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Friday, March 24, 2017

OAS Change is No Big Deal

Posted by Tim Stobbs on March 30, 2012

Well the federal budget came down yesterday, which you can read here the official documents.  But perhaps the most significant change for future retirees is the shift to move the start of OAS from 65 to 67 by April 2023 (see chapter 4).  That means if you are 54 or older by March 31, 2012, you just won yourself a free pass on worrying about this issue, which means you can stop reading now if you like.

For everyone else, I want you all to take a deep breath and realize something very important: the maximum benefit you can receive from OAS is just $6481 per year in 2011.  So in reality you are out just under $13,000 in benefits, so let’s be blunt for a moment: it isn’t a big deal.  If your retirement plans are so tight that losing $13,000 screws them up you have more serious issues to worry about like saving a lot more.  Even if your a couple retiring you lost at most $26,000 of benefits, which becomes a slightly bigger number, but in the end I can make that up by delaying my plan by three months.  My goodness, that is nothing compared to what the stock market can do to my plan in a day at that point.

The reality is the federal government all did us a favour by giving us a 11 years heads up on a policy change so you can now adjust your plan for it.  Heck the even gave an extra five year phase in period on top of the 11 year notice so if your 53 today you don’t have to fully wait until 67 to collect OAS.  Then as an added bonus the gave people the option to take OAS later starting in 2013 and get a larger payout.  You can do that to a maximum of five years which in their example would raise the payout from $6481 to $8814 per year.

In the end the federal budget change despite all the negative media coverage on this issue just made my life easier.  In my plan, I had assumed I only got half of that benefit so with this change the program just got a little more stable, so perhaps I will luck out and get more than that.  Overall, it isn’t changing a damn thing for me and likely won’t for a lot of other people.

Discovering The Root of my Flawed Thinking

Posted by Sheryl on March 29, 2012

This is a guest post from Sheryl in Ontario, who is 40 years old with a grown daughter, and is trying to rebuild her retirement dream just 20 years too late for early retirement.

That small stash of cash I have had for emergencies? Gone.  The line of credit I had set up for emergencies? Used.  March has not been kind to me.  My boyfriend’s father passed away (it was expected) so we had to go out of town for the funeral.  Fortunately, I have family with whom we could spend the night, so expenses were kept to a minimum, mainly gas and about $20 for food on the road.

While we were away, I got into a fender bender with my van.  The van is 15 years old, and knowing that insurance companies will only pay up to the value of the car in repairs, I didn’t have collision coverage.  (By the way, I’ve been driving for 24 years, and other than a small collision 2 months after I got my license, this is my first accident.)  This has cost me about $2,500 (including hiring someone to fight my ticket, don’t want my insurance to go up, so I think it will be worth it).  I also finalized my taxes, and I owe approximately $1,800.  ( I know what I did wrong last year, but didn’t think a few “small” amounts would add up so fast, lesson learned).  On top of that, 2 of my closet inserts collapsed this month, not too much expense, but time and stress when I didn’t need it (patching walls, cleaning up smashed nail polish bottles out of my carpet).

Getting towards the end of the month, I noticed myself getting into my old way of thinking. “Things have already been so bad, and expensive, why not just make this a really bad month and start fresh next month being REALLY good with my money”.  The old me would then go and do a big grocery shop, and then look to see if anything was coming up to being replaced (those sheets/towels/jeans are wearing thin, I better replace them), and buy anything I’d been putting off until things were “better”.  Of course all the stress of having a bad time would result in more eating at restaurants, and perhaps other leisure activities to numb the stress.  I caught myself wanting to do this, but did not follow through.  OK, maybe one extra food shopping trip that was less than $20 for non-essentials.  It got me thinking about why I fell into this trap though.

I work in the accounting department of a car dealership, and every month I produce a financial statement.  Years ago, when the store wasn’t doing well, when we were having a bad month, we would put expenses that normally would get accrued, or that we knew would be coming up (repairs to the building etc) all into that bad month, and start fresh the next month.  Over the course of the year, it would show that we had one or two disastrous months, but the other months looked great.  It was all mind games for the owner (I was instructed to do that by the managers, a lot of politics at the time).  I was learning this at the same time I was learning how to look after my own finances, and applied the same principle. It’s similar to being on a weight loss diet, eating a piece of cake, and deciding that the day is already blown, so I may as well have fish & chips for dinner, and go back to behaving tomorrow.

Unfortunately, I have found that my personal finance cannot be approached in the same manner.  I can use averages of months as a guide, but I have to look at the big picture too.  Using a setback as an easy excuse to relax my self discipline is not going to get me where I want to be in 5 or 10 years.

I’m proud that I figured out why I used to do that, and that I can change how I think now.  The financial damage in March has been controlled, and I think April (and possibly May) will be a “spend nothing” month to get as much of this paid back as I can.

What bad habits have you changed, or are changing with your financial behavior?

Too Much Work?

Posted by Tim Stobbs on March 28, 2012

For the last month I’ve been under going an interesting experiment: I’ve been working full time at my day job.  Why?  Long story, but the summary version is I knew March was going to be nuts at work so I offered them a deal.  I moved my three usual Friday’s off in March into April after the long weekend (which then gives me a week off *grin*).  Yet during March I have realized: I don’t think I can work full time anymore.

It’s only been a month and I’m like exhausted all the time, but this is likely from a good amount of my evenings have been busy with school board meetings.  So I’m running at full steam at two of my jobs and I can really feel it taking a toll on me.  So in some regards this month has proved again what I already know: I really can’t work full time at my day job while I do the school board thing.  It’s just too much for me to handle well, which is good since my usual situation is working at 90% of the time at the day job.

So this got me thinking about other people that talk about being tired so often and I wonder if it is just too much work?  Do people end up mindlessly on the couch in the evening because their bodies and minds just can’t handle 60 or more hour weeks?  Do we all have a right amount of work that we should be doing each week?

I have to think that could very well be a reason, but I think that concept is particularly interesting is I know my productivity at work has gone down this month.  I’m used to having a rather good energy level all the time so I tend to be fairly efficient at finishing tasks.  Now I notice that isn’t the case as much.  So while I’m at work more right now, I would rather doubt over the month that I am getting a lot more done.  I’m running out of steam now so this last day off worked I think will have diminishing returns.

In the end, I wonder how much more productive people would be if the standard work week dropped off by 4 or 8 hours?  Employees would be happier, employers would have less wage costs (not in all cases, but some) and I have to really wonder if nearly the same amount of work would get done in the long haul (short term it wouldn’t work as you likely already have too many employees in burnout).  So what are your thoughts on a reduced work week for everyone?