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Hello-Recently Retired New to Board -Hope I can contribute
Old 01-07-2010, 02:58 AM   #1
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Hello-Recently Retired New to Board -Hope I can contribute

Hello- I have posted a few times in last week after running across this site so I thought I should introduce myself. I am 59 years old and retired about 3 years ago after a career as an exec at one of Canada's large Banks. Work was getting to be a chore so decided I had enough (both financially and work wise). My wife, also retired, is a very young 52. Portfolio runs around $12million including significant uncashed options in the stock of my employer. I am hoping it will eventually be about $15million once all cashed out in 2 years. I will start my pension in about 2 years and it will be $550,000/year (partial COLA). We have no debt, own 3 properties, and travel extensively. Significant alimony payments to first wife. Only daughter is pretty much on her own.

I self manage our portfolios and feel I am qualified to do this (MBA, CA, CFA). Current portfolios mostly dividend paying equities (banks, insurance, telecom) currently generating about $375,000 per year in dividends. Yearly spend is $700,000 including alimony. We have cash on hand for 2 years spending. Don't plan to withdraw principal for a while as dividends and pension will cover current spending requirements. We feel very lucky to be in our current position and are very aware this is not the average for most people.

I am struggling with asset allocation and diversification issues. I view my pension as a fixed income stream so don't feel we need any fixed income securities in the portfolio. This might be a little controversial I know. Also only Canadian equities to get the very beneficial tax treatment of dividends. Over last decade have averaged 7% growth plus about 3% dividends.

The last 3 years have been fantastic. We love retirement although I still dream about work. It was extremely stressful and I guess I am not over it yet. I used to be a "big shot" but don't miss that part too much. OK maybe a little. Major activities include fitness, skiing, mountain biking, and travel. 3 out of 4 parents are alive and require a fair bit of help.

This forum seems really useful. I have read many intelligent comments so far. I can only hope I can add something.
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Old 01-07-2010, 06:28 AM   #2
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Welcome, Danmar.
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Old 01-07-2010, 08:20 AM   #3
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Danmar, welcome to the forum!

Your numbers all have an extra zero from my perspective, so I doubt if there's much advice I could give.

But I am curious -- what is your long-term financial goal? For some folks in retirement, it's to insure that their money lasts. That seems like a done deal for you. Are you trying to maximize return? Maximize your net worth?

Again, welcome!

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Old 01-07-2010, 08:24 AM   #4
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Welcome to the board.

Just curious: how are dividends treated for tax purposes in Canada? Do you consider US equities to be "international" in your portfolio or do you blend them (allocation-wise) with your domestic, Canadian holdings?

Sounds like you have done very well and are enjoying the fruits of your labor.
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Old 01-07-2010, 10:04 AM   #5
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Welcome! I could use advice from both ends of the wealth spectrum.
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Old 01-07-2010, 11:16 AM   #6
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Thanks for the replys. Canadian dividends are taxed at a maximum of about 16% in our province of residence (Alberta). International (including US) are treated like interest and employment income-39% maximum marginal rate. For this reason we have only Canadian equities. As to my financial goals-I guess I made them. I should probably set new ones. If the markets go up we may purchase a place in the south or a big boat. Obviously, we would want to help my daughter but don't need to wait till we pass on for that. Will also give generously to charity. There is still a fair amount of risk until my options are fully cashed so won't do anything big until then. I guess there are always more expensive places to visit if we wanted to be selfish.
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Old 01-07-2010, 11:23 AM   #7
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Thanks for the replys. Canadian dividends are taxed at a maximum of about 16% in our province of residence (Alberta). International (including US) are treated like interest and employment income-39% maximum marginal rate. For this reason we have only Canadian equities.
Wow - with dividends taxed at 16% and no health insurance to worry about, your situation is even better, from a USA perspective.

Yes, I agree -- your decisions will revolve more around life balance than around finances. Nice place to be but complicated just the same.
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Old 01-08-2010, 08:06 AM   #8
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Danmar, I also had high position and stopped having fun and took the leap one year ago. At first I dreamed just about every night about job, not good! Now it is less and less, hope you get this out of your psyche soon! If your looking for a big boat, I sail and could recommend a good one, if power, look at trawlers!
Best!
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Old 01-08-2010, 08:16 AM   #9
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Yearly spend is $700,000
Dang, I thought I spent a lot...........*gulp*

As long as the pension holds you're only at, what, about a 1.2% SWR? How bullitproof is that pension is what I would worry about. Funny that I would still worry even if I had 12M. LOL.
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Bulletproof?
Old 01-08-2010, 04:39 PM   #10
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Bulletproof?

Pension is from one of Canada's large banks. Well funded currently but one can never be totally sure. Shouldn't have to draw from portfolio for foreseeable future as dividends and pension after tax will be in range of $750,000 to $850,000. Still need to cash my options out though.
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Old 01-08-2010, 05:14 PM   #11
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Won't do it for at least 2 years. Where do you keep your boat?
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Old 01-08-2010, 05:20 PM   #12
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We love retirement although I still dream about work. It was extremely stressful and I guess I am not over it yet. I used to be a "big shot" but don't miss that part too much. OK maybe a little.
I can relate to this. Two years retired and still dreaming about work! It takes a while to shake it off.

My husband and I only have one of four parents left. His mother just recently passed away at the age of 90. One of the best things about retirement is spending time with loved ones. Cherish them every day. You'll never be sorry for that.

I look forward to hearing more from you.
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Old 01-08-2010, 05:37 PM   #13
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Welcome , You can skip the comments about LBYM 's as your means are large !
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Old 01-08-2010, 06:13 PM   #14
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LBYM?
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Old 01-08-2010, 06:26 PM   #15
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LBYM?
Live below your means and with some of the members it's a contest to see who can be the cheapest . I'm not sure what the prize is but I'm sure their heirs appreciate it .
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Old 01-08-2010, 07:31 PM   #16
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Thanks. Don't intend to LBYM over the long run. I have never been accused of being cheap and can spend with the best of them.
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Old 01-08-2010, 11:12 PM   #17
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If your looking for a big boat, I sail and could recommend a good one, if power, look at trawlers!
Best!

I am curious too, what would you recommend?
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Old 01-12-2010, 06:22 PM   #18
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Welcome, Danmar.

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Originally Posted by Danmar View Post
I am 59 years old and retired about 3 years ago after a career as an exec at one of Canada's large Banks.... I will start my pension in about 2 years and it will be $550,000/year (partial COLA).
Wow. Have to say that amount is significantly more than I would have expected. I appreciate that you were a "big shot", but most bank pensions impose a significant penalty for retiring before age 65.

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Originally Posted by Danmar View Post
We feel very lucky to be in our current position and are very aware this is not the average for most people.
Good attitude.

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Originally Posted by Danmar View Post
Pension is from one of Canada's large banks. Well funded currently but one can never be totally sure.
BNS, or CIBC?

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Canadian dividends are taxed at a maximum of about 16% in our province of residence (Alberta).
I thought you lived in Toronto?
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Old 01-12-2010, 06:35 PM   #19
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I thought you lived in Toronto?
Well, he did say he had three homes......

Welcome Danmar, from another MBA in Canada - whose annual expenses are ~7% of yours.

If I were in your position (financially rich +++) my principal financial goal would be to stay that way!
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Old 01-12-2010, 07:08 PM   #20
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Welcome Danmar! I was ribbing you in this thread about spending a bunch of money on your daughter's college education, 2 new cars and $2000/month spending money. In light of this thread, I now see that these were completely reasonable expenditures well within your means! I wish I had parents who were able to provide this while I was in college and grad school.
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