My parents are about to retire. Advice? - Page 2
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Thread: My parents are about to retire. Advice?

  1. #11
    Senior Member My Own Advisor's Avatar
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    Based on what I've read, sounds like a good tax accountant is what they need...

    I would agree with this: "They've dealt with many mutual fund salespeople, who I think are woefully unqualified to help then in "retirement planning"."

    Sales does not equal retirement planning.

    Have they tried running some numbers themselves? Bucking conventional wisdom, I've learned it can be tax advantageous to start winding down your RRSP before you're forced to at age 71. Again, another Daryl Diamond fan here:
    http://www.myownadvisor.ca/daryl-dia...eprint-review/

    If they already know how to buy ETFs, they understand their asset allocation and risk profile, they are well ahead of most Canadians who invest.

    Hidden Content - Saving and investing my way to a million dollar portfolio.

  2. #12
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    Quote Originally Posted by james4beach View Post
    ... Right now my mom & dad have no idea how the pension works, so that's got to be one of the first things to figure out. I think that growing old just crept up on them. Working hard, building his/her career and being busy, and then suddenly found themselves at retirement age.
    Merry Christmas & Happy New Year!


    To me, this is the starting point.

    IMO ... "acacdemic" for the pension is irrelevant. What matters is whether the pension pays a guaranteed payout (i.e. defined benefit) or has a value that is withdrawn (i.e. defined contribution which functions like an RRSP).

    This will influence what one does and what one needs to worry about. There are other things like whether one is offered to take a lump sum payout instead of the guaranteed pension and if bridge benefits would come into play.


    For the taxable account, where MFs are in the mix ... are any of the corporate variety that lets one switch without a taxable event? This may allow switching to something that provides solely CG to allow one to plan the timing/minimize OAS clawback (if it can be avoided).


    Cheers


    They just recently re


    alized they have pensions totalling about half their net worth and don't even know the details of the pension, what it promises, etc.

    I don't know whether they'd rather pay an expert, or learn and DIY. Currently they both have the impression that their investments at mutual fund houses (under "advisors") have performed very well over time. So they have the impression that using an advisor has worked well, but I suspect this is only due to the amazing bull market since the 1980s which has masked the enormous fees they've paid to places like Investors Group.[/QUOTE]

  3. #13
    Senior Member sags's Avatar
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    My uncle enjoys a stress free retirement with a DB pension and GICs.

    Sometimes keeping it simple is good.
    Last edited by sags; 2015-12-29 at 11:37 AM.

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  5. #14
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    I will also recommend a good tax accountant that your family trusts. My parents though very smart with their money, being not from this country needed help in the retirement and estate planning. Fortunately my oldest siblings are wizzez at this, and had a plan that included a lawyer, tax accountant and financial planner. Before retiring my older siblings met with them all and did all the calculations and did a plan. It has given my family a lot more confidence that my parents would retire comfortable.

    We kids are also the back up plan.
    On a 'smart' device, please excuse autocorrect/when letters are missing.

  6. #15
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    We did a number of things prior to retirement.

    Several years prior we engaged a good accountant, a CA. We had some potential issues that we wanted resolved prior to retirement. As it turned out we were in reasonably good shape with CRA but the accountant did assist with going forward tax planning. Our bill for the review and re-filings was $3K. We got just over $10K in refunds by re-filing back by as much as six years.
    The real win was knowing that we would not have the taxman knocking on our door plus the annual review questions that we get from our accountant that touch on a number of key personal and financial planning issues.

    I read a number of books including several of Gordon Pape's and also Pensionize Your Nestegg. Not all the data was relevant but I always learned something and took away a few gems.

    We did a complete analysis of what our real banking and investment costs were. We were unhappy with our broker and with the financial advisors at our bank.

    I asked a number of people that I knew how they dealt with investments, advisers they used etc. Surprisingly, not one that I spoke to was happy with their advisor to bank service. We started looking for a new fee for service advisor. It took six/nine months to select one that we were comfortable with. One goal was to get an advisor that my spouse was completely comfortable with in the unlikely event of my early demise. Prior to this she had not been an active participant in the long term financial planning details. This has now changed.

    Three plus years later we are very happy with our decision. We pay less fees and get a much higher and a much more comprehensive level of service that we received from either our former bank advisor or stock broker. Our financial advisor happens to be a CA with a tax specialty so this meshed well with our accountant's services.

    We reviewed our life insurance and cancelled same. Did this based purely on the numbers.

    We reviewed/updated our will a few years prior to retirement. We will be doing this again next year.

    Finally, we decided to change our lifestyle whilst we had the ability to do so. We sold our home and travelled for six/seven months. We downsized to a rental condo. Renting, after 35 years of home ownership, took some getting used to especially for my spouse. I liked it straight out of the gate. We had the intention of buying something but this is no longer at the top of our to do list. Now we travel about five months per year. We expect this to change at some point to some sort of longer term stay in one location during the winter months-either ownership or rental.

    We got in shape. Lost weight, walk much more, and eat more fruit, veg- less meat, and seldom buy any prepared foods. We feel much better for doing this. Cannot imagine going back to our old habits. No use planning for retirement if we do not have the health to enjoy it and do the things that we have dreamed about or planned whilst we were working.
    Last edited by fraser; 2015-12-29 at 05:02 PM.

  7. #16
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    Quote Originally Posted by james4beach View Post
    ... Currently they both have the impression that their investments at mutual fund houses (under "advisors") have performed very well over time. So they have the impression that using an advisor has worked well, but I suspect this is only due to the amazing bull market since the 1980s which has masked the enormous fees they've paid to places like Investors Group.
    This could be the gnarly issue. They need to find out what their returns have actually been and what fees they are actually paying. They could be substantially impacting the longevity of their assets once they are in withdrawl mode. They may also be uncomfortable making whole scale transfers/changes - you will need to be understanding here. I would personally run quickly from an IG-type outfit but that may not be realistic here.
    It is a good thing that half of their value is in their pensions - make sure they don't get talked into taking the cash value for their pensions and investing them elsewhere - keep the pensions for their annuity-like income!

  8. #17
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    Encourage your parents that which ever path they choose to fund their retirement it should be well within their risk tolerance and therefore stress free. The most important decision any new retiree should be required to make is whether to buy the Sportster or the Electra Glide.

  9. #18
    Senior Member humble_pie's Avatar
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    Quote Originally Posted by fraser View Post
    We did a number of things prior to retirement ...

    [insert entire text above]

    ... do the things that we have dreamed about or planned whilst we were working.

    what a fabulous, first-rate retirement planning story. It really is the skeleton for a book!


    i especially admire this part:

    One goal was to get an advisor that my spouse was completely comfortable with in the unlikely event of my early demise. Prior to this she had not been an active participant in the long term financial planning details. This has now changed.

    hope you live forever, fraser. You & madam fraser are one helluva good model.
    ''bonté gracieuse et toute cette sorte de chose"
    - Astérix chez les bretons

  10. #19
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    Quote Originally Posted by humble_pie View Post
    agent99 you're right in most cases. I'd hate to think what my kids suggestions might be. Maybe Try to Sell your Knitting? Bake Sales? or the most lucrative old age financial support idea they could possibly invent: Fix Up some kind of Business selling Wild Berry Jams & Jellies.

    but there are all kinds of families. There have been quite a few responsible adult offspring in cmf forum - often oldest sons or daughters - who've visibly been helpful to their parents, without ever being invading or pushy.
    You are of course right. I was being a bit cynical. Actually, my older brother who has a business/accounting background looked after my parents retirement finances. Mostly pension income, but suggested affordable expenditures that could make their retirement more comfortable. And we do know families where the offspring are better qualified than their parents to handle the parents investments and finances.

    But if retirees have some smarts, maybe looking after their investments and finances could be a challenging and satisfying retirement occupation? For us, it was even although at first I was disinterested. But I realize that is not for everyone.

  11. #20
    Senior Member kcowan's Avatar
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    James

    Since you are the only heir, have you tried the strategy of justifying your involvement so that their financial resources provide them with a long and happy retirement?

    We did this with MIL and, after I had been retired for 4 years, I took over her portfolio and gave her simple statements showing investment growth and costs. We gradually moved her nestegg from her portfolio manager to TDW. It was set up jointly with DW and, when she eventually passed on at age 93, it flipped to DW seamlessly. She was involved in every step of the process so that she maintained confidence in me.

    Don't rush. Every decision must be made by your parents when they are ready.


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