Hot Off the Web
WSJ’s Ruffenach in “Don’t count on your house for retirement” reports that in a California area survey, 68% of 60 year olds were counting their home as part of their retirement assets. He suggests that this is not a good strategy, not just because real estate prices are now falling, but because unless you are ready today to sell the house and convert the proceeds into an income stream, then the house does not belong into the category of financial assets; it belongs into the category of lifestyle assets.
In “You can’t take it with you, so what happens to your retirement savings” Nancy Wood of the Financial Post answers a reader’s question on RRIF withdrawals. She points out that at age 94 the required withdrawal is 20% minimum per year.
Jamie Golombek in Financial Post’s “How to have cash at the end of it all” discusses ideas on the most tax-effective sources of retirement income: annuities (purchased with non-registered funds, so that a portion of the income is return of capital and thus not taxed), systematic withdrawal plans on a mutual fund account (same idea, some of early payments are primarily return of capital), T-series of mutual funds (allowing investors to receive predetermined automatic monthly distributions, which are return of capital initially). It is probably a good idea to determine if these options are not just tax-effective, but also good investments!
WSJ’s “Target date funds shake up the mix” discusses how Target Date Funds’ popularity is increasing in 401(k) plans and that the asset mixes used are also getting more esoteric/aggressive; asset classes now included at times are REITs, emerging market funds, TIPs, commodities, floating rate loans. If you are considering Target Date Funds you may want to also read at this website Target Date Funds and Target Date Funds II.
Globe and Mail’s Rob Carrick in “Tighter lending on the horizon” reminds us that with the coming credit tightening, a good pre-emptive action is to check on our credit file and correct any potential errors. For Canadians the relevant Credit Bureaus to call to arrange for a free credit report are: Equifax, TransUnion, and Northern Credit bureaus and you should contact all three.