It’s challenging enough to figure out how much you’ll want to spend at the start of retirement.  Even more challenging is deciding how your spending will change as you age.  These choices make a big difference in how much money you’ll need to retire.  They also shape the spending options you’ll have available throughout retirement.  Here I explore the good and bad parts of common wisdom on retirement spending to arrive at my own spending plan for retirement.  Spoiler alert: the “go-go, slow-go, no-go” narrative is good marketing, but it has cracks. Two extremes Some people focus on the early part of their retirement.  They want as much money as possible available early on while they’re still young enough to enjoy it.  They seem to think of their older selves as a different person who they care less about than their current selves. Others focus on their older selves and worry about running out of money at some point.  These people usually spend far...

When Canadians are just getting started managing their own investments at an online broker, their pre-existing ideas create a lot of confusion.  Here I go through several of the most common misconceptions I encounter in a conversation format. Novice Investor:   Ok, so I’ve opened a TFSA with my online broker, and I’m ready to put my $50,000 in. Michael James:   Great.  We just have to transfer the money to your new TFSA from some external account, like a chequing account at your bank.  Just a few clicks and we’re done.  The money will be there in a day or two. NI:   Wow! That was easy. So, we’re all done? MJ:   Not quite.  All we’ve done is fill your TFSA with dollars. NI:   That’s all I did with the TFSA I used to have at the bank.  It’s closed now. MJ:   Yes, but that TFSA was just a savings account earning a little bit of interest.  You said you want to put this $50,000 away for the long term in an all-in-one ETF. ...

I finally pried open my wallet to pay for improved email delivery of my posts to email subscribers.  I tried to remove ads and include the entire post in each email.  We'll see if I succeeded or not.

Many aspects of personal finance have changed in the 36 years since The Wealthy Barber classic book first appeared.  To update it, author David Chilton had to not only do an extensive rewrite, but he had to come up with new advice.  He did a great job of making The Wealthy Barber  2025 update fully relevant to Canadians today.  Chilton takes important topics that are usually dry and hard to understand and brings them alive in an entertaining story format. But this book is much more than just a fun take on personal finances; the advice is excellent.  Chilton gives insights you won’t find elsewhere.  The book is like a course on personal finance requiring no previous knowledge, and even discussions of insurance and wills are funny and compelling enough to be page-turners. The bulk of the book is a set of financial lessons mainly aimed at Canadians between 20 and 45.  The early chapters introduce the characters, make it clear that the lessons require no ...

For solid financial advice backed up with academic evidence, investors can look to Wealthier: The Field Investing Guide for Canadian Millennials by Mark McGrath, adapted from Daniel R. Solin’s U.S. version of this book.  Although it is aimed at millennial-aged Canadian DIY investors, there are discussions about financial advisors as well. Outline The book begins with excellent advice on how to invest well, followed by how you can fall off the good path into bad investing due to a “rigged system.”  By understanding the possible investing pitfalls and the ways the system is rigged, investors can stay on a good path. I found the most interesting section to be the discussion of stoicism.  The authors discuss several elements of the stoic mindset that are useful for avoiding investing mistakes such as selling out of fear. The book continues with DIY financial planning and how to save enough to get to “the number.”  This part of the book had an interesting discussion of t...

I recently wrote that “this is my 8th year of drawing down my RRSP.”  To explain why I do this, even though I’m not even close to 71 yet, I wrote “to reduce lifetime taxes.”  A commenter observed that this isn’t the right objective, which is true enough.  What I wrote is conveniently short, but not accurate.  My real reason for melting down my RRSP early is surprisingly challenging to define. Reducing lifetime taxes Some people claim that minimizing taxes really is their true objective, but I doubt this is true.  Going all in on this goal would mean quitting your job and giving away all your savings.  There might be some taxes in the short term, but after that, you’d never pay any income taxes again. This is clearly not what people mean when they say they want to minimize taxes.  So, the real objective is something else. Maximizing after-tax consumption This goal is a little better, but still not quite right.  To go all in on this goal, you would ...

People seek universal answers to personal finance questions, but the correct answer almost always starts with “it depends.”  What is good advice for one person may be terrible for another person.  This fact is often overstated, though.  For each question there tends to be a small number of important factors that determine the correct answer.  One such factor is your current wealth level.  In his book The Wealth Ladder , Nick Maggiulli explores how your current wealth level affects the financial choices you should make. Maggiulli refers to his book as “a grand unifying framework that will fundamentally change how you think about wealth and how to build it.”  On one level, this sounds a little grandiose.  However, it can be challenging to get through to people who seek universal answers that don’t exist.  These people need to be hit over the head with the idea that your best choices going forward depend on your current stage of wealth accumulation. ...

I get a lot of friends and family asking for help figuring out their retirement finances when they’re just a few years from retiring.  These discussions follow a common pattern: people say they want to spend more in their 60s while they’re still able to enjoy new experiences, but they make plans that involve spending less in their 60s than they will have available in their 70s and beyond.  They resist a simple idea even after I show them how much more they could be spending early on. I’ll illustrate what’s going on with an example that borrows from some of the real cases I’ve helped with. Meet Dan Dan is a single guy about to retire at 60.  Here are his relevant financial details: TFSA: $200,000 RRSP: $300,000 Pension: $4000/month indexed to inflation + $800/month bridge until he is 65 CPP: entitled to 90% of the maximum amount ($826 at 60, $1290 at 65, $1832 at 70) OAS: entitled to the full amount ($740 at 65, $1006 at 70, 10% increase at 75) Dan tried to work out what t...

A : I’ve got a guy who’s getting me into private equity.       A : This ad for a used car looks like a good deal. B : Are you sure that’s a good idea? Valuations in private equity are just made up.       B : The ad says it’s being sold as is, and you can’t go see the car. Do you know what you're getting into? A : That’s one down side, but the low volatility of private equity makes it less risky, and that’s what I’m looking for.       A : That’s a down side, but this is the brand I’ve been looking for. This model is highly rated. B : But the low volatility of returns is just a consequence of the made-up valuations. All the risk is hidden until a knowledgeable buyer evaluates the assets.       B : A good rating applies to the average car of this model. That won’t mea...

It’s a good idea to start saving when you’re young, but not for the reasons that personal finance experts give.  They offer tidy examples that have little connection to the real world.  Here’s a typical version: If you save $1000 per month from age 25 to 35 and then save no more, at a 7% annual return, your savings will grow to $1.3 million by the time you’re 65.  If instead you wait until you’re 35 to start saving $1000 per month, and you save for the full three decades until you’re 65, you’ll only have $1.17 million.  That first decade of saving is more valuable than the last three decades combined.  So get started early. This seems reasonable until we test it on someone who is 65 years old today.  Meet Jim.  Back in 1985, he was 25 years old working full time.  The minimum wage at the time was about $700 per month, but Jim was doing well making $1200 per month.  Now let’s ask young Jim to start saving $1000 per month.  Hmm.  That...

We often see debates about whether or not volatility of returns is a good measure of risk.  This debate is related to what I think is a bigger issue: the difference between perceived risk and actual risk.  Perceived risk is influenced by observations and “dollar bias,” but actual risk comes from the full range of what might happen and its influence on buying power. Dollar bias and buying power In some contexts we forget about inflation and view dollars as constant over time.  For example, we tend to focus on nominal returns and think that it’s okay to spend gains as long as we leave the principal intact.  But the principal will erode with inflation if we spend all the nominal gains. Another context where we see this bias is with mortgages.  We can calculate that with a 30-year $400,000 mortgage at 4%, the first year’s payments will only reduce the principal by about $7000.  But even with only 2% inflation, the buying power of the principal will erode by abo...

Before reading Barry Ritholtz’s book How Not to Invest , I wondered if the “Not” in the title was a sign it would be filled with gimmicky ways of giving investment advice.  It isn’t.  Investing well is simple enough, but the world tries to push us towards many types of poor choices that lose us money.  The best advice is a list of the many things to avoid when investing.  This book gives readers the benefit of Ritholtz’s extensive experience with staying on the simple path to investing success. The book is organized into four parts: Bad Ideas, Bad Numbers, Bad Behavior, and Good Advice. Bad Ideas Part of what makes it so easy to push investors toward bad ideas is that we believe secret ways to create wealth exist when, in fact, they don’t exist.  “We don’t like to admit it, but nobody knows anything about the future—not just you and me, but the so-called experts too.”   I’ve had the experience of getting people to agree that the future is unknown, and ...

There is no shortage of studies showing that average investors underperform the market averages, often by 2-3% per year.  However, Barry Ritholtz’s excellent book How Not to Invest says that average investors underperformed by 5% per year one decade and only 2% per year the following decade.  How could this be?  It doesn’t appear to make sense.  So, I started digging. The Data Here are simplified version of the chart I saw on page 382: So, average investors trailed a basic 60/40 portfolio by 2.4 percentage points per year.  This is plausible.  Investors pay expenses, and some of them do some market timing.  Here is what I saw on the next page: This time the behaviour gap is 3.8 percentage points per year for 20 years.  Ritholtz makes the point that “The longer the holding period, the greater the impact of errors that disrupt compounding.”  This is true as it applies to the final dollar value of your holdings.  After all, 20 years of mis...

I was a guest on a TD Direct Investing webinar to discuss the case for delaying the start of CPP and OAS payments with Robert Moysey.  He did a great job asking good questions and keeping me on track.  See the link to the video below.  

In a weak moment, I agreed to appear on a podcast.  I like podcasts, but I’m not trying to build my brand or anything like that, so my sole motivation is to help others.  This can be a weak motivator in the face of doing actual work. But Robert Moysey asked me many good questions about CPP and OAS, and I’ll be appearing on his investing webinar series on Thursday, May 29th at 2:00 pm. For those with average health and who have enough money to live on through their 60s, it makes sense to consider waiting until age 70 to start collecting CPP and possibly OAS too. Here are the particulars for those interested in watching: DATE : Thursday, May 29, 2025 @ 2 PM ET TITLE : Is it a mistake to take CPP and OAS early? DESCRIPTION : Some retirees like to take Canada Pension Plan (CPP) and Old Age Security (OAS) payments as soon as they're eligible for them in hopes of maximizing the value they draw from those programs. Are they making a massive mistake that could cost them dearly in reti...

Having listened to a few episodes of Ramit Sethi’s podcast where he helps couples face and conquer their money issues, I looked forward to reading his book Money for Couples.  In it, Sethi distills his experience helping hundreds of couples into strategies that cover a wide range of problems.  It’s clear that Sethi has the skills and experience necessary to help couples with their financial problems.  However, creating a book to help people solve these difficult issues on their own is a different challenge.  I’m optimistic that this book will be helpful for some couples with big money problems. For many couples, talking about money is painful and ends in a fight.  A common theme throughout this book is that couples need to find a way to have money discussions that feel good.  To this end, Sethi provides many strategies as well as actual scripts of what to say.  These strategies go a long way to help draw in a spouse who avoids all talk about money. Mon...