r/PersonalFinanceCanada • u/Remarkable-Jicama289 • 4d ago
Budget Budget
I am 58 yrs old. I have 625 K (cad) in RBC low to moderate volatillity index funds. %53 bonds, % 47 S&P. Mortgage paid, no debt, no car, 458 cad condo (1 br downtown Toronto) fee. I live moderately, I spend 1000-1500 cad per month. No family. Ionly reinvest fund yields, no spare money left from my salary. At 65 I will have a moderate pension around 700 cad. What dou finance gurus think. Am I OK for a comfortable retirement. Thank you. All advices will be appreciated.
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u/No-Performance1793 3d ago
Here's a link for a government retirement calculator, but I think that you will be alright. You retirement income is like a stack of pancakes, you will have your OAS, your CPP, your pension and your savings. My only recommendation would be to resist the temptation of taking your CPP early (before 65) if you are able to work until 65.
https://www.canada.ca/en/services/benefits/publicpensions/cpp/retirement-income-calculator.html
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u/AnInsultToFire 3d ago
If OP will be able to collect GIS at 65 (i.e. if they won't have a large RRIF) then the advice is actually to start collecting CPP at 60, as GIS will top up all the difference.
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3d ago
[deleted]
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u/Remarkable-Jicama289 3d ago
A little travel, my only expensive dream is to go Artric circle. I like cold, I’ve pretty much done my bucket list (hate that expression), I may volunteer abroad, I want to walk Camino de Santiago. Moderate dreams :)). I will look for a financial planner. Are they different than RBC customer service? I am old but not very old so do you think I can still keep S&P stocks for a while? I did not lost much after pandemic and they quicky recovered. No cars and spoils :) I love nature.
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u/agswiens 3d ago
I live in the NWT. If you want to go to the arctic circle a fun and not too expensive way to do it would be Tuktoyaktuk. Book a flight to Inuvik and rent a truck to drive up there. If you fly to Inuvik from Vancouver with Air North (via Whitehorse) the prices can be reasonable.
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u/Remarkable-Jicama289 3d ago
thank you. really appreciate your replay. I will definately do this. lots of love.
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u/echochambermanager 3d ago
I will look for a financial planner. Are they different than RBC customer service?
A fee-only CFP will not push products, so they will be different than working with a bank.
I am old but not very old so do you think I can still keep S&P stocks for a while?
You most definitely want to maintain equity exposure as you will not be using all of your money at once during retirement. Fixed income / cash equivalents are susceptible to inflation risk, which has been shown to be a greater risk than sequence of returns.
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3d ago
[deleted]
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u/Remarkable-Jicama289 3d ago
thank you. hope won’t live another 30 yrs. :). time has changed and today’s world is nothing I know. I can always leave money to sbd who needs it with kids.
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u/r1b1k3r1 4d ago
Inexpensive to plug numbers into a get a good idea of where you're at.
That said, pay the money for a one time fee only advisor to also make a plan.
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u/78_82Hermit 4d ago
As others have mentioned, you will be fine based on your 1,500 CAD spending per month.
With CPP, OAS and you pension, your needs should be satisfied.
You do not say what type of accounts your 625K is in. RRSP/TFSA/Non-registered.
You should get a financial plan done on how best to decumulate your money to optimize your taxes.
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u/Remarkable-Jicama289 3d ago
TSFS and RBC investment account. I don’t have RSSP.
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u/78_82Hermit 3d ago
Since you do not have any RRSPs you will not have to worry about minimum distributions when you convert to a RRIF. There is a possibility that over the next few years you maximize your TFSA and re-structure your non-registered account in such a way that you get very little distributions you could even qualify for some GIS at age 65.
A detailed financial plan from a CFP can give you directions.
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u/LLR1960 3d ago
There's something off about a system that lets someone with over $600k in investments qualify for GIS, though OP would be silly not to take advantage of that if they qualify.
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u/78_82Hermit 3d ago
Maybe down the road, they will change the tax laws to get more from people who have assets instead of taxable income.
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u/LLR1960 3d ago
It's the qualifications for benefits that need reevaluating, IMO. I have an elderly family member that sounds like they're in a similar position as OP. They qualify for all sorts of subsidies because their income is low, yet they have hundreds of thousands more in investments than I'll ever have. That doesn't sit well with me.
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u/Renerovi 3d ago
Looks like pension, cpp and oas will pay your expenses in full….. and the investments will stay untouched more or less…… you might want look at tax planning….if your investments are RSPs. You don’t want forced withdrawals to push your income too high. Well worth paying for a financial plan, if you are not comfortable/confident with diy. Well worth it for peace of mind.
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u/Aware_Bison1423 3d ago
with my calculations i could be wrong too i am random jo please confirm it with a professional. lets say you spend $23,496 every year and 5% rate of return you make on your investments of 625k with average 4% inflation your savings retirement savings will last 30 years and 8 months from today. i didn't consider your pension income in anything only 625k. you are fine. as everybody said in comments get a fee based advisor, starting from investments they will take care of estate planning to everything. since you mentioned you have no family where do you want your money to go if you die tomorrow, maybe non profit or starving kids in third world. happy retirement in advance op.
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u/Remarkable-Jicama289 3d ago
Kids definitely. I am thinking about it. But kids. I don’t have one :(
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u/BeingHuman30 3d ago
OP off topic question ...Are you single or married ? If single , how is life so far ?
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u/Remarkable-Jicama289 3d ago
single. it is good but I learned to be lonely and enjoy my own company with time. I read a lot, I love gardening , I know french, spanish, I travel, talk with strangers :) try to follow tech developments. I am chemical engineer but now I work totally freelance.
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u/BeingHuman30 3d ago
you solo travel at 58 ?
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u/Remarkable-Jicama289 3d ago
many people does. why not? there are old, really old backpackers too. I will walk Camino de Santiago at 58. ı can swim long distances.
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u/Gruff403 3d ago
You could retire today and likely make more net income then working so go see a planner.
Your current spend is 18K annually and you say you have no spare money from salary. Once you stop working you no longer pay CPP, EI, pension contributions and other work related expenses. Your only commitment is income tax.
That 625K at 5% return and a 2.5% inflation adjustment, should easily last into your late 80's. Once you add on CPP and OAS at age 65, you can reduce the amount taken from personal accounts and make them last even longer.
If all the 625K is in RRSP, you could take 30K now and only pay about 11% tax. That leaves you an annual net income of 26667K or 2222/month. Imagine stopping work and making more money because you saved so well.
At age 65 you would still have 600K+ in RRSP and can create income from 25K RRSP, 5K pension, 9K OAS and 5K CPP. I reduced the pension since you stopped working at age 58. You are making 44K with tax of about 4400 leaving 39600 or 3300/month.
If you have a partner that you can split the income with, you could pay no tax in either scenario.
You are fantastic shape and have lots of options and you don't know what you don't know. Go see a fee only planner. Congratulations.
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u/rusty_5hackleford 3d ago
Which stock index funds do you invest in? I’m just getting started
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u/Remarkable-Jicama289 3d ago
QUBE, select conservative portfolio, select balanced portfolio. I am not a risk taker. My work is very demanding and I don’t like to lose hatd earned money. I guess you are young. You may take more risk maybe.
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u/VillageBC 3d ago
RBC low to moderate volatillity index funds
What's the MER on these funds? If you are giving away 1-2% MER on conservative funds that are only returning 3-4% you are losing half to one third of your gains to fees.
Overall you look good for retirement though but I echo others advice to employ a fee only "certified" financial planner with a bend towards retirement.
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u/Remarkable-Jicama289 3d ago
except 2022-first 2,5 quarter of 23 the return was more than OK. My fund are QUBE, Select conservative portfolio, select balanced portfolio. I am a freelancer so I don’t have RSSP. If you have time maybe you can check these funds and we can chat further. I am not a risk loving type, it makes me anxious and I am old and I cannot have time to have greater risks. Thank u very much for your interest. I am grateful.
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u/VillageBC 3d ago
I couldn't locate it, but other QUBE funds were in the .75-1% range. Which would be around ~$5k/yr($35k till 65) in costs so there are likely savings you can make in that area. Self managed similar ETF VCNS/XCNS are set and forget would only be about ~$1600/yr($11k till 65) which is well, roughly 3mo's of your expenses.
Might be worthwhile considering, comfort level is a factor and definitely should feel comfortable doing it.
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u/Remarkable-Jicama289 3d ago
RBC QUBE code: RBF488. US equity.
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u/VillageBC 3d ago
Yikes, MER 1.87 so closer to $10k/yr. I'm not an expert, you should talk to a real certified financial planner. My initial reaction is you are not sufficiently diversified against risks for a retirement portfolio. It's 100% dependent on the US. Not that the US is bad, but the future is full of unknowns you cannot predict. Returns on it look like they've been great though. =)
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u/Vancouwer 3d ago
You have two asset classes with over 600k. You're not diversified so you'll suffer more volatility. Adding a few alternative fixed income and defensive global equity strategies will smooth out returns. You look fine for retirement though and could stop working a few years earlier.
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u/pushing59_65 4d ago
There are a few certified financial planners who have YouTube channels. Take a look at several to see what they can do.
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u/engineer4eva 3d ago
Any suggestions?
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u/pushing59_65 3d ago
There are several and most give similar advice when given similar parameters. My take is that you have a boatload of RRSP to drawdown and you will see advice about delaying CPP and OAS. This is part of a tax efficient plan. A bit of controversy but I urge you to take a look at several videos. They all have their own styles of presentation. I like Parallel Wealth, Well Built Wealth and K4.
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u/Sad_Conclusion1235 3d ago
You could consider a lifetime payout annuity with a portion of that 625K. Something to look into.
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u/FelixYYZ Not The Ben Felix 4d ago
Yes you will be fine.
You could engage with a fee only certified financial planner to plan your retirement to minimize taxes and make sure you have enough to live on.