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Should I take CPP at age 60?

By Barbara Knoblach, PhD, CFP®

Mature couple walking in countryside

The calendar has flipped, and we have a new year ahead. Bring on 2020.

The kids are back at school; homework, lessons and sports practice have begun to fill the family calendar again. Summer holidays and backyard BBQs are on the horizon but may not feel that way given the dark days, rain (and snow) across most parts of Canada.

It’s a time to look toward to new challenges at work, plans for the New Year, and yes, summer vacations. Because, really, what is all our hard work for, if not, at least in part, to afford time with friends and family?

In fact, as you ease into a busier winter schedule, it’s a great opportunity to pause and remember why you work hard, and to recommit to your life goals—including your important retirement goals. Who doesn’t dream of the day when all four seasons are theirs to shape and enjoy?

But retirement looks very different to everyone, and one of the most important things to consider when planning yours, is the optimal time to apply for Canada Pension Plan (CPP) benefits. All it takes is a bit of calculated foresight, to make the decision that will best suit your circumstances.

Here’s a look at some basics:

Canada Pension Plan benefits can be drawn as early as age 60 (reduced 0.6% for each month before 65) or as late as age 70 (increased 0.7% for each month after 65).

The average life expectancy for Canadians is age 80 for men and 84 for women. Statistics Canada predicts a continued rise in life expectancy of roughly two years over the next 15 years.

Things to consider:

Life expectancy

Contemplating your mortality may feel uncomfortable, but it should not be ignored. Your health and whether longevity is a family trait, are things to consider when making your decision regarding CPP.

If you take your CPP starting at age 60, your breakeven point with someone who waits until age 65 is when you both turn 74. Confused? Let me put it another way – I will use an example to illustrate my point.

If Mary takes her CPP at 60 and Brenda takes hers at 65, Mary’s monthly CPP payment will be 36% lower than Brenda’s, but she will collect five years longer. They will be 74 when Brenda pulls ahead of Mary for overall amount collected.

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Posted in Ask Your Money Coach, For your information


5 Retirement Pitfalls and How to Avoid Them

By Karin Mizgala, Co-Founder and CEO Money Coaches Canada

Over the years I’ve transitioned many clients through retirement and while each story is unique, there are some commonalities in their experiences. One story that sticks with me is the reaction that my client Margaret (name has been changed) had when we went through the retirement projections which gave her the green light for retirement. Instead of jumping for joy, she burst into tears!

Initially, we were both surprised by her reaction, but it really isn’t that surprising at all. Retirement is a major life change, and what major life change comes without a mixture of excitement and fear? Margaret was elated that she had achieved her goal of a comfortable retirement, but overwhelmed by the implications of what this freedom actually meant for her and the new set of decisions she now had to make.

While we may gripe about our jobs and dream of the day when we can kick up our feet and relax, the side of us that is fulfilled by the structure and purpose of our work may feel overwhelmed by the responsibility of deciding what comes next. The cage is open, yet we may be afraid to fly out into the unknown. Continue reading

Posted in Money Coaching


Make the Most of the Holiday Season

financial well being

Don’t let this holiday season hurt your financial well being. Stay on track and enjoy the season without the stress of putting your financial future in jeopardy.

To help, we’ve assembled our most popular holiday-themed articles in one place. Each is a quick read and will give you great tips and strategies to enjoy the best of the holiday season without adding financial stress.

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Posted in Budgeting and Cash Flow, Money Coaching


Money Makeover – High Income Couple Out of Debt and Ready for Retirement

By Christine Williston, B.A., CFP®, Money Coach

 

Meet Melanie and Brian

When I met Melanie and Brian (names have been changed for privacy), Brian was 50 years old and Melanie was 42. Both had high power, high paying corporate jobs that kept them very busy. What free time they had, they devoted to their two children ages 13 and 14. Their income was almost half-a-million dollars a year, but without the time or expertise to maximize their financial situation, they found themselves in debt and worried about retirement. Continue reading

Posted in Debt, Money Coaching, Money Makeover, Success Stories


5 Investment Strategy Tips for the Soon-To-Be Retired

By Karin Mizgala, Co-Founder and CEO Money Coaches Canada

Investments

It’s not uncommon for folks approaching retirement to think that retirement planning is finally behind them. They’ve put in the years of saving and investing; now it’s time to Google hotels in Santorini, Greece, right? Well it is, and it isn’t!  There are many decisions about your savings and investments that you need to make to ensure that you can kick back and enjoy retirement. Continue reading

Posted in Investing, Money Coaching, Retirement savings


6 Simple Keys to Financial Success

By Karin Mizgala, Co-Founder and CEO Money Coaches Canada

Money—such a loaded word. We spend an amazing amount of time, energy and emotion on money; loving it, hating it, worrying about it, or being frustrated by it. The one thing we don’t often do is talk about it. Sure, we’ll collectively moan over coffee or cocktails that we don’t have enough, that everything is so expensive; but the silence or moaning reinforces the illusion that money is complicated.

Are you thinking; what do you mean illusion? Money is complicated.

I get it. We can easily feel overwhelmed by debts, multiple investment choices, the general economy, job security, and pressing retirement decisions. But I would counter that while money may sometimes feel overwhelming, it really isn’t complicated or even all that interesting.

In fact, after more than 35 years in this business, I would say there are 6 fundamental money principles that anyone can master. If you take action on these 6 concepts you can change financial concerns into financial contentment.

Let’s take a look at them one-by-one Continue reading

Posted in Money Coaching, Relationship to money


Investments Plain and Simple

How Investments Are Taxed

When making investment decisions, it is wise to consider the various tax implications – both positive and negative. As always, first remember that your investments should reflect your goals and values, your time frame and your risk tolerance. It’s vitally important to remember that though tax advantages can change with the government, investment decisions should only change with life considerations.

Here are some important guidelines on how investments are taxed for you to keep in mind:

Pension

Registered Investments (RSPs & Pensions):
These are not taxed until you remove money from your registered investment. You will then be taxed at the rate applicable on your income at withdrawal, which is usually at a lower rate at retirement than when you were working.  You also get a tax deduction when you contribute to a registered investment.

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Posted in Financial Literacy, Investing, Retirement savings, taxes


Do You Have What It Takes To Be An Entrepreneur?

By Karin Mizgala, Co-Founder and CEO Money Coaches Canada

Starting your own business is easier than it has ever been before. The internet has made it possible to serve customers not only across the country, but across the world. Accessible technologies have made it conceivable to create an app, bring a product or service to market, be a consultant or teach courses.

Entrepenaur Canada

This exciting new path to entrepreneurship has no age barriers either; kids are pitching viable ideas to savvy investors on the television show Dragon’s Den; millennials have been nicknamed the side-hustle generation; and businesses started by baby boomers with no interest in retirement, are on the rise.

But what will make any of these new businesses successful is not an internet connection and a large Twitter following. Today’s entrepreneurs need the same mindset and success principles that Canadian J.L. Kraft had when he started selling cheese out of a horse-drawn wagon in 1903.

Let’s look at what draws people to entrepreneurship and what needs to be considered before taking the leap. Continue reading

Posted in Money Coaching, Small Business


Don’t Let Back to School Break the Bank

By Sheila Walkington, BBA, CFP® 

The back to school cliché is that kids dread it and parents are gleefully counting the hours. But in reality, lots of kids are excited to go back to school (albeit an excitement that usually fades with the first homework assignment) and many parents dread September because it feels like open season on their bank accounts. Back to school spending seems to escalate every year, but it doesn’t have to be that way. You may not be able to keep your kids excited about school, but saving on back to school expenses is possible with some planning.

Back to school basics

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Posted in Budgeting and Cash Flow, Money Coaching


Embrace Aging and Plan for a Happy Retirement

How We Age is Changing

As youngsters, we can’t wait to get older.  Sometime later, we become less enthusiastic about our next birthday.  We come to realize our mortality with the tick-tock of age.  It’s a matter of perspective.

Age has also changed in perspective over history.  For much of human history, the toil of daily work didn’t stop until health failed or death.  Retirement didn’t exist.  Caring for the elderly was short-lived if at all.  When Benjamin Franklin uttered his famous quote: “Nothing can be certain, except, death and taxes”, the average longevity was just 35 with almost nobody reaching age 60.  It would be the 20th century before average longevity creeped up to 50.  With modern breakthroughs in health care and eradication of diseases, average longevity has surged to 85 today with many reaching 100.  Aging isn’t gone but we have the opportunity to stay with it longer. Continue reading

Posted in Relationship to money, Retirement savings