Early Retirement Planning Ideas

December 16, 2011 admin No comments

It seems no matter where you go these days some one is talking about early retirement. Most working age individuals seem to want to get out of the rat race as soon as possible but don’t know that in order to do so they will need to do some early retirement planning. For early retirement to become a reality and not just a dream careful planning needs to be done, you need to start saving early and be disciplined to achieve your goals.

First you need to figure out how much your life is going to cost you, if you are retiring early then you will still be quite active and may require more discretionary funds then a person who retires later in life. Most people in retirement need about 70-80% of their re-retirement income, but if you plan on doing say a lot of traveling you may require more. You should also consider your retirement in two stages. First make sure you’ve saved enough in your registered plans such as RRSP’s, LIRA’s, TFSA & pension plans in Canada or 401(k)s, IRA’s & pension plans in the United States.

Once you’ve figured out how much you will need after age 59 in the USA or 60 in Canada including long-term health care costs then you can start to figure out the period of retirement before this. If you have maxed out your contributions to registered pension plans than you can start save money in a non-registered investment account. You should consider investing in assets that reward you to own them for example by way of a dividend.

In Canada if you invest in qualified Canadian corporations that pay you a dividend you will pay a reduced rate of tax than you would on say employment or interest income. In fact with an annual income under $40,970 in 2010 you would pay little to no Federal tax at all on your dividends from qualified Canadian corporations.

Early retirement planning is key if you want to achieve your goal of retirement at a young age. A solid plan for saving money is the only way you will be able to achieve it short of winning the lottery, you must be disciplined in your approach and review your plan yearly to make sure you are on track to meeting your savings requirements. You may need to make periodic adjustments to your plan as your life changes. No one said it was going to be easy but if your goal is to exit the 9 to 5 daily living you’ll need to make sure you stay on track.

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Too “Even Bigger to Fail”

December 16, 2011 admin No comments

The banks were “too big to fail” before the 2008 crash. Do you know those same banks are even bigger today?

According to data compiled by Capital IQ, JP Morgan had assets of $1.3 trillion before the crash, now it has $2.3 Trillion. BofA went from $1.4T to $2.2T, Citi from $1.8T to $1.9T and Wells Fargo from $0.5T to $1.3T.

These four banks have the equivalent of more than half the entire output of the U.S. economy of $14.4 Trillion! That’s just too risky for the fiscal health of the country.

The U.S. government had no choice but to bail out the banks. Had they not done so the economic catastrophe in this country would probably have been at least as bad as that of the Great Depression. Sometimes you can learn from history. Why aren’t we learning from this piece of recent and painful history by allowing these banks to get bigger than they were before the crash of ’08?

JP Morgan consumed Bear Stearns and Washington Mutual. Bank of America gobbled up Merrill Lynch and Countrywide. Wells Fargo picked up Wachovia. Citibank was in such tough shape back in 2008 they were not in a position to acquire any of the troubled financial firms.

So, what will happen when one of these financial mega outfits gets in trouble the next time? Most likely, the same exact thing as the last time, a government bailout. In fairness, these institutions are much better capitalized then they were in the period leading up to the crash. One might argue the oversight is better now, though after what recently happened to MF Global that hope seems overly optimistic.

The fact remains, these banks are at the core of the financial lives of millions of Americans and they are once again “too big to fail” because the repercussions of failure would be devastating.

By all accounts the probability of failure of any of these institutions is extremely low but should we even allow a low probability scenario to remain in play? When the financial engine of the world’s biggest economy is at stake it seems the answer should be a resounding, ‘no’.

While the prospect of a mega bank failure is highly unlikely there is a much more likely outcome. Let’s call it “too big to serve”. That is, too big to serve its customer base effectively. It’s a daunting task to merge big corporations. The different corporate cultures, information technology, politics, compensation systems and so on make these mergers almost doomed from the start.

We’ve already seen one example of how the hubris of a mega bank can impact the customer experience. Just a few months ago Bank of America was about to roll out a monthly fee for customers using their debit cards. The backlash was fast and furious which led to the bank retracting their position.

Customers will decide for themselves if their Merrill Lynch experience is better now that it’s a Bank of America experience, or if their Wachovia relationship is better coming from Wells Fargo, or their Washington Mutual interactions are better now that they are JP Morgan Chase.

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Major Change to Holiday Compensation Claims

December 16, 2011 admin No comments

Introduction
A recent change in European law may mean a change to the way compensation claims are processed for injuries suffered abroad and the amount of compensation awarded.

Up until now holiday makers and travelers abroad have been able to claim compensation under English law with the convenience of being able to instruct UK based solicitors to pursue their claims through the English legal process.

It was confirmed last week by senior judges that injury claims as a result of an incident abroad, which took place before January 2009, will now be processed according to the laws of the country where the incident occurred.

The impact on compensation claims
It is likely that this change in legislation will mean smaller payouts for Brits injured abroad. The process of claiming for injuries suffered in incidents such as car crashes, outdoor pursuits, slips at the pool and food poisoning is expected to take longer and be fraught with difficulties.

Depending on the country involved the amount of compensation received could be a fraction of the level of compensation due as a matter of course in the UK. There are many reasons for this, which for example, includes countries where the cost of living is low and payouts are correspondingly low and countries who have a more generous social security system that offsets the need for higher care and rehabilitation costs.

The costs of making the claim may also end up being higher with the possibility of restricted choice in legal representation and additional difficulties will include language problems, lack of local knowledge, cultural differences and the complications of disparate legal systems.

The impact on claimants
Statistics from the Foreign Office for 2010-2011 highlight that over 3700 British citizens were hospitalised as the result of an injury abroad and required the help of Foreign Office staff.

The British Courts have still to interpret the provisions of the new regulations but it is thought that the majority of compensation claims for injuries sustained abroad will now have to be processed in the country of incident.

This could put Britons at a disadvantage depending on the country involved and may mean that victims, particularly in the more serious claims cases, receive inadequate awards to fund living expenses, medical treatment and long term rehabilitation and specialist care services.

Seek expert advice
If you have been injured or become unwell through an incident whilst on holiday or working abroad then you should still consider contacting a UK based injury compensation solicitor in the first instance.

This will help you to determine in the first place whether or not the claim can be processed in the UK or has to be undertaken in the country where the injury took place.

If the claim has to be pursued outside the UK then an experienced and professional injury claims solicitor should be able to:

  • advise on the important actions to be take, or;
  • assist with introductions to legal representation and the appropriate authorities in the country concerned or;
  • handle the claim on your behalf through commercial relationships and associations already established

Either way the process of claiming compensation for an injury abroad has now changed and will be more difficult than before. It is therefore sensible to seek experienced legal advice in the first instance before considering a claim.

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