tag:blogger.com,1999:blog-4402283548766807872.post1821741301876586206..comments2024-03-20T02:26:06.500-04:00Comments on The Blunt Bean Counter: How Much Money do I Need to Retire? Heck if I Know or Anyone Else Does! - Part 6The Blunt Bean Counterhttp://www.blogger.com/profile/11358868550072516313noreply@blogger.comBlogger25125tag:blogger.com,1999:blog-4402283548766807872.post-66938144467158846222017-08-19T14:01:09.384-04:002017-08-19T14:01:09.384-04:00Hi Anon
I think in reality, many peoples retireme...Hi Anon<br /><br />I think in reality, many peoples retirement follows a somewhat similar staging as you suggest. However, tax efficiency needs to be factored in and that often changes or alters your plan. It is best to have your accountant or financial planner walk through your plan to ensure cash flow and tax efficiency.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-91463617786057436272017-08-19T11:51:26.795-04:002017-08-19T11:51:26.795-04:00I find that results are always based on inaccurate...I find that results are always based on inaccurate information. First the majority of people do not live until 95 and only exacerbates the concerns of people feeling they have to reach unattainable numbers to retire. Second it appears fundamental thinking is that people should rely on RSP for their total planning. Logically thinking should it not be broken down in steps? Your first stage of retirement should be taken care of by your RSP and in my opinion used up before age 72. The time you are forced to place it in a RRIF. Next it seems, no one takes in account of peoples largest investment their home and the value you have built over the years. This income source once sold, is in some cases larger then their RSP. Third, once if you have lived this long, personal savings should be used to finalize your remaining costs and hopefully you have used your resources to secure you and your love ones with a healthy and enjoyable retirement.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-14065293108911218812017-02-01T23:39:13.540-05:002017-02-01T23:39:13.540-05:00Hi Jo
Note sure where you get your basic survival...Hi Jo<br /><br />Note sure where you get your basic survival rate number. Everyone is different based on their specific circumstances. <br /><br />You should engage a fee for service financial planner who could review your exact details and confirm yeah or nay. The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-5654425129208587312017-02-01T18:03:15.867-05:002017-02-01T18:03:15.867-05:00This comment has been removed by the author.Johttps://www.blogger.com/profile/05867777568273250915noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-42626893054653935642016-06-15T21:13:31.401-04:002016-06-15T21:13:31.401-04:00Reading your blog I feel less alone in my quest of...Reading your blog I feel less alone in my quest of financial self-suffiency - retirement freedom !Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-7991323995354089092016-06-08T00:09:30.957-04:002016-06-08T00:09:30.957-04:00http://www.thebluntbeancounter.com/2014/04/retirem...http://www.thebluntbeancounter.com/2014/04/retirement-planning-spreadsheet.htmlThe Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-61215610606058659582016-06-06T14:56:11.410-04:002016-06-06T14:56:11.410-04:00where can I get that spread sheet. I am not that s...where can I get that spread sheet. I am not that smart to create my own!!?Anonymoushttps://www.blogger.com/profile/11735548850932880406noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-78720405834700344782014-03-03T15:48:21.599-05:002014-03-03T15:48:21.599-05:00Thx CI
Yes, I have attempted to try and write a b...Thx CI<br /><br />Yes, I have attempted to try and write a blog on the tax optimization (may go with overview of issue), but the math is too intense and just too time consuming to follow through. I will leave it to a math wiz like Michael James to write such a blog.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-42684073848517918042014-03-03T12:39:43.984-05:002014-03-03T12:39:43.984-05:00An excellent series and a good start ... I think a...An excellent series and a good start ... I think a couple of commenters are onto a key issue. Optimizing tax can do a lot to reduce the magic number - optimizing through timing in retirement years as Anonymous says and type of investment for non-reg. If I can reduce my net tax rate from 30% to 20%, that's like 0.4% more net return on 4% gross return. CanadianInvestorhttps://www.blogger.com/profile/05645767559302303541noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-69565711839696562602014-03-02T16:48:47.897-05:002014-03-02T16:48:47.897-05:00Thanks for pointing out what I missed (your target...Thanks for pointing out what I missed (your target audience). <br /><br />That being the case, I see no reason why a current HNWI would miss the published retirement targets if they remain focused on the controllable factors (adapting to the uncontrollable). Just as the median Canadian could take lessons from the HNWI and adapt them to their own situation. <br /><br />In the meantime, thanks for all your effort! <br /><br />SSTnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-71699640392089624832014-03-02T15:13:53.196-05:002014-03-02T15:13:53.196-05:00Hi SST,
Your comment above is one of my all-time ...Hi SST,<br /><br />Your comment above is one of my all-time favourites and I really like your comment about setting realistic and achievable financial goals. <br /><br />That being said, I explicitly state in my header that this site is "meant for taxpayers no matter their income bracket, but in particular for high net worth individuals and entrepreneurs who own private corporations." Thus, I guess I am writing for the lucky 1%, however, I always try to make the posts inclusive for anyone, not matter their financial situation. Believe it or not, my initial numbers used way higher spending limits, but I dialed them back because of exactly what you commented about. So, I walk a fine line as to what I am trying to accomplish with this blog and trying to promote tax and financial literacy for all. The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-30700119404993553932014-03-02T14:27:15.114-05:002014-03-02T14:27:15.114-05:00Multiple retirement scenarios presented, all of wh...Multiple retirement scenarios presented, all of which require at least one million dollars in investable assets, yet only ~1% of individual Canadians will ever attain this level. During the peak of Boomer retirement this ratio may hit ~2%, the highest degree of millionaires throughout Canadian history!<br /><br />"Household" millionairedom is substantially higher at ~3%.<br /><br />With that said, I am glad you acknowledge in your conclusion the dismal and daunting task set out before the populace (e.g. 'Freedom 75'). Unattainable goals are of no use, except possibly for destroying motivation.<br />If YOU are "feeling worse" about your finances now, imagine how the median Canadian feels, the ones who are not high-income earners or business owners or mortgage-free.<br /><br />Setting realistic and achievable financial goals, coupled with learning the use of the proper monetary devices, would seem to be a much more productive path to a satisfactory retirement (at whatever dollar amount that may be). <br /><br />Don't get me wrong, I think the value of expert tax advice far outweighs that of the investment "experts" (mainly because taxes deal with what is, not what could be), especially in a country as heavily taxed as Canada. Your website is a boon to all who care to be concerned about their financial well-being. <br /><br />Save diligently, invest wisely, live prudently, retire happily. SSTnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-20273518227357134872014-03-01T08:41:22.269-05:002014-03-01T08:41:22.269-05:00Hi Barbara
I am glad you are feeling better about...Hi Barbara<br /><br />I am glad you are feeling better about your finances, I am feeling worse :(<br /><br />The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-39848685539531461752014-02-28T23:45:48.531-05:002014-02-28T23:45:48.531-05:00Thank you, this series has been very informative a...Thank you, this series has been very informative and interesting. I am feeling much better about our finances now! Barbaranoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-92063274714913299012014-02-28T21:27:08.132-05:002014-02-28T21:27:08.132-05:00Hi Bet
Thx for persevering through the 6 parts an...Hi Bet<br /><br />Thx for persevering through the 6 parts and for your personal experience and advice. It sounds like you have observed first hand some unexpected developments that threw retirement plans into disarray. If everything went as expected, planning would be oh so much easier.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-51529848111063656082014-02-28T19:22:10.583-05:002014-02-28T19:22:10.583-05:00We've never planned on retiring at 55 but we&#...We've never planned on retiring at 55 but we've always worried about being forced to semi-retire/financially-catastrophically-job-change at 55. (Both sets of parents got forced into early retirement so we know it can happen.) Based on all the numbers you've kindly provided I think we'll survive if it does happen to us, despite the fact that we don't have DB pensions. (Both our Dads have but they weren't indexed.)<br /><br />I always shiver when I hear people counting on their higher earnings in their 50s to help them with their retirement. So much can go wrong with that kind of delaying tactic. We'll be encouraging our kids to start saving for their retirement in their 20s like we did. (We think they may be able to because we expect to help them with the lion's share of their education costs.) All those sales pitch graphics about the merits of investing early, even if you have to stop for a while during the young child years, really hold some truth. A large part of our retirement savings dates back to contributions made when we were under 30.<br /><br />Thanks for such a detailed and interesting review of what it might take. It's been fascinating following along!BetCrookshttp://financialcrooks.comnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-40474286563828966752014-02-27T18:03:49.697-05:002014-02-27T18:03:49.697-05:00Thx Anon.
I appreciate you sharing your real life...Thx Anon.<br /><br />I appreciate you sharing your real life example. I was also struck at how well thought out and considered your plan is. Thx again for sharing. The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-35660639880879798142014-02-27T14:34:50.838-05:002014-02-27T14:34:50.838-05:00At Marks' request, I am posting my previous em...At Marks' request, I am posting my previous email to him:<br /><br />I like to share my experience:<br /><br />Ten years ago I figured that I could retire. I created a spreadsheet that calculated, year after year, investment return, expense adjusted for inflation, income tax, and remaining capital. The assumptions I used were:<br /><br />- 2% inflation<br />- 4% investment return net of management and trading fees; the entire return fully taxed<br />- income tax rates remained the same, but brackets adjusted for inflation<br /><br />My registered accounts were fairly large, so I was careful to calculate each year the minimum withdrawal and the resulting income tax. In fact, one main reason I created this spreadsheet was so that I could play around with registered account withdrawals before minimum withdrawals kick in, to see which strategy would work best.<br /><br />I did not factor in OAS or CPP (there is always that sticky OAS clawback, and even the Service Canada website cannot give you an accurate CPP amount in a future year when you actually start drawing on it). And I did not factor in my house.<br /><br />The expense number I used to start was simply my previous year’s actual expense. In the model, I just ran with this expense, adjusted for inflation.<br /><br />Starting from age 50, it turned out that my withdrawal rate was 3% (excluding income tax), and the money ran out after 45 years. That was how I concluded I could retire.<br /><br />(It turned out the best withdrawal strategy from registered accounts is to leave the money there as late as possible. The tax savings and resulting returns from these earlier years seem to offset higher income tax during the requisite withdrawal years.)<br /><br />Here is my experience so far:<br /><br />- My actual income tax has been lower than calculated, probably because of dividends and unrealized capital gains in my unregistered accounts.<br /><br />- My actual return on capital yearly had been: 6.62, 6.82, 3.79, -7.27, 11.31, 8.32, 6.12, 6.20, 7.78%<br /><br />- My actual expenses (excluding taxes) had fluctuated from year to year, but over 10 years, the actual total expenses are 4% less than the projected total.<br /><br />As a result, I am ahead of the model I that ran 10 years ago. Every year I update the spreadsheet with actual numbers, so that I can compare where things differ, and also see how the projections change. (I don’t bother updating the tax brackets or the expense projections.) Currently, the projections show that there will be quite a bit of money left after year 47.<br /><br />Just for curiosity, I plug in a hypothetical withdrawal rate of 4% at age 65 into the spreadsheet, and let it run. Money will run out at age 95. So a 4% withdrawal rate excluding income tax is probably OK but I would be cautious of it.<br /><br />On the other hand, I did not include OAS and CPP. Also, my situation is a two-income family.<br /><br />This spreadsheet has been one of my most important financial management tools in the past 10 years. It is not that hard to create a spreadsheet like this where one can fill in one’s numbers and assumptions and see the projections; there ought to be one in the public domain.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-67337948347994733772014-02-25T18:29:45.166-05:002014-02-25T18:29:45.166-05:00Yes, this weather sucks. Just got my clubs regrip...Yes, this weather sucks. Just got my clubs regripped and I can't wait to hit some balls in the spring weather.<br /><br />Happy to comment on your great blog Mark.My Own Advisorhttp://www.myownadvisor.canoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-44801305443188939312014-02-24T23:05:36.752-05:002014-02-24T23:05:36.752-05:00Hi Mark:
Thx for your comments above and your com...Hi Mark:<br /><br />Thx for your comments above and your comments throughout the series. As you note, no study can cover all the variables and your retirement number is not static. But you at a far younger age than I, already have a target and a goal and your eye on the retirement ball, which is great.<br /><br />Phil and Tiger have their work cut out for them, with all the great younger players, hope to see some golf weather soon, very depressing winter.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-54393047878856598582014-02-24T17:49:03.294-05:002014-02-24T17:49:03.294-05:00Great series!
I figure we could retire at 55 with...Great series!<br /><br />I figure we could retire at 55 with $1.5 M in RRSP, TFSA and non-registered assets and my LIRA.<br /><br />This excludes my pension, my wife's pension and any CPP and OAS payments. It excludes our home value. We would draw down most of the RRSP from 55-65 and keep some RRSP for a RRIF at >65. We would defer CPP until age 65 to maximize payments. OAS at 67 or later.<br /><br />The biggest problem I have with the retirement number, is it's not static, it's dynamic, there are not only yearly tax implications but payment implications as well. No study can cover all the variables and likely never will.<br /><br />Your series did a great job covering very, very well Mark. Well done, that was a ton of work. <br /><br />Signed,<br />This Mark and Phil Mickelson fan<br /><br />My Own Advisorhttp://www.myownadvisor.canoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-79608718267949373002014-02-24T12:07:24.997-05:002014-02-24T12:07:24.997-05:00Michael, thx for your assistance and your insights...Michael, thx for your assistance and your insights.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-39873773137306659922014-02-24T12:06:20.606-05:002014-02-24T12:06:20.606-05:00Hi Richard
The marginal rate in scenario 1 is clo...Hi Richard<br /><br />The marginal rate in scenario 1 is closer to 31%. Many people who own corps ignore CPP and RRSP and try and build up their retirement within their holding companies.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-40764460292853666182014-02-24T11:11:34.526-05:002014-02-24T11:11:34.526-05:00Hi Mark,
Great series. I suspect many people wil...Hi Mark,<br /><br />Great series. I suspect many people will realize that they are on a Freedom 75 path unless they save more or plan to spend less in retirement.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-51489846106366692542014-02-24T11:05:42.953-05:002014-02-24T11:05:42.953-05:00Those taxes do add up. I wonder what the impact wo...Those taxes do add up. I wonder what the impact would be if CPP payments were removed. I'm guessing the marginal tax rate is around 35% so the total tax on the CPP income is $6,300 and the net value is just under $12,000. Of course getting an RRSP large enough to support those withdrawals without contributing to the CPP would be quite a feat :)Richardnoreply@blogger.com