Tax Changes for the Better in SK

Well it happened and I didn’t even notice until I was reading on taxtips.ca that SK finally changed their tax laws to account for the federal enhanced dividend tax credit.

What does it mean? Well if your like my wife who collects all the dividends (taxable accounts) it means she actually gets a reduction on her other income by getting dividends. I love the government! If your happen to have a low income, you get all the breaks. Which is partly how I plan on retiring at 45. If you get most of your income from capital gains and dividends you are paying way less tax for the same net income.

Retirement Myths

Most of the retirement planning people provide advice like:

-You need 70% of your pre-retirement income in retirement to keep the same standard of living
-You are going to live longer, so plan to live to 100 years old.
-You can’t count on government pensions

All of the above is bullsh!t.

If you are following my previous post guideline of the 30-30-40 budget, you need exactly 40% of your pre-retirement net income to keep the same standard of living. After all your house should be paid for so you don’t need 30% and if you are not saving for retirement you don’t need another 30% of your net income.

Check out the government’s average life expectancy (~75 for males and ~81 females) and you will be a bit overly optimistic to assume that you medical science will keep you alive for another 20 to 25 years.

The entire myth about the CPP running out of money is a bit of carry over myth from the US where social security is on rocky ground. We have been assured that the CPP fund has enough money to keep going.

So remember to take any ‘advice’ from someone selling you a mutual fund or other product with a grain of salt. After all they are just trying to earn a living by making you work longer than you need.

Holiday Spending

Can you hear it in the air? Tiny bells and beeps indicating you’re spending far too much money at Christmas again. Well it doesn’t have to be that way; you just have to adjust your thinking a bit.

I personally like to start shopping for Christmas starting the week after Christmas. Why? Wrapping paper and cards are cheap and if you have the storage space it is a great cost saver.

Then on Jan 1, I start putting away $150 a month into my ING savings account, so by next Christmas I have my $1500 saved for buying presents before I buy my first present. When I go to actually buy the presents I look for things people will really enjoy rather than worrying if I’m not spending enough. If I end up under budget I just get a nice present for myself on Boxing Day when the sales are on.

Happy holidays every one.

A blog about early retirement and happiness