Whether you use the 4% rule for retirement income or some other strategy such as my cushioned retirement investing , a fatal flaw lurks, threatening to undermine any sensible plan. This flaw is the number one reason why it makes sense to be conservative with the percentage of your assets you plan to spend each year. I saw a good example of the problem when I helped a retired family member with her finances. I worked out a safe withdrawal amount each month and set up her portfolio to transfer this amount into her chequing account each month. Within a year, she needed to make a large withdrawal from her savings. The reason doesn’t matter. It could have been for a car, a grown child who needed money, or something else. The problem was that she wanted to have her cake and eat it too. She wanted a steady income from her savings and to be able to dip into her savings when necessary. The problem is you can’t do both safely. I don’t think the rest of us are much different. We ca...

I used to think that the main factors that kept people from investing in the stock market were volatility and risk. However, a recent conversation with someone I’ll call Jim taught me that the difficulty of finding decent advice is a barrier as well. Jim runs a successful small business in a rural area. He is at retirement age now and has turned over most of the business operations to his sons. He’d prefer to retire fully, but he still works enough out of his home to draw a minimum wage salary. Jim’s retirement plan consists of continuing to work at his business and occasionally severing parts of his land to sell. He has some assets in an RRSP, but he’s not sure how much to trust the income he can draw from it. He had his RRSP at one of the big banks for many years, but his results were poor. Recently, he took a recommendation for another advisor who turned out to work for an insurance company. So, now Jim’s in expensive segregated funds, not that he’d heard of “segregated f...

I found my blog in a searchable list of over 2000 personal finance blogs . Apparently, I’m number 112 in Canada. I assume this is for several reasons. I don’t know how to set the blog up properly for viewing on phones. I’m not on Facebook. I use too many numbers and charts. The writing level is too high. Sometimes I take unpopular positions if I think the common wisdom is wrong. I don’t know much about SEO. I don’t fix broken links often enough. I have no idea why my Google PageRank got dropped to zero. I’m unwilling to pay anyone to fix some of these things. No doubt others could add to this list. I appreciate all my readers who fight through these problems and give me a reason to keep blogging. I managed only one post in the past two weeks: Seniors Staying in their Homes I was pickier than usual recently. Here are a couple of articles worth reading this weekend: Shawn Langlois has a funny chart overlaying predictions of economic doom on top of a steadily rising...

Rob Carrick says realtors and family members should stop pushing seniors to sell their homes . He portrays both groups as greedily seeking money. No doubt there are family members out there looking to get access to an early inheritance, but there’s no shortage of delusional seniors who won’t move but haven’t been able to properly maintain their homes in years and whose ability to care for themselves is in doubt. As it happens, my wife and I have been living through a period where four seniors in the family are having difficulty managing in their homes. In one case there was no sign of dementia, but she wouldn’t leave a rural home even after requiring 24-hour nursing care at a cost that would have drained her savings in a couple of months. In two other cases, dementia is an issue, but they insist on staying in a home they can’t maintain without constant help from overworked family. In a fourth case, she is already in an apartment, but often can’t even open her front door. We fo...

Here are my posts for the past two weeks: Powerless Employees The Year of Less Here are some short takes and some weekend reading: Justin Bender pulls his asset location rules together in an excellent post where he goes through an example of allocating your money across a TFSA, RRSP, and a taxable account. The calculations may seem complex, but I use a spreadsheet that does them automatically for me. That way, I only have to figure it all out once. Justin is right that DIY investors may do well to just keep the same allocation within each account for simplicity, but if you’re paying someone else to manage your money, you should expect them to get post-tax asset location decisions right. Potato says that doing what you think adults are supposed to do is “cargo cult adulting.” It’s better to decide for yourself what being an adult means. I liked his example of some young people thinking they have to own a house before having kids. It’s true that I owned a house before h...

I don’t have to look far into my circle of family and friends to find compulsive shopping. This isn’t a problem I understand very well myself; I don’t like shopping and have many excuses for why I haven’t replaced old clothing. In her book The Year of Less , Cait Flanders gives us insight into shopping addiction as well as addictions to alcohol, other drugs, food, and television. Fortunately, she also describes her path away from the pain that drives these addictions. The centerpiece of Flanders’ solution to her addictions was a self-imposed yearlong shopping ban. Her rules were quite strict. For example, she banned herself from shopping for take-out coffee, clothes, shoes, accessories, books, magazines, candles, furniture, and electronics. She did allow herself to replace things that she needed but had worn out. During this yearlong shopping ban, she also got rid of most of her stuff. Her goal was to reduce her belongings to just the things she really used. This is one asp...

I’m used to bank branch employees having almost no power to overrule procedures enforced by their computer systems. Even branch managers can do little to override computer rules other than send requests to centralized bank departments. A recent stay at a Comfort Inn in Laval showed me that this way of running a business has made it to at least some of the hotel industry. We wanted to stay at the same hotel as others who were attending the same event as we were. We booked online and chose to pay extra to get a king-sized bed instead of a queen-sized bed. When we arrived, they said they had no rooms available with a king-sized bed. This isn’t too surprising. I’ve encountered this at even some high-end hotels when they juggle reservations trying to keep as many rooms booked as possible. What happened next surprised me. I accepted their apology for not having the room we booked, and I asked that they reduce our room rate to the queen-sized bed rate we were offered online. But t...