I’m on record saying that every Canadian retiree and soon-to-be retiree should read Retirement Income For Life by Fred Vettese. It offers five clear strategies for making the most of your accumulated savings and turning it into predictable, sustainable retirement income.

In the book, Mr. Vettese refers to an online calculator to help Canadians take the concepts outlined in the book and put some personalized context to them. The calculator has been totally revamped and is now in the beta-testing phase. I offered to share the link so our readers could test it out and offer any feedback on the enhancements.

“The biggest change is that it now contemplates someone doing the calculation up to 10 years before actual retirement so it shows their income from all sources (including employment) both before and after retirement and moreover recognizes the deductions for employment expenses, RRSP and pension contributions etc. in the pre-retirement period.” – Fred Vettese.

Some of the other improvements:

• It shows the impact of adopting the three main enhancements. It does this by showing both Before and After scenarios.
• It can now be used by people who are as many as 10 years away from retirement, and hence who still have earnings and are making contributions to RRSPs and pension plans, not just those retiring immediately.
• Existing debt (like an outstanding mortgage) is recognized.
• It now recognizes that an investment property (e.g. a condo one is renting out) may be an investment, not just stocks and bonds.
• It allows for future windfalls, like an inheritance or money that becomes available from downsizing a house.
• It takes into account the possibility that income tax may be payable if one liquidates investments that are not tax-sheltered.

Here’s a link to the beta version which will be live until September 21, after which they will make adjustments based on your feedback.

• • Calculation tool: Retirement Income for Life <—Update: The calculator has not been responsive for the vast majority of readers this weekend. I’ve given that feedback to Mr. Vettese and he says the firm will look into it on Monday.

If you use the tool and complete your calculation can you please leave your feedback here in the comments section? I can then point Mr. Vettese to the collective feedback in one location.

This Week’s Recap:

I managed one post this week: Save More Tomorrow – The Procrastinator’s Guide To Saving Money.

I was all over the internet this week, though. First up on Global News I shared my thoughts with Erica Alini on how quickly to pay off your student loans. The short answer is, don’t rush into an aggressive pay-down schedule and forget about the rest of your budget.

Next, Justin Bender from PWL Capital answered a question from me about when it makes sense to switch from Canadian listed ETFs to U.S.-listed ETFs to save on foreign withholding taxes, currency conversion, and MER. Justin did a great analysis of the simple way (my current VEQT portfolio) and the more complex, but cheaper solution (using U.S.-listed ETFs) and gave me a lot to think about.

Finally, in my Toronto Star Smart Money column, I wrote about the best credit cards for a student budget.

Also, remember to get your free ticket today to access the Canadian Financial Summit. This year’s conference takes place online from September 26-28, 2019. You’ll be able to watch an all-star panel of 25+ Canadian personal finance experts, including yours truly, discussing every personal finance topic under the sun.

Weekend Reading:

A very relevant post from Mark Seed in light of Justin Bender’s analysis on U.S.-listed ETFs. Mark shares how to exchange Canadian to U.S. dollars using a strategy called Norbert’s Gambit.

No question, Stephen Weyman at Credit Card Genius does the most thorough analysis on the Canadian credit card rewards and loyalty point landscape. Here he looks at which Canadian rewards program is worth the most.

Travel expert Barry Choi at Money We Have shares what first time flyers need to know.

Late starting on your RESP? Million Dollar Journey blogger Frugal Trader shows you exactly how to catch up.

Jeff Rose, the U.S. advisor and blogger behind Good Financial Cents, hilariously (and accurately) lists seven advisors he’d like to punch in the face:

“I’ll share some financial advisor horror stories that other clients have shared with me, the lessons learned, and let’s just see if you would want to pull a Rocky Balboa on their face, too.”

Dale Roberts stirred up a hornet’s nest with this hypothetical question: Will the CRA eventually tax your Tax Free Savings Account? I hope not.

Speaking of stirring things up, Ben Felix took another run at dividend investors with his latest video explaining the irrelevance of dividends:

In summary, Ben says, “Even in a stock-picking environment, there is no reason to believe that dividends, or the growth of dividends, would be an indication of a good stock to own.”

Financial Consultant Aaron Hector has done some excellent work analyzing CPP and OAS. His latest looks at OAS clawback secrets for those with a high net worth.

How to tell if someone is a financial expert? Nick Magguilli offers the Financial Turing Test.

Relevant for me after my recent rental car fiasco: Will my credit card cover me if I crash a rental car?

Knowing the future wouldn’t help you pick the right mortgage. Why? Rob McLister shares the power of short terms.

Finally, Rob Carrick nails it when he says this country needs to help renters more than it needs another program to help home buyers.

Have a great weekend, everyone!

I should’ve written this article on Sunday. Instead, my lizard brain decided to spend four hours watching football (and being disappointed by the Browns, yet again). Humans are natural procrastinators. We want to feel as good as possible all the time. That’s why we spend now and save later, eat now and diet later, binge-watch Netflix now and work-out later. It’s a vicious cycle.

The right dose of discipline and effort can help curb your procrastinating nature for a while, but our lizard brain is powerful and makes us fall back into bad habits. Savings plans get derailed, diets get cheated on, and, well, you never did go to the gym.

So what’s the solution? You can design a clever trap to fool your procrastinating lizard brain. Or better yet, use one that’s designed for you. It’s called automation, and it goes beyond simply paying yourself first.

Save More Tomorrow

One of the best ways to get employees to save for retirement is to automatically enroll them into the group savings plan instead of leaving it up to individuals to opt-in. Automatic savings plans are the most effective way to build up a nest egg. If you have to actively think about saving, odds are you won’t do it.

Putting away even a small amount every month is a great first step, but perhaps there’s more you can do to ensure a bright financial future.

Back in the mid-1990s, behavioural economists Shlomo Benartzi and Richard Thaler devised a program called Save More Tomorrow that used nudges to help people make better long-term financial decisions. The program invites employees to gradually increase their savings rate over time.

Save More Tomorrow turns our natural tendency to procrastinate into a positive outcome. While most people would cringe at the idea of saving an extra $100 today, they’re more likely to agree to save that much in January, when their raise kicks-in. The Save More Tomorrow program asks the question and then automatically commits you to that increased amount in the new year. You don’t have to think about it again.

By all accounts it has been wildly successful – boosting the savings rates of as many as 15 million Americans.

“The average saving rates for (Save More Tomorrow) program participants increased from 3.5 percent to 13.6 percent over the course of 40 months.”

Benartzi isn’t satisfied, though. He thinks digital tools such as apps, websites, emails, and text messages can help people save even more money. But it’s not enough to just use these nudges inside of workplace sponsored programs. The new “gig economy” consists of freelancers, part-time workers, independent contractors, and the self-employed. It’s estimated that more than 40 percent of workers are no longer salaried employees.

These people will be solely responsible for their own retirement and financial well-being, and Benartzi says if we don’t provide them with easy digital tools for savings, we could be looking at a generation of workers struggling to achieve financial security in retirement.

Digital Nudges

Apple Pay and Amazon’s one-click buying are examples of digital tools that have made it easier than ever to spend money. With tools like robo-savings apps, the goal is to make saving money just as easy.

One example of a digital nudge might be in the way a question is framed. When users were randomly assigned different versions of a question about how much to save, only 7 percent opted to save $150 per month, while nearly 30 percent decided to save $5 a day. The smaller, daily amount seems more achievable even though it gets you to the same result in the end.

Related: The Illusion of Wealth

Another example is to provide just in time feedback to your mobile device. Apps that track your investment performance and spending habits can have a huge impact on your behaviour. Users of a U.S.-based app called Personal Capital decreased their spending by 15.7 percent. Most of that decrease came from discretionary spending, with users spending less on categories like dining out.

Results from government surveys support this behaviour. The majority of consumers with access to their financial information on mobile phones check their balances before making large purchases, and of those who check, 50 percent decide not to buy an item because of the feedback.

Improving Financial Literacy

One major issue with teaching financial literacy in school is that students can’t apply the concepts they learn until many months or years later. One study found that, like other education, financial education decays over time; even large interventions with many hours of instruction have negligible effects on behaviour 20 months or more from the time of intervention.

Benartzi says the just-in-time financial information provided by a good app can solve this timing issue, providing people with crucial information when they need it the most.

Final Thoughts

I think about my finances more than the average person but that doesn’t mean I’m not susceptible to nudges. Just the other day I was checking my mortgage balance online when I saw a note that read, “increase your payment by $50 and you will save $2,469 in interest and pay off your mortgage 10 months sooner,” followed by a link to take action. So I did it. The new payment starts next month.

I’m confident that future me will be able to handle the higher payments next year and my discretionary budget will naturally adjust to its new reality.

In fact, whenever I set up my budget for the new year I look for other opportunities to save more tomorrow through the power of automation.

For the past two years, hundreds of you signed up to watch me and dozens of personal finance and investing experts speak at the Canadian Financial Summit. Well, we’re back again with a fresh new line-up of information designed to make you better savers, investors, and take control of your financial future.

Get your free ticket today to access this virtual financial summit, which takes place online from September 26-28, 2019. You’ll be able to watch an all-star panel of 25+ Canadian personal finance experts, including yours truly, offering sessions that include:

• Better, smarter, easier ways to invest
• What a safe withdrawal strategy looks like for retirement at any age
• Getting the most out of TFSAs, RRSPs, and RESPs
• How to prepare both your portfolio and lifestyle in the years before you retire
• How to check your “retirement readiness” <——- That’s mine!
• F.I.R.E. (Financial Independence/Retire Early
• Minimize costs, maximize bang for your renovation bucks
• Real estate investing made easy
• How to legally avoid Canadian taxation when you move for work or retirement
• How to use Financial Technology (FinTech) to save major cash
• How to most efficiently draw down your nest egg in retirement
• How to earn more money by creatively advertising innovative side gigs
• Avoiding crippling fees and terrible advice
• How to strategically pick the perfect wardrobe without breaking the bank
• Benefit from automatic insurance packages on your credit card
• Much, much more!

Sign up for free tickets to the 2019 Canadian Financial Summit right here and you’ll also be eligible for the early bird discount for lifetime access to every single session for just $87. The All Access Pass also includes exclusive access to seven expert sessions, plus other extras such as e-books, guides, and apps, that’ll make you a better saver and investor.

Why get an All Access Pass?

• “Those bonus videos alone are worth the price of a ticket.”
• “The eBooks and other free resources – combined with the any-time & anywhere convenience – was just too much to pass up. I’ll save hundreds of dollars with the bonus tax workbook alone!”
• “I just wanted to go back and re-watch certain talks again in more detail to make sure I didn’t miss anything.”

My session will be on September 27th and in it I explore everything you need to think about as you prepare for retirement. From putting together the puzzle of your retirement income sources, planning how you’re going to spend your time, and most critically, how much you plan to spend in retirement.

Just head on over to the Canadian Financial Summit, sign up for free, and be automatically entered to win one of the free Premium All Access Passes they will giving away when the event goes LIVE on September 25th.

This Week’s Recap:

Wow, this one was incredibly popular with readers: Using a robo-advisor in retirement – A Wealthsimple Case Study

Over on Rewards Cards Canada, here’s a look at the best Aeroplan credit cards in Canada.

In other news, I’ll be hosting an AMA (ask me anything) on Reddit (r/PersonalFinanceCanada) on Thursday September 26th. Stop by and ask a question or just hang out and read the thread as it unfolds in real time. I’ll also post the re-cap here afterwards.

In financial planning news, I’ve finished up the MoneyGaps free trial and hope to launch a discounted ‘light-advice’ service in the next few weeks. How does a $199 retirement readiness check-up and financial report card sound?

I think there’s a lot of potential with this service for those who aren’t ready for a full and comprehensive financial plan. Let me know what you think in the comments.

Weekend Reading:

Stephen Weyman of Credit Card Genius lists the best credit card offers, sign-up bonuses, and deals for September. Some great offers included this month!

She ditched Canada at 56 for Belize, where a couple can get ‘everything you can imagine’ for under $50,000 per year.

An older post from sketch guy Carl Richards, but still relevant and thought provoking today – Everything you need to know about personal finance from 11 simple sketches.

Ben Carlson is tired of people like Michael Burry knocking index funds so he wrote a piece debunking the silly ‘passive investing is a bubble’ myth.

Another take on the idea of a passive investing bubble, this one from John Stepek, editor of MoneyWeek:

“A bubble implies that there’s a mania for getting rich here. Instead, this just looks to me like an old-fashioned competitive price war. Investing is getting cheaper, and the folk who charge more don’t like it.”

Speaking of bubbles, though, how much will a year of university or college cost? Rob Carrick has put together a handy student calculator.

Dr. Daniel Crosby says the formula for happiness is simple: Wanting what you have.

Downtown Josh Brown and Michael Batnick play their favourite game – What are your thoughts? – on negative interest rates, IPO flops, market sentiment, and much more:

The Money Geek Graeme Hughes shares his thoughts on what’s wrong with Canada’s investment industry.

Michael James rips apart the argument that the government should eliminate mandatory minimum RRIF withdrawals.

Gen Y Money tackles multi level marketing from the angle of the anti-MLM friend (her). Interestingly, 83% of MLM sellers are women and a lot of MLM direct sellers start when they enter motherhood. They see it as a social outlet and a chance to contribute to their household finances.

Finally, selling a house in the United States (and I’d say in Canada as well) is extremely expensive. The Economist looks at why America’s real estate brokers are such a rip-off (note: you might need to register to read the full article).

Have a great weekend, everyone! And, remember to grab your free ticket to the Canadian Financial Summit here.