Money is still a taboo topic in many cultures. Well, that’s not exactly true. We love to complain about money – about the price of gas, the cost of groceries, the rise and fall of lumber prices, our empty bank account, our credit card debt.

But we rarely talk about the value of money and the role it plays in our lives. What it means to us. Why we make certain decisions about money. How we see money supporting our future goals.

Author Ramit Sethi says the way we feel about money today often stems from our childhood experiences. He calls these our invisible money scripts:

“Invisible scripts are truths so ubiquitous and deeply embedded in society that we don’t even realize they’re guiding our attitudes and behaviour.”

The University of Chicago’s Financial Education Initiative came up with Talking Cents cards to spark conversations about money with your kids and help them develop a positive relationship with money.

I ordered a deck of cards last year to try them out. Each night after dinner we drew a handful of cards and went around the table discussing the questions and our answers. 

The deck contains 108 cards, plus a link to a discussion guide for each card. The discussion guide is a great addition to encourage a richer discussion with prompts and follow up questions. For example, one of the cards included this quote from Albert Einstein:

“If you want to have a happy life, tie it to a goal, not to people or things.” Do you agree or disagree?

The discussion guide for this card said that it may be interesting to share a little bit about Albert Einstein. He was born in Germany in 1879 and later immigrated to the United States. He won the Nobel Prize in Physics in 1921. Extend this discussion by having others explain why they agree or disagree with the quote.

I bought the deck of cards directly from the University of Chicago website. It cost $20 USD plus $13 shipping – so just over $40 CAD. Not cheap.

Thankfully, the Rational Reminder team of Ben Felix and Cameron Passmore, who have made Talking Cents a regular feature in their podcast, have brought the cards to Canada and now sell them for $30 CAD plus tax (free shipping).

If you want to do your part to encourage more rich conversations about money you can pick up your deck of Talking Cents cards at the Rational Reminder online store.

Finally, I’ll leave you with another question from the Talking Cents deck. I’m curious about your answers so please leave a comment below:

“What is something you could buy for yourself but haven’t because you think it would be too extravagant?”

For me, I’ve always wanted to fly business class on a long flight. Even though I have plenty of points to support our (eventual) travel, I’ve always thought it was best to conserve them for more economy redemptions.

But, that changed recently when I re-booked our trip to Italy for 2022 and found business class seats available for 70,000 Aeroplan points (Calgary to Rome). I’ve never been more excited for an 11-hour flight in my life!

This Week’s Recap:

On Friday I updated my post on whether you should defer OAS to age 70 or take it at 65.

Over on Young & Thrifty I took a look at BMO InvestorLine’s self-directed trading platform.

Many thanks to Erica Alini at Global News for including my OAS analysis in her latest Money123 newsletter <–you should subscribe to this.

Promo of the Week:

I’m still baffled why so many Canadians still keep high cash balances in their chequing account or in a big bank savings account that pays next to nothing in interest.

Yes, interest rates are still pitifully low. But that doesn’t mean accepting zero or next to zero percent interest on your cash savings. 

That’s why I promote EQ Bank’s high interest savings account which pays 1.25% interest and offers some chequing account functionality like free e-Transfers and bill payments.

I also like that EQ doesn’t play the promotional interest game – giving you a high rate for just a short period of time. Instead, EQ Bank typically sits in the top 5 of all high interest savings account rates across the country.

Sure, you’re not going to get rich stashing your money in high interest savings. But you can literally get 125x the interest by moving your cash from a big bank to a high interest online bank like EQ.

Weekend Reading:

A look at some excellent free Amazon Gift Card offers on select new credit card applications, from our friends at Credit Card Genius.

National Bank’s discount brokerage arm just eliminated commissions for ETF and stock trades. Rob Carrick writes, should you move your brokerage account to benefit from zero commissions? (<–subscribers)

My take:

I did this in 2020 – moving my RRSP and TFSA from TD Direct to WS Trade to save $10/trade while I added new money regularly. WS Trade is not nearly as robust of a platform as TD Direct but it served the purpose. Nice to see the big bank brokerages adopting zero-commission now. https://t.co/afYQujPHxy

— Boomer and Echo (@BoomerandEcho) August 27, 2021

Millionaire Teacher Andrew Hallam asks young investors, would you pass the wizard’s test?

At the Toronto Star, improving your investment portfolio requires facing some sneaky biases.

A must read for investors who feel compelled to tilt their portfolio towards or away from specific countries or regions. Stock returns are random. Stop trying to predict winners and just hold a globally diversified portfolio.

Ramit Sethi explains how to automate your finances using technology and psychology:

“Using automation to reduce choices sets you up for success with money, without even having to think about it on a daily basis.”

Turning to the election, here’s why experts say inflation won’t be solved on the campaign trail.

And, here’s a detailed look at the three major political parties’ proposals on childcare and what they could mean for your finances.

Morningstar’s Christine Benz says to forget income replacement, focus on supplying cash flow needs in retirement.

PWL Capital’s Ben Felix argues that our money decisions should be anchored in the objective of living a happy life:

Morningstar takes a closer look at popular retirement savings estimates and asks if you really need to save that much for retirement.

Here’s Kiplinger with six retirement killers to avoid at all costs.

Michael James on Money has mixed feelings about Daryl Diamond’s new book, Retirement for the Record.

Mortgage broker David Larock looks at the current case for variable rate mortgages.

Jason Heath answers a reader question about whether to maximize the down payment on a house or to keep some money to invest.

Of Dollars and Data blogger Nick Magguilli looks at whether we’re in a “melt-up” for investment returns.

Finally, Warren Buffett and Charlie Munger famously have three boxes for investment ideas: In, Out, and Too Hard. Here’s why you don’t have to invest in everything.

Enjoy the rest of your weekend, everyone!

Many retirees want to know how much they can spend in retirement without running out of money. The caveat is that most also want to remain in their home as long as possible. With the pandemic shining a light on poor conditions and service at long-term care facilities, it’s likely we’ll see even more seniors wanting to ‘age in place’. 

What that means for some retired homeowners is coming up with a way to tap into their home equity. The most common thought is to downsize – sell the family home and move into a condo or smaller house while pocketing the difference in price. Another option is to sell the home and rent in retirement. 

Those who want to remain in their home for comfort, sentiment, or other reasons may choose to utilize a home equity line of credit. One challenge with this approach is getting a large enough loan in place while you still qualify (i.e. before you retire). Another challenge is that tapping into the loan triggers monthly interest payments.

Finally, there’s one option that was once considered taboo but is now becoming increasingly popular: a reverse mortgage. Canadian homeowners aged 55+ can set up a reverse mortgage through one of two lenders, Equitable Bank and HomeEquity Bank.

The reverse mortgage allows you to access up to 55% of the value of your home. The cash can be paid over a longer period of time (literally like a reverse mortgage), or in a lump sum up front. 

The money is tax-free. You maintain ownership and control of your home, and only pay back the loan when you move or sell. Any appreciation in value over time still belongs to you. You’re simply required to keep the property maintained, pay your property taxes, and keep the house insured.

In areas of the country like Vancouver and Toronto, many seniors will find that their home is by far their largest asset. If the idea is to age in place and leave the home in your estate, you may be sacrificing your own retirement lifestyle along the way.

Imagine you live to age 95. How old will your beneficiaries be and how useful will an inheritance of several million dollars be to them at that time?

Then there’s the reality that you may not be able to age in place for your entire lifetime. Poor health outcomes might dictate a move to a retirement home at some point. 

A paid off home is indeed a cornerstone to a solid retirement plan, but retirees should also consider tapping into their home equity by some measure to enhance their lifestyle and/or plan for extra healthcare costs in their later years.

One question for my homeowner readers – would you consider a reverse mortgage? Let me know in the comments.

This Week’s Recap:

Earlier this week I wrote about two types of overconfident investors.

Last week I was excited to share a conversation with Alexandra Macqueen and David Field, the authors of The Boomers Retire.

Alexandra was gracious enough to offer a free copy of the book to give away to a lucky reader who commented on the post. The winner of the book is “Kat” who commented on August 16th at 12:18pm. Congrats, Kat!

Promo of the Week:

Most bank managed portfolios come with mutual fund fees in the 2%+ range. Meanwhile, many investors aren’t interested or cut out for do-it-yourself investing.

A robo advisor is the perfect sweet spot between a fully managed investment portfolio and a self-directed option. With a robo, you can ditch the expensive mutual funds (which can add up to $10,000 or more each year on large portfolios) and still get a managed portfolio of low cost, globally diversified, and risk appropriate ETFs, plus access to a portfolio manager if you have questions or concerns. 

The robo automatically monitors and rebalances your investments as you add new money and when markets move up and down. 

Retirees in particular can benefit from the cost savings and automation that robo advisors provide. Think about it. Cost savings matter the most when your portfolio is at its largest. And, while there’s nothing complicated about the accumulation phase, the withdrawal phase in retirement is another matter altogether. When to convert your RRSP to a RRIF? How much to withdraw from each account every year? When to schedule those withdrawals (monthly, quarterly, annually)?

A robo advisor can help with all of this and more. 

My go-to robo advisor is Wealthsimple, the largest robo-advisor in Canada. Clients with more than $100,000 to invest qualify for Wealthsimple Black, which comes with a reduced management fee of 0.40% plus some other perks.

Right now you can get a $50 bonus when you open and fund your first Wealthsimple account (min. $500 initial deposit). Sign up now to take advantage of this special offer.

Weekend Reading:

Our friends at Credit Card Genius look at the positive and negative changes made recently to Canada’s best credit card.

You might recognize Tomas Pueyo from his excellent COVID-19 coverage but he also worked for years in the financial advice industry and laid out a few things you need to know about how to invest.

Here’s Morningstar’s Christine Benz and Susan Dziubinski on why you should trial run your retirement. 

Steadyhand’s Tom Bradley explains how investors can narrow the gap between their risk capacity and risk appetite.

Jason Heath answers a reader question on how much should you withdraw from your RRIF.

Peter Lazaroff discusses investing regret, including where regret comes from, why we experience it with our portfolio, and what to do about it.

Ramit Sethi talks about why we are so emotional about money in this Harvard Business Review interview:

“Our feelings are almost always unrelated to the financial decisions we make and indicative of something much deeper.”

Can you change your mind about money? Here’s why the biggest improvement you could make to your financial well being might be to reframe the way you think about money.

Jonathan Chevreau is rethinking the speculative component of his core and explore investing approach. I think more stock pickers should do this kind of honest self-reflection.

Here’s a fascinating conversation with one of my favourite writers, Morgan Housel from the Collaborative Fund:

Here’s Morgan Housel again looking back at three times history hung by a thread due to chance encounters.

Nine questions that A Wealth of Common Sense blogger Ben Carlson is pondering about the greatest bull market in his lifetime.

Investment advisor Markus Muhs with a scathing critique of market linked GICs – not now, not ever. Agree 100%.

A great resource here by Mark Walhout on investing inside a corporation. 

Finally, here’s a nice piece by the Humble Dollar’s Don Southworth on the dreaded “b” word. He writes, “for too many people, a budget connotes pennypinching, financial claustrophobia and sacrifice.” But he’s convinced that budgets can change lives because a budget changed his.

Have a great weekend, everyone!

If you’re like many Canadians thinking about and planning for an eventual retirement, you already know there are a lot of books to choose from at your local bookshop or library shelf. 

But you probably also know that with more and more Canadians hitting the “traditional” retirement age of 65 every year – never mind those of us who strive to retire before 65 – and all of us planning to live longer than ever, the topic of retirement is hot and getting hotter. 

That’s why I wasn’t surprised to see another retirement planning book pop up earlier this year. Titled “The Boomers Retire: A Guide for Financial Advisors and their Clients,” it’s co-written by two Certified Financial Planner certificants (CFP®), David Field (of Papyrus Planning) and Alexandra Macqueen (of “Pensionize Your Nest Egg” fame).

Last March, Alexandra helped me out with a decision about whether to stay in or leave my employer pension plan.

I’m interested in retirement, and I know my readers are, too – so I decided to check in with David and Alexandra to chat about why they wrote this book together, what they hope readers will get out of it, and why you should consider adding The Boomers Retire to your reading pile. 

Why another retirement planning book? 

“As strange as it seems,” says Alexandra, “there’s just always something new to say about retirement.” That’s because retirement keeps changing, she adds:

“What retirement means, when it takes place, how we fund it, how long it might last, how we plan for it and the strategies we can put in place to help ensure a successful retirement … they all change over time, and by a surprising amount! So even if it feels like you know a lot about retirement, there’s always more to learn and know to make sure you’re prepared.” 

Just take the Canada Pension Plan, for example. Even though it’s been around since 1965, it’s undergone several major overhauls since then and we’re in the middle of implementing the last round of changes, which started in 2019.

For people approaching age 60, the decision about when to take the Canada Pension Plan is key – but that decision is complex and there’s a lot of nuance in figuring out what the best choice is. (Alexandra wrote about CPP claiming decisions for high-income earners in an article that I linked in a recent blog post.)

What’s different about this book?

Many retirement books are targeted to a particular audience or focus on a single strategy, whether that’s retiring early or following a specific asset mix or withdrawal strategy. Unlike those books, this book is much more “agnostic,” the co-authors say. 

“We tried to provide information that’s relevant and practical to a very wide audience,” Alexandra notes. “And because we wrote this as a guide for both advisors and retirees, there’s lots of supporting information, like checklists and references to where additional information can be found.”

The additional info ranges from contact information for provincial pension regulators to checklists for will preparation and the administration of an estate, how to make a home accessible as you age, where to find emergency medical coverage outside of Canada, and more. 

“Many retirement books are written as a story,” explained David. “The Boomers Retire is a tool to help answer questions and ensure nothing is missed. The book has clearly defined subject areas so if you do not have a defined benefit pension, there is no need to read about defined benefit pensions. It is not a novel, it is a retirement resource.”

Why do Boomers need their own retirement planning book?

Boomers are the largest group heading into retirement today, but the retirement they’re heading into is different from how we retired 10, 15 or 20 years ago.

“Retirement is defined simply as ‘withdrawing from active working life,’” says Alexandra, “but that simple definition hides the complexity and the realities of the many, many different decisions that future retirees face today in planning for their own retirements.”

Boomers are also the first generation to enter retirement with a Tax-free Savings Account. “The TFSA is one of the most powerful, underutilized, and underappreciated tools in a retiree’s arsenal,” says David.

Chapter 1 covers three trends that “make retirement different today:” it’s increasingly longer, it’s increasingly diffuse – it might take place before, at, or after the “traditional” age of 65 and might happen in stages, instead of all at once – and funding retirement is increasingly complex.

All of these factors together mean that more than ever before, Canadians are designing their own retirements: when it happens, what it looks like, and how it’s funded. And these “new realities” mean more planning is required, say the authors. 

What are the top challenges facing Boomers planning for retirement today?

Boomers are living longer and not necessarily healthier with less guaranteed income for life. “Often retirees go from managing one income from their employer to many different sources,” says David. “Everyone of those income sources can have tax and retirement benefits consequences.”

David adds that strategies must change depending on health, marital status, differences in age between spouses, and goals that retirees have for their retirement. A strategy that may work for one retiree could be disastrous for another.

The Boomers Retire works to explore the different paths and the benefits and consequences of specific retirement choices.

Where can I buy The Boomers Retire? 

The book is available directly from the publisher, Thomson Reuters.

Of course, you can always check it out from your local library, too.

And David and Alexandra have generously offered readers a chance to win a copy. Let me know in the comments why you think this book deserves a place of pride on your reading shelf, and you’ll be entered into a draw to receive a free copy.