Where Does Most of Your Money Go? 3 Pocket Thieves...

Retirement Income Planning, Calgary

The 3 Pocket Thieves

Interest Costs:

The average Alberta family will lose about $500,000 in interest costs during their 40-year working life. How did we come up with that number?

If you purchase a home for the average $478,000 that will be about $276,300 in interest. A new car every 5 years. ($48,000) Student loans for a couple. ($46,000) Average Credit Card Balance ($60,000). Late payment fees on utility bills, overdraft, late tax filing penalties. It's easy $500,000 and that is based on low-interest rates. Many people do not qualify for low-interest rates, so the number is much bigger.

That works out to be $1041 per month over your lifetime in interest. What if you were able to invest that same $1041 each month and earn an average of 5% annual rate of return. In 40 years you would have $1.5 Million saved up. More than enough to fund your worry-free ideal retirement lifestyle.

Taxes?

The average person will pay 30% of what they make, most of us pay 40%. So if your family income is $100,000 that's another $30,000 or $40,000 per year multiplied by 40 years. That's another $1.2 - $1.6 Million dollars.

Investment Fees?

You really have no idea what you are paying in fees but you will in January (to find out why read How Advisors are Paid). If you have an account at a full-service investment firm you are paying in the range of 2-2.5% or more of the account balance. So, if you have an account size of $500,000 that's $12,500 per year ($125,000 in 10 years). That's fine if you are earning a good return on that investment and you are receiving great advice, retirement planning, and other services from your Advisor, but if you are not - it's a lot of money for nothing. I had a conversation recently with a client where he had not seen any return for 10 years on his investments but had paid out a small fortune in fees. 

There's no need to wonder why so many Canadians lack the finances to fund their worry-free ideal retirement lifestyle. It's not for lack of trying. 

But, who's to blame for all of this? 

You are. Ignorance is no excuse. The fine print has all the scary details if you would only take the time to read it all and do the math. Your pockets are full of holes and you need to do something about it. As you plan out the 2nd half of your life it's crucial to fix the money leaks and the 3 big ones are interest, taxes, and fees. Put more money in your pocket by becoming more engaged in what's happening.

You need a plan. We help our clients create sustianable, predictable cash flow from their portfolio in the most tax-efficient manner to ensure they never have to worry about running out of money.

Want to retire in the next few years? Click here to Book  an Introductory Meeting

 

Or, check out our upcoming workshops on Retirement Planning.

Retirement Income & Investment Advisors,

Willis & Nancy Langford

Helping you get your financial house in order and ensure you keep it that way for life

 

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Naila Jinnah
Fee-Only Planning Client

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