How much is enough in retirement?

Well, it depends.

The rule of thumb that you only need 70% of your pre-retirement income is too simplistic.   For some people, it is sufficient.   But for many, it is not.

A good start in determining how much you’ll need in retirement is to break down your budget into two categories of spending –

  • necessities (basic food, shelter, clothing, medication, etc.), and
  • discretionary (travel, dining out, entertainment, money for a new car every years, etc.)

If your basic needs add up to 50% of your after-tax income, you will have up to another 50% for discretionary spending.  So if you choose to spend only 25% on discretionary items, then you will need a total of 75% of your current income in retirement.

And remember to take into account in your calculation that certain expenses will decline or even disappear in retirement.   For example, you will no longer have to make CPP or EI contributions, income tax will likely decrease, and the need to buy work clothes will be a thing of the past.

On the other hand, certain costs will likely increase in retirement.    Healthcare and hobby related expenses will likely go up.   So include these items in your retirement budget.

The last bit of planning is to make sure you will have enough income to take care of your retirement needs when you retire, before you retire.

Back From the Future – Savings Basics


I came across a recent ad with ex-dragon Arlene Dickinson espousing her goal-oriented strategy for saving money and restoring financial well-being.  Immediately, the book The Millionaire Next Door came to my mind.  This New York Times bestseller was published a number of years ago sharing with readers the surprisingly simple, yet effective secrets to amassing a million dollars or more.  Those strategies then still apply today, as they did for many generations before us.

Both messages are literally the same.  Slow and steady win the day when it comes to responsible saving and budgeting.

For example, you can save as little as $2.75 a day; and that can add up to $1,000 a year.  Think 20 years into the future, that’s $20,000 from just saving the price of a cup of coffee at Starbucks today!  This doesn’t even take into account the compounding effect of investing, which can potentially double (*) this total!

So by giving up a coffee at your favourite Tim Horton’s, walking or taking public transit instead of driving to your local store, and packing your lunch instead of fast food out, they can all add up.

There are many ideas to save.  Just google budgeting, saving tips, etc. and you will be bombarded with thousands of useful websites and ideas.   My book ‘The Personal Budgeting Kit‘ also has many smart saving ideas to help you on your way.

Here are some other strategies to keep in mind. They are simple, basic and logical.

– live below your means
– save your money
– pay down your debt

– have a plan/goal
– seek advice
– read up on saving ideas

As quoted from the Millionaire Next Door – “Whatever your income, always live below your means.”
And as quoted from Arlene Dickinson in the ad – “Keep at it when you can and it will add up.”


(*)  assuming a 6% or higher compounding annual return.

Save your money $$$

Here are some concrete saving ideas to help you keep more of your money.   Read my recent posts on how to save over $42,500 in just 7 years, even with only a 4% rate of return!

1)   Do not impulse buy, only shop for what’s on your prepared list;
(Studies have shown that as much as $3,700 a year is wasted on unnecessary purchases.)


2)   Lunch in (not out) more often;
(A average savings of at least $5 per meal when not lunching out.  Do this twice a week and you will save $520 a year.)

lunch in, save money

lunch in, save money


3)   Stop food waste, be creative with leftovers;
(Studies have shown that as much as 35% of our food ends up being wasted, or $2,200 year.)


4)   Pay your credit card bills on time;
(It’s obvious, many dollars can be saved when you stop those 18% to 20% interest charges levied by your credit card companies.)

no more credit card late payments!

no more credit card late payments!


5)   Look for cheaper phone plans;
(Even a savings of $20 a month in your phone plan will save you $240 a year.)


Add up all your savings and you are well on your way to top up your TFSA for a more secured future!

see your money grow!

see your money grow!

Save up to $15 a day for your TFSA

My yesterday’s blog shows that you can amass $42,600 in tax free savings with only a 4% return and in just 7 years.

The difficult part for most of us is coming up with the money to contribute to our TFSA (tax free savings account).  For 2015, the yearly maximum is $5,500 or about $15 a day.

$5,500 is a lot of money for most people.  But $15 is more attainable.   So focus on what you can save each day, instead of the huge end sum of $5,500.  If you can’t possibly save $15, try $10 or even $5 a day.   Any amount will work and get you started.

Put real cash saved each day into a glass jar so you can actually see it before depositing the money into your TFSA account at the end of the month.   Start all over for each month.   I’m certain you’ll be surprised how your TFSA will build over time.

Save $15 a day = $5,475 yearly!

Save $10 a day = $3,650 yearly!

Even just save $5 a day = $1,825 yearly!

Now isn’t this worth pursuing?   And what a great way to start a January.

TFSA tax free $ accumulation – how cool is that!

I can’t think of a better way than the chart below to illustrate the power of tax free savings accumulation.

If the maximum contribution to a TFSA (Tax Free Savings Account) has been saved since its inception in 2009, one can expect to have almost $42,700 by the end of 2015!   This is assuming only a 4% rate of return.   If the investments in the TFSA yield a higher return, the accumulation would be even higher.



Automate your financial life

automate to organize

Life’s not always a beach.   There’s work to be done and things to plan for before you play.   So let’s start the new year off on the right foot, and make a simple plan for your 2014 saving plan.

Don’t want to have to scramble (again) to deal with last minute financial tasks, like RRSP contribution and tax filing organization?   Well, you can make life easier on yourself by sparing a few moments now to plan ahead.    Here is a financial 5’er list on what to automate now to simplify your life for the rest of the year.

  1. Automate your files for your tax filing papers:   Set up a few folders to handle all the tax papers that should be arriving soon for this year’s tax filing – tax slips, investment activities summaries; donations, medical and other receipts, etc.  Keep these paperwork organized by keeping receipts categorized using envelops and folders.   Make sure you mark them clearly to indicate their paper contents.   A good starting point is to see what receipts were used from your previous year’s filing.
  2. Automate your RRSP contributions (*) for this year:  For many tax filers, this is still a good way to save money and defer/reduce tax at the same time.   Setting up an automatic savings plan for as little as $50 a week will yield you at least $2,600 a year in contributions!;
  3. Automate to maximize your TFSA contributions (*) for this year:  Although your contributions are not tax deductible, the income generated is tax free.   You can save your annual contribution limit of $5,500 by setting up an automatic savings plan of only $106 a week.;
  4. Automate to maximize your RESP contributions (*) for this year:   There’s free money from the government (grants) to help with your child or grandchild’s post secondary education.  Up to 20% of your contributions to a maximum of $500 a year is available per child.   By setting up an automatic contribution of $50 a week will add up to $2,500 a year, and the plan will also be entitled to the maximum $500 grant.;
  5. Automate your donations for this year:  Registered charities prefer receiving regular donations from their supporters than one time donations.   It helps them to budget their operations better and for you, it is a no-brainer way to donate.   You can set up as little as $20 a month automatic donation to yield you a $240 donation receipt at the end of the year.   Check here for information on the super credit available for first time donors.


It’s a good idea to set up these automatic savings and out-transfers at the same time as when your paycheques are deposited into your chequing account.   That way, you’ll be more likely to reduce your spending because the money is not in the account anymore.

Now pat yourself on the back for a job well done.   You’re set for a more organized and well planned out 2014!


*    You are strongly advised to meet with your financial advisor/accountant/tax preparer to determine your optimal contributions level for your specific circumstance.

How to save money on your cellphone data plan

It’s shocking how much extra we can end up paying for cellphone data if we don’t pay attention to our data usage.   A bit of video streaming and podcast can send our billings through the roof if we’re not careful.   So what can we do rein in our cellphone data bills?   Here are a few good ideas to keep in mind –

  • try to access free wi-fi as much as possible.   A lot of public places now provide free access.   All you need to do is ask.
  • know which apps are running in the background.  Turn them off when you’re not using them as they also chip away at your data plan.
  • refrain from sending large files and pictures, or updating programs unless you are accessing free wi-fi.
  • always monitor your data usage regularly to keep it under control.
  • know when your billing cycle ends.  This way you can limit your data usage for this cycle.  Especially if you know you’re running the risk of going over your plan limit for this cycle.
  • put your cellphone on airplane mode when it’s not being used.
  • turn off roaming when travelling outside your plan area.   Consider checking with your carrier to find a plan that can save on roaming charges when you’re on the road and you need to access data.

Avoiding debt for this holiday season

Debt burden is an increasing problem for many people today.   And no wonder, we’re constantly being bombarded with advertising and with the holidays coming even more so.

So let’s look at bulletproofing your mind from all the temptations to spend big over the holidays.   Here are a few tips –

1)   Always work from an affordable budget and put a reasonable limit on the amount to spend on gifts and holiday entertainment.

2)   Shop small – consider small but unique gifts for family and friends.  There are many local merchants and crafters selling affordable and one of a kind items.  They would certainly appreciate your support this holiday season.

3)   Shop later – many merchants start their markdowns, and some aggressively, as Christmas eve approaches.   They are afraid of being saddled with inventory after the holidays.   So if you can, refrain from buying the first two weeks of December.   Instead wait.   Chances are the closer to December 24th, the lower the prices.   Of course, this doesn’t apply if the item is a hot seller this season and it is something you definitely must buy.

4)   Give gift cards – not only are these appropriate gifts to give, they are also convenient and can be easy on the pocket book.  Today, you can virtually buy gift cards in any denomination from almost all retailers.   There are even discounted gift cards for entertainment and dining that can be bought from merchants like Costco, Groupon and Living Social.

Remember, holidays and good times will come and be gone too soon.  But bills and debt can be a real stress after, adding to the gloom of the dreary winter months ahead.   So be mindful not to lighten your pocketbook too much this holiday season, and you’ll be thankful that you did this coming January.


Money Smarts – Holiday Saving Tips

By Sylvia Lim, CFP, CGA

When it comes to Christmas, commercialism has won out over the real celebration of the occasion. If you want to have a meaningful holiday season without getting caught up in the hype and frenzy, here are some holiday tips to help you stay jolly without consuming every cent you’ve got:

  • Make a gift list and set spending limit on each person. Be realistic and don’t go overboard. Always total all the spending before you do your shopping. Revise down the limits if necessary to an affordable total. Giving the perfect gift does not mean giving the most expensive gift. Often the homemade, thoughtful items are the most memorable.
  • Shop with cash and bring enough on what you’re prepared to spend. We tend to spend less with real money.
  • Skip the Christmas cards and save on postage. Use e-Cards and e-Greetings for online freebie greetings; or just email your holiday greetings to distant friends and relatives.
  • Shop at factory and discount outlets.
  • Don’t buy gift tags. Cut out pictures from used Christmas cards for use as gift tags.  Enlist your kids for this task!
  • Recycle your ribbons and gift bags for next year.
  • Have pot luck holiday dinners. You provide the main course (like the Christmas turkey) but have your guests bring agreed-on side dishes, desserts, wine, or other beverages to the family meals.
  • Start your gift list for next Christmas now. Keep an eye out for after Christmas and holiday sales and take advantage on attractive markdowns. Buy only if you have spare cash now and don’t charge up your credit cards if you can’t pay off your monthly balances.
  • Give The Personal Budgeting Kit to loved ones for Christmas. It’ll start them on the road to financial freedom, and help them save thousands of dollars over their lifetime. It’s the best investment you can make to help your loved ones with their money challenges.

There are more money saving tips for the whole year in The Personal Budgeting Kit. This is a timely guide and workbook to help everyone save their money.

5 Ways to Save $

By Sylvia Lim CGA, CFP

Five areas to help you save $100 a month!

You can do it. A bit of spending awareness can help you save money painlessly each month. Here are ideas to help you get started and stretch your budget.

Dining out:

  • Most families eat out at least twice a week, some as many as four or five times! Cut back your dining out habit by only once a month and save yourself at least $30.
  • Substitute one ‘dining out’ meal with a ‘pick up main course’ meal. This helps you save on the price of the bread and butter, salads and beverages. This can easily save you $15.


  • Buy ‘in season’ fruits and vegetables. Be flexible in your meal planning and take advantage of weekly store specials. This can save you at least $10.
  • Buy in bulk your basic grocery essentials. For example, buy four liters of milk instead of one liter at a time. Freeze the extras until you need it and save your money. This can easily save you $15.

Banking and credit card matters:

  • Track your ATM and debit card transactions. These habits may be costly conveniences. Curb their uses or shop for a good package plan can save you $10.
  • Average bank credit card charges 18.5% in interest rate. Switch to a ‘low rate’ card can easily help you save $8 if your average credit card balance is $1,000. Save more by paying the balance off.

Personal care:

  • Instead of expensive facial cleansers, use powdered milk! This can save you $7.
  • Have your haircut every 6 weeks instead of every 4. This can save you $7.

Household products:

  • Make your own all purpose cleaner. Mix together 1/4c baking soda, 1c ammonia, ½c vinegar and 1 gallon of warm water. This helps save $3.
  • Don’t buy carpet deodorant. Sprinkle baking soda on carpet instead. Wait 15 minutes and vacuum. This will save you $3.

Find more saving and finance tips in Sylvia’s books–visit the Books page.