Retirement… your plan may be well-thought out, but there could always be an unforeseen event that could derail your journey. You could live a lot longer than you anticipate, have more financial health problems or suffer from a rise in inflation. But, there are certain measures you can take to ensure your money outlasts you.
Know when to Downsize
Retirees who did not save enough and want to live in their home may need to consider their reality. If it costs more to stay in your home than you can afford, you may need to be honest with yourself and make the hard decision to downsize. Your home is an asset, but if it’s too much, it could become a liability and ultimately a financial burden. An overly large home isn’t a necessity in retirement, but money is.
Helping Your Children Way Too Often
All parents want to help their children, but many of them give them way too much money too quickly. This can hurt their only financial affairs. It’s a good idea to set up an estate that you can dip into when needed, but should you not, your children can benefit later on.
If you spend an excessive amount of money in the early part of your retirement, you won’t have enough to live on as you age. Be cautious of focusing all of your money into saving vehicles like GICs and cash. Whilst it may seem like the safest option, you may be missing out on opportunities and even lose money after you pay taxes and factor in inflation. This, along with overspending, means you’ll need to make some major lifestyle choices if you don’t want to suffer financial ruin.
Retirement is an uncertainty in life, but what you do to prepare for it can make or break you in the grand scheme of things. Don’t make the mistakes that will affect how good you could live during retirement.
Has a loved one recently died and left you with a plethora of money? If so, you may be wondering what you can do with it. It’s amazing how much wealth a person can accumulate in a lifetime, and their family members have no real clue about it. If you’re lucky enough to find yourself in that situation, here’s how you can use it wisely:
Pay Down Your Debt
If you have received an inheritance and are saddled down with debt, consider using that money to pay down your debt. You’ll sleep better knowing your financial obligations is being taken care of or is now fully paid off.
If you’ve had difficulty saving for your retirement, you could use that inheritance for investments – even if you’re dealing with debt. Use the inheritance to make up for lost time, so that when you return to it you can live on something rather than nothing. Of course, any decision you make in regards to your inheritance should take into consideration your income. If it’s unstable or relatively low, and you don’t have an ideal retirement plan, investing the money can help.
Help Others with the Inheritance
Sometimes, it’s better and feels good to help others. This is especially true if your debt and retirement are already in good financial shape. When giving away the inheritance, there are two options.
1/ Give it to family and/or friends
You can also help your family out as well. Consider paying for your child’s education or putting the money toward a down payment on a home.
If you go with the charity option, you will be eligible for certain tax credits.
Spending It Like You Want
No one needs to tell you how you should spend your inheritance, as it’s your money. As long as you have controllable debt, you have a decent amount of retirement saved up and your income is stable, you can spend your inheritance as you wish. Consider something like a home renovation as a great way to add more value to your property.
Before you go jump the gun and re-sign with your current mortgage lender, it’s always important to consider shopping around to see if you can get a better deal. The biggest monthly expense for most people is their mortgage payment, yet a shocking amount of households just automatically renew their mortgages when the term is up. Shopping around is always a good idea, because you may be able to negotiate a better deal. Here are three tips to help you lower your mortgage payments come renewal time:
1. Get a head start
What you definitely don’t want to do it wait until the last minute (i.e., when your mortgage is actually up for renewal) to start shopping around for new terms. Give yourself a little time and start shopping around for a better rate a couple months before your mortgage is up for renewal. This way, you’ll have plenty of time to search for and compare different renewal options.
2. It’s not all about interest rates
Please don’t just fixate on interest rates – there are plenty of other factors that determine a good mortgage rate. Remember to factor in the amortization period, rate types (fixed rate or variable rate) and the flexibility of the payment schedule. These are all crucial factors in lowering the cost of your mortgage payments.
3. Shop around
Before trying to negotiate a lower rate from your bank, find out what other banks and lenders are offering. There are quite a few websites that post current mortgage rates from banks, which can vary widely.
It might be uncomfortable to think of the day when your sun sets, but uncomfortable or not, it’s greatly encouraged to be prepared for that moment as much as possible. We all have a say in when, where and how our hard-earned assets are distributed. With that in mind, take a look at these four steps to comfortable estate planning.
1. Pay All Your Bills Including Debts and Taxes
The beneficiaries of your estate will not see a dime until all your bills have been paid, this can’t be stressed enough. Take care of all your accounts so you take care of your loved ones. If you are deep in debt, chances are there will be little left of your estate for the people you intended to benefit once you pass.
2. Write a Will
While it’s obvious, it’s amazing how many people omit writing a will all together. Your estate and how it is distributed is and should be your call. Sadly many estates are left in the hands of lawyers and judges. A good written will guides how your estate is distributed and to whom specifically. To put it bluntly, you get to determine how your estate is used even in death.
3. Establish an Executor You Can Really Trust
Take careful consideration when deciding who is best for the task of executor. The trusted person should have the time, knowledge, skill and responsible attitude to carry out your wishes honestly. It’s often assumed the eldest child should handle this task, but it’s certainly not a concrete condition.
4. Properly File Important Documents
Keep all your valuable papers together. Insurance policies, wills, bonds, investment records, birth certificates, marriage certificates and social insurance numbers – make sure your family knows where they are.
Wealth Management is a carefully designed strategy to help you meet your financial needs and goals, one of them being financial independence. The ability to live your life as you choose with a secure financial backing for you and your family is considered, by many, the ultimate success.
1. Financial Literacy
Research has shown that people who are financially literate end up with more wealth than those who are not. There is a strong monetary incentive for becoming financially sophisticated. Taking the time and effort to become knowledgeable in the areas of personal finance and investing will pay off throughout your life. Make use of the knowledge your financial advisor provides. Financial learning and financial independence are lifelong endeavors.
2. Think Long Term
The level of your wealth should be measured by the length of time you could maintain your standard of living without an additional pay check. In other words, if you had to stop working right now, how long could you maintain your current lifestyle needs? The principles of gaining financial independence seem simple, although we all know it is in the application that we occasionally stumble. Spend less than you earn. Keep investing. It is important to take a long-view focus as you work towards your financial goals. It takes more than a few weeks to achieve financial independence.
3. Good Debt vs. Bad Debt
Consumer debt is the bane of financial independence. Borrowed money should only be used for investing, not to finance lifestyle needs. ‘Bad debt’ is used to finance consumables and other lifestyle preferences. ‘Good debt’ could be termed as strategic loans used to invest, or money used to make more money. Your gains need to be greater than your borrowing costs; borrowing to meet short-term desires is counterproductive.
Composing a will is much like planning any other milestone event, but in addition to all the important and meticulous details you want to get right, there’s also a legal process to consider. With that in mind, here are five important things to consider before writing you will.
The law must be considered. A will that does not comply with the provincial legal rules in place is as good as no will at all. When and if a will becomes invalid, the financial fruits of your life’s work will be distrusted by the hand of a public trustee.
Although it happens rarely, it’s often recommended to have certain conditions in your will about incapacitation. This can be anticipated legally in your will by appointing an attorney for both your financial and medical decisions.
If necessary, certain stipulations can be place on the passing down/over your fortune to your beneficiaries. Children for example can be prevented from receiving inheritance before they are ready to use them responsibly. A binding will or an instructive but non-binding memorandum of wishes can be used to tell the executor how to proceed with assets. You can also set up predetermined dates and times for your assets to be passed down to young adults and children. This can also be done in several installments.
Most importantly, it’s crucial you prepare and find a suitable executor. Someone who is trustworthy and has direct access to each beneficiary. It’s the executor’s job to appoint accountants and lawyers to help the process, but ultimately it’s up to he or she to oversee the process and make sure everything is done correctly.