Background 1: I turn 71 this year. So my RRSP’s must be converted to RRIF’s before December 31. With the COVID-19 lockdowns ongoing, I have time to take care of these (boring but important) financial details.
Background 2: My mother died in 2018. For several years, I helped her manage her money. Plus, I’ve been the lead in dealing with the estate. There are some “lessons learned” that I’m putting in place for my continuing retirement.
My goal with this exercise is to set things up so there’s minimal ongoing “management” needed.
Where are all the Important Documents?: Will, birth certificate, marriage certificate, house deeds, etc. My mother had a document box. All my documents are in my bank safety deposit box.
Where’s the money?: My mother had a file drawer with the latest paper statements. I am lousy at filing… Instead I use a spreadsheet to track my “net worth”. It’s on my primary desktop computer (an Apple Mac Pro), backed up to iCloud. I do “file” paper copies in an old (30-years old!) red binder on my bookshelf.
How many financial companies?: My mother dealt with 4 banks. Checking and savings accounts at all of them. Investments (GIC’s) and RRIF’s at all of them. I deal with 3 companies. 20 years ago these were a brokerage firm, a bank, and a trust company. Today, the bank and trust company distinction is gone, bu I’m still comfortable with 3 companies.
Oops — Complication #1: I also have paper shares in 3 companies bought 40 years ago. Enrolled in DRIP plans. So that’s 3 more financial companies. Oops.
Simplification #1: Transfer the shares to an existing investment account and exit the DRIP’s.
Oops — Complication #2: Investments (stocks and mutual funds) are subject to capital gains taxes. Need to know the “cost basis” to calculate the capital gain. For investments held in a brokerage this is tracked, but not if the same asset is held in different accounts, and not if moved from one firm to another. And definitely not for paper stock certificates with a 40-year DRIP!
Simplification #2: I calculated the cost basis for the paper stocks with DRIP’s using tax returns from the last 40 years. It is in my “net worth” spreadsheet. By exiting the DRIP’s, there is no need to adjust those numbers in the future. I will add information for mutual funds to that sheet.
Where is pension income deposited?: My mother had 6 sources of income (OAS, QPP, 3 RRIF’s, and a SAAQ pension). Money went into 4 different bank accounts. This worked for her while she lived in her house. She used the checking & savings account at her primary bank for living expenses. She paid big annual bills (house taxes and insurance) from a second bank. Money in the third bank was use for emergencies, travel, and savings.
Complication: Monthly living expenses change when circumstances change. In my mother’s case, this happened when she sold her house and moved into an apartment. It happened a second time when she move to an assisted-living residence. I would transfer funds twice a year to cover the increased monthly spend.
Simplification #1: I will have 4 sources of income (OAS, QPP, and 2 RRIF’s). OAS and QPP already deposit to my main checking. I have set up the RRIF’s to provide monthly income deposited in my main checking account.
Simplification #2 (Future TODO): I expect income to be greater than living expenses. I will set up an automatic investment plan to move the excess to an investment account.
Monthly Bill Payment Simplification: I have arranged for all monthly bills (phone, cable, credit card, hydro, etc.) to automatically be paid from my primary checking account.
Paperwork reduction: I have never been good at filing. I joke that my filing system is an “archeological filing system” — I put all documents in a pile, newest on top; discard paper from the bottom when the pile gets too large. If I need to find a document I can dig down through the strata to find it.
Simplification: I have configured e-statements (online delivery) instead of paper mail for most companies I deal with. I’ll monitor p-mail for companies I missed.
Future Simplifications???: I found these useful when helping Mom. May want to set up in future.
- Power of Attorney: Was extremely useful when helping manage Mom’s medical decisions and finances. I don’t need help today, but will some day.
- Pre-arranged funeral: We don’t live forever. By pre-arranging the funeral, reduces the stress for the survivors at at particularly stressful time.