/
Very smart to smooth out taxes.
Yes, agree it’s a good book. There is an abundance of wealth creating books but little on creating retirement cash flow.
I just reserved this again at library for another reading. Third in line.
The one thing I have different plans for is to use own funds rather than take cpp early as he suggests…want more govt indexed long term $; and move through / draw down my own registered $ a litttle quicker before this
Yes, tax smoothing is smart. I know I should be withdrawing somewhat more; raising taxes now but hard to move out of a sweeter tax spot.
The answer is: it depends.
Many factors.
Not sure where you live or your financial situation but 50% tax on RRSP money? Quite likely poor planning on the part of the investor if one’s RRSP tax rate will be that high. Maybe a nice problem to have though.
No tax on unregistered capital drawn in retirement, let alone dividends income? Quite likely poor investing on the part of the investor.
Perhaps 2 rather extreme examples?
I am drawing 90% of my taxable “income” from RRSP withdrawals at a small fraction of your suggested tax rate (and reinvesting some). It’s working for me.