A look at the best of the Internet, from an SPP point of view

Making ends meet with a “work optional” retirement

Writing in MoneySense, Jonathan Chevreau has a new take on how we should approach retirement. Rather than planning to put down the tool box forever and live off pensions and savings, he writes about a “work optional” retirement.

Chevreau says he learned of the phrase “when it was uttered by financial planner Doug Dahmer, founder of Burlington, ON-based Retirement Navigator.” He asked Dahmer to define it, and his reply was “it’s working because you want to, not because you have to… It relates to those who purposely choose to continue to work, despite already having achieved a financially feasible retirement.”

This optional work, Dahmer states in the MoneySense article, should be doing something you love on your own time schedule for someone you want to do it for. The money, the article notes, should be money “that at the end of the day, is not needed: it’s simply an added bonus.”

“In practice, then, achieving the status of ‘work optional’ is almost exclusively limited to those who are self-employed,” notes Chevreau. “The self-employed are not accountable to the bidding of bosses or shareholders, can choose to limit their customers only to those with whom they love to work, and they can choose to either outsource or delegate to others the aspects of the job they don’t enjoy. They can pick and choose their own schedules.”

This is very good thinking. Save with SPP knows a number of people who retired from their 9 to 5 jobs, and are now doing things like teaching line dancing, consulting (one friend is a consulting agronomist), starting home businesses embroidering things, and so on. They are either continuing to do things they loved to do, or learning new things.

Chevreau’s article goes on to note that for those saving on their own, without a workplace pension, it’s pretty expensive to save enough money so that you never need to work again.

Quoting U.S. author Tanja Hester’s published work on the subject, Chevreau notes that “full early retirement – ‘in which you never need to work again [for money]’—means if you are an investor that you will need to save between 25 and 35 times your annual expenses by the time you leave active employment.”

And Hester, notes Chevreau, has a “magic number” for full early retirement – “annual spending times 30 + 10 per cent contingency. Then there is the safe annual withdrawal rate, which ranges between three and four per cent per annum.”

When you are on a fixed income in retirement, unexpected repairs are a bane of your existence. A “work optional” retirement might allow you to have that contingency fund set aside to help you out when something out-of-the-ordinary occurs.

If you don’t have a workplace pension plan, or you want to augment the plan you have, take a hard look at the Saskatchewan Pension Plan. It’s unique, in that it not only offers low-cost professional investing and the benefits of pooling, but there’s a full array of lifetime annuity options available to turn your savings into lifetime income.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

By Sheryl Smolkin

This is the last Best from the Blogosphere for 2015 and I’m taking a break, so the next one will be published on January 25, 2016. We wish all savewithspp.com readers a healthy, prosperous New Year.

As we look back on 2015 and ahead to 2016, there is much to think about. We have a new Federal government, the loonie is at an all-time low and Canadians have extended extraordinary hospitality to Syrians and other refugees from war-torn lands.

Here are some interesting stories we are following:

In TFSA vs. RRSP: How are Canadians saving? I interviewed Krystal Yee (Gen X), Tom Drake (Gen Y) and Bonnie Flatt (Boomer) to find out how Canadians are taking advantage of the tax-sheltered savings vehicles available to them.

In What Sean Cooper Really Achieved By Paying Off His Mortgage In 3 Years Robb Engen from Boomer and Echo tells us that Sean Cooper didn’t just pay off his $255,000 mortgage in three years; he taught us all a lesson in personal branding. Mr. Cooper, a pension analyst by day, mild-mannered blogger by night, took an almost Machiavellian-like approach by achieving fame through mortgage freedom at age 30.

Jim Yee offers some Year End Finance Strategies that will take advantage of ongoing changes to our tax rules. For example, in 2016, the new Liberal government will be lowering the tax rate on the middle income bracket from 22% to 20.5% so those individuals making more than $45,283/year but less than $90,563/year, deferring income to next year might save some tax dollars.

On the Financial Independence Hub, Doug Dahmer writes about the timing of CPP benefits. He says the CPP benefit for a couple can be in excess of $700,000 over their lifetime and the study demonstrates that the difference between starting your benefit at the least beneficial date and starting at the best date can be more than $300,000.

And finally, Rob Carrick at the Globe and Mail offers some thoughts on how to prepare for a frugal retirement. Frugality is assumed to be a virtue in the world of personal finance writing, but on the outside, frugality is sometimes a synonym for cheap. He refers to a blogger on Frugalwoods who argues that making the choice to be frugal is about asserting your independent thinking about money.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.