In the US, remember there are three "legs" on your retirement chair-Social security, private pensions, and Savings.

you should never rely on 2/3 of your retirement income to come from sources beyond your control, ie social security and only pensions. Inland steel workers' in the 80's and 90's found out the hard way when their pensions were slashed from thousands a month w/ health benefits to a few hundreds and very little health benefits. union auto workers will soon be meeting the same fate (going into bankruptcy) as will teachers because of the state budget cutbacks and most pensions are currently underfunded in states. social security is insolvent in 6 yrs or so plan ahead to go w/o and it won't affect you. all three legs of any retirement should be solely controlled by you to guarantee your lifestyle in retirement :-) ~ liz

Greetings again, everyone,

The suggestion that I made was not related to the management of one's specific retirement-related assets, but of the action that one might choose to take to provide some current income as an alternative to liquidating some of one's regular equities when stock prices were rather drastically down, especially when over the short term, as they were a few months ago. Especially since a number of us felt that the drastic reduction which we had suffered was of rather a temporary nature, with a good possibility that it would be recovered, at least partially, before too long. Usually after a drastic drop there is at least a partial recovery in the short term, even if the price levels drop again later, on the way to a recovery over the longer term.

For example, if one chose to borrow some money to live on a few months ago rather than selling equities at the bottom (so far) of the market ... the recent recovery has been 12 - 15% or so ... and if one had borrowed back in November, 5 months ago, at say 6% (maybe less) annual rate for a fully-secured loan... to trade 3% cost, even if not deductible, for a gain of 12% or so, if we chose to sell the equity now, even if the 12% is before-tax income, would be a deal that would interest many of us, I think. And we might choose not to liquidate yet, either, feeling that our potential gain could well be higher than the interest cost on our loan, over a longer period.

It is basically a different approach than many might choose to use with regard to the management of their assets with a view to preserving some of their value that we had a strong feeling might be recouped later ... and before a really long interval.

Usually I don't want to borrow to finance consumption ... but in this situation, I would give it careful consideration. In the light of my evaluation of what might be the short-term and long-term action of the equities' markets.
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Many Canadians have about 5 legs on their retirement stool.

1. O.A.S. People with about 20 years of residence can apply for Old Age Security at age 65 - which in the days of SAHMs was about the first income that many of them had had that they could call their own.

If the person has about $60,000. income, they start clawing that pension back, at a rate of 15%, and when one has about $110,000. annual income, it gets totally clawed back.

2. C.P.P. Something over 40 years ago the Canada Pension Plan was set up, with every earner of earned income being required to contribute a percentage above a certain amount of wages, and not assessed on the portion of income above a certain much higher level, with employer contributing, as well.

One can begin to collect Canada Pension Plan benefits beginning at age 60 if one is "substantially retired" and one is happy to accept a 30% reduction from the regular level, at a rate of 6% per year ... and if one continues to contribute above age 65, one receivesa 6% addition to one's standard rate per year of deferral.

3. Private Pension Many people have had a private pension system, usually contributory, but there are not nearly as many as previously, and most newly instituted ones in recent years are much less generous than in earlier years. The earlier ones were usually defined benefit programs, guaranteeing a certain rate of payout throughout one's retirement years, often continuing, if at a lower rate, to a surviving spouse. In recent years new plans were usually defined contribution plans - the employer made a certain contribution, matched by the worker, and the worker was responsible for managing it on his own, with eventual payout fully dependent on the employee's skill in having managed it well.

4. Registered Retirement Savings Plan: Tax-deferred individual retirement funds. Several years ago the government instituted a tax-deferred retirement account system where investors could invest limited percentages of one's earned income, on a pre-tax basis, with no tax liability on earnings through the years of investment ... but with every dollar withdrawn being added to income and taxed accordingly.

5. Regular invested funds Plus a number of people have collected some after-tax savings that were invested pretty well as one chose, with earnings taxable throughout, but sometimes qualifying for some reductions on ongoing income, and on the asset when liquidated.

Many of us who are older have much larger need for medical, dental and other health-related services than in earlier times and our out-of-pocket costs for many of them are non-existent or small, so that is a substantial benefit, as well.

Good wishes as you make your financial plans for not only current needs, but for your life-long time horizon, as well.

ole joyful