When it comes to retirement planning, be sure to not only consider the financial side of things. Remember that taking care of your health is equally important. You may be saving enough money to enjoy a long retirement, but if you aren’t exercising regularly and eating healthy foods, you may not be in prime physical shape in order to enjoy the things you plan to do upon retirement.
Although we cannot control our health entirely, the choices we make today will have a significant impact on our overall physical health. When it comes to making healthy choices, don’t be too cheap. Be willing to spend your money on the things that promote good health such as fresh vegetables and fruits, whole-grain pastas and breads, and multivitamins. Don’t be too frugal when it comes to healthy choices, and despite what some may think, eating healthy doesn’t have to cost a lot. If you compare the cost of buying fresh produce to buying prepackaged processed foods, you will discover that prepackaged foods can end up being more costly.
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by Guest on June 25, 2010
There is nothing quite like tough economic times to bring frugality into brilliant focus. Survival issues drive every decision. Priorities suddenly assume an importance beyond what was ever thought possible. Health issues give way to paying the rent or putting food on the table. The price of gasoline reduces driving a car to when it is only absolutely necessary. Clothes and furniture are now luxury items that must be put off. And then you are reminded of saving for retirement. Surely, that can be put off, too?
Unfortunately, time is not on your side when you put off saving for your future well being. The price for living an older life with dignity keeps increasing, right along with everything else, and probably more so due to the hyperinflation in the medical industry. Social Security may only supply 40% of your desired retirement income. You will need additional savings, and the best time to start is always now, even if economic times are tough.
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by Pam on February 9, 2010
With the introduction of the Tax Free Savings Account (TFSA) in January 2009, Canadians now have another investment vehicle option to save for retirement. Whereas before, most people took advantage of the immediate tax deduction for contributing into a Registered Retirement Savings Plan (RRSP), now they have to consider what will be most beneficial to them in the long run. With the RRSP contribution deadline for 2009 fast approaching, it’s important for Canadians to make this decision ASAP.
What are the advantages of contributing to a TFSA?
Although you don’t receive an income tax deduction for contributing into a TFSA, there are some important advantages to consider. All earnings within a TFSA are not taxable, whereas with an RRSP, earnings are tax deferred, but when funds are withdrawn, they are fully taxable.
A second advantage is that there are no expensive tax implications when you withdraw from a TFSA. Since you’ve already paid tax on the money you contribute to a TFSA, when you withdraw the funds it is not a taxable event. By contrast, if you withdraw from an RRSP, not only are you subject to an immediate withholding tax, you also have to add the amount withdrawn to your income for the year and you may end up paying more tax when it is time to fill out your tax forms or prepare your online taxes this year.
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by Pam on February 5, 2010
1. Start contributing today into your RRSP for the 2010 tax year rather than waiting until the last minute to contribute. If you can’t afford a lump sum contribution, start up a preauthorized contribution that comes directly out of your bank account on the same day that you get your paycheck. By investing regularly throughout the year instead of contributing a lump sum at the RRSP deadline, your money will have more of a chance to grow for you, and will significantly impact your returns over the long term.
2. If you think you will earn more money in future years, consider deferring your tax deductions until a later tax year. Just because you contribute in 2010, it doesn’t mean that you have to benefit from the tax deduction in 2010. Save it for a year that you expect your marginal tax rate to be much higher. For instance, full time students with part time jobs who want to start saving for retirement, will likely benefit from deferring their tax deductions.
3. Take advantage of a spousal RRSP if you expect your spouse’s income to be lower than yours when you reach retirement age. By splitting your income it will result in a lower tax bill in the future.
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by Pam on February 3, 2010
If you anticipate that your spouse’s income will be considerably lower than your own during retirement, a great way to save money on your tax bill is to take advantage of a Spousal RRSP. It’s a simple and strategic way to split your income.
How does a Spousal RRSP work?
The higher income-earning spouse contributes to the Spousal RRSP and gets to claim the tax deduction. The money in the plan then accumulates free of tax until it is withdrawn by the other spouse (the lower income earner), which will result in tax savings.
What you should know about Spousal RRSPs:
If you are the plan owner and your spouse is contributing into your Spousal RRSP, if you withdraw money from the plan, any money contributed in the last 2 calendar years as well as the current year will impact your spouse’s taxes. In other words, your spouse’s taxes will end up being impacted. So, it would not be advisable to start up an RRSP unless you are certain you won’t have to withdraw the funds in the short term. (Before investing in an RRSP, it’s important to have an emergency savings account set up so that in the event of an unexpected expense, you wouldn’t be depending on RRSP money.)
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by Pam on December 1, 2009
How To Retire Rich; Time Tested Strategies To Beat The Market And Retire In Style by James O’Shaughnessy
How to Retire Rich
is a an easy-to-read book about investment strategies that will help you to reach your retirement goals. The author, James O’Shaughnessy, is a mutual fund manager and an experienced investor who has studied the history of the market for the past 45 years. Based on in-depth research, he has developed solid investment strategies and has shared them in his book.
He uses four different couples at different life stages to illustrate how the various investment strategies can be streamlined for every situation. By doing so, it makes it easier for readers of all ages to identify with what he is saying.
Some key points outlined in the book are that investing in the market is extremely important if you want to retire rich. Instead of being afraid of market fluctuations, the author says we should be afraid of losing purchasing power if we insist on investing in cash and other “safe” investments. Although knowing that your principal is guaranteed may give you peace of mind today, knowing that your money will be worth so much less in the future should motivate you to consider other options.
According to O’Shaughnessy’s research, the New York Stock Exchange has gone up 71% of the time in the past 45 years. He continuously emphasizes that the only way to retire rich is to invest in the market and that informed investors realize that day-to-day gyrations mean almost nothing in the long term. The important thing is to not get overwhelmed by current market fluctuations but to focus on the future and understand that the value of your investment will ultimately grow over the long term.
An interesting point in the book is that successful investing runs contrary to human nature. The author says “The reason most people don’t retire rich is that it’s simply too hard to keep their emotions in check and stay focused on the long term.” Once we are able to accept that the value of our investments will fluctuate and discipline ourselves to stay invested, we will be set up for success and will ensure that we don’t lose the purchasing power of the money we have worked so hard to save.
I would highly recommend that you read this book if you are interested in learning how to develop a solid investment strategy for your retirement. O’Shaughnessy provides practical tips on choosing individual stocks to create a portfolio. He also discusses the benefits and disadvantages of mutual funds, and provides recommendations based on historical research. It’s a book that will encourage you to stay invested in the market even in the event of a market crash or an economic downturn. Check out this book and start implementing the strategies today.
