Victory Lap

Once you achieve Financial Independence, you may choose to leave salaried employment but with decades of vibrant life ahead, it’s too soon to do nothing. The new stage of life between traditional employment and Full Retirement we call Victory Lap, or Victory Lap Retirement (also the title of a new book to be published in August 2016. You can pre-order now at VictoryLapRetirement.com). You may choose to start a business, go back to school or launch an Encore Act or Legacy Career. Perhaps you become a free agent, consultant, freelance writer or to change careers and re-enter the corporate world or government.

How Business Owners can level pension Playing Field with the Public Sector

Posted By Financial Independence Hub | September 21, 2015

By Jean-Pierre Laporte

Special to the Financial Independence Hub

The Great Recession of 2008 had many consequences, but in the world of pensions, it truly highlighted the chasm separating private-sector from public-sector retirement plans.

The “Great Divide” boils down to this: civil servants have back-stopped, defined benefit pension plans that will provide a comfortable level of pension benefits in retirement, whereas the tax payers responsible to fund such great plans are largely relegated to RRSPs with much lower contribution limits and a limited ability to weather financially volatile markets.

For most, this state of affairs is immutable and lamentable. For those who have made pensions their passion or profession, there are solutions. The difficulty is to make them accessible to the majority, who happens to be the marketplace. What are some of these solutions that put the private and public sectors on an even keel?

The Dividend Route

Sudden Retirement Syndrome (SRS)

Posted By Michael Drak | September 18, 2015

By Michael Drak

Special to the Financial Independence Hub

Sudden retirement syndrome is not a real medical condition as far as I’m aware but for me it best describes the shock of withdrawal that occurs when a person leaves their corporate job.

This can occur through either downsizing, formal retirement or can even occur when a person is leaving after many years spent with the Corp to do something else.

The shock from going unprepared from a busy work-life to nothing can be very stressful and in extreme cases can even result in premature death. We all have heard stories of people in retirement who lost their motivation to do much of anything, started drinking heavily, and died within a short time.

I’ve known quite a few people who have suffered from SRS. My father suffered through it, a close friend died because of it, and I even had a taste of it after leaving my corporate job of 36 years — which is crazy in itself because I already had a game plan in place for my next move. I clearly remember the ringing in my ears, the feeling of uncertainty, the feeling of living in a fog for a period of time. It’s hard to break away from something that has become a piece of you over the years.

It’s important to note that not everyone will suffer from SRS. People who are able to detach themselves successfully from work when they walk out the door are usually spared. An example would be an assembly line person who is able to leave their job when the whistle blows and not think about work until the next day. While an assembly line worker may be burned out physically and mentally, as they are not challenged intellectually, the Corp does not own their soul, unlike corporate executives who are linked to their work 24/7 and whose self-identity is tied to the job that just ended.

Retirement shock can be hell

Should we change the word “retirement”?

Posted By Financial Independence Hub | September 12, 2015

By Marion Humphries

Special to the Financial Independence Hub

Let’s start by defining the word retirement. A quick online search reveals that the literal meaning of the word retirement is: to withdraw, retreat; the time at which one withdraws from the workforce.

By definition, the act of retiring has a very passive connotation. No wonder there is apprehension by some to enter into this phase of life. The word Retirement suggests inactivity, slowing down, isolation, loneliness, and withdrawal from society.

Perhaps we can gain a better understanding of why such a negative spin was placed on retirement by briefly examining its history. The concept of retirement was introduced in North America a little over 100 years ago when the industrial revolution was taking place.

It was thought that elderly workers would slow down production. Job opportunities were limited, and older workers were preventing younger workers, with families to support, from much needed employment. Paying elderly workers to stop working seemed like a good idea. Initially, the US government paid the matured workers to step aside and withdraw from the labour force.

Social Security, 1935

Eventually, in the United States, the Social Security Act was introduced in 1935, whereby workers would pay into the program throughout their employment and eventually fund their own retirement.

Business Owners Beware!

Posted By Financial Independence Hub | September 11, 2015

IRC Photo - Low Resolution — Ian Campbell

By Ian R. Campbell, Business Transition Simplified

Special to the Financial Independence Hub

I recently read a headline that said Business Owners Need To Be Very Afraid. The first line or two of the article paraded a litany of things that were unlikely to frighten a business owner’s dog, let alone a business owner.

However, while the article content was uninspiring the article title was “on the money.” The heading I have chosen for this post likewise wouldn’t frighten a business owner’s dog – but only because dogs can’t read.

If you are a business owner or an advisor to business owners here is a list, with brief reasons, of six things you need to keep front of mind and continually update your opinion on.

Government debt

Debt is higher than it has ever been in most developed and developing countries at the municipal, provincial/state and federal levels. Governments at root are no different than individuals, households or companies – unless of course you are an American who thinks the U.S. Federal Government can print new fiat currency forever without consequence.

Eventually, Peter can no longer rob Paul and debt needs to be repaid. How: by levying multiple forms of taxes on those who can pay. Businesses almost certainly will see both direct and indirect taxes at all levels increase in coming years. This is but one factor that will negatively impact business after-tax free cash flows – and in the end it is current and prospective “after-tax free cash flow” that is the most important business value metric.

Industry consolidation

Incorporated? Don’t overlook TFSAs & RRSPs if your time horizon is long enough

Posted By Financial Independence Hub | September 9, 2015

By Benjamin Felix, PWL Capital Inc.

Special to the Financial Independence Hub

When people have corporations it’s common for them to retain all earnings in excess of their living expenses inside of their corporations to avoid paying personal tax.

This seems logical. By leaving the money in the corporation there is more money to invest in the corporate investment account, and we know that about $50,000 of dividends can be taken out of a corporation nearly tax-free, making the idea of leaving everything in the corporation until it’s time to draw a conservative retirement income appear very attractive. This strategy may have also been motivated by the tax advantage that used to exist for taking a dividend-only income.

Shift to mix of salaries & dividends

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