CAN I AFFORD TO RETIRE?

Written by Peter F. Baigent CFP, CLU, CHFC, RFP


First Published Fall 1990 Almost every day I get asked, "Can I afford to retire?" Although we have very sophisticated computer programmes to answer these questions, we must first askrepparttar client "How much do you need coming in every month, in today's dollars when you retire"? This gets everyone squirming atrepparttar 112203 thought of having to do some budgeting, to determinerepparttar 112204 answer to that question. I guess budgeting conjures up thoughts ofrepparttar 112205 early years, when pennies had to be pinched and planning was a necessity. I do not feel budgeting is necessary at retirement, but an analysis of your cash requirements will be necessary in order to determine when you can retire. This is rather a hypothetical cash flow estimate.

To further complicaterepparttar 112206 problem, most people think in after tax terms as they are used to a take home pay cheque. At retirement, you usually have to remit your own income tax payments directly, whereas previously they were deducted at source. There will be a lot less deductions at retirement. You no longer have to pay Canada Pension or Unemployment Insurance, Union dues or most group insurance costs. But, you need to base your calculations on gross income.

How much you will need at retirement depends totally on your lifestyle. A good financial planner will tell you if your figure is realistic, butrepparttar 112207 standard of living is yours to decide. Henry David Thoreau,repparttar 112208 famous American philosopher in his book "On Walden Pond", speculated that one could subsist by living in a pine box in a forest nearrepparttar 112209 pond. Althoughrepparttar 112210 example is extreme, it makesrepparttar 112211 point about lifestyle. It will be different for each person. What is suitable for me may be

Warning - This Lease Might Explode Any Minute

Written by George A. Parker


Mike Caringi, owner of a small New Jersey business that sells pumps, found himself facing a gut-wrenching dilemma last summer. Should he continue paying $ 1,500 each month for essential telecommunications services he no longer receives and for leased equipment he claims was never installed? Or, should he stop making payments and face a potential lawsuit fromrepparttar firm that financedrepparttar 112202 equipment under a ‘hell or high water’ lease? Mr. Caringi’s company is one of several thousand small companies aroundrepparttar 112203 country reeling fromrepparttar 112204 bankruptcy of Norvergence, a reseller of telecommunications and Internet services. Atrepparttar 112205 core ofrepparttar 112206 quagmire facing Mr. Caringi and others is that Norvergence succeeded in getting customers to sign separate lease and service contracts that provided its services. When Norvergence abruptly shut its doors, it left thousands of its customers scrambling to replace telephone and Internet services while obligated to shell out over $ 200 million in lease payments to Wells Fargo Financial, CIT and 30 other leasing companies overrepparttar 112207 next five years.

How can you protect your company from being victimized in a similar situation? Certainly, most transactions involving equipment leased in connection with a related service carry some degree of risk. You can reduce that risk by taking certain precautions. First, where possible, avoid leasing equipment whenrepparttar 112208 equipment is proprietary to a service. The chances are that you will be stuck withrepparttar 112209 equipment ifrepparttar 112210 service provider fails. Make sure thatrepparttar 112211 leased equipment has an underlying value that justifiesrepparttar 112212 lease. By doing a present value calculation of all payments owed underrepparttar 112213 lease agreement and comparing that value torepparttar 112214 fair market value ofrepparttar 112215 equipment, you can see whetherrepparttar 112216 lease value is reasonable. Check to see whetherrepparttar 112217 equipment is used by similar service providers, in case you need to switch services. Finally, make sure you can resellrepparttar 112218 leased equipment inrepparttar 112219 after-market, if necessary. As a last resort, you may be able to cut your losses by havingrepparttar 112220 ability to buy-outrepparttar 112221 equipment fromrepparttar 112222 leasing company to be resold to someone else.

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