# Ten Keys to a Happy Retirement



## Belguy (May 24, 2010)

I thought that this article posted by Rob Carrick of the Globe and Mail might be of interest to some:

http://www.marketwatch.com/story/10...-in-retirement-2012-07-05?mod=wsj_share_tweet


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## sags (May 15, 2010)

How does a person save 11 times their highest earnings?

I started out at less than $6000 a year and 40 years later earned $80,000 a year. 

If I spent my life living in a cardboard box, didn't eat, didn't own a car, and didn't have kids.......I don't know if I could have saved $880,000.

Advising people to do the impossible doesn't accomplish anything. It is a panacea that clouds the real issue........which is lack of workplace pensions.

In the past, employers and employees both contributed to the retirement plan. The joint contributions made it possible to acquire enough capital to derive a decent monthly pension income.

In today's world we are told we can do it alone.

The reality is we can't.

The government's support of pension schemes that won't deliver.........is pushing the problem down the road for another government to deal with.

Think government programs are expensive now? Wait until everyone starts retiring with no pension and no income.


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## MoneyGal (Apr 24, 2009)

sags said:


> How does a person save 11 times their highest earnings?


A perfect example of how one-size-fits-all financial "rules" are ridiculously overgeneralized.


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## steve41 (Apr 18, 2009)

Every once in a while I get the wacky idea that I should make RRIFmetic public domain, but then I get over it.


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## Spudd (Oct 11, 2011)

I tried to DL the demo but it wouldn't run on my Win 7 machine, and I haven't gotten around to taking it to the basement to our old XP box. Do you have any plans to make it Win7 compatible?


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## steve41 (Apr 18, 2009)

Spudd said:


> I tried to DL the demo but it wouldn't run on my Win 7 machine, and I haven't gotten around to taking it to the basement to our old XP box. Do you have any plans to make it Win7 compatible?


 There are a lot of small boutique legacy authors like me. The cost of migrating up to a new platform is just too prohibitive. For this reason, MS have provided Windows7 PRO (not Home Premium) with 'XP mode' RRIFmetic runs on W7Pro XP mode, but if you have a tame XP available, use it.


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## kcowan (Jul 1, 2010)

steve41 said:


> Every once in a while I get the wacky idea that I should make RRIFmetic public domain, but then I get over it.


How about making a spreadsheet available for free but charging for the version with some needed features. Under Win7, Excel will run spreadsheets without active macros for free. This handles all my essential spreadsheets. For active macros, I use OpenOffice.

As for saving 11 times income, I think you need to get to maximum income in your 40s then work for 20 more years to achieve it. Is that typical? I doubt it.


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## steve41 (Apr 18, 2009)

kcowan said:


> How about making a spreadsheet available for free but charging for the version with some needed features. Under Win7, Excel will run spreadsheets without active macros for free. This handles all my essential spreadsheets.


I played around trying to imbed the math in Excel.... pretty much impossible. Remember, RRIFmetic is a complex, nested recursion clusterf**k. Spreadsheets aren't suitable.


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## Barwelle (Feb 23, 2011)

Spudd:

Try this: You should have a shortcut for the demo on your desktop, right? Right-click on it; click on Properties. Click on the "Compatibility" tab. Then check the box next to "Run this program in compatibility mode for:" Then select Windows XP. I have two options for XP :Service Pack 2 and Service Pack 3... I don't know the difference, but the default for me is SP 3. Click Okay, then try it out.

[Note, I don't have the demo myself, so no guarantees that this will work, but I've had to do this with other programs.]

Let me know if that works.


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## steve41 (Apr 18, 2009)

This is not like the old familiar compatibility mode. It is a major departure. The best thing is to google "XP mode" ..... there are several good youtube walk throughs of XP mode.


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## Barwelle (Feb 23, 2011)

I believe the XP Mode you are referring to in Posts 6 and 10, steve, that is only available in higher end versions of 7, runs the whole system in XP Mode rather than one program.

The old familiar compatibility mode is still available in Win7 (and is available in Home Premium). Microsoft itself recommends what I suggested at about 0:55 in the video on this page. Or also, as they suggest in the beginning of the video, to click "troubleshoot compatibility" instead of "properties" after right-clicking on the icon, which will do essentially the same thing.


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## steve41 (Apr 18, 2009)

Unfortunatley, I don't have W7, so I get my feedback from my users. I would be surprised if the compatibility mode thingee worked though.


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## Barwelle (Feb 23, 2011)

Spudd, you better get on this and settle the Great Compatibility Debate haha.

So... If I'm right, do I get a share of the profits from the larger customer base you would have if you can run RRIFmetic in Win7? :biggrin:


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## Spudd (Oct 11, 2011)

I have to wait till I get home to try, I can't download/install software on my work laptop.  Patience my darlings!


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## steve41 (Apr 18, 2009)

'Profits?' What the heck are profits?


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## HaroldCrump (Jun 10, 2009)

MoneyGal said:


> A perfect example of how one-size-fits-all financial "rules" are ridiculously overgeneralized.


True, however, this news article is from the US.
As per the author, one of the reasons for the 11x of earnings is the health care costs.
The US medical system for seniors (Medicare and Medicaid) is in shambles.
Health costs are one of the leading reasons for bankruptcy in the US.

It would have been nice if you could insure away that risk, even if the premiums of a PPO plan are high vis-a-vis retirement income.
However, insurance claims are another big scam in the US.
The industry is notorious for overcharging and then denying claims, leading the claimant straight into bankruptcy.

Other than that, it's a pretty mundane article.
Just like _buy low, sell high _and _invest in what you know_.


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## MoneyGal (Apr 24, 2009)

HaroldCrump said:


> True, however, this news article is from the US.
> As per the author, one of the reasons for the 11x of earnings is the health care costs.
> The US medical system for seniors (Medicare and Medicaid) is in shambles.
> Health costs are one of the leading reasons for bankruptcy in the US.
> ...


I appreciate your comment, but I take issue with it on those grounds as well. The "average" U.S. consumer will not need 11x highest earnings to adequately fund retirement. "Most" will need something less, a small fraction will need nothing or very little, and another small-ish fraction will need more - potentially much more - than 11x income (and they will need to transfer that risk over to insurance companies). 

(I'm writing a white paper on health care cost risk in the U.S. now, for a U.S. client, and I can post a link when published.)

NOTE that I am not referring to the research publication from which the newspaper article was derived (and then posted in Rob's link). I'm referring to the idea that there is a "rule of thumb" number that describes a "useful" average or provides appropriate guidance.


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## Eclectic12 (Oct 20, 2010)

MoneyGal said:


> ... The "average" U.S. consumer will not need 11x highest earnings to adequately fund retirement. "Most" will need something less, a small fraction will need nothing or very little, and another small-ish fraction will need more - potentially much more - than 11x income (and they will need to transfer that risk over to insurance companies).
> 
> (I'm writing a white paper on health care cost risk in the U.S. now, for a U.S. client, and I can post a link when published.) ...


I wonder how to come up with the numbers needed to figure this out? Hopefully you've got access to some good information.

The other question that is relevant to the US is how to predict the medical needs. Based on the description, the widow and her husband had a good retirement - until he had a heart attack, spent two weeks in intensive care and died. Five years later, she was still working off the $200K still owed.

An educated guess says that if the husband had dropped dead, her retirement situation would have been much better but it's only partial info and also says nothing about the "average" person.

Then too - there's the risk from the medical insurance, where one buys with the hope of putting the risk onto the insurance company but that's not what happens. A US example is the Tampa business men who bought the "gold plated, all inclusive" medical plan, only to find out years later that some tests (including the cancer they had) were deemed "too expensive" so the doctor could not order the test.

Or a Canadian example is where for travel insurance, not reporting on the application that the medicine dosage had changed slightly resulted in denying the claim.


Cheers


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## Spudd (Oct 11, 2011)

FYI, for those interested, Barwelle's compatibility mode suggestion did not work. It let me choose the compatibility setting no problem, but when I run it I still get the error that it's not compatible.


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## Sherlock (Apr 18, 2010)

I think having 11 times your final work year's salary by 65 is reasonable if you start saving before 30 and let the compounding interest do most of the work.


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## steve41 (Apr 18, 2009)

Spudd said:


> FYI, for those interested, Barwelle's compatibility mode suggestion did not work. It let me choose the compatibility setting no problem, but when I run it I still get the error that it's not compatible.


 As I said, Windows7 Home Premium won't run RRIFmetic, WIndows7 Professional (with XP mode in place), will.


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## Barwelle (Feb 23, 2011)

Aw, shucks.

steve41 - 1
Barwelle - 0


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## cardhu (May 26, 2009)

sags said:


> How does a person save 11 times their highest earnings?


Its far from impossible ... circumstances make a difference of course, but 4 decades of saving can produce an impressive nest egg ... if you get an early enough start, and you don’t do disastrously badly (note that you don’t have to do spectacularly well, only to avoid doing disastrously badly), then at retirement that nestegg should be composed mostly of investment returns, with substantially less than half representing the actual dollars that you carved out of your income to set aside. It is obviously a more difficult (though still not impossible) target to reach for an early retirement, but for an age 65 retirement, its well within the realm of reasonable. 

I’m not endorsing the validity of this particular benchmark ... merely observing that its not that difficult to accomplish, for one who begins early, and makes a life of spending less than they earn ... oh, and of making smart, tax-efficient choices.


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## Cal (Jun 17, 2009)

I would say the 'stay in good health' line caught my attention the most.

If it were only that easy.

All you can do is live a healthy lifestyle and hope for the best of health. Whether you save 11 or 100 times your salary doesn't really matter if your retirement years are spent in ill health.


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## Daniel A. (Mar 20, 2011)

My pensions will give me all of 11 times and more if I live past 85 years.
As sags has said most people won't have near that amount to work with and pension income or lack of will be the deal breaker.
Very few people even look at the issue till after age 45, people on this forum are not the same as the majority of people in Canada.

I remember all the years of contract talks at work younger guy's only wanted money worry about the pension later, they would have been more than happy if we had gone along with that.
Several years ago I read a study that said most don't even know if they have a pension at work but assumed they did.
The fact is most don't I wonder if those folks realize that today.

As my wife can attest pension was always number one in my work life followed by vacation, I'm living my dream now and its real.
I meet many folks from all across the country RVing some hope maybe in 5 years they might be able to quit work a few said they should have left 5 years sooner before health problems came up.
Still more said they were envious and wished they had done things different.
Changing CPP to better reflect that that is the corner stone for most Canadians pension hopes would have been the best move.
We are all going to pay in the end but taking more from peoples pay check would help.

65% of Canadians don't have pension savings other than CPP & government supplements, how many millions of people will have to sell their houses.


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## Financial Cents (Jul 22, 2010)

MoneyGal said:


> A perfect example of how one-size-fits-all financial "rules" are ridiculously overgeneralized.


Totally agree with MG.


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## Mookie (Feb 29, 2012)

What a silly article - if anything, shouldn't it be 11 x *EXPENSES*, not income? People who are frugal in their worklife will probably continue by nature to be at least somewhat frugal in retirement, and overspenders will probably continue to overspend. If a couple makes $250,000 per year, but only spends $65,000, don't you think their target should be closer to $715,000 than $2,750,000? This 11x rule also doesn't factor in pensions. Some people with fat DB pensions + CPP and OAS could probably survive quite comfortably in retirement without saving a dime.


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## Eclectic12 (Oct 20, 2010)

Daniel A. said:


> ...Very few people even look at the issue till after age 45, people on this forum are not the same as the majority of people in Canada....Several years ago I read a study that said most don't even know if they have a pension at work but assumed they did.
> 
> The fact is most don't I wonder if those folks realize that today...


Or there are those that know they have a pension but "don't bother me with details". At one of the seminars to convince people to convert from a DB to DC pension - when the DB pension formula was put up, the woman beside me gasped "you mean I won't be collecting 100% of my salary in retirement?"

The too, a co-worker was overwhelmed with the DB versus DC choice so her comment was "it's too complicated to figure out, if I don't have enough money in retirement I'll go to Yonge Street and become a bag lady."



Cheers


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## HaroldCrump (Jun 10, 2009)

Mookie said:


> shouldn't it be 11 x *EXPENSES*, not income?


Then they will run out of money in 11 years, no?


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## kcowan (Jul 1, 2010)

Yes 25x is more reasonable because with investment growth, it should last forever (or until an old folks home on the government).


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## Young&Ambitious (Aug 11, 2010)

Eclectic12 said:


> The too, a co-worker was overwhelmed with the DB versus DC choice so her comment was "it's too complicated to figure out, if I don't have enough money in retirement I'll go to Yonge Street and become a bag lady."


Well, it's always good to have a backup plan :tongue-new:


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## Mookie (Feb 29, 2012)

HaroldCrump said:


> Then they will run out of money in 11 years, no?


My main point is that the magic number (if there is one) should be some multiple of your expenses, not a multiple of your income because some people spend everything they make (or more), while others spend much less. The author of the article must be making an assumption that “the more you make, the more you spend”, which is not always true. You also need to factor in other sources of retirement income such as CPP, OAS, and company pensions into the equation, not to mention how long you expect to be retired for. 

I realize 11 x expenses is not enough, but if you had 11 x expenses at retirement, and it was invested in something that made a modest positive return, plus you had CPP, OAS, and maybe a company pension of some kind, your money would definitely last longer than 11 years.

I guess what it all boils down to is that one size does not fit all as MoneyGal mentioned.


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## RedRose (Aug 2, 2011)

"Cut your garment according to your cloth."

If one has less to retire on then we will have to live within our means.

Seniors in retirement the COL may be reduced, if no fancy cars, vacations, new or renovating houses etc..

Death is not an option, but how you die is. An American Health care quandry right now.
Can they afford to die in a facility or just sign DNR to save debt for the surviving spouse.


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