# Getting Close to Retirement



## DesignerDee (Apr 10, 2013)

I am looking for some safe suggestions as to where to turn to invest my money.

I will be retiring in 3 months, with a full pension at age 56. My partner has been retired for 9 years now, and we have kept our finances separate quite successfully, although we share all expenses 50/50. We look after our own expenses and debts outside the house, and don't see any changes on that part. Our expenses are approximately 800 each for household and food all in - yes, that includes taxes, and our house is fully paid for approx value of 350k. New roof and furnace within the last 5 years, so no major expenses expected there, for a few years (famous last words).

Now for my part: I have a small RRSP of 49,000. My TFSA is maxed at 25,500., and I have 125,000 in a 5 year laddered GIC, first year ends end of May 2014 @ 2.05%. When I retire, I will have a small severance of approximately 25,000. The only major expense I plan on is purchasing a new car (or suv to be specific) upon retirement, which will probably take care of the severance. What I really need assistance with is I have 365,000 sitting in my high interest savings account. I am not an investor, and am skittish on doing anything even the couch potato thing. The bank is desperately trying to get me to do something with it, I understand that they are in the business of making money, so no surprise there. How stupid would I be to put it into a conservative portfolio with a 1.85% MER?

I will appreciate your feedback.


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## wendi1 (Oct 2, 2013)

Dee - I am not a financial planner, but I think you need one. Not the bank advisor, you are correct that they are incentivized, and not necessarily providing you information in your best interests.

If you were 23, I would encourage you to implement a Couch Potato-type indexed balanced portfolio, but since you are not planning on earning much more money, and are certainly not an experienced investor, I think you need some real advice. Interview some financial planners and accept that you will have to pay them for their time. 

You are a low-risk investor, since this is your "eatin' money" for more or less the rest of your life. Moneysense.ca has a list of fee-only financial planners. Why not start there?


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## birdman (Feb 12, 2013)

I'm not a financial planner either; however, a bit more info would probably be required for someone more knowledgable than myself to provide a more meaningful response. Firstly, is your pension sufficient to cover your planned expenses? Is it indexed? Will you need to tap into your savings to pay for your anticipated expenditures in your retirement (eg travelling, cottage, etc). Also, you may need to consider your wifes financial position as well in all of this. For example, if you predecease your wife what % of your pension goes to her and will she still be able to live in the lifestyle she is accustomed. The vice-versa is also true. Once you have all this figured out and anticipate your future financial needs you work towards jointly deciding on how you wish to spend your hard earned savings and income which may or may not leaving a legacy. 
Depending on your financial needs you then start investing your cash and decide how much risk you wish to take. One rule of thumb is 100 minus your age is a suggested amount to be invested in the market. From there you start thinking about where to invest, what stocks to buy, dividends, etc. I expect most people in retirement, including myself, invest in blue chip dividend paying or growth stocks or etfs, i shares, etc. I am probably a little biased here but I think it is very important to that investors understand exactly what they are buying or investing in regardless of whether or not you use a financial planner or buy mutual funds.
I think you have started in the right place and I suggest you just keep reading all the posts on this forum and you will be amazed at how fast you start to learn what others are doing.


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## DesignerDee (Apr 10, 2013)

*frase,* Yes, my pension will be sufficient, and it is indexed. I do plan to travel, but no major trips in the first 2 years. We do have timeshares, and plan to do last minute vacations (45 days advance planning or less) only via car. Our pensions are similar, and the other spouse would receive 60% in both cases. Unless there is a drastic change in lifestyle, there should be no problem. 
*Wendi1,* It looks like I will have some homework to keep me busy for the first little while. I just picked up the latest Moneysense magazine from the post on Friday I will have to study it right away - thanks.


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## the-royal-mail (Dec 11, 2009)

1.85% MER is way too high. Don't meet with the bank "advisor" - he wants to sell you mutual funds so your money can go to work for them.

For you to take equity risk doesn't make much sense to me either.

Frankly, I don't think you need to do anything other than relax and withdraw your money as needed. Leave it in some sort of HISA where you can withdraw it as you need it. Even 1% of the amount of "spare" money you have is a lot of money.

You've worked all of your life. Sit back, enjoy and don't complicate things any further.


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## sags (May 15, 2010)

Agree with TRM.

Only comment would be to spread the HISA money around to different accounts. If it is in 1 account, it is over the guarantee limit.


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## My Own Advisor (Sep 24, 2012)

"If money isn't bringing you happiness, you aren't spending it right." Nice one rikk.

Totally agree with other comments, the 1.85% MER is way too high. 

The $125,000 in a 5 year laddered GIC is a good move, to go along with your full pension.

Seems you are set.

The $365,000 sitting in a high interest savings account is a good problem to have. I would let it sit there until you can retire and then find a good use for the money after doing some research and reading. One option, put the money to work in a non-registered account to spin off tax credit eligible dividends; keep money as a large emergency fund, or any combination of investing and savings.

Again, sounds like you are an excellent financial health. Nicely done.


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## jmarks (Feb 14, 2012)

Being in a similar position I'm very interested in this thread.
Is 1.85% MER too much for a top rated fund that consistently has top decile performance and is conservative ? A fund that is globally diversified and has a targeted return of 6% after fees.


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## OnlyMyOpinion (Sep 1, 2013)

Wouldn't it pain you greatly to give up nearly 25% of your return? (i.e. a total return of 7.85%, you give up 1.85 and keep 6%).
The targeted return you mention is one thing, but how has it actually performed over the last 3,5,10 years?
The Morningstar Global Neutral Balance benchmark has only managed 5.88%, 9.15% and 4.74% over 3,5,10yrs. The Global Coach Potato shows 5.57%, 2.62% and 5.49%, etc. It seems that 7.85% might be a stretch? 
We would certainly not assume that sort of return from our investments heading into retirement (as the OP was). We would also be more conservatively focused on (Cdn) dividend and income than on capital growth which a broad global fund seems more likely to be targeting.


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## jmarks (Feb 14, 2012)

OnlyMyOpinion said:


> Wouldn't it pain you greatly to give up nearly 25% of your return? (i.e. a total return of 7.85%, you give up 1.85 and keep 6%).
> The targeted return you mention is one thing, but how has it actually performed over the last 3,5,10 years?
> The Morningstar Global Neutral Balance benchmark has only managed 5.88%, 9.15% and 4.74% over 3,5,10yrs. The Global Coach Potato shows 5.57%, 2.62% and 5.49%, etc. It seems that 7.85% might be a stretch?
> We would certainly not assume that sort of return from our investments heading into retirement (as the OP was). We would also be more conservatively focused on (Cdn) dividend and income than on capital growth which a broad global fund seems more likely to be targeting.


I hate fee's of any sort! And for many years now have had quite a disdain for Canadian Mutals of any sort. Having said that if I can get 6% real return does it really matter what I have to pay for that return? A friend got me looking at ATB balanced fund ATB103. It has beat its peer group every year for the last 10 years, and by a significant margin. 10 year return has been 6.5% vs 5.4% for its peer group. 
I don't know if it's just marketing or what but even with a ridiculous MER this fund seems like a very good place to put a big chuck of cash, with minimal risk.


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## marina628 (Dec 14, 2010)

I am only 46 but personally I have some mutual funds that I am paying 2% on that earned me in the 14 -30% range this year.I know generally they are a bad idea but for instance TD Global growth fund is up 40% this year and a MER of 2.55%.I do all my investing online no sales person twisting my arm but I still have some high MER MF as part of my portfolio.I also like the Health Science and Science Technology that have a 10+ year track record.If you are 100% against MF you may be leaving some good profits on the table.Obviously it depends on your situation if it makes sense or not.


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