Lucky Lucky Ducky Duck!

I am a lucky ducky. I realize that. I have spent the morning being lazy  reading the Personal Finance section of The National Post's new E-Magazine (and it's free)!  The Donald can keep his billions, I neither want nor need them.  Not that I'm wealthy....I'm not!! To make it into the top 1% (in Canada) I would have to be earning $191,100 - even in my last years of teaching I wasn't making even half of that and now that I am on a pension I earn less than 30% of my former gross income. If I look at net income I make about 50% as I no longer have most deductions that made my teacher's paycheque look like it got hit by a land mine!

With that said I am still such a lucky duck with my employee pension for life! In Canada 47% of people between the ages of 55  and 64 do NOT have an employee's pension and of that 47% only 15% have enough money saved to live on in their senior years and the rest will live in poverty. Lower income folks, those earning between $20,000 and $50,000 have an average of $250 saved for retirement! Those of us with kids in their 20's know how hard it is these days to even get a job with health benefits let alone full-time hours and/or a pension.  It's a huge crisis!!

Now...I'm not saying I don't deserve my defined benefits pension or that I didn't work for it. I do and I did. And I contributed an average of 13% of every paycheque for the privilege. I lived on way less when I was working so that I would be comfortable when I retired. I don't have a huge pension but it's enough for one person. The poverty line in Ontario for a single person is just under $20,000. I'm in the $30,000 range now and would find living on $10,000 less possible, but probably not comfortable!

What is the answer? I don't know. The gov't of Ontario is creating a mandatory employee pension plan for those without one starting in 2017 with equal contributions from employees and employers. This has caused a lot of dissent as people will have to learn to live on less and many don't want to do that. Also companies aren't excited about it as that will be less profit for them. It's hard to look ahead to retirement when you don't have enough to live on NOW!

Conclusions:
1) I sure wish Kazi had gone into teaching instead of her current minimum wage jobs.
2) I'm thinking I'll open up an RRSP for her and make small contributions. Eventually I hope she'll be able to take over the contributions. People need to start saving for retirement as soon as they get a job!
3) I'm a very lucky ducky! And I'm in the minority, not the majority so I need to do my part. Part of that is being an activist in the $15.00/hour minimum wage battle currently being waged in Canada and the U.S. In Ontario the minimum wage is a whopping $11.25 per hour. A livable wage is considered to be $16.60 per hour. We're not even close.

Thoughts?

Mid-Month Money

I was thinking yesterday, yes thinking, that I don't post that much about money anymore. There's only so much excitement one can wring out of an unchanging monthly pension. Before I retired, two years early, I had to meet a few goals: pay off all debt and increase savings to a level that felt comfortable. I had a Five Year plan and I worked away at it and was able to retire early, thankfully.

Now I still try to sock away some money every month into savings and most months I'm successful at doing that. My budget is very simple: take my net pension, subtract all variables and invariables (is that a word?) including savings, and the rest is my spending money. I divide the spending by 4 weeks so that every week I can put cash in my wallet. I've been following this plan since I retired in 2014 and it works for me. Occasionally I have to use long term savings for big purchases and travel but I rebuild month by month.

There IS a little bit of exciting money news though...

• I will receive a cost of living increase starting the end of January which increases my net pension by $30 a month. Not a lot but it covers increases in condo fees, insurance and increased utility bills (almost)
• I did my income tax online to see whether I would get a refund or not. I don't have any tax receipts yet but it was pretty easy to guestimate. I will receive a refund but nowhere near what I used to receive. Only about $200. But I don't have to PAY which is the important thing. I needed to know this because...
• I filled out my forms to start receiving my Canada Pension in June and they want to know how much income tax I want taken off. So I had to see what my income taxes look like before I could answer that question. Woo hoo!! Looking forward to that additional money every month and all the fun it will bring!

January's Budget - Am I on Track?

I would say that I am! My $150 weekly allowance seems to be multiplying somehow. I've paid $120 for an eye exam, $50 to charity, an extra $50 to savings, $38 to Walmart, $17 to Shoppers Drugmart, $14 for a movie and $11 at Value Village and $10 on yoga. My ticket for the Food and Wine Show ($32) will come out of next's weeks allowance. If you did the math you'd see that I've spent more than my $150(x two) weekly allowance. That is because I overestimated some of my bills. I estimated $75 for natural gas and the bill was only $47; electricity was $65 and I estimated $70 and so on. Those extra little snippets go into my misc budget which funds my allowance :) Aren't numbers fun??

I have $127/$160 in my gas budget and Dougie's tank is almost full and $158/$280 in the food budget. So far this month I've only had to put $33 in the gas tank (I see that oil dropped to below $30/barrel!!!) and have spent $122 on food. That's for two adults. I'm pretty good at stretching my food dollars - I got 3 meals out of 4 chicken breasts! And 4 meals out of 1 package of ground turkey!

So that's how it rolls for January so far...I hope I haven't jinxed myself by proclaiming that I've had a good month so far...!!

Retirement Update

I noticed a blog post the other day (http://ndchicscents.blogspot.ca/) entitled "Retirement Update" which motivated me to provide one too.

Yup, still retired!!

When I was approaching retirement I thought I would give myself a year to figure out what I wanted to do with the rest of my life. It turns out a year wasn't long enough.  Bear in mind that a lot of life-changing events occurred over the past year and a half in addition to retirement: relationship ending, loss of future plans, 20 year old pet passed away, had to sell house in PEI, living on half the income I was used to, and a back injury.... which all contributed to low level depression and anxiety. Adjusting to retirement isn't as easy as it would seem!

So...where do things stand now?

• health: medication is helping both with both back pain and mood enabling me to get physical once again; riding my back  bike (thanks for catching that typo sis!) and going to yoga and meditation has also helped me both physically and mentally. I still see a counsellor and am on a wait list for "group therapy"
• social contact: staying in touch with people is so important but not easy for me being the introvert than I am: every day I try to connect with a few people through texting, emailing, Facebook, blog, phone calls, going to social events, getting together with family, becoming more of an activist and so on. I still have days when I'd rather not see anyone 
• reviving old hobbies: my brother said to think back to childhood when we naturally gravitated to the hobbies and activities that we loved: for me that included biking, sewing and reading as well as sports, board games and playing cards. I also loved to draw, play piano and be creative. So far I have done one sewing project with another in the works, I have purchased a book about drawing as well as an "adult colouring book". I am working (slowly) on carving a piece of soapstone and indulge my love of reading every day. As a child one of my favourite things to do was to put a book and a bagged lunch in my bike's basket and ride out into the countryside, then climbed a tree to read and eat my lunch :) These days I try to get out on my bike every day but so far haven't gone out into the countryside with a book and a lunch. I'll add that to my to do list! I go to a "sports night" once a month in addition to a monthly "games night" and last week I started going to a weekly "euchre night" which has been fun. Usually I get out to see one movie a week with a friend
• new hobbies/activities: what would I like to do that I haven't tried yet? Painting, particularly water colours, learn a new instrument or purchase a keyboard, go back to school (tuition at my alma mater is free at age 60) so I'm considering attending part-time next year - perhaps a degree in film or getting back into the visual arts
• volunteering: haven't made my mind up about that one yet - I want to volunteer but not sure about where or how often. I sort of dread being on a schedule
• part-time work: at this point in time I don't feel inclined to get a part-time job
• travel: planning a trip or two each year is fun and exciting yet expensive. Once my Canada Pension Plan kicks in next May I'll be able to travel more frequently.
• redecorating: still working away at this though things have slowed down now as the weather is too nice to be inside as much. Hopefully I'll feel more motivated in the fall...

So things are moving along. I would say the biggest barrier is lack of "motivation".  I get things done but at a much slower pace than in the past and have to push myself to move some days. I feel that I'm on the right path and need to be more patient with myself. It's been a HUGE adjustment and it's not over yet. 

I'll be OK.

Frozen Assets

When I got up this morning it was -29c so is it any wonder my ass(ets) is/are frozen??? I've managed to have quite a few NO spend days this month because who wants to go outside?? That being said I did do some shopping on Friday in preparation for my Valentine's Day guests. But I'm still on track for February and may have some $$ left at the end of the month if I can stay the course!

Gas Budget - I have almost a full tank of gas and $120 left in the gas budget. If you don't drive anywhere gas stays IN the tank!! Also, I lumped ALL my errands together last Friday to use as little gas as possible. I've been averaging $30/week for gas so far which means I might have $60-$80 left in this budget line at the end of the month!

Food Budget - I spent more on food for the first half of this month than I did during the same time period in January. Some of that went for snacks for my party plus I bought extra food that I cooked for breakfast Sunday morning. There is still $116 left in the food budget and I won't be shopping for a a few days as I couldn't fit another thing in my fridge if I tried! I'm sure there will be a few dollars left in the food budget at the end of the month.

Misc Budget - Out of the $313 in the misc budget for the 2nd half of the month I have $230 left. Money has been spent on wine, chocolate treats from the Bulk Barn, movie rentals for the party, music downloaded from iTunes and a book from Amazon for my Kindle app. Upcoming expenditures include going to lunch with a friend tomorrow and the Bryan Adams concert on the 24th (though I've already paid for the ticket!) I hope I don't spend all of the rest of this budget by Feb. 28.

For the next few months any budget remnants will go to paying for my trip to England in Sept. So far I need to pay off my plane tickets and the deposit for my hiking trip with Annie. I therefore challenge myself to direct at least $150 (gas - $80; food - $30; misc - $40) towards my Mastercard at the end of Feb. Whatever is outstanding on my Mastercard will be paid off using my tax refund sometime in March.

Increased savings so far this month includes $350 from my pension and $200 in interest for a total of $550!! I have two more interest deposits from RRSPs to come yet this month. I'm surviving on my pension so far - I'm doing it, I'm doing it!!

Famous last words.....

Wheeeeeeeeeeeeeeeeeeeeeeeeeee!!

Drum roll please........

I have just submitted my Application to Retire online!! Woot woot!!  I will be officially retired on June 30, 2014 and collecting my pension in July!! On June 30th I will receive a lump sum payment of my pay for July and August (as our school year ends August 31st) plus..............

A $5,000 bonus for letting the school board know by April 11th that I am retiring!! Score!!

The down side, not for me but for grads of teacher's colleges, is that enrollment is DOWN and less than half of them will be hired. The number of new teachers far outweighs the rate of retirement what with fewer students in our schools. So I am willing to step aside for a fresh young eager enthusiastic teacher...I know, it's a sacrifice but I'm willing to make it :)

Now while that sounds like OODLES of CASH coming my way it will be taxed at a rate of 50% give or take...however I should be in for a juicy tax refund NEXT year! (Haven't even got this year's refund yet and I'm dreaming about next year's!) But I'll take what I can get and be happy with it.

Today I ran a HUGE training session with the EAs, admin staff and school board representatives. It took hours and hours and weeks and weeks of work to prepare but the great feedback I received made it all worthwhile. I look at it as a legacy I leave behind when I retire.

I have fallen behind with bringing objects home from school so I'm going to distract you now with.......

            FLOWERS!!

            GREEN SHOOTS!!

....you've forgotten all about my April 3 Challenge now haven't you?? hee hee...oh rats...

Okay, feast your eyes on some MYRTLE...
And for Barb - remember you commented the other day about the snow being gone from my patio?

Almost.....

 One last holdout due to the shade...

It was such a beautiful day on Sunday I sat outside with the last pile of snow on one side and the blooming myrtle on the other side, savoured a good cup of chocolate chai tea while I lazily listened to an audio book called "Death and the Lit Chick" - can't wait to get back into it again tonight!

Oh, and by the way I've returned to my bike with a vengeance! Pedalled for over 90 minutes and 30 kms last night! And today is Day 9 of my Juice Fast! If you would like to visit the website and learn more about this type of fast go HERE!

The Numbers Are In

                  All of the important numbers are right here!

• 125 days until retirement
• 80 school days until retirement
• 10 days until March break (we start on the 7th this year which is an unpaid PD day - thanks a bunch SCHOOL BOARD!)
• 4 - the number of kitchen cabinet handles I didn't buy as I miscounted - duh...
• 14 - the number of gallons of paint waiting patiently for me to get tinted
• 10 - the number of days until I start painting (coincides nicely with March break - what a holiday THAT will be!)
• 13 more paycheques until I start living on my PENSION - sure hope I know what I'm doing!!
• 8 - the number of rooms I still have to paint (as well as the hallways on each floor)
• 2 1/2 - the number of extra hours I get to sleep in tomorrow as I am going to a PD session that doesn't begin until 8:30am!! Woot!
• 27th - the date of Kazi's 3rd interview!
• 5 - the number of books I'm currently reading
• 5 - the number of rooms that have wallpaper border still to remove
• infinity - the number of nail holes to be filled and sanded prior to painting the walls
• 0 - the number of books I'll be reading during March break!
• 0 - the number of km I've ridden on my bike in the past week!
• 1 - the number of bags of Smarties I've eaten in the past week!
• 47 - the number of times I've procrastinated about riding my bike this past week
• $60.00 - the amount left in my chequing account until Friday's payday
• 4,529 - the number of times my cat has yowled at me for her supper
• 2 - the number of Tylenol I need to take!

My days are numbered!! Over and out!

No More RSPs For Me

Big Pile of Locked-in Money

I do not enjoy giving the government my hard-earned money. Before I even see my paycheque the government has taken their cut which amounts to about $3,000 a month. As if that wasn't enough I pay huge taxes on just about everything I buy from gasoline to groceries. GST, PST, and now HST. Oh, I'm not done yet...there's also all the other little or not-so-little fees throughout the year for things like a fishing license, a new sticker for my car's license plates and so on.

So, I try to find ways to hang on to more of my money hence I've been a faithful contributor to an RSP account for over 20 years. Because my employer takes off a big chunk every month for my teacher's pension I haven't had a ton of contribution room in my RSP each year therefore I don't want to lose a lot more of my money to withholding taxes when it's time to withdraw.

Yeah, here's the kicker. Putting money INTO an RSP really helps out at tax time - I've gotten some juicy refunds over the years. However, I didn't do the smart thing and reinvest that refund - if I had I'd be sitting on a pretty nice cushion of savings right now. No, being a single parent meant I used that refund to catch up on bills, buy my daughter a new pair of ghillies for her highland dancing and pay off credit cards etc. 

BUT, using another highland metaphor - EVENTUALLY YOU HAVE TO PAY THE PIPER!!  Yes, the government was nice to you when you put your money IN, but when you take it OUT they want more than their fair share.  See chart below for taxation rates depending on the amount you withdraw.

Withholding Taxes

Funds withdrawn from an RRSP will be charged withholding taxes. This amount must be held back by the plan administrator and remitted to the government on your behalf.

Effective January 1, 2005, the following withholding tax rates apply:

Amount of RRSP Withdrawal	All Provinces Except Quebec	Quebec
Up to and including $5,000	10%	21%
$5,000.01 to $15,000	20%	26%
More than $15,000	30%	31%

You will receive a T4 RRSP receipt for any funds withdrawn during the year showing the amount to be included in your taxable income and the credit for the withholding tax.

YIKES, right? Just think a minute. $15,000 x 30% = $4,500!!! Whoa Nellie!!

My plan, then, is to only withdraw $5,000 per year so that I pay the lowest taxation rate of 10%. So for every $5000 I withdraw I will only receive $4,500. HOWEVER, that's not the end of the story unfortunately. The gov't has a mighty long arm here in Canada and when TAX Time rolls around again the next year I will have to declare that $4,500 as income because when I put it into my RSP it was DEFERRED income. Soooooooooooo if my income is too high the gov't will take some more of my $4,500. It's so frustrating!!!

So I have a plan. You know me, I've always got a plan. I will retire in June 2014. The following year, 2015, I will withdraw $5,000 from my RSP and put it into my Tax-Free Savings Account (TFSA).  My income will be drastically lower due to living on a reduced pension so HOPEFULLY I won't have to pay any more tax on my RSP withdrawal come tax time. 

I will put off collecting Canada Pension until at least age 65 in order to keep my income lower. Once I've got all of my money out of RSPs and into TFSAs I'll start to collect my Canada Pension Plan which will be a higher monthly amount than it would be if I started collecting it at age 60.

So I can no longer put any money INTO RSPs as it's going to take me up to ten years to withdraw my $$ at $5,000 per year. From now on my savings will go into my TFSA, so I'm really, really hoping that the contribution rate of $5000 per year gets doubled to $10,000 per year after the Federal Election.

Other factors in my decision:

• I want to have the control over my money, not the gov't (yeah, right!)
• I want to have access to my RSP funds in the years before I'm eligible for OAS (Old Age Supplement) and before accessing my CP (Canada Pension Plan). Once I hit 65 I will be receiving CP & OAS as well as my teacher's pension. It will be the years from 58 to 65 that will be the leaner years, income-wise thus making it the ideal time to withdraw funds from my RSP and keep tax rates at their lowest. (Not that 10% is low by any stretch of the imagination!!)

So that's my story and I'm sticking to it! I hope.