Less than 5 years to go for retirement - Strategy for critique - Page 2
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Thread: Less than 5 years to go for retirement - Strategy for critique

  1. #11
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    Is there something obvious I haven't considered or a different strategy to consider in how to drawdown our savings?
    For me , the most unpredictable think when retired is medical care that not covered by OHIP, especially dental care... and older you become, more care you need ....


  2. #12
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    Quote Originally Posted by janus10 View Post
    ... It's only in the last 2 years we haven't contributed to our TFSAS.
    And that is because we just felt more comfortable having an emergency fund sitting in our bank account rather than in our TFSAS...
    I don't understand this ... I have two TFSAs, one with the emergency fund with the main bank - which can be in my hands on a next business day basis (worst case, two business days). There's also a brokerage TFSA for equity investments, where some investments are available two business day basis and some are on a four business days.

    If there's TFSA contribution room available and emergency fund cash - surely tax free in the TFSA is better than paying income tax on it?


    Then too, if one decides that the situation has changed and more equity is the game plan going forward - the new TFSA room granted in Jan will allow for this. Where one also wants to cut back on the cash part, one can withdraw in mid to late Dec, which in Jan will become additional TFSA contribution room for the equity TFSA.

    ... just my two cents.

    Cheers
    Last edited by Eclectic12; 2015-02-17 at 06:24 PM.

  3. #13
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    Quote Originally Posted by My Own Advisor View Post
    2019 retirement sounds lovely!

    As for your plan...
    1. max our RRSP contributions by contributing $33k / year - wow....great stuff if you can do this.

    2. What are you using the TFSA room for? RRSP withdrawals to TFSA?

    3. A $1 M non-registered and RRSP portfolio in 2019 would likely be "enough money". If you have more in non-reg. assets, the better I think. How are you investing the non-reg. money? CDN stocks? ETFs? Income-generating assets? $600,000 non-reg. yielding 4% stocks would be $24,000 per year and you wouldn't need to touch the capital.

    4. I think having $200k set aside (in addition to the $1 M) above? is outstanding.

    If you still have CPP and OAS to draw from in the coming years, it seems you are set...especially if CPP and OAS can almost cover 1/2 of your expenses. This is excellent.

    Overall, a great plan, I hope to get there someday
    The focus has always been on maximizing RRSP contributions first, TFSA second, due to our tax bracket. Since we have never taken any money out of our TFSA, it wasn't clear how painless this process is (I think we all have stories about how difficult banks can make it to get access to our own money). So, because we wanted to have an emergency fund immediately accessible, we went the past 2 years with that in our bank account.

    But, with so many questioning why we did this, I think it is time to adjust our strategy to take advantage of the TFSA room again. We can catch up on our TFSA contribution room (2014 and now 2015) and invest in equities. Then, when it comes time in 4 years to create our Cash Wedge, we can pull that out and transfer it to our non-registered portfolio (or even count it as a contribution to our RRSP) and then put the cash proceeds from downsizing the house into some GICs in the TFSA. Hopefully our room will have grown larger due to capital appreciation.

    Non-reg portfolio is almost exclusively in Canadian stocks that pay dividends and is about 70% the value of our RRSPs. Of course, the RRSPs will start pulling ahead if only because we will be contributing about $40k / year for the next few years. I'm with you on the idea of constructing a portfolio where dividends could be enough to provide all the income necessary without needing to touch the capital. Our RRSPs, OTOH, are almost exclusively US stocks that pay dividends.

    Yes, the idea is that if we can approach $1M in RRSP/Non-Reg and have another $200k in laddered GICs to take us into retirement, it should be a pretty solid foundation because my wife and I are not high maintenance. It will be a shock for my wife to start seeing our balances go down, so it may take 2-3 years before she even thinks of loosening the purse strings.

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  5. #14
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    Quote Originally Posted by gibor View Post
    For me , the most unpredictable think when retired is medical care that not covered by OHIP, especially dental care... and older you become, more care you need ....
    Dental care won't be a problem - one trip to a minor hockey game, sitting close to the action where the glass is low, and, if lucky, that should remove all the chiclets from the mouth!

    But, your point is well taken - I have the impression that self-insuring is the better way to go - premiums too high to cover too little, with high deductibles. Likely we will pay out of pocket.

  6. #15
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    Quote Originally Posted by Eclectic12 View Post
    I don't understand this ... I have two TFSAs, one with the emergency fund with the main bank - which can be in my hands on a next business day basis (worst case, two business days). There's also a brokerage TFSA for equity investments, where some investments are available two business day basis and some are on a four business days.

    If there's TFSA contribution room available and emergency fund cash - surely tax free in the TFSA is better than paying income tax on it?


    Then too, if one decides that the situation has changed and more equity is the game plan going forward - the new TFSA room granted in Jan will allow for this. Where one also wants to cut back on the cash part, one can withdraw in mid to late Dec, which in Jan will become additional TFSA contribution room for the equity TFSA.

    ... just my two cents.

    Cheers
    No income tax on our emergency fund since there is no interest paid on the money. In reality, the money was there in case some big expenses came up (we thought we might have to put down the 13 year old SUV but it got a reprieve); we need a new roof; and, my wife wasn't sure if she was going to get this job offer. So, now that the vehicle is still humming along, my wife went from a 1 year contract to permanent, we can adjust our thinking to be less conservative.

  7. #16
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    It's been 3 months since I started this thread and our investment balances have improved: RRSPs up $47k ($15k from contributions); Non-registered up $63k; TFSA up $2k (still haven't made any new contributions - need to have a discussion with my wife about our future); savings/emergency fund up $35k.

    Also realized that the idea of using the Cash Wedge could be modified. If I have built up a substantial cash wedge, I could not only use that to fund the short to medium term retirement expenses, but also tap into it when markets are down to buy when things are on sale. It means I want to have 1 or 2 extra years worth of very liquid assets.

    My CEO asked me last month how much longer would I continue to work and I hesitated a long time before giving him an answer - not the truth, necessarily, but the answer. I said 5 years but my real thinking is that I will have stopped working by then, or in a very different role (e.g. part time with reduced responsibilities).

  8. #17
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    Another month in the books and RRSPs are up $67k YTD ($25k from contributions); Non-registered is up a heady $90k; TFSA up $18.5k (finally contributed $16.5k); savings/emergency fund still up $35k. That puts total liquid assets at a level where I projected them to be by the beginning of 2017.

    One of the best developments is having a discussion with my wife to make sure she was going to redirect her efforts into our financial well being. Interestingly, she seems to be having more of those days where she isn't thrilled with her coworkers. It only takes one or two people to ruin it for everyone.

  9. #18
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    Janus10 - your non-reg. is up $90K in one month??

    If so, wow, great work.
    Hidden Content - Working on a $1 million portfolio and $30k per year from it.

  10. #19
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    ^I think it's 90K YTD for non registered and large gains in other accounts although I can't follow what is gains and what is contributions.

    Janus10 are you heavy in oil stocks that tanked last year and are now recovering, or do you have some other magic formula? It may be helpful to share your investing tactics.

  11. #20
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    ^^^ Yes, the gains are all YTD and the RRSPs ($25k) and TFSAs ($16.5k) and emergency fund ($35k) have had contributions.

    Last edited by janus10; 2015-08-29 at 01:39 AM.

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