How much do you know about financial independence?

So how is everyone planning around the shitshow that's unfolding in Europe?

Talk of a very severe recession caused by massive escalation of fuel and food prices killing consumer demands...

Anyone care to forecast how that could impact Canada?

Posted by: SixZeroSixOne

So how is everyone planning around the shitshow that's unfolding in Europe?

Talk of a very severe recession caused by massive escalation of fuel and food prices killing consumer demands...

Anyone care to forecast how that could impact Canada?

and rising interest rates, you forgot rising interest rates.

Don't forget about Inflation too!!

https://www.mrmoneymustache.com/2022/01/11/inflation-should-we-be-worried/

Posted by: SixZeroSixOne

So how is everyone planning around the shitshow that's unfolding in Europe?

In terms of how I am going to adjust my investment plan? No changes at all. My plan is designed to work when Russia invades Ukraine or whatever comes down the pipe the next 50 years. 

What I will adjust is my spending. High gas prices? I'll drive less. High food prices? I'll buy less meat. Due to COVID I had already cut my booze, eating out and travel down to near zero.

Posted by: XXX_er

i took an old CA skiing around the local hill, he bought me lunch and advised me to take the early CPP, i forget his rational was but he was quoting numbers in fractions which i thot was wierd but those old CA's can be rather eclectic, same guy discovered he was a year older than he thot was so he bought a new PU

There are benefits for taking benefits early, "on time" or late it just depends.

Taking early benefits your monthly payments are lower, but you get them for longer. If you compare taking CPP at 60 to taking it at 70 the payments at 70 will be a lot higher, but it will take quite a few years before you get enough "extra" money to make up for the delay in taking the benefits. If you end up retiring and realize you don't have enough income to live off of maybe taking benefits early is a necessity? Maybe you realize all the adults in your family died fairly young so taking benefits late seems like it will not pay off for you?

Taking benefits late you get more money each month and it's almost guaranteed to not fail so it's like a DBP or an annuity. If you are like me and don't have any stable income in retirement [mostly stocks] that can be very attractive. Perhaps the adults in your family live a very long time and you are a bit worried you might run out of money at the end? Waiting to take benefits late is a nice way to ensure you'll have at least a base of reliable income in extreme old age.

If you are not sure and can't decide you can take benefits "on time" and split the difference.

Posted by: Vikb

Posted by: SixZeroSixOne

So how is everyone planning around the shitshow that's unfolding in Europe?

In terms of how I am going to adjust my investment plan? No changes at all. My plan is designed to work when Russia invades Ukraine or whatever comes down the pipe the next 50 years. 

What I will adjust is my spending. High gas prices? I'll drive less. High food prices? I'll buy less meat. Due to COVID I had already cut my booze, eating out and travel down to near zero.

The nice thing about being used to living well within your means and consistently saving and investing is that it makes you more resilient against economic adversity. You build up bandwidth to either adjust your lifestyle to reduce your spending or, if necessary, increase your spending to maintain a minimum quality of life.

Posted by: Vikb

Posted by: XXX_er

i took an old CA skiing around the local hill, he bought me lunch and advised me to take the early CPP, i forget his rational was but he was quoting numbers in fractions which i thot was wierd but those old CA's can be rather eclectic, same guy discovered he was a year older than he thot was so he bought a new PU

There are benefits for taking benefits early, "on time" or late it just depends.

Taking early benefits you monthly payments are lower, but you get them for longer. If you compare taking CPP at 60 to taking it at 70 the payments at 70 will be a lot higher, but it will take quite a few years before you get enough "extra" money to make up for the delay in taking the benefits. If you end up retiring and realize you don't have enough income to live off of maybe taking benefits early is a necessity? Maybe you realize all the adults in your family died fairly young so taking benefits late seems like it will not pay off for you?

Taking benefits late you get more money each month and it's almost guaranteed to not fail so it's like a DBP or an annuity. If you are like me and don't have any stable income in retirement [mostly stocks] that can be very attractive. Perhaps the adults in your family live a very long time and you are a bit worried you might run out of money at the end? Waiting to take benefits late is a nice way to ensure you'll have at least a base of reliable income in extreme old age.

If you are not sure and can't decide you can take benefits "on time" and split the difference.

I think the general advice I read in printed articals is to get it early while you can, the difference between taking early CPP at 60 vs 65 is a 30% reduction in monthly payout so you get less $$$$ faster and break even in the total payed out is I think age 73, not sure what the % is for waiting to age 70 but you gotta last till till then

I got a defined benifit pension, those things are great, I'm not worried about running out of $

Posted by: XXX_er

i took an old CA skiing around the local hill, he bought me lunch and advised me to  take the early CPP, i forget his rational was but he was  quoting numbers in  fractions which i thot was wierd but those old CA's  can be rather eclectic, same guy discovered  he was a year older than he thot was so he bought a new PU

Well, your CA is dead wrong.

could be but you don't know the questions he asked

in any case most articals I have seen say take the money and run

Don’t take retirement advice from someone with a DBPP unless your question is how to get a DBPP.

Posted by: XXX_er

could be but you don't know the questions he asked

in any case most articals I have seen say take the money and run

Follow the money. Most of those articles are written by financial advisors who are paid proportional to the assets they hold for investment. So if they advise you to take your OAS/CPP later and draw down your personal pension assets earlier, they will lose income. That's why finding a good fee for service advisor who doesn't sell you investments is the best option.

There are only a few reasons to start taking CPP/OAS before age 70. Once you start taking CPP, you lock in your monthly payment (indexed to inflation). If you start at age 60, you will get a monthly payment that is 36% less than if you wait until age 65. If you wait until age 70, then you get 42% more as a monthly payment. So for comparison, if your contributions to CPP qualified you for a monthly payment of $1000 if you retire at 65, then ...

- if you start to collect at age 60, you would get 1000 less 36% - $640/month

- if you start to collect at age 70, you would get 1000 plus 42% - $1420/month.

Remember, you lock in your amount as soon as you start taking CPP. So get out your calculators, kiddos, let's solve the equation!

Compare collecting CPP at 60 vs CPP at 70. If you collect at 60, then you are getting 640/month for 10 years or 120 months. So you collect $76,800 by age 70 if you start collecting at age 60, but you continue to collect that lower amount for the rest of your life. However, if you wait to collect until age 70, then you'll be getting more than double the amount at $1420/month. So if we solve the equation;

640x + 76,800 = 1420x

1420x - 640x = 76,800

780x = 76,800

x = 76,800/780 = 98

So after 98 months (8.2 years, ie age 78), you will hit the breakeven point where the total cumulative amounts you collect are the same, whether you started at 60 or 70. However, after that, your gains for having started at 70 mount up very quickly. From that point forward, you are getting an income of $780/month more for having waited until 70 to collect.

Reasons for starting to collect early are very few.

1. if you have a health issue and don't expect to live to age 78

2. your family has a genetic history of lowered life span, so again you don't expect to live past 78

3. you have minimal retirement savings, so lack the means to support yourself to age 70 without the added CPP income.

FYI, anyone can go to the Government of Canada | Service Canada website and set up access to their Service Canada records. You can get a report of your CPP contributions going back to your first payment, and an estimate of your monthly CPP benefit if you start collecting at age 60/65/70. I've done it, and strongly recommend anyone who is within about 10 years of planned retirement to do the same. It's an important piece of your long term plan.

The calculations for OAS are similar, but you can't collect OAS before 65. Also, the increased amount for delaying to age 70 to collect is 36%, rather than the 42% additional that you get in the CPP program.

Average life expectancy in Canada is 82.  

I’m not sure if I give a shit about min/maxing my returns after that age.  YMMV.

But if the factors that bring the average down don't apply in your personal circumstances, then you need to consider that you could live much longer.

Infant mortality and childhood diseases bring the average down, behaviours associated with being an 'immortal' teenager, etc etc. I've survived those, plus never smoked, been addicted to a substance (okay, caffeine ...), maintain an active and fit lifestyle, and 3 of 4 grandparents lived into mid and late 80s.

So I've prepared my financial plans all the way out to age 95.