We spent a few years building up a massive bank of travel points before our first trip to the U.K. in 2019. Indeed, we put nearly 1 million travel points to work booking flights and hotels for a 32-day trip to Scotland and Ireland. Then we went back to work replenishing travel points for our revenge travel year in 2020, which ended up getting postponed to 2022. We took it easy(ish) on travel in 2023, but have three trips booked this year that pretty much drained all of our points again.

I get it. Obsessing over travel points is not for everyone. My wife and I have collected rewards from more than a dozen credit cards, all in a well thought out goal to maximize our travel points, save money on flights and hotels, and upgrade our experience whenever possible.

We’ve also willingly paid – wait for it – more than $3,000 in annual fees! Crazy, right?

But I’ve done the math and figured that paying $3,000+ in fees was a good investment to earn more than 1 million travel points. I valued those points at about $20,000. How? Let me explain.

The main rewards program to drive all of this was the American Express Membership Rewards program. It’s the most lucrative in terms of number of cards available, the incredibly generous sign-up bonuses, and the ability to transfer Membership Rewards points to other programs such as Aeroplan and Marriott Bonvoy.

I typically transfer Membership Rewards to Aeroplan on a 1:1 basis. I value Aeroplan miles at 2 cents per mile. That means 1,000,000 Aeroplan miles x 2 cents per mile = $20,000 worth of travel rewards.

Marriott Bonvoy is not as lucrative – these points are only worth about 0.9 cents – so I limit the number of points I transfer to Bonvoy on an as-needed basis. Besides, we mostly rent Airbnbs when we travel as a family.

Amex Cobalt

I start with the Amex Cobalt card – the best card for everyday spending in Canada with 5x points for food & drink. Sign up and spend $750 per month on this card to get an extra 15,000 Membership Rewards points (plus the 45,000 points you’d earn if you spend $750 per month on a 5x spending category).

Then use your own referral link to refer your spouse or partner (called: activating Player 2), and have them do the same thing. This could be worth a total of 120,000 Membership Rewards points in a year, plus another 10,000 for the referral bonus.

Amex Platinum

Next, go big with a premium card like the American Express Platinum Card. This one is great for airport lounge access, plus preferred status at Marriott Hotels (automatic Gold Elite tier). Yes, it’s a steep annual fee of $799 but you get a $200 annual travel credit AND a $200 annual dining credit to offset $400 of that fee. Plus, in the first year you can earn up to 100,000 Membership Rewards points when you spend $10,000 within the first 3 months.

Amex Aeroplan Reserve

Wanna get crazy? Refer your spouse or partner to the American Express Aeroplan Reserve Card where they can earn up to 90,000 Aeroplan points (plus a sweet 30,000 point referral bonus for your partner).

This card comes with a whopping $599 annual fee but includes access to select Air Canada Maple Leaf Lounges, plus Priority Check-In, Priority Boarding, and Priority baggage handling with Air Canada. Not bad!

American Express Business Gold Card

The best sign-up bonus in Canada right now is for the American Express Business Gold Card, where you’ll get 75,000 Membership Rewards points when you spend $5,000 within the first 3 months. The annual fee is just $199, which is reasonable for a business card.

I *just* completed my $5,000 spend on this card (deposits for Airbnbs for this summer) and instantly received the 75,000 Membership Rewards welcome bonus. I transferred that to Aeroplan and it allowed us to upgrade our flights to business class to Edinburgh on October. Nice!

Again, refer your partner or spouse and do it all over again to earn another 75,000 Membership Rewards points.

Marriott Bonvoy Cards

Chalk this one up as an absolute no-brainer card to have in your wallet. The Marriott Bonvoy Card gives you 55,000 bonus (Bonvoy) points when you spend $3,000 within the first three months. Not only that, you get an annual free night certificate to stay at a category five hotel (easily worth $300+), making this a card a keeper from year-to-year. The annual fee is just $120.

We just used our free night to stay in the Calgary Marriott Airport in-terminal hotel the night prior to an early flight departure. Nothing beats walking out of the hotel lobby and right to your gate without stepping foot outside!

Again, refer your spouse or partner and do it all over again to earn another 55,000 Bonvoy points, plus 20,000 referral points, and another free night certificate.

Building your Travel Bank

By my count, that’s up to 530,000 Membership Rewards points and 130,000 Bonvoy points (plus two free nights, plus $400 in travel & dining credits) from eight cards, split between spouses so there’s only four cards each. Spread these out over the year so you can better align your regular spending with the minimum spend amounts required for each card.

This strategy is not for the faint of heart. You’d be paying more than $2,200 in annual fees for these cards. But the payoff could be worth $12,700 or more, depending on how you redeem your points. Plus, hotel status, airport lounge access, priority boarding, etc. 

The time to use this strategy is when you have multiple trips lined up for a year.

Guess what? Cancel the cards after almost a year so you don’t have to pay a second annual fee. I keep the Cobalt card as my everyday card, since it has a high earn rate, plus the Platinum Card for the hotel status and airport lounge access, and the Bonvoy Card for the free annual night certificate. The others have been rotated through over the years by either me or my wife to capture the bonuses.

Questions? Hit me up in the comments.

This Week’s Recap:

Kyle Prevost shared the details on his new DIY retirement planning course for Canadians. Worth checking out!

Also popular was the last Weekend Reading edition all about when to RRIF.

From the archives: A two-fund solution for investing in retirement.

Promo of the Week:

Author and friend of the blog Mike Drak has generously offered to send Boomer & Echo readers a free electronic copy of one of his three books, choosing from:

• Retirement Heaven or Hell
• Victory Lap Retirement (2nd Edition)
• Longevity Lifestyle by Design

If interested, please email Mike directly at michael dot drak at yahoo dot ca. He’d also love for you to write an Amazon review afterwards.

Weekend Reading:

Short and sweet this week. 

The always eloquent Morgan Housel shares a few thoughts on spending money.

Dr. Preet Banerjee asks if today’s young, diverse investors are making good choices with their money?

It’s a Ben Felix trifecta. First up, Ben explains the role of bonds in retirement portfolios, and suggests we move beyond common asset allocation advice.

Then, on YouTube, he says that popular personal financial advice suggests that portfolios should contain at least some bonds and that asset allocations should shift increasingly into bonds as investors move toward retirement, but new research suggests that this thinking is due for an update:

Finally, Ben takes a hard look at ESG investing and says it may be counterproductive:

“Hedging ESG risks and feeling good about your portfolio are valid reasons to consider the ESG characteristics of the companies that you own. When it comes to making the world a better place, I don’t have the solution, but ESG investing probably isn’t it.”

The Humble Dollar’s Jonathan Clements says our experiences – especially those during childhood and that involve family – tend to triumph, shaping our world view and potentially setting us up for costly financial mistakes.

Jason Heath shares some surprising retirement math you need to know, from how long you’ll live to deferring CPP.

Advice-only planner Anita Bruinsma compares active versus passive investing.

Finally, retirement expert Fred Vettese explains (and charts) why you should be able to save more money closer to retirement.

Have a great weekend, everyone!

“Will I be OK in Retirement?”

“How much do I save this year if I don’t want to have to eat pet food when I’m 83?”

“What do most Canadians spend each month after they retire? I don’t even know where to start with this stuff!”

In response to questions like this, most mutual fund salespeople from major Canadian financial institutions (you can usually find them in big banks and strip malls) generally respond something along the lines of:

“Look, investing is the key here. Saving more is always better. Look at this chart – now here’s another chart that shows how awesome your life would eventually be if you saved more. Finally, here’s a third – really fantastic chart – and it shows that you’ll have [fill in # of millions here] if you invest with us, because we pick by far the best investments. After all, we help thousands of Canadians across the country everyday, we’re pros at this stuff.”

Then a year later (usually right around this time of the year – aka: “RRSP Season”) a lot of folks feel they should probably check in on their plan and/or realize they still don’t really know the answers to the questions they had the year before. They make their once-per-year appointment with their “adviser” and they are treated to some “free” coffee, great small talk about their family, maybe a chat about the weather and the local sports team. Finally, investments are discussed, reassurances are made, semi-complicated vocabulary gets tossed around… and the cycle repeats itself.

All the while, 2%+ is being funneled out of the client’s entire nest egg, and into the company’s earnings.

I know that this isn’t news to most Boomer & Echo readers. I’m preaching to the choir a bit here. But given that there is still over 5x as much money in Canadian mutual funds as there is in ETFs, I don’t think the message is getting through to too many people. 

Wait – Who Is This Guy Again?

My name is Kyle Prevost, and I’m interrupting today’s regularly-scheduled Boomer and Echo programming to chat about retirement planning.

Big shout out to Robb for letting me reach out to you all and do my thing.

I’ve been writing and talking about personal finance in Canada for 16 years. You might have seen Robb and I chatting at the Canadian Financial Summit, and read some of my writing at Moneysense or MillionDollarJourney.ca over the years.

But it’s a recent project on DIY Canadian retirement planning that I wanted to highlight today. It’s the best resource that I’ve ever created and that I’m most proud of in my career.

I’m talking about the first ever online course for planning your Canadian retirement – at any stage of your life.

It’s called 4 Steps for a Worry Free Retirement – and you can find it here.

What’s So Special About an Online Course?

Sure, there is some really solid information out there on blogs and in books. But here’s the advantages that 4 Steps to a Worry-Free Retirement has over those products.

• Everything – all in one place. No more saving specific articles to come back to. Now it’s all tied together for you in a logical order, and you can come back to the information whenever you need a refresher or want to double check something.
• It gets instantly updated. For example, I just went through and filled in all of the new 2024 tax and CPP/OAS information. Any book you buy is out of date a few months after you purchase it.
• Passively reading something is not the best way for most people to thoroughly understand a topic. My course comes with original explainer videos, 25+ full-length interviews from the Canadian Financial Summit (including a couple with Robb), a downloadable/printable workbook, and concrete recommended steps to take action.
• Access to our virtual Worry-Free Study Hall. (Which is really a teacher’s attempt to name a private discussion group. It kind of looks like a Facebook discussion wall that only people in the course can see. Questions or answers can be posted anonymously. I answer all questions in this area, so that everyone can benefit from reading through other’s inquiries.)

How Do I Know This Thing is Any Good?

Don’t take my word for it. Hear what these Canadian personal finance experts had to say about 4 Steps to a Worry Free Retirement:

• Here’s a podcast with longtime Toronto Star columnist and university instructor Ellen Roseman – who thoroughly reviewed the course.
• Multi-decade retirement expert from Moneysense and the Financial Post, Jonathan Chevreau also took a look at the course.  You can read his review here.
• If you are still in a podcast state of mind, I chatted with Kornel Szrejber on the Build Wealth Canada Podcast after he took the course. Mike Heroux (aka: The Dividend Guy) also had me on his podcast.
• I was even on the TV show Money Matters with Mike Braga. You can check out the episode here.

Here’s what fee-only financial planner and columnist Jason Heath (of Objective Financial Partners) had to say about the course.

“Kyle’s course can be a great resource for someone preparing for retirement or already retired. There is no single “right” way to manage your finances but what he does is distill many best practices into plain English for a layperson to help them figure out what is right for them. His background as a teacher definitely comes across in the course. Too many financial industry people do a poor job of conveying financial topics in a way that makes sense. The approach of the course is meant to teach and empower, and it definitely does just that.”

But – after all that – you’re still not sure if you want to invest the time, effort, and cash, I go one step further: A 100% money-back guarantee. Look, I’m not here to make a quick sale. If you’re not happy with the purchase, I don’t want you going around telling everyone that I’m a jerk. It’s really simple, if you don’t think the quick tax wins alone won’t easily save you the purchase price of the course – if you don’t think it’s worth your hard-earned cash – I’ll refund your order.

So How Much Does This Thing Cost Anyway?

In exchange for creating a resource that took thousands of hours to research and create + the commitment to keep updating the course AND the promise to answer your specific questions, the price tag is 500 bucks.

But – for the first 20 Boomer and Echo readers who sign up, I’m going to take a hundred bucks off the price tag. The promo code is: echo100. Make sure and click “Have a Coupon” on the order screen here, and then type in: echo100  

Hey, I’m aware that $500 is a lot of money. It’s about half the cost of a university course these days.

If you look through this course and can honestly say that you don’t think it’s twice as useful as any university course out there – I’ll give you your money back.

That’s it. 

No tricks. No hidden fees, kickbacks from big companies, or percentages taken out of your portfolio. No upsells to get to the “second magical VIP tier where you’ll get the REALLY good stuff”. Just a simple upfront price tag for a resource that I stand behind 100%.

Can I Get a Few Details About What’s In the Course?

You can check out the course website here to get a full sense of everything that is included.

But just to whet your appetite, here’s a sneak peak of the topics covered:

• How Much Do I Need to Retire?
• How Much Will My CPP Payment Be?
• How Much Will My OAS Payment Be?
• Decoding Private Pension Plans
• Safe Withdrawal Rates and the 4% Rule
• Working In Retirement
• What Should I Invest In?
• How to Buy and Sell Your Investments
• Decumulation: Withdrawing From Your RRSP, TFSA, and Other Accounts
• RRSP to RRIF Transitions
• Annuities – Buying a Pension
• Can You Retire With a Mortgage?
• Downsizing vs Reverse Mortgage vs HELOC
• Long Term Care Insurance
• Life Insurance in Retirement
• Retire Sooner with More Sunshine
• Bonus Resources (including a handy retirement-specific Tax Breaks Checklist)

I just want to quickly reiterate two things:

1. There is no risk in trying the course. It has a money-back guarantee.
2. The first 20 people to use the coupon code: echo100 get a hundred bucks off.

Would You Do Me a Favour?

I’m trying to get better at this self promotion thing. I’ve seen a lot of mediocre-or-worse products sell like hotcakes because they promised the “silver bullet” to all of life’s problems.  

Usually they were pitched by a good-looking individual who promised that just like them, you too could be successful. 

That’s just not me. 

Call me old school, call me a boring teacher, call me a terrible marketer. That probably all fits.

This course is not a magical silver bullet.  

I don’t have “the one simple secret” that will solve all of life’s problems.

I just have my best attempt to present the latest retirement facts from a Canadian perspective, and a couple decades of helping readers and students understand their personal finances.

What I really want you to know is that I created this course in order to help people just like my own middle-class Canadian parents. I read dozens of books and hundreds of articles (including several from Boomer and Echo) in order to make sure my research was on point. I endured the humbling process of asking experts to give me feedback. And, at the end of the day, I know that this course can really, really help a lot of Canadians – but only if they find out about it first!

So I could really use your help.

I know that Boomer and Echo readers understand that there is a lot of money to be saved by withdrawing from their RRSP and TFSA in the right order once they hit retirement – but the average Canadian has no idea on this stuff.

Folks are busy, and it’s really hard to separate the slick marketing of bogus products from the resources and advice that will actually help them.

So I’m hoping you’ll let people know that the course exists and that I’m available to answer any questions.

A positive word from you to a friend would mean a lot to me. Your friend or family member is much more likely to listen to you than to a Facebook ad or even to the recommendation of a notable Canadian financial expert. 

Thanks in advance for your time and consideration – and hopefully we’ll talk soon in my virtual classroom!

Kyle Prevost is a financial educator, author and speaker. He is also the creator of 4 Steps to a Worry-Free Retirement, Canada’s DIY retirement planning course.

One chief concern for retirees and the soon-to-be retired is when to convert their RRSP to a RRIF. A common misperception is that this conversion has to take place in the year you turn 71.

While it’s true that your RRSP must be closed by December 31st of the year you turn 71 and the funds withdrawn, converted to a RRIF, or used to purchase an annuity, you can choose to open a RRIF at any time. Once a RRIF is opened, you’re required to make minimum withdrawals from it starting the year after the RRIF was opened.

Why would anyone want to open a RRIF before age 71?

Save on withdrawal fees

Withdrawals directly from your RRSP are often subject to something called a partial de-registration fee. Depending on the financial institution, these fees can range from $35 to $50 per withdrawal. 

If you planned on making monthly withdrawals, that can add up to $600 per year in unnecessary fees.

Conversely, withdrawals from a RRIF are not subject to any such fees.

Better manage withholding taxes

Withdrawals directly from your RRSP are also subject to withholding tax.

• $1 to $5,000 = 10% withholding tax (5% in Quebec)
• $5,001 to $15,000 = 20% withholding tax (10% in Quebec)
• $15,001 and up = 30% withholding tax (15% in Quebec)

Conversely, the minimum required withdrawal from a RRIF is not subject to withholding tax (although it is of course still considered taxable income and you can elect to have taxes withheld).

Note that any amount withdrawn over and above the minimum is subject to the same withholding tax schedule as the RRSP.

Take advantage of pension splitting and a tax credit at age 65

Perhaps the best reason to convert your RRSP to a RRIF early is to take advantage of pension income splitting and the pension income tax credit.

Again, a withdrawal directly from an RRSP is simply considered taxable income.

But a withdrawal from a RRIF at age 65 and beyond is considered eligible pension income (just like defined benefit pension income) and up to 50% can be split with your spouse. Only the withdrawing spouse needs to be 65, so they can indeed split their pension income with a younger spouse.

Pension income from a RRIF also qualifies for a $2,000 non-refundable pension income tax credit, which can save you $300 in taxes.

Partial RRIF

There’s no need to convert your entire RRSP to a RRIF before age 71. A sensible strategy can be to open a RRIF and transfer a small balance from your RRSP.

This “partial RRIF” means lower minimum mandatory withdrawals. This can be handy for early retirees who think they may still earn some employment income from part-time work, for example, or for those who just want to maintain flexibility and not be subject to larger mandatory withdrawals.

Even a modest partial RRIF of $12,000 can give retirees a $2,000 per year withdrawal that qualifies them for the full pension income tax credit from age 65 to 70.

This Week’s Recap:

Last week I shared a guest post from insurance expert Glenn Cooke on advanced term life insurance strategies.

Next week I have another guest post from my good friend Kyle Prevost, who has put together an incredible resource on retirement planning. You’ll want to check this out!

I like to pick on the cookie cutter RBC Select Balanced portfolio and TD Comfort Balanced portfolio, but the other banks are just as bad for their closet index fund offerings.

Scotia Selected Balanced Portfolio. 1.99% MER. Will underperform index every single year. pic.twitter.com/ecth3zIXtB

— Boomer and Echo (@BoomerandEcho) January 26, 2024

If you’re still invested in one of these cookie cutter balanced mutual funds, and getting nothing more than a phone call once a year (if that) from your bank advisor at RRSP season then we need to chat about my fee-only financial planning service to see if it would be a good fit for you.

Or, check out my DIY Investing Made Easy video series where I walk you through the exact steps to take control of your own investments and reduce those fees by up to 90%.

Promo of the Week:

Part of my revenge travel escapades involves collecting a massive amount of American Express Membership Rewards that I can either transfer to Aeroplan to redeem for flights (preferred) or to Marriott Bonvoy to redeem for hotels.

That means optimizing my every day spending with credit card rewards points. I do this with the American Express Cobalt card – an absolute no-brainer for earning 5x points on groceries, dining, and take-out (eats and drinks). It’s the top credit card in Canada for earning rewards on everyday spending.

But I also need to take advantage of new credit card sign-up bonuses from time-to-time to boost my rewards.

The best one on the market right now by far is the American Express Business Gold Rewards Card, where you get a welcome bonus of 75,000 points when you spend $5,000 within the first three months.

Don’t you need a business to apply? Technically, no. With the growing gig economy from side hustles and small entrepreneurial endeavours, your business can simply be First Name Last Name Inc.

Want another travel hack? Sign up for the American Express Business Card and meet the minimum spend requirements to get your 75,000 point welcome bonus, then use your own Amex referral link to refer your spouse or significant other.

You’ll get up to 30,000 more points as a referral bonus, and your partner can get the 75,000 point welcome bonus as well (after meeting the minimum spend requirements). That’s 180,000 Membership Rewards points!

Transfer those points to Aeroplan where they can typically be worth 2 cents per mile. That’s $3,600 worth of flight rewards.

Yes, there’s a $199 annual fee ($398 if you each have your own card). But that’s still a net gain of $3,202. Travel hacking at its finest!

This strategy is called activating Player Two, so instead of having a secondary credit card for your spouse on the same credit card file, each spouse opens their own account.

Deploy the same strategy for the American Express Cobalt Card.

Weekend Reading:

Congratulations to long-time My Own Advisor blogger Mark Seed for paying off his mortgage. Now for the difficult decisions around what to do with the extra cash flow. Continue working full-time and save more? Continue working full-time and spend more? Reduce to part-time work? All good options to consider.

I appreciate the transparency from the recently retired Michael James, who shares his investment returns from 2023.

Here’s another one from Michael James, with some tough questions for the retirement experts that were recently interviewed on the Rational Reminder podcast.

Rob Carrick on why the first four months of the year are a ‘danger zone’ for TFSA contributors. I agree. All the more reason to keep good records of your own TFSA contributions and withdrawals.

Investors are worried whenever stocks reach all-time highs. But, as PWL Capital’s Ben Felix explains, saying that stock market valuations are high misses a lot of nuance. Which stocks are we talking about, and even more broadly, which markets?

A Wealth of Common Sense blogger Ben Carlson answers a reader question about whether you can live on dividends from the stock market?

A great post from The Loonie Doctor about his wealth journey, including a warp-speed trip along the hedonic treadmill – a common occurrence for high earning physicians and other professionals.

The human trait that causes Canadians to take their CPP benefits early (subs):

“It’s such a common phenomenon that it has a name in behavioural science: present bias. It’s the tendency to focus more on the present than the future when making decisions. It can lead us to overvalue immediate rewards and undervalue longer-term ones. Scientific studies show that most people prefer to receive money sooner, even if we know that we could get more if we wait.”

I also think the eligibility letter that Service Canada sends out to 59.5 year-olds saying they can apply for their CPP is a poorly designed “nudge” that leads people to take their benefits earlier than needed.

Here’s A Wealth of Common Sense blogger Ben Carlson again with the historical rate of return on housing. Hint: not as good as you’d expect.

In Fred Vettese’s Charting Retirement series at The Globe & Mail, he answers whether gold is a good hedge against inflation (subs):

“As for the most reliable hedge against inflation, it just might be a traditional portfolio of stocks and bonds.”

Finally, advice-only planner Anita Bruinsma smartly explains why it’s a good thing that bank cards and digital payments are the norm for teenagers today.

Have a great weekend, everyone!