Retire rich on your terms

We can’t claim originality with our Retire Rich cover line, but there’s a reason this topic consistently resonates with so many readers. I won’t belabour the distinction I usually make between retirement and financial independence except to say the latter (aka “findependence”) usually should come first.

Let’s focus instead on the word “rich.” Robert Gignac once wrote a financial novel entitled Rich is a State of Mind. His point was there’s no one-size-fits-all number about what constitutes rich. As David Aston’s cover story details in this issue, those content with frugality and a simple life may view themselves as “rich” once they’ve amassed a $250,000 portfolio, or even less. For others who wish to tour the world in style many months of the year, portfolios 10 times that size (or more) may be their idea of rich.

Our website MoneySense.ca contains several online tools useful to retirees and near-retirees, including a life expectancy calculator. Only you and your loved ones can determine the optimal mix of leisure time and financial resources that will support your chosen lifestyle. But our tools, together with this issue’s cover package, will help you retire when, where and how you want.

Of course, if you don’t aspire to be “rich”—however you define it—a senior Canadian couple that believes they can live on $30,000 a year need not save even a dime. They may be able to collect that much in combined CPP and OAS benefits once they reach age 65 (age 67 for younger folks). Even then, however, I’d argue they should stash some cash in TFSAs because I’d be nervous having all my retirement eggs solely in the Ottawa basket.

At the other extreme are those who want to live large both in Canada and abroad—with access to one or more vacation homes, frequent dining out, state-of-the art toys and gadgets, and the latest luxury car. (The latter is the focus of our Auto spread this issue.) If you aspire to such a “Cadillac” retirement, you’ll need to factor in significant tax headwinds. We assume MoneySense readers aspire to more than a subsistence-style retirement, so our tax columnist Evelyn Jacks looks at the three key tax phases for those at or approaching retirement.

Our coverage of exchange-traded funds (ETFs) continues to expand but that doesn’t mean we no longer cover mutual funds. Suzane Abboud decided she needs a break from her column but with this issue, senior editor David Hodges has grasped the mutual fund torch. His first salvo argues mutual funds still merit a place in investor hearts, provided they adhere to the guidelines his experts suggest. Even ETF fans may find they also own mutual funds in their company’s group RRSP (as I do).

Our beef is only with certain mutual funds that do nothing but mimic index funds (index-huggers or closet indexers) but charge 2% premiums for the privilege. If you’re paying a premium for an investment with a shot at beating the index, it shouldn’t look like the index. David has also launched a mutual funds blog on our website.

We have begun to revamp the Living section. The first change can be seen on the final page of this issue: “The Payoff” is replaced by “The Bottom Line.” Stay tuned!

Finally, congratulations to contributor Preet Banerjee, who won the Portfolio Management Association of Canada’s Award for Excellence in Investment Journalism for his article “How you doin’?” in our June 2012 issue.

About Jonathan Chevreau

As MoneySense’s Investing-Editor-at-Large, he is also author of Findependence Day and co-author of Victory Lap Retirement. Reach him at [email protected], where he is the founder of Financial Independence Hub.

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