Advice re Mtg with bank manager

[Nuiloa]

I'm meeting with my bank manager this week to discuss options for retirement and to see if I can really afford to go. Here's a rough breakdown per month:

Pension: $3300 after tax
Canada Pension 500 after tax
Total: $3800

Expenses:
Housing (condo fees, utilities, taxes, hydro): $402
Cell phone/land line/satellite TV/iPad: $75
Home Insurance/Car and RV Insurance/RV Contents: $250
Health insurance + out of country insurance (snowbird): $200
Gas for Car and RV: $650
Camping fees: $500
Food and Misc: $400
Entertainment: $200
Total: $2727

I have 0 debts. Own both the condo and the RV outright. I also have about $120,000 in savings (reg'd retirement funds, and tax-free savings account)

Am I missing anything? Is there anything specific I should be discussing with my banker?

[REWahoo]

I think you may be the first to ask here about discussing whether or not you can afford retirement with your banker. Is he/she a qualified retirement financial advisor?

A banker would be way down on my list of who to consult about retirement. The manager of my local liquor store maybe, but my banker, no...

[SecondCor521]

Inflation - Are your increases in expenses matched by increases in the pensions over the years?

I don't see taxes listed - that may take up some of the ~$1100 flex. Have you looked at your tax situation?

Expenses -- is this a budget you've been living on for a while, or is it what you've come up with by reviewing your bills? My rule of thumb is that about 1/4 to 1/3 of expenses are not regular monthly bills but are "non-recurring recurring expenses" -- this month it might be Christmas presents, or the car needs a new set of tires, or the kid needs school registration fees paid, or .... If you've been living and tracking for a while, this is less of a concern.

Bias - might the bank manager be biased in his/her opinion? Maybe they want you to retire so they can sell you a reverse mortgage. Maybe they don't want you to retire because then you get a special deal on your checking account. Always consider where advice is coming from (even free advice from strangers on the web :-) ).

2Cor521

[brewer12345]

Um, why the hell are you discussing this with your *banker*?

[Nuiloa]

Quote:

Originally Posted by REWahoo I think you may be the first to ask here about discussing whether or not you can afford retirement with your banker. Is he/she a qualified retirement financial advisor? A banker would be way down on my list of who to consult about retirement. The manager of my local liquor store maybe, but my banker, no...

I'm just looking for validation :-) Actually, after I entered the numbers above, I realized that I can well afford it and still have $$$ to pay for RV gas and repairs.

[Nuiloa]

Wow! I always thought bankers were pillars of the community, sages of the dollar bill, purveyors of all that is pure and good in financial worlds.

Apparently not

[Sarah in SC]

Um a banker is salesperson at best, a paper-pusher at worst. The very last place I'd go for financial advice, either way.

[Nuiloa]

Quote:

Originally Posted by SecondCor521 Inflation - Are your increases in expenses matched by increases in the pensions over the years? I don't see taxes listed - that may take up some of the ~$1100 flex. Have you looked at your tax situation? 2Cor521

All good questions. The pensions I listed were after taxes (figured out from the gvt. of Canada tax website).

The pensions will have cost of living increases annually (not a big deal and I'm not counting on it). I also get an addition ~$400 after age 65, although the pension will drop by ~800. I have planned for a $400 decrease in overall pension after 5 years.

I have entered the numbers and have adjusted for some inflation - assuming that everything will go up by about 5% a year, which has been the trend.

Right now - the numbers are based on an ideal retirement which sees me travelling for 9 out of 12 months. This can be reduced if the financial situation demands it.

I also assume that I'll drop dead by about age 67, given the way I drive.

[MichaelB]

Quote:

Originally Posted by Nuiloa I'm meeting with my bank manager this week to discuss options for retirement and to see if I can really afford to go.

You may be able to afford retirement before you enter the meeting, not so sure once you leave.

Quote:

Originally Posted by Nuiloa Here's a rough breakdown per month: Pension: $3300 after tax Canada Pension 500 after tax Total: $3800

Any COLA with this pension? Is the Canadian in US$ or Loonies?

Quote:

Originally Posted by Nuiloa Expenses: Housing (condo fees, utilities, taxes, hydro): $402 Cell phone/land line/satellite TV/iPad: $75 Home Insurance/Car and RV Insurance/RV Contents: $250 Health insurance + out of country insurance (snowbird): $200 Gas for Car and RV: $650 Camping fees: $500 Food and Misc: $400 Entertainment: $200 Total: $2727 I have 0 debts. Own both the condo and the RV outright. I also have about $120,000 in savings (reg'd retirement funds, and tax-free savings account)

If your pension is indexed you should be able to leave your portfolio alone and use it only for emergency.

Quote:

Originally Posted by Nuiloa Am I missing anything? Is there anything specific I should be discussing with my banker?

He isn't your banker. You are his meal ticket.

[MichaelB]

Quote:

Originally Posted by Nuiloa The pensions will have cost of living increases annually (not a big deal and I'm not counting on it). I also get an addition ~$400 after age 65, although the pension will drop by ~800. I have planned for a $400 decrease in overall pension after 5 years.

Why does the pension decrease by $800?

[Nuiloa]

Quote:

Originally Posted by MichaelB Why does the pension decrease by $800?

We have a built in bridge benefit which approximates what we would get from Canada Pension (CPP). This is for anyone retiring before age 65. The pension is also indexed, although that is optional (ie the COLA is not guaranteed)

At age 65, the bridge benefit stops but at that point you get CPP plus Old Age Security (which is about half of CPP).

Many people take CPP from the moment they retire, but there is a 6% per annum penalty for taking it early. The thinking is that you are collecting longer, so in effect you are getting more money. People who delay taking it get a higher pension at age 65 but have to live to age 73 before they match the benefits of those who took CPP early.

I'm kind of on the fence about it. I don't need the money and, after taxes, I'll barely get $400/month.

On the other hand, if I wait it's basically giving me a return of 6% a year. Can't get a bank to give me that. After taxes, I'll have about $600/month. This may come in handy down the road as long term care needs start to surface (assuming I live that long).

[Nuiloa]

Quote:

Originally Posted by MichaelB You may be able to afford retirement before you enter the meeting, not so sure once you leave. He isn't your banker. You are his meal ticket.

Met with the man and he helped with some minor things. He talked me into transferring some registered pension plan money from a mutual fund account to a GIC which is getting 2.2% interest. This makes more sense to me since the other account was going nowhere fast.

He gave me a breakdown which showed me a year by year projection of my income given current interest rates and my pension. Ultra conservative. Also very helpful.

Most helpful of all: He showed me that by working part-time, I may be shooting myself in the foot. The extra income will mean that I won't qualify for certain pensions after age 65. They claw back the government pensions if you make too much per year!


He didn't try to sell me anything, which I was a bit afraid of after seeing some of the comments here

All in all, I feel much better about my decision to retire 100% instead of dragging it out.

[REWahoo]

Quote:

Originally Posted by Nuiloa He didn't try to sell me anything, which I was a bit afraid of after seeing some of the comments here

You either got very lucky or Canadian bankers are an entirely different species from what we have down south.

[Nuiloa]

Quote:

Originally Posted by REWahoo You either got very lucky or Canadian bankers are an entirely different species from what we have down south.

Well, the advice from all of you "forumers" helped. I went in knowing that I wasn't buying anything.

Thanks.

[pb4uski]

Quote:

Originally Posted by Nuiloa He didn't try to sell me anything, which I was a bit afraid of after seeing some of the comments here

Sounds to me like he sold you a GIC.

[RunningBum]

What about replacement cost of the car, appliances, etc?

[Nuiloa]

Quote:

Originally Posted by pb4uski Sounds to me like he sold you a GIC.

Nope - we just moved some money from one type of investment to another that is actually going to give me some interest.

[Nuiloa]

Quote:

Originally Posted by RunningBum What about replacement cost of the car, appliances, etc?

Well, I won't be home much and the appliances I have are all new. The car might be a problem but I have enough in the slush fund to deal with that.

All in all, I think I'll be ok long-term.

[l2ridehd]

Moving money from a mutual fund to a bank CD (GIC) is selling you something. Might be the right decision at 2.2%, but he had you move money to his business (the bank) from someplace he did not control.

I am with others, a banker is probably a little below my bartender as someone I would go to for this type advice. Last one I talked to tried to sell me an annuity. I know there may be a place for them with some folks, but I prefer to manage my own destiny.

Good luck and enjoy your retirement.

[Nuiloa]

I really was surprised at how many people are against bankers. That's quite an eye opener.

The mutual fund RRSP was held at the same bank - all I did was move money from one account to another.

He also had me sign a disclosure stating that he did not receive a fee for his services and that he only advised me on the things I had asked for.

I guess Canadian banking practices are different than US ones.