Weekend Reading: Retiring With Purpose Edition

Weekend Reading: Retiring With Purpose Edition

Much has been written about the financial side of retirement – do you have enough saved, how much can you spend, will your money last a lifetime? But retirement is part financial and part psychological.

More than just a number in your bank account, retirement is also how you feel about moving on to the next chapter of your life. Indeed, it’s not what you’re retiring from, but what you’re retiring to.

A few weeks ago, financial planner Mark McGrath shared an absolutely gut-wrenching story about his father – a long-time business owner who sold his business, retired, and lost his identity and purpose. The story does not have a happy ending, but Mark felt it was important to share the lessons he learned from this heartbreaking experience:

“We learn about the financial side of retirement but not enough about its emotional and psychological aspects. About how our identities can be intertwined with our careers and our businesses.”

The story hit home for many people and has been viewed an incredible 5.1 million times on Twitter. Mark later stopped by the Rational Reminder podcast to talk about the emotional story and why people need to start thinking about retiring with purpose.

I’m grateful that Mark was brave enough to share this cautionary tale as it has forced me to think about my own retirement plans and helped shape conversations I will have with my retired or soon-to-be retired clients.

This Week’s Recap:

You might also remember Mark from this excellent guest post here – 8 overlooked ways to save tax in retirement.

Earlier this week I wrote about building if/then statements into your financial plan.

We had an eventful week – first getting a firm possession date on our new house for the end of April, and then accepting an offer to purchase our existing house.

The timing could not have worked out better, as we’ll have about a week to move and clean-up our house before the new owners take possession.

That beats the last time we moved, when we had to sell early to secure funding for the new house and ended up renting for three months in between.

The financial planner in me has been craving certainty in our situation for more than a year. I can’t wait to get settled in our new house, tally up the final costs, and then get back to our other financial goals – including filling up our TFSAs again and contributing to our corporate investing account.

Promo of the Week:

In case you haven’t heard, the new First Home Savings Account launched today. While most banks aren’t ready to administer the accounts yet, Questrade got a head-start on the competition and has the FHSA available to open and fund today.

Questrade FHSA

Remember, the FHSA combines the best of the RRSP (tax deductible contribution) with the best of the TFSA (tax-free withdrawal for a first home purchase). Contribute up to $8,000 per year, to a lifetime limit of $40,000.

Many of my clients have been eagerly awaiting the account to launch, to either use for themselves or to gift money for their adult kids to start saving towards a first home.

Questrade is the first out of the gate if you want to open and fund a First Home Savings Account today.

Weekend Reading:

Speaking of the FHSA, financial planner Anita Bruinsma explains everything you need to know about the new account.

Erica Alini shares how the CRA resuming child benefit clawbacks has some parents scrambling.

An inside look at how the Bank of Canada sets interest rates. A really good read.

I’ve enjoyed Fred Vettese’s Charting Retirement series in the Globe and Mail. His latest looks at whether older retirees should trust their financial judgement:

“The results show that as people age, there is a decline in their ability to make good financial decisions that is not consistent with their own confidence in managing their money. This suggests the need to automate retirement planning as much as possible, especially after 75.”

Canada Pension Plan expert Doug Runchey explains whether it makes sense to contribute to CPP after age 65 if you’re still working.

Why Canadian bank stocks might not be as special as we think.

A Wealth of Common Sense blogger Ben Carlson answers a reader question about consumption smoothing and whether young people should be saving less.

Prompted by french pension protests, economics professor Trevor Tombe answers the question: How secure is the Canada Pension Plan? The answer: Very.

Finally, the always brilliant Morgan Housel compares the Silicon Valley Bank run to fears about the Brooklyn Bridge collapsing back in 1883:

“You never know what the American public is going to do, but you know that they will do it all at once.”

Have a great weekend, everyone!

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  1. Gin on April 2, 2023 at 12:46 pm

    An informative article as always, thank you!
    Congrats on the house sale and the move in date. Being one of the more stressful things in life, wishing you a smooth move into the new place.

    • Robb Engen on April 6, 2023 at 9:14 pm

      Thanks so much, Gin! A lot of work ahead of us over the next few weeks but we’re so excited to get moving.

  2. EZ on April 6, 2023 at 7:15 pm

    With the FHSA being fairly new, I wonder what your thoughts are on something I’m considering. I’m pretty content renting, and not really putting much weight into purchasing. I’ve maxed out my TFSA and RRSP. I’m wondering if I should try maxing out this new FHSA in order to get the tax credit/refund, which I can use to invest and compound, then either transfer to RRSP later or cash out and take the tax hit later on. Basically, arbitraging time to compound my portfolio.

    • Robb Engen on April 6, 2023 at 9:17 pm

      EZ, you should absolutely do this. You can keep the account open for 15 years – who is to say whether you’d want to buy a home in that time? And if you don’t, transfer it into your RRSP tax-free without needing any extra RRSP room. It’s a win-win proposition.

      • Wil on April 17, 2023 at 10:02 am

        Can Parents contribute for FHSA for their Kids ( 18+)

        • Robb Engen on April 17, 2023 at 10:25 am

          Hi Wil, parents can give their adult children money with the idea that they will open a FHSA and contribute the money. To be clear, it’s the child who needs to open the account and contribute the money…and they would receive the tax deduction for the contribution (which they can carry forward to a higher income year).

          Parents cannot contribute directly to their kids’ FHSA and cannot receive a tax deduction for the contribution. It’s a gift to your kids, and they make the contribution and receive the deduction.

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