# Mom wants retirement income... where do I put it?



## recklessrick (Jun 16, 2013)

My mom is in her late 60s. My dad died 10 years ago and left her about $260k, he was under-insured by today's standards but no by 10 years ago. Anyway, she gets his pension OAS and CPP plus has a good job. She's been letting her 260k sit and has taken any gains out to build a house and buy a car. Now she'd like to look at using that investment money to draw from so she can supplement her pension, OAS, and CPP and not work anymore. This seems very do-able seeing how the non-investment money brings in about 2k a month. Even another $500 a month would let her travel a little more and do stuff like that. 

She has had a mediocre investment adviser so far. High fees and moderate returns. I'd feel better if she put it in something that would give her even the same moderate return but without the ~2.75% MER. I've been doing a ton of reading for my own investments and I'm doing a mix of eseries funds and ETFs for my retirement savings. I don't want to get creative with her money because it's her's and not mine... I was even thinking of the ING balanced income streetwise fund for her to put all of her money into. Very simple and 1.5% less MER than she spends now. We could do even better in the MER with ETFs through questrade or even TD waterhouse but I'm not sure if it's a bigger risk. I'd be helping her with the management of it as she doesn't seem to latch onto the financial and investing concepts despite being quite smart and sharp. Are there some good dividend ETFs that I should be looking at instead? Perhaps the BMO REIT or CDN dividend? iShares and Vanguard?

Has anyone been in the same situation?


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## Cal (Jun 17, 2009)

I would recommend a fee only advisor. They could assess her entire portfolio. You haven't given us much in regards to her current holdings to make an informed decision on what I assume would be a balanced portfolio.

$260k invested wisely should prove upwards of $1000 a month in income.


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## Squash500 (May 16, 2009)

I'm personally using CPD, XTR, XDV, and some cash (TDB 8150) and a couple of GIC's to get a satisfactory monthly income in my non-registered account. 

Of course my portfolio is not without risk...as the CPD and XTR have had wild rides lately...but I'm hanging in there. I keep my portfolio as simple as possible....therefore a financial advisor is not needed....which saves me a lot of money in advisory fees etc.


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## marina628 (Dec 14, 2010)

Sounds like my sister in law who lost her husband 5 years ago(Early 2008) and was left with almost Identical amount except she was only 54.The market crash was her first experience with the markets and thank God we convinced her to leave everything alone for the first year or so.She opted to invest 60% long term in stocks and ETF and the rest she bought GIC with the idea each year one year of expenses would mature.She gets the payout once a year and of course has to budget from there but seems to work so far.Tax planning is critical ,my sister in law had no experience and first year took out $49,000 in RSP to buy a car for cash and do some home repairs then a year later got a tax bill for $5000 .She would have been better to use the LOC than take that hit.


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## GoldStone (Mar 6, 2011)

Squash500 said:


> I'm personally using CPD, XTR, XDV, and some cash (TDB 8150) and a couple of GIC's to get a satisfactory monthly income in my non-registered account.


YTD returns:
CPD: -6%
XTR: -5%

XTR is a bad product, no ifs and buts. Several forum members warned you about it -- long before it plunged. Sadly, you chose not to listen.


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## GoldStone (Mar 6, 2011)

To OP:

I agree with Cal's advice in message #2. Seek services of a *fee only* advisor. Mom needs a financial plan. Product selection to generate income is only a small part of it.


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## AltaRed (Jun 8, 2009)

Cal said:


> $260k invested wisely should prove upwards of $1000 a month in income.


That implies a 4.5% yield....which is reaching for yield in today's environment.... e.g. >5% dividend yield on equities and >3% on fixed income on a 60/40 split. I'd suggest no more than a 3.5% target yield and perhaps even 3%. 

The latter could potentially be obtained with a dividend focused ETF (but not something like XFN that is heavily financials), a REIT ETF, and a 5 year GIC ladder (or GIC/ ST Corp Bond lETF) for FI. The problem going forward is slowly increasing interest rates that will depress (underperform) all 3 of those pieces (utilities, REITs and bonds).


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## recklessrick (Jun 16, 2013)

I actually don't mind the idea of a fee only advisor, I hand't thought of that.


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## Squash500 (May 16, 2009)

GoldStone said:


> YTD returns:
> CPD: -6%
> XTR: -5%
> 
> XTR is a bad product, no ifs and buts. Several forum members warned you about it -- long before it plunged. Sadly, you chose not to listen.


 I really don't think that XTR is that bad a product. There's a lot worse out there believe me with much higher MER's too boot. I'm getting a nice monthly income from the XTR.

The XRE has been far more of a disaster then the XTR IMHO.


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## Squash500 (May 16, 2009)

recklessrick said:


> I actually don't mind the idea of a fee only advisor, I hand't thought of that.


 The problem is that fee only advisors for the most part aren't licensed to sell you anything.


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## james4beach (Nov 15, 2012)

Please be very careful, no matter how you proceed. Above everything else I recommend caution and look for flaws with EVERY fund that's pitched to you. Every fund has its downsides and flaws. Until you have learned about the caveats of a fund, you really haven't learned enough about a fund.

You have to be very careful because this may be a particularly dangerous time to get into dividend and high yield funds. There are a lot of bad products out there and we may be entering a rising interest rate environment, which would hit "income" and yield funds very hard.

Either way, the key to retirement income is to achieve a combination of income / interest / dividends AND return of capital, which means selling off assets. There is no other way.


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## james4beach (Nov 15, 2012)

XTR has its pluses and minuses, but don't even consider buying it until you can answer these questions

1. what does its underlying portfolio yield?
2. what is its corporate bond exposure% ?
3. what is its junk bond exposure% ?
4. what is its total exposure to "equities and junk bonds" combined?

In addition I'll also add that currently, GICs are probably a much better investment than almost all bonds or bond funds out there. They yield more and have zero risk if CDIC insured. So something like XTR or a bond heavy fund is probably a waste... you could just use GICs in lieu of the bond component.


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## GoldStone (Mar 6, 2011)

james4beach said:


> Please be very careful, no matter how you proceed. Above everything else I recommend caution and look for flaws with EVERY fund that's pitched to you. Every fund has its downsides and flaws. Until you have learned about the caveats of a fund, you really haven't learned enough about a fund.


+1



james4beach said:


> You have to be very careful because this may be a particularly dangerous time to get into dividend and high yield funds.


You have to be very careful because it's mom's money. Do you have the knowledge and experience to manage it properly??


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## Squash500 (May 16, 2009)

james4beach said:


> XTR has its pluses and minuses, but don't even consider buying it until you can answer these questions
> 
> 1. what does its underlying portfolio yield?
> 2. what is its corporate bond exposure% ?
> ...


 James I totally realize that the XTR, CPD and XDV all have weaknesses. The problem is that I need to generate a decent monthly income to pay all my expenses. Investing my portfolio totally in GICS is a waste for me. 

I'm only 51 years old...but I received a will inheritance a couple of years ago that was more than 260K. Therefore most of my assets are in my non-registered account. Therefore the CPD and XDV is paying me tax advantaged monthly income.

I don't really care if the XTR or XDV or CPD fluctuates a lot as long as I receive my monthly income. I'm single with no children so I don't really care if my estate eventually goes down to zero--LOL. I also don't have a car and hate travelling so I'll take my chances. I don't have enough money to properly diversify into individual stocks so I find that ETFS for me are a compromise solution.

Also I can afford to make a few mistakes in my portfolio as I'm not paying a financial advisor 1.5% plus each year to manage my portfolio etc. As usual just my opinion.


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## humble_pie (Jun 7, 2009)

rick, the issue of how to manage the investments of a relative who is thought to be unwilling to manage them himself or herself comes up in this forum regularly.

forum members often have reservations about this situation. It's not right to be asked to comment on the life savings situation of a 3rd party who is not even present as a username.

in addition, if i may be so bold, one cannot help but notice that you came to this forum 2 months ago & you appear to be opening DIY investor accounts at a discount broker for the first time in your life.

as it happens, i think the responsibility for managing another person's financial life is overwhelming. It's not a matter of filling out a few discount broker's forms, then picking a few etfs from a soda bar menu. It's a matter of understanding the budget, the risk tolerance & the tax consequences of many different investment scenarios, for another person. It's a question of being able to powerfully support that person if another 2008/08 type global financial collapse should occur.

speaking of a meltdown scenario, please keep in mind that your own funds - as well as your wife's funds - would also disappear. Are you sure that you have the experience to handle such a situation?

for all these reasons, i find myself wondering why your mother does not set out to master the first level of investment knowledge herself. She sounds wonderfully competent - imagine being willing & able to cheerfully work until one is in one's late 60s! kudos to her!

at the moment, we don't even know if your mother would have any interest in managing her own investments. It's also possible that she gets along well with her present advisor & values the relationship.

while we are on this subject, perhaps i might go all the way & mention your wife as well? because, although i do believe that often there's one individual in a family who is perhaps more talented or successful in finance, at the same time i also believe that all the others should keep their knowledge up to speed, should understand exactly what he is doing, should be able to take over seamlessly if the principal player should disappear.

other posters have suggested consulting a fee-only financial advisor. This is a good idea in theory but the reality seems to be that they are difficult to find. There have been many threads about this. The best ones - those with outstanding expertise plus nothing to sell - are expensive, usually charging $3500 or higher for the preparation of an appropriate action plan.

in short, i think the worst thing you could do is attempt to inflict an alphabet soup of ETFs upon your mother, all taken from suggestions posted on an internet chat forum by anonymous usernames.

i think the best thing you could do is encourage her to study her own investment choices. She might not have enough time while she is still working, but she might find this to be a fascinating - also profitable - post-retirement activity.


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## My Own Advisor (Sep 24, 2012)

What is the tax-hit on XDV, if you don't mind me asking? I assume it's tax-advantaged due to the ETF holdings?

@Squash500, have you maxed out your TFSA as well?


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## Squash500 (May 16, 2009)

My Own Advisor said:


> What is the tax-hit on XDV, if you don't mind me asking? I assume it's tax-advantaged due to the ETF holdings?
> 
> @Squash500, have you maxed out your TFSA as well?


MOA.. XDV is mostly eligible dividends and capital gains. Yes my TFSA is maxed out as well.


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## james4beach (Nov 15, 2012)

humble_pie: great reply

I'll point out that for eligible dividends, both plain old TSX index funds: XIU and ZCN have wonderfully tax efficient distributions (which made me once ask in these forums if 'ZCN is the best dividend fund?')

They actually both have pretty good dividend yields and that's without doing anything exotic at all. Just the plain TSX index!


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## tygrus (Mar 13, 2012)

You had better have a heart to heart with your mother before putting it in the stock market. its been my experience that most older people do not wan that exposure later in life and cannot handle the risk and volatility. Fixed income may be a better choice.


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## My Own Advisor (Sep 24, 2012)

@James4beach, so as dividend ETFs go, I suspect XIU, ZCN, XDV and ZDV are pretty tax-efficient then. Haven't ran the numbers, just assuming based on their holdings.


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## recklessrick (Jun 16, 2013)

humble_pie said:


> rick, the issue of how to manage the investments of a relative who is thought to be unwilling to manage them himself or herself comes up in this forum regularly.


Great reply, humble_pie. I have serious reservations and it seems that consensus is to A) encourage her to understand and plan her own or B) keep working with/find another investor she feels comfortable with to come up with a plan so they both understand. This sounds much better to me after thinking about it.

I would not pick ETFs from a soda bar menu or treat it lightly, mind you. You are correct that it's one thing dealing with my money but someone else's may be too much.

Yes, I am new to investing but not to finances. Now that I am debt free, I have the money to get serious about *my* retirement future. I'll be learning as I go and from this forum a lot and have 15 -20 years are solid savings ahead of me. It's one thing when it's my money but another when it's my mom's. Probably best to leave it to someone who has dealt with this before even if it does cost her the 2-3% MER.

You are right, I have a TD Waterhouse account and will be consolidating all of my investments there along with my wife's. She will also learn what we are doing here so she can take over in the event of her needed to take over because I'm gone or something. Above all, I'm trying to keep things super simple via this forum and CCP.

Thanks again for taking the time to go into length about your thoughts, I do not take finances lightly.


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## recklessrick (Jun 16, 2013)

james4beach said:


> Please be very careful, no matter how you proceed. Above everything else I recommend caution and look for flaws with EVERY fund that's pitched to you. Every fund has its downsides and flaws. Until you have learned about the caveats of a fund, you really haven't learned enough about a fund.
> 
> You have to be very careful because this may be a particularly dangerous time to get into dividend and high yield funds. There are a lot of bad products out there and we may be entering a rising interest rate environment, which would hit "income" and yield funds very hard.
> 
> Either way, the key to retirement income is to achieve a combination of income / interest / dividends AND return of capital, which means selling off assets. There is no other way.


I would not pick things willy-nilly or on a whim, that's for sure. There would be tons of research into every fund I would look at. All in all, I really don't think I'll be doing this for mom because I'm not sure it's a good idea. The forum seems to agree and I'll side with the wisdom of the masses


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## recklessrick (Jun 16, 2013)

tygrus said:


> You had better have a heart to heart with your mother before putting it in the stock market. its been my experience that most older people do not wan that exposure later in life and cannot handle the risk and volatility. Fixed income may be a better choice.


Mom doesn't like the stock market and is not good with the ups and downs. She has too much equity exposure in her portfolio now IMHO and should be much more into fixed income for both her sanity and income sake. 

I think she needs to have a solid talk with her advisor now and tell her his plans. Until now, she's just given him free reign without understanding his plan. Maybe that will be where I can help, to help develop her plan.


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## MoneyGal (Apr 24, 2009)

Ok, here are a few thoughts for what they're worth. This may sound negative, but it isn't intended to. 

First, you need to understand that leaving this in the hands of mom's advisor doesn't mean a better outcome is ensured. Even though $260K is your mom's life savings (beyond CPP, OAS and other potential sources of retirement income, such as equity in a house), it is a small account for a licensed financial advisor -- and if that advisor specializes in *accumulating* assets (i.e., they're a salesperson above all else), I'm not sure how much help they will be in creating a decumulation plan for your mom. 

Here are some of the questions I think you need to contemplate with your mom: 

- Does she intend to leave a financial legacy, or are all of these funds available to spend during her lifetime? 

- Does she need the funds to handle day-to-day living expenses, or are these essentially "reserve" funds that she can deplete as she chooses? If they are "reserve funds," what happens if/when they run out entirely? (worth contemplating, even if the likelihood of this seems very low - it does sound like you've thought about this)

- Has she worked through the tax and other implications of taking her own CPP now or delaying? 

- how much responsibility does she want to take for managing her investments, now and into the future?


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## recklessrick (Jun 16, 2013)

MoneyGal said:


> Ok, here are a few thoughts for what they're worth. This may sound negative, but it isn't intended to.
> 
> First, you need to understand that leaving this in the hands of mom's advisor doesn't mean a better outcome is ensured. Even though $260K is your mom's life savings (beyond CPP, OAS and other potential sources of retirement income, such as equity in a house), it is a small account for a licensed financial advisor -- and if that advisor specializes in *accumulating* assets (i.e., they're a salesperson above all else), I'm not sure how much help they will be in creating a decumulation plan for your mom.
> 
> ...


I'm going to send her these right now so we can talk about them, great questions.


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## OhGreatGuru (May 24, 2009)

I know I'm going to sound like a tout for RBC, but for a neophyte investor of that age, who's looking for steady supplemental monthly income, I would simply recommend RBC Monthly Income Fund. MER is ~1.2%, distributions can be payed out monthly in cash instead of re-invested. Distributions will be a mix of interest, dividends, and gains, so they have some tax efficiency. It is a CDN Neutral Balanced Fund, roughly 50/50 fixed income and conservative CDN equity. (In fact you can emulate the performance of the fund pretty closely with 50% RBC Bond fund and 50% RBC Dividend Fund)

This fund is currently distributing about 3.9%; my IRR over 12 years is about 4.7%. It's benchmark is the 5-yr average GIC index. With $260k in it, the monthly distribution right now would be about $845.

The RBC fund sales person (I won't dignify them with the title of investment advisor) will probably try to persuade you/her to buy a bunch of higher MER funds, or one of their portfolio funds, but ignore them

As with any mutual fund they warn you they cannot guarantee monthly payments, but this fund has never failed to make distributions. In a bad market year it will make ROC to sustain distributions.

TD Monthly Income Fund is pretty highly rated too, but has a higher equity balance, so it is a little more volatile.


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## AltaRed (Jun 8, 2009)

For that kind of money, those with an RBC Direct Investing discount brokerage account qualify for D series mutual funds from RBC, saving 25 to 50 basis points. My bro and I moved all our mother's investments from RBC Bank/Asset Mangement to RBC DI some time ago to capture this efficiency. The RBC Monthly Income Series D fund MER is 0.88, versus 1.21 for Series A. Series D can only be purchased at RBC Direct Investing. It makes a difference over time.


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## MrMatt (Dec 21, 2011)

AltaRed said:


> That implies a 4.5% yield....which is reaching for yield in today's environment.... e.g. >5% dividend yield on equities and >3% on fixed income on a 60/40 split. I'd suggest no more than a 3.5% target yield and perhaps even 3%.
> 
> The latter could potentially be obtained with a dividend focused ETF (but not something like XFN that is heavily financials), a REIT ETF, and a 5 year GIC ladder (or GIC/ ST Corp Bond lETF) for FI. The problem going forward is slowly increasing interest rates that will depress (underperform) all 3 of those pieces (utilities, REITs and bonds).


It might be reaching for cashflow, but it's easily achievable for an annuity.

If it's all play money, it really matters on her risk tolerance, she should go see a fee only planner/advisor.

My advice, drop $100k in an annuity to get the $500/month to boost up the lifestyle, then invest the rest, if it does well, good, if not she's not really risking a lifestyle cut.


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## tygrus (Mar 13, 2012)

MrMatt, its been my experience that mutuals are not actively managed enough, thats why they fail to capture long term income. They perform for a year or 2, then not for 3 years cause the fund manager is too conservative or always behind the curve. RBC just likes to get your money parked and earned fees. I learned my lessons on mutuals way back in the 90s. An ETF is a different animal in my view manged by professionals.


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## OhGreatGuru (May 24, 2009)

AltaRed said:


> For that kind of money, those with an RBC Direct Investing discount brokerage account qualify for D series mutual funds from RBC, saving 25 to 50 basis points. ...


I agree the D Series would be a better return, and it annoys me that RBC will not offer it retail to larger accounts. (I was hoping I could get it through PH&N, because they carry some RBC D series funds. But not that one.) But OP's description of his mother did not suggest that she would be the type of investor who would be comfortable managing a Discount brokerage account. And I wasn't going to suggest that her adult child take over her financial affairs for her.


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## AltaRed (Jun 8, 2009)

OhGreatGuru said:


> But OP's description of his mother did not suggest that she would be the type of investor who would be comfortable managing a Discount brokerage account. And I wasn't going to suggest that her adult child take over her financial affairs for her.


I agree. I primarily wanted to point out that a better option to RBC A series funds was available to those with RBC DI accounts.


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## AltaRed (Jun 8, 2009)

MrMatt said:


> It might be reaching for cashflow, but it's easily achievable for an annuity.
> 
> If it's all play money, it really matters on her risk tolerance, she should go see a fee only planner/advisor.
> 
> My advice, drop $100k in an annuity to get the $500/month to boost up the lifestyle, then invest the rest, if it does well, good, if not she's not really risking a lifestyle cut.


I agree an annuity (with a little left over to play with) might be the best option. The question is when might be the opportune time to get into an annuity. A fee only planner should be able to advise her on timing (age, term, etc).


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## recklessrick (Jun 16, 2013)

AltaRed said:


> I agree an annuity (with a little left over to play with) might be the best option. The question is when might be the opportune time to get into an annuity. A fee only planner should be able to advise her on timing (age, term, etc).


That's a really interesting idea, I hadn't thought of an annuity.


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## humble_pie (Jun 7, 2009)

guru you would never sound like any kind of tout!

the roybank MIF sounds like a possible candidate, especially in altared's arrangement where his own mother is holding it through roybank's discount brokerage so as to obtain the lower MER series.

although even with a stated .88% MER, actual costs are north of 1%, because one has to include the commission costs incurred by the portfolio itself, as it buys & sells securities among its holdings every single day (these commissions are never included in a MER.) These costs would be low for this fund because it is very stable, but nevertheless they would push the total expense north of 1% imho.

fwiw i think the first things to consider are moneyGal's questions. What sort of estate does rick's mother want to leave, if any? how is she planning to use income from the invested $260k? has she worked out when to take CPP?

in addition, it's possible that a good part of her financial circumstances may be missing (rick, this is not a criticism, it's just that it's difficult to think about a shadow who's not only not present but only a portion of the shadow has been shown.)

for example, will the mother have a pension from employment? does she have a separate rrsp of her own? a tax-free tfsa of her own? does she own her home or does it still have a mortgage (sounds like the former.)

bref, it's possible that maman is better off than we might be thinking.

ps i haven't given up my idea that maman can jolly well take part in planning her own senior financing, thank you very much. It's worth noting that slightly condescending remarks upthread about her financial acumen or lack thereof are coming from this forum's most highly esteemed & knowledgeable members ... but these are nonetheless older male members each:

re fee-only financial planners: folks are talking about these as if there are some in every neighbourhood. But afaik the few financial planners who are not salespersons in disguise are exceedingly rare, expensive & difficult to find.

as soon as one is talking the level of fees involved - a few thousand $$ - why not consult an actuary in private practice? there are a few. MoneyGal knows a very good one, for example.

an actuary would be able to examine the totality of maman's life, including any pensions, estate intentions, desires to remain involved with her financial life. He could form a financial plan that would easily hold up for 10, 15, 20 years. It might include an annuity, or it might not.

after that, the picking of a few appropriate products to fill out the plan would be easy.


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## MoneyGal (Apr 24, 2009)

AltaRed said:


> I agree an annuity (with a little left over to play with) might be the best option. The question is when might be the opportune time to get into an annuity. A fee only planner should be able to advise her on timing (age, term, etc).


I'd be shocked if the average fee-only planner understood annuity variables enough to advise. The most common refrain you hear is "it isn't a good time now, because interest rates are low" - which, to anyone who knows anything about annuities, provides a cue that the speaker doesn't know very much about these products. 

There is a good, short piece in the most recent edition of MoneySense on annuity purchases, called "Your DIY Pension Plan" -- it's worth picking up a copy of this month's edition of MoneySense for this article alone.


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## AltaRed (Jun 8, 2009)

MoneyGal said:


> I'd be shocked if the average fee-only planner understood annuity variables enough to advise. The most common refrain you hear is "it isn't a good time now, because interest rates are low" - which, to anyone who knows anything about annuities, provides a cue that the speaker doesn't know very much about these products.


Perhaps but I suggest a fee only planner (as in estate planning) as an alternative to annuity salesmen. As already suggested, an actuary could be better. The key is to get someone who can do the proper 'what if' analysis in the context of the individual's entire financial picture (pension, savings, mortgage, etc, etc).


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## MoneyGal (Apr 24, 2009)

AR, good point...my argument wasn't in favour of an insurance salesperson, either!


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## james4beach (Nov 15, 2012)

MoneyGal said:


> There is a good, short piece in the most recent edition of MoneySense on annuity purchases, called "Your DIY Pension Plan" -- it's worth picking up a copy of this month's edition of MoneySense for this article alone.


I went to 7-Eleven and Pharma Plus to get the magazine but couldn't find it on the shelves.

Where can I buy MoneySense?


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## HaroldCrump (Jun 10, 2009)

james4beach said:


> Where can I buy MoneySense?


Why buy "Money-Sense"? :rolleyes2:
Pretty much any Canadian library should have a copy.

If you do insist on buying, you can easily subscribe from their website.
If you are a member of Air Miles, they provide a discounted annual subscription.
If you want a single copy, many magazine stands should have one.


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## Spudd (Oct 11, 2011)

If you live in a big city, you can also get it online for free through the Zinio magazine service via your library's website. I know for sure that Ottawa and Toronto have this. I *love* this.


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## james4beach (Nov 15, 2012)

MoneyGal said:


> There is a good, short piece in the most recent edition of MoneySense on annuity purchases, called "Your DIY Pension Plan" -- it's worth picking up a copy of this month's edition of MoneySense for this article alone.


I found MoneySense at a bookstore (the Summer 2013 issue which is the latest one) but didn't see this article inside.

Are you sure you have the right magazine & article name? I skimmed this issue and didn't see any article with a title like that.


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## MoneyGal (Apr 24, 2009)

Mine's at work. It's likely the September issue. 

The basics of the article are this:

- Life annuities get a bad rap; at advanced ages, no other guaranteed product can provide the same yield
- No one is telling you to go and buy an annuity immediately with all of your money; this is a product you can/should "ease into" over time. Maybe buy a bit at age 70, a bit at 75, and a bit more at 80


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## MoneyGal (Apr 24, 2009)

james4beach said:


> I found MoneySense at a bookstore (the Summer 2013 issue *which is the latest one*) but didn't see this article inside.


(You may have noticed that your linked URL includes the word "archive")


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## james4beach (Nov 15, 2012)

Weird. Summer 2013 was the latest issue at my large chain bookstore, I guess they didn't have the latest issue. Third store I've visited now... I guess I'm doomed to not read about annuities!


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## Spudd (Oct 11, 2011)

The cover has a big golden egg on it. Did you check your library website to see if you can read it online via Zinio for free?


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## MoneyGal (Apr 24, 2009)

No worries...check out the first link in particular: 

http://www.ifid.ca/research.htm


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## james4beach (Nov 15, 2012)

To the original poster

The calculations in my thread might be useful to look at
http://canadianmoneyforum.com/showthread.php/16222-Modeling-retirement-investment-yield

I'm not advising that exact portfolio, just trying to work through the calculation and come up with a typical case.


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## Xoron (Jun 22, 2010)

If you wait a month, most of the previous months articles are available on Moneysense's website:

http://www.moneysense.ca/

So check back there next month to see if the article is posted.


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## avrex (Nov 14, 2010)

I was not aware of the online 'archive'. Thank you for pointing that out.

Hmmm. If I don't mind waiting a month or two, perhaps I should not renew my print version on MoneySense. Something to think about.


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## yyz (Aug 11, 2013)

If you use Airmiles a 1 year sub to Moneysense is on sale right now for 75 airmiles,a pretty decent price.


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## OnlyMyOpinion (Sep 1, 2013)

*Link to the MoneySense Article mentioned*



james4beach said:


> I found MoneySense at a bookstore (the Summer 2013 issue which is the latest one) but didn't see this article inside.
> 
> Are you sure you have the right magazine & article name? I skimmed this issue and didn't see any article with a title like that.


The article is on-line now: http://www.moneysense.ca/retire/annuities/everything-you-need-to-know-about-annuities


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## GoldStone (Mar 6, 2011)

Spudd said:


> If you live in a big city, you can also get it online for free through the Zinio magazine service via your library's website. I know for sure that Ottawa and Toronto have this. I *love* this.


Just tried it. Looks great. Thanks for mentioning!

Is it possible to access older magazine issues through library/Zinio? I only see the most recent ones.


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## Spudd (Oct 11, 2011)

GoldStone said:


> Is it possible to access older magazine issues through library/Zinio? I only see the most recent ones.


No, I don't think so, but once you've borrowed an issue once, I think it stays in your library forever so you can build up an archive over time. But there's no way to get older issues if you never got them before.


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## My Own Advisor (Sep 24, 2012)

Back more to the thread....makes me wonder...what is a good ETF portfolio for a retiree?

I'm trying to look at some combinations for my parents, with <$100 k of investments.

Strongly considering:
GIC laddered ETF (TFSA) + CDN equity ETF (XIU or ZCN) (TFSA or non-registered) + CDN dividend ETF (TFSA or non-registered) and U.S. ETF or U.S. dividend ETF (non-registered).

Parents are in their 60s and have pensions (yes, they are lucky).

I read a previous comment, someone was using CPD, XTR, XDV and some GIC's to monthly income.


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## MoneyGal (Apr 24, 2009)

If they have pensions, their capacity to take investment risk is heightened. Do they need additional income?


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## Squash500 (May 16, 2009)

My Own Advisor said:


> Back more to the thread....makes me wonder...what is a good ETF portfolio for a retiree?
> 
> I'm trying to look at some combinations for my parents, with <$100 k of investments.
> 
> ...


MOA that someone was me--LOL. I'm only 51 yet I'm investing like someone who is 70 years old. I'm investing in the CPD, XTR, and XDV because I need that monthly income to live on in my non-registered account.

I got a lot of my DIY ideas from reading this book by Allison Griffiths.

http://www.amazon.ca/Count-Yourself-Take-Charge-Money/dp/1439189315


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## My Own Advisor (Sep 24, 2012)

Yes, they need a little bit extra income MG. 

Once they pay off their debts (that's another post or thread...) I'm tempted to put them into about 50% CDN dividend ETF + the rest would be split up based on what I thought about above. 

I've been telling them to pay off their mortgage and LOC for years and years, but I'm not sure it's sinking in. Over the last few years, now they are retired, they are realizing because they are servicing debt in retirement, they don't have as much money to spend on the grandkids. I suspect they will start changing their ways so they can spoil my sister's kids again. Hopefully they will listen and turn things around before rates rise.

After they kill $80k in mortgage + LOC debt, I will get them some good products. Just thinking ahead MG.

In the meantime, they have a spending problem not an income problem and they are lucky as long as they have their health.


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## My Own Advisor (Sep 24, 2012)

oh...that WAS you Squash!


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## MoneyGal (Apr 24, 2009)

My Own Advisor said:


> Yes, they need a little bit extra income MG.
> 
> Once they pay off their debts (that's another post or thread...) I'm tempted to put them into about 50% CDN dividend ETF + the rest would be split up based on what I thought about above.
> 
> ...


You may find this useful: http://www.ifid.ca/payout.htm


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## My Own Advisor (Sep 24, 2012)

Thanks MG. Based on index, seems annuities are paying just over $500/month for a 65-year-old male, on each $100k invested (~6% yield).


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## AltaRed (Jun 8, 2009)

My Own Advisor said:


> Thanks MG. Based on index, seems annuities are paying just over $500/month for a 65-year-old male, on each $100k invested (~6% yield).


That, of course, is a combination of income and capital.... presumably that is what you meant by 'yield'?


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## MoneyGal (Apr 24, 2009)

Well, technically it is all yield (defined as income return from an investment). The capital belongs to the insurance company; this is the essence of the annuity contract. 

(Prescribed annuities calculate a ROC element for tax purposes, but there is no 'remainder' from the annuity contract.)


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## MoneyGal (Apr 24, 2009)

Also please note the differentials between the annuity payouts at age 65 and age 75. Everything I've ever written on annuities recommends a gradual process of annuitizing or "pensionizing," starting at age 65 at the very earliest, and moving most purchases after the age of 70.


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## Sampson (Apr 3, 2009)

Even at 65, those payouts are pretty decent. I thought annuities were a much worse deal than they appear to actually be.

Does any company actually publish their assumptions so clients can get an estimate of the cost of the security/guarantee?


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## MoneyGal (Apr 24, 2009)

...their assumptions? Do you mean, their payout rates? See http://cannex.com/canada/english/index.htm


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## james4beach (Nov 15, 2012)

yyz said:


> If you use Airmiles a 1 year sub to Moneysense is on sale right now for 75 airmiles,a pretty decent price.


I checked and yeah the 1 year (7 issues) subscription is 75 air miles. The equivalent value is around $7.50, which is a significant discount from the usual $20 subscription.


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## My Own Advisor (Sep 24, 2012)

Yes, that is what I meant by yield for this thread, not just income alone. For mid-60s retiree, those payouts are decent for sure.

They are so many annuity products though. What is the best? 

@MG?

Life Annuities? ...with single, joint, contingent survivor?

Term Certain? Although value is subject to income tax for beneficiary?

Prescribed Annuities?


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## MoneyGal (Apr 24, 2009)

Maximize income = plain vanilla SPIA (single premium income annuity). 

All the other riders will decrease the monthly payout. Whether they are a "good idea" for your situation or not depends on...your situation. 

Prescribed annuities = bought with unregistered funds (cannot be bought in a registered plan).


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## My Own Advisor (Sep 24, 2012)

Thanks MG


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## MoneyGal (Apr 24, 2009)

Well, based on your post in the "emergency fund" thread I think you should just tell mom that she should save 30 years of living expenses in cash. Bingo! :encouragement:


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