The MoneySense Guide to Retiring Wealthy

A few weeks ago, I had the privilege of working on the MoneySense Guide to Retiring Wealthy, which has just been published. The guide is now available at retailers such as Chapters, Indigo, Shopper’s Drug Mart, Walmart and Loblaws, or online for $9.95 plus $3 shipping.

This 132-page book — co-edited by MoneySense editor Duncan Hood, long-time contributor David Aston, and me — collects the best retirement and financial planning articles from the pages of MoneySense and organizes them by decade of life. We start with young investors in their 20s, who are just learning to form good financial habits, and we go all the way to managing retirement in your 70s. Everything has been fully updated to include the latest statistics and most current information about government programs and regulations.

As Duncan Hood explains in the introduction:

Unlike dull retirement books stuffed with dense calculations, or chatty volumes bubbling with lightweight tips, MoneySense’s complete retirement guide has just what you’re looking for: proven retirement advice delivered in a straightforward manner—all of it backed up by the editors of Canada’s most-read personal finance magazine.

We’ll tell you how to put together a realistic financial plan, and how to stick to it. We have sections on how to retire early, how to stress-test your retirement plan, and why you don’t need to save a million dollars after all. Every chapter is packed with useful information, but you can always skip straight to the decade you are in to make sure you’re on track. At the end we even include a self-test so you can find out how you’re doing so far.

I’m giving away three copies of the MoneySense Guide to Retiring Wealthy to Canadian Couch Potato readers. To enter the draw, leave a comment below with your most pressing question about retirement. Are you worried you haven’t saved enough? Concerned that your workplace pension may not deliver what it promised? Or is your only concern that you’ll run out of great places to play golf? Let us know what’s on your mind.

Tweet this post to your followers and receive three entries in the draw.

Contest closes at midnight on Tuesday, October 26. I’ll announce the winners on Wednesday.

While we’re on the subject of giveaways, congratulations to Yang S. and Paul E., both of whom won a pair of tickets to see Richard Branson and Peter Aceto at Toronto’s Westin Harbour Castle on Wednesday. The skill-testing question asked for the names of the index funds offered by ING Direct Canada and Virgin Money UK. Everyone got the first one (ING Direct’s Streetwise Funds), but the Virgin product was a little trickier. The correct answer is the FTSE All-Share Tracker Fund, which holds more than 600 stocks trading on the London Stock Exchange. Thanks to ING Direct for supplying the tickets.

82 Responses to The MoneySense Guide to Retiring Wealthy

  1. Simon October 25, 2010 at 9:45 am #

    My most pressing concern: an unexpected event which derails my plan and forces me to dip into my savings much earlier than expected. Ex. Long-term disability.

  2. Cat October 25, 2010 at 9:46 am #

    I work in government and hope to do so for much of my career. I understand that government pensions are pretty decent but I still don’t completely trust that when I retire in 30 years or so it will be enough. Because of this I am putting small amounts into a registered account as well as investing in dividend paying stocks in an unregistered account. Overkill?

  3. Marc-O October 25, 2010 at 9:51 am #

    I’m interested in a copy of the book! I haven’t done the math, but I’m a little worried I’m not putting enough money aside for retirement. I’m in a low bracket right now, so the RRSP doesn’t sound optimal right now, but probably will in the future.. although this means I’m missing out on the magic of compounding. In the meantime my goal is to invest in dividend/income producing assets in a registered account and build them up to something I can live off.. once that’s achieved, I’m ready for retirement!

  4. SimonB October 25, 2010 at 10:08 am #

    I too work for government and will one day bring in a pension of about 2/3rds of my top 5 years of salary.

    Given the pension, how much more should I be investing? I always come back to the Wealthy Barber – 10% saved, max out RRSPs. Does this make sense given the pension? Is it enough?

  5. DM October 25, 2010 at 10:10 am #

    Thanks Dan! My most pressing question is whether inflation for retirees could be significantly higher than general inflation in the economy. In other words, perhaps the goods and services I will need in retirement (e.g. drugs) will be at the high end of the CPI basket. I’m also worried that I might outlive my savings. How old should one assume that one will live?

  6. SophieW October 25, 2010 at 11:05 am #

    Hi Dan, my concern is tax implications of the different investment vehicles. Thanks to my DB pension I don’t have much room left in my RRSP, so what type of investments should I put there, which ones into my TFSA and then what should I put into non-registered accounts?

  7. ldk October 25, 2010 at 11:06 am #

    My husband and I have both been self-employed since we were 24 (now 40) which means zero pension dollars to rely on…we have a fair amount of money put away for retirement (enough? who knows) but wonder about achieving the right asset allocation.

  8. larry macdonald October 25, 2010 at 11:20 am #

    With my retirement linked to government rules and regulations embedded in RRSPs, OAS, CPP, TFSA, registered pensions, etc., will my living standard in retirement be adversely affected by changes wrought by politicans (e.g. hikes in retirement age as in France currently) or simply because of an inability to interpret and navigate the vast complexity of rules and regulations

  9. Paul October 25, 2010 at 11:20 am #

    I’m worried I’m worrying too much about retirement, and putting too much energy (and savings) into preparing it rather than enjoying life…. I work in government and have a pretty solid pension plan, so my personal planning should just be a “bonus”….

  10. Mark October 25, 2010 at 11:25 am #

    Two questions, first question is more related to investing more so than retirement:

    1) How to tax-optimized your tax-sheltered account, I read your article on how to do it but I am wondering if holding cash in a TFSA is the best method? I always thought TFSA was best used for assets that have the highest growth potential since all gains in that account are tax-free. I understand the implication of withholding tax on dividends in any other account aside from RRSP but wouldn’t emerging markets, small caps equities be best kept in a TFSA since all the gains would be tax free (I am not sure on the historical dividends of these asset class)? And holding cash in a TFSA seems like a waste since you gain very little interest anyways (1-2%, being taxed on that amount won’t amount to much).

    2) My goal is to retire at 50-55 years old with about 50k (in today’s dollars) income annually, I worked out the numbers and it seems like I would need about a million and a half dollars (in today’s dollars) to achieve this, is that about the right amount?

  11. Aaron October 25, 2010 at 11:34 am #

    Here’s my question:

    The company I work for offers a matching 4% towards my RRSP. The mutual funds that are available for purchase are all a rip off with MERs in the range 1.5% – 3%. How can I optimize this situation? I’m sure I’m not alone. What are other people doing to reduce MERs? Unfortunately, the HR manager at work doesn’t even really know what a mutual fund is….

  12. Dejan October 25, 2010 at 11:42 am #

    Dan, my concern is somewhat different from some people here – I worry that I am putting too much emphasis on the retirement and am missing out on my ‘best years’ while I am still relatively young and capable of appreciating finer things in life. I am putting aside 10% of my income for RRSP, and rolling tax returns into RESP for my kids. I feel responsible but I also resent I cannot afford to entertain, go to vacations, and otherwise live ‘like there is no tomorrow’ :-).

  13. Canadian Couch Potato October 25, 2010 at 11:43 am #

    @Aaron: I don’t think you want to throw away a guaranteed 4% return. This additional money is likely to outweigh the higher MERs of the funds, at least until your investment grows quite large. My suggestion would be to select the mutual fund with the lowest fee (maybe a bond fund?) and contribute just enough to get the maximum allowable match. Any additional RRSP contributions can go in your self-directed account and be invested in index funds.

    Remember, the 4% return is only on each year’s contribution, and is not compounded, while the MER is charged on the entire amount invested and is compounded. You may want to get out the spreadsheet and do the calculations.

  14. Kevin October 25, 2010 at 11:46 am #

    I recently retired from a steel plant at age 51 just to get out of a toxic workplace. I receive a monthly pension of $2328. I have an rrsp worth $125ooo. in laddered gics and an unregistered account of etfs worth about 100,000. The pension was indexed but the company is in the process of trying to claw that back. I am looking for another job but was wondering about the tax implications when I eventually begin to withdraw money from a rrif sometime in my seventies.

  15. Jason October 25, 2010 at 12:05 pm #

    My most pressing concern at this time is retiring with enough money. As a contractor who runs our money through a family trust, way pay very little, if any to CPP which leaves it almost all up to me. It doesn’t keep me up at night, but I do think its time to see a fee only advisor to put in place a long term plan.

  16. KC October 25, 2010 at 12:53 pm #

    I’m 26 and index investing mainly in stock-based indexes for maximizing growth over the long run. When is the right time to start moving to a fixed income portfolio and how can you minimize the risk of converting the portfolio style when markets may be down?

  17. Patrick Jones October 25, 2010 at 1:21 pm #

    I’m 54 and I’ve got a portfolio of mutual funds – not index funds – currently valued at just under $200K. I’ll have a 30-year pension from work at age 60, and that will cover 60% of my pre-retirement income. (Gross income for 2009 was just over $45K.)
    I had hoped to retire at 60, but now I’m concerned that if I do, I’ll outlive the income derived from my current investment strategy. If I convert my mutual funds into the Couch Potato index funds/ETFs, will I be able to retire with a minimum of 70% of pre-retirement income, or will I have to work till 65?
    Thanks for the excellent blog!

  18. Rich October 25, 2010 at 1:22 pm #

    Thanks for the contest!

    My question: How can I “future proof” my retirement plans? As the population gets older I can’t see how the government isn’t going to have to increase taxes to compensate. It worries me that the assumptions used (i.e. taxation rates) to plan will not be applicable when I want to retire! What can I do NOW to reduce the ability of government to keep more of the money I work so hard to put away for the future?

  19. Canadian Couch Potato October 25, 2010 at 1:32 pm #

    @Patrick Jones: The Couch Potato strategy can lower your investing costs, but it can’t guarantee any specific level of income.

    Are you including CPP, Old Age Security and the Guaranteed Income Supplement in your calculations? If you’ve worked all your life, you should be eligible to receive well over $10,000 annually from these benefits.

  20. David October 25, 2010 at 1:48 pm #

    My question is: how do you get your spouse on-board to build the retirement fund together, who by the way, has no interest in family finance and makes senseless purchases from time to time.

  21. Jack October 25, 2010 at 2:10 pm #

    Been working on your input about the Uber-Tuber portfolio. I am still playing around with the minimum amount to invest into the portfolio (I do not want to “go all in” after the last debacle). Besides still need the emergency fund, basic savings and some USD traveling money. My current problem is convincing myself, at my age, to get the heart to where the head is at.

    Can one build the Uber-Tuber portfolio with your stated minimum of 100k, do it in stages and still be cost effective?

    Thanks,
    Jack

  22. Raj October 25, 2010 at 2:11 pm #

    Thanks for the blog posts & the opportunity to get this book.

    My question: I have a Defined Benefit plan from work (not indexed for inflation). Do I account for this in my RRSP asset allocation? If so, do I treat it as equity or fixed income? Thanks.

  23. Lyne October 25, 2010 at 2:51 pm #

    Thanks for the opportunity!
    Right now, my most pressing question/worry is related to the impact my health is having on my retirement plans… I’m 41 years old, started working for a federal agency 8 years ago, which all sounds great, but I’m having some health issues that are causing some serious wrinkles in the plan. I’ve been off work for 8 weeks now, on EI, because our insurance plan doesn’t kick in until 13 weeks off work, and my sick leave are gone (actually, I owe some days) and I’m dipping in my savings. I’m hoping to go back to work soon, but what I have can come back again, and again…

  24. g sharma October 25, 2010 at 3:39 pm #

    my main concern is not maintaining the correct portfolio because of the fear of a substantial loss. given the market outcomes in the past decade, how should a conservative investor bring himself to bear the risk? i understand that over the long-term the risk-reward balance is reasonable still i am almost all cash at the moment.

  25. Flagen October 25, 2010 at 3:56 pm #

    Thanks also for the opportunity.
    I could always learn more to minimize the risks of a long life and one of the worries I have is long-term disability. Is it worth buying insurance for? What should I be looking for in a policy?

  26. Trevor Newton October 25, 2010 at 4:27 pm #

    My concern is that I do not really want to retire, as I feel I can provide well into my 70’s or 80’s as a health care provider or educator, as long as I remain healthy. I think it is important that we keep the elderly working so we can tap their immense knowledge base that will be invaluable to the generations coming up. My concern is how to balance it all, saving, spending and making income all at once plus enabling for long term security and cover adequate health care costs, as I am presuming the government may not be able to afford it
    thanks
    Trevor

  27. chantl01 October 25, 2010 at 4:37 pm #

    Given the trend being set by other governments around the world (UK and France for example) do you foresee the Canadian federal government raising the retirement age, the age at which federal government pensions (CPP and OAS) kick in?

  28. George October 25, 2010 at 5:05 pm #

    My biggest concern is finding a way to retire early even though I have a great pension. I’d like to transition to part-time work by my 40s, but the earliest I can collect a (reduced) pension is age 50.

    Thanks for the giveaway!

  29. Chris October 25, 2010 at 5:12 pm #

    Thanks for the giveaway!

    My biggest concern is in reducing the costs of employer-sponsored retirement accounts where it isn’t always possible to use the coach potato approach…

  30. Tara C October 25, 2010 at 6:02 pm #

    My biggest concern is asset allocation – not sure how much to put where to ensure that I reach my goals by the end of the road, not to mention tax implications on where to put what type of investment.

  31. Financial Cents October 25, 2010 at 6:25 pm #

    My biggest concern is this – how can I “play it safe” and still take a few risks to reach our financial goals?

    Thanks for the opportunity Dan.

    Mark

  32. James October 25, 2010 at 7:09 pm #

    I’m self-employed, and I always have to wonder if we’ll ever save enough for retirement.
    Considering cashflow is not always steady (it’s very bursty for our line of work), regular saving tends to be hard.

    We have been diligent for our kids RESP, but not so for our RRSP.

  33. Marco October 25, 2010 at 9:38 pm #

    I came across this site a few weeks ago, at which point I decided to educate myself on index funds and ETFs. I have decided to move all my mutual funds & GIC investments to a self-directed account structured similar to the Uber-Tuber portfolio. My question is: None of your portfolios use GICs, is there a specific reason for that, other than current low interest rates?

  34. baa October 25, 2010 at 10:11 pm #

    I would love to win the book.

    To achieve my goal of creating enough secure income for a fancy retirement appt. eventually, I am concerned about limiting/maximizing investment risks especially after the last two years (cpp, old age, and my efforts for pension), considering where inflation is going, and whether there’s a nice enough retirement place out there worth the expense.

  35. Alex October 25, 2010 at 10:29 pm #

    Being younger I want to plan ahead and get started in the right direction, but I am not sure what the best vehicle is (RRSP, TFSA, unregistered) to optimize my Potato Portfolio? I am just currently using a TFSA savings account, but would like to improve my returns.
    I’m in my late 20s so I know the sooner I get to it the better, but I don’t want to setup the wrong type of account.

  36. telefantastik October 25, 2010 at 11:39 pm #

    My concern is outliving savings and having the right financial plan to make sure they don’t run out too early.

  37. Kris October 25, 2010 at 11:48 pm #

    My concern isn’t money (although maybe it should be). I’ve invested my time in a great education, have a wonderful job with good benefits and a defined benefits pension, etc.

    A few years ago, one of our HR people told me he regretted that employees spend so much time focused on learning about and saving for retirement. His theory is that we should spend our time in our 30s, 40s and early 50s developing consuming passions and interests that will sustain us in the “after-work” part of our lives.

    I think he might be right – unfortunately, my career is demanding and the long hours leave little time for pursuing and developing those other interests. So my biggest concern about retirement is finding time now to pursue some of my NOT WORK interests.

  38. Corey October 25, 2010 at 11:52 pm #

    My concern is what to do with my ETFs once they have gone through 25 years of stupendous growth! How do I take a couch potato approach to securing a good source of income with minimal overhead?

  39. DAve@50plusfinance October 26, 2010 at 12:20 am #

    My question is how can a person new to investing get started with $1000 in the couch potato way?

    Thanks for this giveaway.

  40. Elizabeth October 26, 2010 at 7:57 am #

    What is a ideal rate of inflation that you would use to discount dollars for the next 10 years when calculating erosion on your portfolio.

  41. TJ October 26, 2010 at 8:34 am #

    Here are my concerns (some of which may have already been mentioned):
    Experiencing a debilitating health issue which could possibly derail an otherwise lovely retirement.
    I just can’t figure out exactly how to go about setting up a Couch Potato-type (RRSP) index fund-the specific steps involved to say transferring registered funds from one (or more) fund companies to say TD e-series index funds.
    And then what happens say at age 71? What’s the procedure then?

  42. brad October 26, 2010 at 8:43 am #

    My most pressing concern is whether I’ll be able to save enough over the next 15 years (I’m 51) to actually be able to retire; I didn’t start saving seriously for retirement until my early 40s and I’m way behind where I should be at this point.

  43. John October 26, 2010 at 9:05 am #

    It’s hard to find books that advise retirees how to manage investments. I’m curious to read your advice,

  44. Guleed October 26, 2010 at 9:20 am #

    I worry about what will happen to my retirement savings in terms of world economies. With western countries carrying huge debts and developing nations facing climate changes will there be a huge crash? Will i see 3 decades of savings evaporate?

  45. Trevor October 26, 2010 at 9:38 am #

    I’m just getting started, and already in my 40’s, so my concern is that I won’t have enough saved to live on in case of disablility. Don’t plan on retiring too early- rather work at something I enjoy. Thanks.

  46. hysljo October 26, 2010 at 9:56 am #

    My greatest puzzle with respect to retirement is understanding the impact of inflation on the long term if I choose to take early retirement (eg. mid 50’s). I am self employed and therefore do not have a defined benefit pension plan. With these factors in mind, I really need to understand and employ strategies related to creating my own form of indexing.

  47. Steve October 26, 2010 at 11:09 am #

    Long time reader of MoneySense and I would love to win the book.

    My question has to do with figuring who and what to believe or better put is how to cut away the clutter of all the various financial advice out there. I read a ton of PF blogs and I’m always wondering if the advice is any good.

  48. Rick October 26, 2010 at 11:33 am #

    I don’t believe that the CPP will disappear but as you said on Tom Young’s radio show, you do not think that we need as much money to retire as the Banks and other Financial Institutions forecast. Wouldn’t the retiree’s lifestyle dictate how much someone would need to retire comfortably and afford to continue living and doing what they were doing before retirement? Your book should be an interesting read.

  49. PTDBD October 26, 2010 at 11:50 am #

    I’m worried that so many are employed by the government, as demonstrated by many of your posters. That means I pay their salary. If they could see my income they would be even more worried.

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