[Ep. 192] Planning for a Successful Retirement with Larry Swedroe

Scotiabank Momentum Visa Infinite

This episode of the Mo’ Money Podcast is sponsored by the Scotiabank Momentum Visa Infinite card. Earn 10% cash back on all purchases for the first 3 months (up to $2,000 in total purchases).1 Plus, no annual fee in the first year.2 A welcome offer of up to $299.To learn more & sign up for the card, click here.

1You will earn 10% cash back (the “Offer”) on the first $2,000 in eligible purchases posted to your new Scotia Momentum® Visa Infinite* credit card account (the “Account”) beginning on the Account open date and ending 3 months after that date or when you reach the maximum cash back value of $200, whichever comes first (the “Offer End Date”). Eligible purchases include purchases (less any refunds, returns or other similar credits) but do not include payments, cash advances (including balance transfers, Scotia® Credit Card Cheques or cash-like transactions), interest, fees or other charges. After the Offer End Date, you will earn regular cash back on purchases at the regular cash back rate described in the Scotia Momentum Visa Infinite Cash Back Program (the “Program”) that applies to the Account (the “Cash Back Program Rate”).  The 10% cash back rate for any category is made up of the sum of: (i) the regular Cash Back Program Rate (variable by categories as set out under the Program); and (ii) a “Bonus Cash Back Rate”. Cash back earned under this Offer will be credited to your Account in 2 instalments so long as your Account is open and in good standing at time of payout of each:

1.Bonus Cash Back Rate: The amount earned under the Cash Back Bonus Rate will be credited to your Account within 2- 3 months after the Offer End Date; and

2.Regular Cash Back Rate: The amount earned under your regular Cash Back Program Rate will be credited to your Account according to the regular cash back payment schedule as set out under your Program (November).

EXAMPLE: If the regular Cash Back Program Rate for the Gas Stations and Grocery Stores category is 4% then the Cash Back Bonus Rate will be 6% for that category so that you will earn a total of 10% on the amount of all eligible everyday purchases in that category until the Offer End Date. If you make $2,000 in eligible everyday purchases in the Gas Stations and Grocery Stores category, your cash back earnings will be credited to your Account as follows:

First, the Cash Back Bonus Rate of 6% x $2,000 = $120 will be credited to your Account within 2-3 months of the Offer End Date.

Secondly, the Cash Back Program Rate of 4% x $2,000 = $80 will be credited to your Account as per the regular cash back payment schedule (November).

The Account is considered in good standing if it is not delinquent (past due) or over limit and the Cardholder(s) is not in breach of the Revolving Credit Agreement that applies to the Account.

All other terms of the Scotia Momentum® Visa Infinite* Cash Back Program Terms and Conditions apply. Offer applies to a new Account only opened by April 30, 2019.

Former or current Scotiabank credit cardholders of any kind in the past 2 years, including those that transfer from an existing Scotiabank credit card account or re-open a closed Scotiabank credit card account, are not eligible for this Offer.  All rates, fees, features and benefits are subject to change.

Offers may be changed, cancelled or extended and cannot be combined with any other offers.

2 We will waive the initial annual fee for the primary card and each additional supplementary card for the first year.  Offer applies to new Scotiabank credit card account (“Accounts”) only that are opened by April 30, 2019. Any additional supplementary cards must be issued by April 30, 2019 to qualify. Former or current Scotiabank credit cardholders of any kind in the past 2 years, including those that transfer from an existing Scotiabank credit card account or re-open a closed Scotiabank credit card account, are excluded from this offer.

The current annual fee is $99 for the primary card and $30 for each additional supplementary card.

The current preferred annual interest rates for the Account are: 19.99% on purchases and 22.99% on cash advances (including balance transfers, Scotia® Credit Card Cheques and cash-like transactions).  All rates, fees, features and benefits are subject to change. Offers may change, be extended and cannot be combined with any other offers.

3Based on a $99 annual fee waiver in the first year and a potential cash back earning of up to $200 during the offer period.

I don’t know why exactly, but lately I’ve been hearing from my millennial clients their big concern about not being able to afford retirement. I’m talking 20 and 30 years olds freaking out because they have no idea how they’ll ever be able to save up $1 million (or most likely more) for retirement, plus pay of their student loans, buy a home, start a family, and just simply live!

So, I thought I would bring on a retirement expert who can shed some light on the most important things we all need to know about retirement. My guest for this episode is Larry Swedroe, the author of Your Complete Guide to a Successful and Secure Retirement, as well as the director of research for Buckingham Strategic Wealth and the BAM Alliance.

Here are a few things we discussed in this episode.

What People Forgot to Plan – What to Do in Retirement

Most people focus on the money part. How much do I need? How should I invest to reach that number? Will it be enough? But really, you should start by outlining what you want to do when you’re actually retired. How do you want to fill your days? What’s your exit strategy from the workforce? Are you going to do a full-stop retirement or ease into retirement by going part-time or consult? Before testing out any retirement calculator, define what your retirement will look like first.

Planning to Live Longer Than 20 Years in Retirement

Another concern I often hear is that we’re all living longer. Many of us will live until 100! So if we retire at 65 and live until 100, that’s 35 years of retirement we need to prepare to have income for. That might make your palms sweaty, but it’s actually fairly simple math to figure out how to afford a long retirement. Larry suggests taking the number of years you plan on being retired for and multiplying it by the gross annual income you’ll need to live off of in retirement. Then, figure out how inflation will come into play, and that’s your number!

How to Be a Savvy Investor

Larry shared some amazing pieces of wisdom when I asked him about how we all can be savvy investors. Here are his top tips:

  • Make sure you’re only spending money on things that are important to you.
  • Save as early and as often as possible.
  • Make your savings automatic through auto-debits and auto-withdrawals to your savings and investment accounts.
  • Read the book Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler & Cass R. Sunstein to learn how to nudge yourself into doing the right things
  • Invest in low cost Index funds or index ETFs
  • Avoid investment products sold by insurance companies and Wall Street investment brokers as they’ll be more expensive and most likely won’t outperform index funds.
  • Don’t work with any financial profession who earns a commission when working with you.
  • Diversify your portfolio to include more foreign equities and fixed income. Don’t focus solely on domestic stocks and bonds (just Google what happened in Japan).
  • Don’t mistake the home you live in for a real estate investment. If you live in it, it’s not an investment. Once you sell it, it is.
  • Be careful with real estate investing (just look at what happened and is happening in the U.S.)

Enroll in My Investing Course

Investing Foundations for CanadiansWant to jump start your investing journey but don’t know where to start? Enroll in my Investing Foundations for Canadians online course to learn everything you need to know about how to start investing, building wealth and planning for retirement!

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