Building up retirement wealth with limited resources

Rafal Gerszak/The Globe and Mail

Joe’s overriding concern is to keep his rustic cabin – on leased land with no services in a prime B.C. location – for as long as possible. He knows it will be tight so he’s aiming for a 12-per-cent return on his investments, much higher than the 2 per cent he’s earning currently.“For the past couple of years, I have been upgrading my financial-planning knowledge for retirement by going to night school and wading through vast amounts of economic information,” Joe writes in an e-mail.

Looking at Joe’s expenses, he could probably cut back on groceries and dining, drinks and entertainment. As well, he might be able to shave a bit from his communications bill. Otherwise, he lives modestly. His other notable expense − a discretionary one − is his cabin: $200 a month for the land lease and $300 a month for tools and material needed to fix it up. That’s in addition to the $1,050 rent he pays for his apartment in the city.

“Options for him to consider are robo-advisers, also known as online portfolio managers [MERs of about 0.6 per cent], asset allocation exchange-traded funds [about 0.25 per cent] or if he can find someone to assist him, a self-directed model portfolio [about 0.15 per cent].” One option for Joe is to consider selling a half-share of the cabin now, Ms. Williston says. Some of Joe’s neighbours have already done so. He’d get some cash, his lease payment would fall to $100 a month and he might even be able to find a partner to cover the cost of tools and building material in exchange for Joe doing the work. This could save another $300 a month.

globemoney Great article. I find that we focus too much on budgeting but not on making supplementary income in retirement. Why is it only an expense issue and not an income problem?

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