Hub Blogs

Hub Blogs contains fresh contributions written by Financial Independence Hub staff or contributors that have not appeared elsewhere first, or have been modified or customized for the Hub by the original blogger. In contrast, Top Blogs shows links to the best external financial blogs around the world.

Third Age education: Later-life learning

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Mature students are very focused on their classes
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By Aaron Hector, Doherty & Bryant Financial Strategists

Special to the Financial Independence Hub

Have you ever wanted to do or learn something, but never seemed to have the time? With commitments to family, friends, your career and hobbies, it’s easy to see how life can get away from you.

The term ‘Third Age’ refers to the stage in life after which you have retired and your children are independent. This is the stage at which you become liberated and finally have extra time.

It’s back-to-school season for our youth this fall – but why not for you too? Let’s look at some options for lifelong learning opportunities available during your third age.

First, it doesn’t have to be expensive! There are a number of low-cost to no-cost education options available. Seniors are offered discounts on many different products and services; including reduced bank fees, transit passes, discounted meals and even tax breaks. Perhaps the single greatest of all such discounts is the offer of free tuition – which has been extended by many universities here in Canada. If you consider that one year’s tuition can cost over $10,000, then a four-year degree could equal $40,000 in savings. Of course, you don’t need to commit to a four-year degree; you could get plenty of enjoyment from taking a single personal interest course.

Seniors and the Lifelong Learning Plan

The cost of various student fees, class materials, and textbooks are generally not free. For seniors on a strict budget, or for those who are trying to keep their net income below the Old Age Security (OAS) clawback threshold ($73,756 for 2016), taking advantage of the Lifelong Learning Plan (LLP) could be a suitable option to pay for these supplemental education costs. Continue Reading…

3 questions if you often carry a balance on your credit card

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Attractive girls with bags and credit cards on a white backgroundBy Alyssa Furtado, RateHub.ca

Special to the Financial Independence Hub

When comparing credit cards, it’s easy to get seduced by reward programs offering cash back, travel points, or other benefits. If you pay off your entire credit card balance every month, then these types of cards are a great option. But if you don’t usually pay your balance off in full or you have an upcoming expense that’ll take you a while to pay off, using a rewards card might not be the smartest move.

1.) What’s the best type of credit card?

If you usually carry a balance on your card, you might want to consider getting a low-interest credit card.

As the name suggests, low-interest credit cards are specifically designed to offer competitive low interest rates on purchases, balance transfers, and cash advances. Not only will you pay less in interest, you will also be able to pay off your debt faster since your interest costs will be lower.

This is why a low-interest rate is one of the key features many people look for in a credit card.

2.) What’s the best low-interest card?

There are a number of fixed low-interest credit cards so it’s worth comparing them, but one of the best cards available is the BMO Preferred Rate MasterCard.

Continue Reading…

Can’t retire? Semi-retirement is more fun anyway!

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Jon Chevreau on Peter Armstrong’s On the Money: CBC.ca

My recent blogs on Semi-Retirement seem to have struck a chord.  After I wrote this online piece for MoneySense.ca: Semi-Retirement is the Future (and a version here on the Hub, under the headline The Next Boomer Wave: Semi-Retirement), I was interviewed by Peter Armstrong at CBC TV’s On the Money Show.

The context of the CBC’s Tips for Boomers segment was in part my new book Victory Lap Retirement, written with Mike Drak, who describes it as a “retirement book about NOT retiring.” The first of several excerpts ran in the Financial Post on Monday.

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CBC’s Peter Armstrong (Twitter.com)

After the CBC segment aired, Peter published his own blog covering similar territory, which you can find under the headline You’re Never Going to Retire — and Here’s Why. He picked up on my statement that the Millennials are going to live a long time and therefore will have an 80-year investment time horizon. I mentioned that a few weeks ago, when I gave a talk to T.E. Wealth in Ottawa about financial advice for Millennials.

Long-lived Millennials need to be mostly in stocks

Continue Reading…

Can your pension plan pay out for 30 years?

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Piggy bank sculpted in sand on sandy beach“Keep close watch on the financial health of your pension plan. The family retirement depends on it.”

A worthy nugget of information often lands within my purview: one that musters important implications for investors.

A recent US headline read “State pensions are awash in red ink.” The estimated shortfall ballpark was 1 trillion dollars. Ouch! Today various pension plans are underfunded, while others could easily be heading that way. Some pension income benefits may be reduced if the weaker funding levels don’t improve.

Say your family plans to retire around age 60 with a pension and at least one spouse lives to 90. Ask this critical question: “Can your pension pay expected benefits for 30 or more years?”

Anyone who is a member of a pension plan should take note of this unsettling situation: those who are still contributing, along with those now receiving pension benefits.

Pension plans rely on three sources of funding:

  • Employer contributions
  • Employee contributions
  • Investment returns

Ongoing low returns are devastating for many pension plans. Longer life expectancy places additional demands on pension payouts.

Some pension plans may incur problems in paying all the promised benefits. Every pensioner should assume all pensions can undergo changes – even CPP, OAS and Social Security.

Participating in pension plans may mean making some irreversible decisions.
Notable pension events occur when:

  • A choice is presented to join a pension plan, buy back past pension service or retire normally or early.
  • An early retiree is offered the option of staying with the pension plan or transferring the commuted value.
  • Accepting a commuted value shifts responsibility to provide in retirement to the employee’s hands.
  • Switching from defined benefit to defined contribution keeps the employee working longer.

Steady pension income has always been an important part of the retirement puzzle for many families.  Pension reductions can rattle some pillars and assumptions of retirement planning.

Consider what could happen to the retirement plan if the expected pension was reduced, say by 30%. Here are some key matters that arise:

• How would you make up the potential income shortfall?

• How much more investment capital would you require?

• Is there sufficient time to accumulate the additional funding?

Pension administrators typically provide an “annual pension summary.” Upon receiving the summary, every pension member should:

• Check the estimated funding level with the pension department.

• Review the most beneficial pension options to achieve family goals.

• Determine whether it’s more desirable to commence the pension early or later.

• Understand the implications of pension income splitting and $2,000 credit.

No doubt some retirement plans will face difficult choices. Hence, I favour starting this analysis at least five years before retirement. Long-term income goal adjustments may be necessary. There are no simple answers, even for pension plans that are rock solid today.

Be savvy and don’t assume that your pension remains iron clad forever. It may be called upon to deliver benefits for 30 years, perhaps more.

AdrianAdrian Mastracci, MBA,  is president and portfolio manager for Vancouver-based KCM Wealth Management Inc., specializing in designing and stewarding retirement portfolios

How executives can survive sudden job loss

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By Bill Treasurer

Special to the Financial Independence Hub

The transition of a leader’s career from the top of the crest to the other side can actually be a beautiful thing. This is the time when your wisdom is ripest, when the bulk of your legacy has been established, and when your influence has left a tangible and positive mark.

At this stage of your leadership career, you are a leader in full. It’s worth noting that the leadership influence of many leaders became fully expressed late in life. Benjamin Franklin was 70 when he signed the Declaration of Independence (Samuel Whittemore was 81). Ronald Reagan was 69 when he became president, and 77 when he left office. Golda Meir became Prime Minister of Israel when she was 71. Dr. Ray Irani, the CEO of Occidental Petroleum, is currently 75 years old, making him the oldest Fortune 500 CEO.

While your leadership career may span many years, the current average retirement age in the United States is 62. Given that average life expectancies have been steadily growing, figuring out what to do with all that accumulated leadership wisdom and influence before you retire, will help soften whatever butt-kicks may come when the gates of your career close. (By butt-kicks, I mean embarrassing and humiliating moments in your leadership that serve as a starting point to discover your strengths and values, and become better).

Butt-kicking tips for senior leaders

Continue Reading…