Book Review: Money Sense Guide to Retiring Wealthy

A week ago, I received a copy of the above book from the Canadian Capitalist giveaway.   This is my first book review, so please bear with me.   I will briefly summarize the topics covered and list what I like and didn’t like about this book.  Let’s begin.

Summary

This book introduces us to the idea of retirement and breaks it down to different stages of our lives.  Generally, it focuses on a “typical” couple living in Canada, and what they can expect living and working from their twenties until they reitre.  I’ve  briefly summarized each chapter below.

Ch. 1 Retirement Made Easy:
Figure out costs of your basic needs and what would be luxuries.  Count on the government for Canadian Pension Plan (CPP) and Old Age Security (OAS) payments.  Factor in pensions (if any), and Registered Retirement Savings Plan (RRSP).  Figure out your level of risk.  Balance your present with what you want to do in the future.

Ch. 2 Your Twenties:
Spend less than you earn and invest in yourself.  Your earning potential is your biggest asset.  Start to pay off your student loans, and learn how to make and follow a budget.  Avoid consumer and credit card debt (“bad” debt), and if you must take out a loan (i.e., for a new car), know what your options are and do your research before you set foot in a car dealership.

Ch. 3 Your Thirties:
You will have a lot of expenses – try to stay afloat without incurring “bad” debt.  Your mortgage, RRSP’s, TFSA, car payments, RESP, home expenses – you cannot do it all, all at once.  Embrace “good” debt (i.e., your mortgage), and focus on paying that down.  You will need to prioritize RRSP, and RESP.  You may also have one spouse stay at home after a child is born – make sure to explore the tax benefits of this.  Have an emergency fund for at least 3 – 6 months of expenses.

Ch. 4 Your Forties:
Your expenses will (likely) be less than your thirties.  Your home is most likely paid off, and you have more flexibility to save towards RESP and RRSP.  Check in with a (fee based) financial advisor to make sure you’re on track. Life changes may happen (i.e., divorce), so you may need to re-visit your budget and adjust accordingly.  Consider a line of credit if you need money, and can pay it back relatively quickly.

Ch. 5 Your Fifties:
Even if you haven’t saved much towards your retirement, in your fifties, you have more flexibility to save very aggressively.  Likely, you have no mortgage, and your kids are out of the house.  Fuel your additional disposal income towards your retirement savings.  Know what your investments are (i.e., risk factor, MER) and have a back-up plan.  Know the perks of a pensions and be realistic about your retirement needs.

Ch. 6 Your Sixties:
Evaluate all your sources of income: CPP, RRSP, OAS and any pension. Evaluate what your needs in retirement are. Evaluate the benefits of retirement: no more CPP payments, lower tax bracket, etc.  If you don’t have enough to cover your expenses (both basic and luxury), consider working part-time. Know how much you can safely withdraw each year.

Ch. 7 Your Seventies:
Focus on enjoying and simplifying your lifestyle.  Plan your legacy.  Be aware that the government will force you to withdraw your RRSP in the form of Registered Retirement Income Fund (RRIF) or convert it to an annuity, and know your options.  Consider the options of a retirement home, and how it compares to a nursing home.

Ch. 8 Self Test:
This chapters pulls a bunch of data from Statistics Canada and the reader can compare themselves with the rest of the nation.  One thing is for sure, wealth is not balanced in our nation.

“The richest 20% of Canadian household control about 69% of the wealth.  The next quintile down possesses a further 20% of our national net worth.  There is not much left over for the other people.  The bottom 60% of households control only 11% of Canada’s wealth.  In fact, the bottom 20% of the population posses no wealth and actually owes a few thousands dollars more than it owns.”

Likes

I like that this book gave a very general overview for the general population, and has current data.  It gives sound advice for all ages, and gives a reality to check to what we should all think about for retirement at each different stage in our lives.  It reminds use, that we may not need millions of dollars, but we would like to do in our retirement will affect how much our nest egg needs to be.  The book doesn’t try to go beyond the most basics, and advises consulting a lawyer or financial planner.

Dislikes

This book is primarily geared towards a “typical” married couple who will be working from their twenties to their sixties.  It assumes they buy a house and will have it paid off by the time they retire.  We all know that most peoples’ lives are not “typical”.  Life happens, divorces happens, illnesses happen.  And while the books briefly touches on the “non-typical” topics, we are mostly left to our own devices to figure that out.

This book also doesn’t provide too much insight for the Twenties.  That was the shortest chapter, and since I am in my twenties, I would have liked to see more on that stage.

This book also makes the assumption that the government will help you out to cover basic necessities when you age.  It also briefly mentions that there are fears of CPP drying up, or payments may not be available for our generation.  Yet, thoughout the book, it assumes the maximum CPP and OAS payment for a “typical” couple (i.e., two incomes).

Verdict: Recommend

This is a great beginner book for any savvy personal finance person.  For me, I didn’t learn too much for the early chapters, but I learned a lot about what to expect later in life, and how I can educate and help my parents figure out their retirement.  I learned how great a pension can be, what an RIFF  and annuity is, and how to protect my estate.

Hope this helps!

Cheers,

 

 

 

 

Disclosure – I received this book from a giveaway from Canadian Capitalist.  I am not affiliated with Canadian Capitalist or Money Sense in any way.  I do not earn commission from either parties and my review of this book are my honest opinions.

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3 Comments

Filed under Book Review

3 responses to “Book Review: Money Sense Guide to Retiring Wealthy

  1. I thought about buying it, but it sounds too basic for me to want to read it. I feel like that info is all over the net already.

    But it’s a good starting primer for anyone who wants to start learning about money, I guess.

  2. Pingback: Frugal Parents: Growing up in Fab Frugirl’s Family | fabulously fru-girl

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