Can I retire?

 

by Jamie MacDonald

Okay, you want to retire.  What in the heavens are you suppose to do now?  How do you know if you have enough to retire and will it last your life time?

 

 

The majority of people in Nova Scotia do not know the exact answer to those questions simply because they are too busy earning an income, paying down debt, and/or raising a family.  Then it hits you, the mortgage is gone (hopefully), the kids have left the nest, and the job you have had forever is starting to get to you.  Time to make a change.

 

Where do you start?

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To begin with, look at your net worth.  Simply add up the value of all your assets, including the market value of your house, land, car, savings, RRSPs, etc., and subtract your debt including mortgage, line of credits, credit cards, personal loans, etc.

If the amount is a negative then you might want to correct that before retirement.

Next…

Look at your monthly family net income (what income your family receives after taxes and deductions).

Total up the monthly debt payments you make from your mortgage, credit card, personal loans, car loans, etc.

Subtract the total debt payment from the total net income.

The answer, is the amount you use for living expenses and could closely reflect what income you need in retirement.

 

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If you are presently having trouble getting from one payday to the next then you may need to consider downsizing and/or reducing your debt before retiring.

If you are fortunate enough to have savings, pension plan, or other retirement income then you may be able to supplement it with a Canada Pension Plan (as early as 60) and/or Old Age Security at (age 65) if you are eligible.  You may also be eligible for government tax credits and more information is available by calling Pension Services 1-800-277-9914.

 

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Finally, it is never too early to start reviewing your retirement. There are many other factors that impact one’s retirement including health, job loss, family matters, and lifestyle, so it’s important that you talk to your financial advisor before making any retirement decisions.  An advisor can easily determine if retirement is right for you and most offer free advice.  It’s the best place to start if retirement is in your future.

 

 

Jamie MacDonald, RHU JS MacDonald Financial Services Antigonish, NS

Jamie MacDonald, Advisor
JS MacDonald Financial Services
Antigonish, NS (902) 735-3011

 

By the same author:

The Value of Gift Giving

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by Jamie MacDonald

It’s a common occurrence over the holidays to spend more than we expect. This often occurs because we fail to budget the amount we spend on gift giving. There is however a way to avoid such financially difficulties with a little planning and some personal touches.

 

 

To begin with, set the approximate amount that you want to spend, say $200, and keep within that budget. Then make a wish list of individuals that you plan on providing gifts this Christmas. The last step is to determine the average value of each gift by simply dividing the total budget by the number of people on your list. For instance, if you have 10 people on your list than the average value would be $20 ($200/10= $20).  You can certainly adjust the value of the gift per individual but try to have the total amount for all gifts within your established budget.  Now when you consider gifts for each of the people on your list, you have an idea whether it’s affordable. The problem is:  what happens if you have too many people on your wish list or your funds are too low?  There are other solutions.

As the old expression goes…it’s not the gift you give but the thought that counts.  Some may feel the expression of a gift lies in its monetary value, while others strive for a more sentimental or personal touch. For those without the need for monetary constraints, gifts can come in all sizes and be rather expensive.  A number of us, however, don’t have that luxury and the personal touch to a gift, a token of our affection, or simply thinking of them over Christmas has more value than the price tag.

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Something as simple as a greeting card with a thoughtful note inside is an inexpensive gift but with a personal approach. Try creating your own or adding a gift card from their favorite store. This consideration would be truly appreciated and still within your budget. You don’t need to be an artisan to make your own gift.  Share a part of you and your home with a baked good, herbs from your garden, or a photo from you or your family. If you are thinking of those friends and family in distant places, why not make it personal with a phone call.  Let them know you were thinking of them at this time of year. Making the effort in creating the gift is rewarding and will truly be appreciated.

There are endless ideas for gift giving and with a little planning you can make it both personal and within budget. Take the time this year to plan your holiday gift giving and you may find that the true value in Christmas is not in what we spend but the thought that counts.

Merry Christmas!

 

Profile Photo Jamie

Jamie MacDonald, RHU
JS MacDonald Financial Services
Antigonish, NS

Finding the line in the sand; on teenagers and the value of money

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by Jamie MacDonald

Well, I cannot say that I know exactly what a teenager may be thinking when he or she is asked about the future value of money. I do recall my youthful days when getting my first pay cheque was a most joyous occasion. It meant a new sense of freedom and a rite of passage. It also meant that I could spend it any way I wanted to… a night on the town, a new pair of jeans or even flowers for my girlfriend. But it was meant to be spent. Not to be saved. So when does the ‘line in the sand’ appear for us where money earned is supposed to be saved.

For most of us growing up in Nova Scotia, the youthful years were guided by our parents, educators and mentors. Our minds were molded in preparation for our adult years ahead. We learned the skills that lead us into adulthood and independence. A life of responsibility and purpose. A point in our lives where our financial future would start to take hold. Unfortunately for some, the so called ‘line in the sand’ is only an illusion. Unable to comprehend the idea of saving for the future, their lives are here and now. An attitude very reflective from our youthful days.

We live in a world of wants and needs, where purchases are often made with credit. We simply use future earnings to pay for the present. Purchasing a home with a mortgage is a good example; credit cards are not so good. I remember my first credit card (another rite of passage). Reality struck home when I maximized the card and the monthly interest payments consumed my hard earned pay. I realized that the pair of jeans I purchased were equivalent to two long hours working in the warehouse. So how does our youth learn about saving for the future and the value of money.

Understanding the future value of money, or simply saving for the future, comes from educating yourself and from others. Having the willingness to begin saving comes from experience and taking on responsibilities. This change in attitudes needs to begin early in our youthful years and it can be accomplished by taking some first steps. For me it was simply getting my first summer job. Regardless of the steps teenagers take as young adults, a positive approach to their financial future will teach them the future value of money and hopefully help them find that ‘line in the sand’.

Profile Photo Jamie

Jamie MacDonald, RHU
JS MacDonald Financial Services
Antigonish, NS

RRSPs are not for everyone

by Jamie MacDonald

Every year around this time I find myself inundated with last minute investors trying to make their RRSP contributions before the end of February cut-off. In a number of cases, individuals have waited religiously to the very last day and make it a rite of passage. Ironically these same individuals often have a misguided view on the value of their RRSP contributions, let alone the need for one.

 

A registered retirement savings plan (RRSP) is great product for saving for the future, but it is just another investment tool that individuals have available from the retirement toolbox.

RRSPs are not for everyone. They offer a deferred tax investment that can shelter your taxable earnings from higher marginal tax rates today and withdraw the funds in a lower tax rate once you retire. If you have relatively the same tax rate in retirement as you do now then RRSPs won’t help you. This is common amongst individuals with good pensions such as teachers, professionals, senior government employees, etc. Low income earners may not benefit from RRSPs as they don’t have high marginal tax rates. In other cases, individuals who have maximized their pension contributions each year, may be limited in their ability to contribute to an RRSP. So who benefits from an RRSP?

The most common situation for the average Joe (or Jane), is someone who has above average income today, no pension in retirement and needs to build a savings plan after they finish work. If you have a spouse who has little or no income in retirement then a spousal RRSP would be ideal. Additionally those who want to save up to buy their first home or get a post secondary education, an RRSP may be ideal for these individuals.

 

As mentioned above, RRSPs are just one of many investments options to explore when saving for the future. I don’t like paying taxes just as much as the next guy so I dig through my retirement toolbox and see what else is available. Maybe a tax-free saving account (TFSA), a Registered Education Savings Plan (RESP) , or possibly a non-registered account. Paying down debt, such as a mortgage, is also a good choice. There are lots to choose from and everyone is different. Before you run out to make that next RRSP contribution, spend a little time to learn what your goals are for the future, understand the various investment tools available, and speak to an advisor who knows how to put it all together for you. It will be time well spent.

 

 Jamie MacDonald, Advisor
JS MacDonald Financial Services
Antigonish, NS (902) 735-3011

 

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