Time for some full disclosure: I’m spent. I’m absolutely spent. Creatively, at least. Maybe it’s not “spent”, but more “focused” on other things. All I know is that, sitting here, writing this weekly newsletter, it’s getting the best of me. It’s a hard reflection — I don’t remember this difficulty last year.
A quick comment or two on Hockey Canada’s loss in the gold medal final this morning: In many ways, this was the best way to lose a game. There is no sensible person on the planet who watched the game and came away thinking the USA “crushed” Canada, or was even the better team. Every single person on social media across all platforms have agreed that Canada was “goalied” this morning — stymied by the best goaltender on the planet. Canada played a fantastic hockey game, were clearly the superior team, and did it all without their trusted leader. Funny things happen in winner-take-all games.
And let’s not skip over the class shown by the American team after their victory. They acknowledged being outplayed. They have toned down all sorts of trash talk and rhetoric. They even brought this grown man to tears with the Gaudreau tribute. Truly, this was a classy team when it counted and a worthwhile victor.
Congratulations to the Americans. You won’t have any experience defending a title — it’s far harder than winning it the first time around. Good luck in the next Games!
I’m going to try talking about work this week instead. I promised a few weeks back I’d try to produce something you could learn, something of value you could take with you during the week. Way back, I wrote a very short-lived newsletter called “Toonie” that attempted to provide this sort of value. Maybe I should revive it. It was far, far more widely read than this Sunday Edition has ever been.
Where it fell short for me was in the weekly effort it took to put together that level of value for a reader. Financial writing is difficult — there are so many “it depends” and so many variables to work through, it takes considerable effort to be concise and accurate at the same time.
You Need Less Money in Retirement Than You Think
This point-of-view will probably run against prevailing advice. Delayed gratification is a good thing, they say. If you want to have fun, you’ll need to save at least, say, $1 million by the time you are 65 years of age. Because, of course, loaves of bread will be $20 when you ultimately decide to retire.
(For those who think $1 million is a lot, it’s really not. Approximately 40% of workers in Canada are funded through taxpayer dollars, and the majority of those have pension plans which hold large retirement assets. You may not be staring at $1 million in your online banking portal, but you certainly have access to healthy retirement income.)
But there’s more to the retirement income story which helps take some burden off today. You probably don’t need $1 million (or more) to retire. There are other sources of income to get you through.
The Canada Pension Plan is a very real savings asset. You can’t add it to your net worth statement, but a generally healthy retirement will yield $12,500-$20,000 a year (depending on when you started contributing and how much you contributed in your working life). When you turn 65 years of age, you also gain access to Old Age Security, or about $10,000 of additional income in the year. In total, most Canadians who worked and contributed CPP in their career, will receive upwards of $25,000-$30,000 per year. For a retired couple, you could potentially double it.
Then you can consider tax. The current basic personal amount (the amount of money you receive “tax-free”, for lack of a better term) is $16,000 federally. When you turn 65 years of age, you gain an additional $8,400 of “tax-free” income through the age amount. As a result, for many, many Canadians who receive CPP and OAS, a great deal of the income is tax-free.
So, backwards engineer the math — if a retired couple has about $50,000 (for round numbers) of tax-free income, they have $4,150 of tax-free money to spend on a monthly basis. Many don’t have a mortgage or rent. Many have lesser wants and desires. Many have a save-first attitude.
And this is the base for many Canadians. If you have any net worth of any kind, it adds to this amount. Tax becomes a consideration for all amounts above the basic and age amounts, but it’s not an unbearable amount of tax in the base brackets.
$4,150 per month is not a crazy amount of money per month, no. But it’s a strong start, and it eliminates some stress in your earning years to save for retirement.
Here’s my last comment on amounts of money you need in retirement: Remember the basic math that $1,000,000 of savings, with no rate of return at all, is withdrawn to nil at $40,000 per year for 25 years. This $40,000 adds to the $30,000 of CPP and OAS I discussed earlier. And in reality, an inflationary rate of 2% and a savings rate of 4% in a $1,000,000 savings account would require $50,000 per year in withdrawals to get it down to nil in 25 years. Now you’re at $80,000 a year in cash income (less some tax), which is more than the average Canadian salary right now.
All of this is to say: You need to save less for retirement than you think. Don’t use my words to go on a spending spree now — compounding is a very real thing when you mention retirement savings — but use it as a chance to reduce your stress and anxiety about the future.
The Second Cup
The Ultimate Color E-Ink Tablet Buying Guide
Chalid Raqami has the best e-reader and e-ink reviews on YouTube, bar none. This is an excellent comparison between the reMarkable Paper Pro, the Kindle Scribe Colorsoft, and Boox Note Air 5C. I thought the reMarkable would be blown out of the water, but appears to hold its own in certain categories.
Satchel & Page Executive Briefcase
I think I’ve found my desert island briefcase. I have likely written about it before, but there is something about the black leather option that has caught my eye.
Satchel & Page Carry On Pro Review
I’m clearly on a Satchel & Page kick. This review of the upcoming Carry On Proluggage option from Satchel & Page is splendid. I’ve saved more than a few videos from Desmond Wong to watch over the coming week.
Wes Huff on receiving the Gospel, rather than achieving the Gospel
Wes Huff continues to share the Good News in a wholly unique way.
Marcin Patrzałek Proves One-Guitar Masterpieces Are Real
This can’t be real. Seriously? I don’t think this video “proves” anything at all. But assuming it is real, this is some of the coolest music I’ve ever seen.
Current Reader
Here’s a unique new RSS app making the rounds this week. Side-note: I feel like serif fonts are making a comeback in apps these days (check out Acme Weather, a new weather app making the rounds as well). I’m here for it.
Highlight of the Week
“The best-educated and highest-earning Americans, who can have whatever they want, have chosen the office for the same reason that devout Christians attend church on Sundays: It’s where they feel most themselves. “For many of today’s rich there is no such thing as ‘leisure’; in the classic sense—work is their play,” the economist Robert Frank wrote in The Wall Street Journal. “Building wealth to them is a creative process, and the closest thing they have to fun.””
— Derek Thompson
This resonates. Seriously, seriously resonates.
Happy Sunday. I hope you have a wonderful week ahead.
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