CPP Rules

New CPP Rules

Here’s a reminder about some good news about Canada Pension Plan benefits. As of January 1, 2012, you no longer have to stop working to draw CPP. You can simultaneously receive and accrue CPP benefits between the ages of 60 and 70, which means you have increased potential to improve your retirement finances.

The old rules stipulated that you had to stop working in order to collect early CPP benefits. As of January 1 of 2012, that condition no longer applies.

Financial Security in Retirement

Term Deposit and Savings Account rates have dropped to 50 year historic lows.  The Federal government is talking about adjustments to various pension programs.  How do you ensure that you have a financially secure retirement with all of this uncertainty?

Establish your financial foundation - Many people have an idea of when they would like to retire but have little idea how much money they have already saved up.  Between work pension plans, mutual funds, term deposits, RRSPs and TFSAs, people can have money spread out among many investment options.  Before you decide when to retire you should know how much you have available to you today as a starting point.

Determine how much you need in retirement - Some people plan to do a lot of travelling in retirement and others plan to stay close to home and family.  Some will still have debt going into retirement and others will have been out of debt for years.  Your retirement can sustain any of these choices if you have planned and prepared for it.   To begin planning start by figuring out how much you will really need to live on during retirement.  Take into account that your health costs may increase over the years. Once you know how much you will need to live on each month you can work those numbers back to determine how much you will need to have saved upon retiring.  A financial planner can help your numbers be realistic and they can help determine any potential OAS and CPP cash flow into your monthly budget.

Good $ Information

There are many good financial advice articles floating around the web.  Here are articles from the past few weeks that I think may be worth your time:

Why women need to save more than men for retirement at Globeandmail.com - Longer life spans, health issues, less income and savings, and lower benefits are some of the hurdles.

Generation Spend at Macleans.ca - Today's youth are looking at outspending Baby Boomers

Is retirement chained to your home? at Financialpost.com - Canadians plan to take longer to pay off their mortgages, maybe even 35 years, but they don't expect it to affect their retirement plans.

Young, broke? You, too, can be a millionaire at Financialpost.com - Young people should start a tax-free savings account as soon as possible

Wealth Building Tips for New College/University Graduates at Milliondollarjourney.com

Enjoy.  If you know of some others, please let me know.  Jerry

Learning From Someone's Money Mistakes

I had someone tell me a bit of a depressing story about a month ago.  I'm sharing it here because I beelive we can all probably learn something from it.

This person's son and daughter-in-law were eager to buy a home in the middle of the job/housing boom.  They were told repeatedly by family members that owning a house would be better than renting, even though the couple really didn't have a down payment.  They took about a year of scraping together a 5% down payment plus the CHMC insurance fee and went off to see someone about a loan.