following along the early retirement threads, having read continuously on the subject for the past 6 months (including Derek Foster's book).
Would love comments on our situation - our accountant, relatives etc would all be horrified that we are planning so sparse a future - so anonymous web feedback is appreciated
-we are both 45, about to bail from the hamster wheel we are on, thinking about selling the house with about 150k equity, buying a mobile (ie manufactured) home for about 50k in rural community, banking 100k (plan to invest in dividend stocks, hoping to generate 5k p.a. to pay for vacation - we love to travel)
-eventually we could sell the mobile home (understanding it's a "depreciating asset") and the stocks, and get back in to the rat race if we desire
-figure we need 2k per month to live - if we each earn about 25k or some combo thereof (spouse has higher earning potential than i do), that will give a bit extra per month for auto & home maintenance/savings (based on ernst & young tax tables that I can no longer find on the net)
-go down to one vehicle, one cell phone
-no kids or dependents (of the two-legged kind)
-have aeroplan and marriott points to help with a global, year-long odyssey we hope to take - husband has agricultural skills that are demand and that will enable him to work abroad even if only for room and board for us during our travels - but plan to use proceeds of sale of his current business to help with the rest (not much - but if say 20k, plan to put in rsp to reduce this year's tax burden, as well as capital gains tax burden, then withdraw over the year we travel when income is lower)
-both husband and myself have various skills that can produce "multiple streams of income" depending on economic climate - ie everything from truck driving to professional to retail - we are very varied skill-wise - so future part-time employment should be no issue and both of us are fine thinking about working part-time for most of our lives
-we hope to use the dividend money eventually to spend some time in mexico or florida during the winters (relying on agricultural or other part-time seasonal employment the rest of the year) - we are also comfortable with the idea of volunteering abroad for a few months at a time, living sparsely and for room&board, but seeing different countries ie we don't always need to travel 5*
-we have about 200k in RSPs; neither of us has pensions
-own a 2 ac piece of land in eastern ontario that we could eventually settle on - though not practical now, for employment reasons - value, 10k max
-he has a term life insurance policy, i have a "health" one - ie for critical illness
-spouse could possibly inherit some money in his 60s, maybe 100k+ though we would never rely on that - it's just a possibility; I don't stand to inherit anything
-not sure what we'll get later on, CPP/OAS-wise, GST rebate-wise, etc - maybe about 20k total per annum? Husband had good income until now...I had average or below-average income.
-after imminent sale of his business, we will have no debt (knock on wood)
-and that's it - not much certainly, when i read Globe article about people with dual pensions and millions of dollars in assets who worry they cannot retire, it leaves me terrified - but when i crunch the numbers, I don't see why we cannot generate enough to live on per month, at least for a few years until the midlife crises have passed.
So, bottom line is you have approx 370k to fund early retirement until you are 60/65. At 65, CPP, OAS and GIS will provide all the income you will need (approx 25k), providing you have a mortgage free home so you only need to bridge the gap between 45 and 60/65. Find out how much CPP you will receive assuming no further contributions from http://www.sdc.gc.ca/en/gateways/nav/top_nav/program/isp.shtml
D oes the 50k for the mobile include the land?
Using Derek's 4.7% with 300k invested, 1% inflation and 24k annual withdrawal you will run out of money at age 63 and the mobile will probably need replacement as well. But with p/t income and/or lower income requirements your plan should work out. 24k income seems too high for just 2 people with no rent/mtg to pay - does this include your travel budget? My in-laws live on approx 8k/year in Calgary excluding travel.
You may also want to read "Cashing in on the American Dream..."? It's about a couple that retired at age 35 on 400k and became 'Perpetual travellers'. Their webpage is: http://www.geocities.com/TheTropics/Shores/5315/index.html
> Find out how much CPP you will receive assuming no > further contributions from > http://www.sdc.gc.ca/en/gateways/nav/top_nav/program/i > sp.shtml > > Does the 50k for the mobile include the land? > > Using Derek's 4.7% with 300k invested, 1% inflation > and 24k annual withdrawal you will run out of money > at age 63 and the mobile will probably need > replacement as well. But with p/t income and/or lower > income requirements your plan should work out. 24k > income seems too high for just 2 people with no > rent/mtg to pay - does this include your travel > budget? My in-laws live on approx 8k/year in Calgary > excluding travel. > > You may also want to read "Cashing in on the American > Dream..."? It's about a couple that retired at age 35 > on 400k and became 'Perpetual travellers'. Their > webpage is: > http://www.geocities.com/TheTropics/Shores/5315/index. > html
very reassuring - thank you! Yes, that is terhorst or fortenscu (sp), I believe - i bought all those books in the US from a dealer there. Just read Fred Brock, also. Inspiring.
the rsp is about 200 - so not generating "income" per se at this moment - it's the 100 from the house that we'd hope to invest.
the mobile probably would not include the land, though have not researched that thoroughly yet - and have to look in to whether or not eventually we could put one on our land (very stringent rules in that area of the province, kind of a specialized thing).
I think your plan sounds just fine. It's all dependant on how much comfort you need, really, all those stupid stories about needing millions are ridiculous.
We plan to live simply, we're just building the structure for that now. We're 29, with a brand new baby and plans for at least another one, and we already can live on two part time incomes with no hardships. And this is in the GTA!
A couple more books you should read, if you haven't already
How to survive without a salary
One acre and security
There's one more good one, forget the name, I'll post it later, if you're interested.
Let your accountant and relatives be horrified! It's a lot better than YOU being horrified at the end of your life regretting not taking the plunge. To quote Will Rogers, "Why not go out on a limb? That's where the fruit is."
If it means anything, I don't regret taking the plunge and retiring last year (at 34). There hasn't been one day since then where I say, "Gee, I really wish I was back in the 9 to 5 grind." If I've planned wrong (I don't think so), but IF, then I'll go back to work. But I'll have had a period of time where I was FREE - and you can't put a price on that. How much time do we really have?
Best of luck!
Cheers, Derek Foster (author STOP WORKING: Here's How You Can!)
> Let your accountant and relatives be horrified! It's > a lot better than YOU being horrified at the end of > your life regretting not taking the plunge.
thanks derek - yes, for me, for us, it is indeed about time. If things look impossible then i'll be more tempted to sell everything and travel the world til the money runs out - i'm bound to run in to some sort of living/working volunteer (or not) situation. I'd prefer to be poor on the road than poor at home. There is so much i want to see and do and experience. I'm a travel-aholic.
r (sitting here with an extreme wasp sting reaction so i may get to retire earlier than i'd thought )
This retirement section is very interesting, and I found a lot of inspiring posters. I had not been browsing this section because I figured that I've my retirement plan all figured out.
I'm 30 and am planning to retire somewhere in 45-50. Some posters in this forum may feel very sorry for me, but my definition of retirement is very different from their:
1. Relying on part-time income, to me, means you're not in retirement. Call it retirement if it makes you happy. You're working because you have to to sustain the same standard of living.
2. Actually PLANNING to come back to the work force WHEN the money runs out, to me, is not retirement. It's an extended leave. What happen when you're an 80 year of with heart problems and out of money? Will you rely on your adult children? What will you pass on to your children and grand children when you pass away? Your debts and funeral costs?
Although I'm planning to retire much later, that doesn't mean that I can't have fun between now and then. I still have long weekends and paid time-off, in addition to having the option to take extended leaves to do all the traveling. To some posters, that's probably the same as retirement.
Rabbit - The book is 'The Joy of Not Working', by Ernie Zelinski
We are also travellers, been to 20 countries in the past six years. You may find a nice cyberhome at www.lonelyplanet.com on the Thorn Tree forum there, or www.politicalstew.com, a spin-off of the LP site where lots of experienced travellers gather.
Silver - who says I want 'retirement'? I'd be happy to work part-time as long as I can, it adds variety to my life. We'd rather have one of us home with our kids at all times while they grow up, so this arrangement works well for us.
Silver - who says I want 'retirement'? I'd be happy to work part-time as long as I can, it adds variety to my life. We'd rather have one of us home with our kids at all times while they grow up, so this arrangement works well for us.
But we're in the section of retirement. If that's not what you're talking, I don't know why you post here.
well, that's interesting - i never thought about the semantics - to me, retirement can include working part-time, even if the income is necessary - because the 9-5 drive and rat race isn't part of that picture and the job doesn't have the same focus.
retirement to me means, removing myself from the artificial bounds of society - the keeping up with the joneses, the two-weeks-only vacation - it means living more for my schedule than for someone else's and enjoying the quiet life...
thanks for the book suggestion and net link - i've read the book - there's a "simple living" one by a canadian woman i'd recommend:
Enough : lifestyle and financial planning for simpler living - by Wylie, Betty Jane
I got a copy from our local library.
rabbit
Guest
Re: our early retirement plan, a la Foster - maybe disastrous?
Maybe I'm really naive or a born pessimist, but how does one retire on $25k/year? Do people have longterm care insurance or just assume they'll be healthy till death? I think a nursing home or assisted living accommodation costs an average of $2500/month (at least in the GTA it does) if one is unfortunate enough to need care. Any comments on whether or not longterm care can be subsidised if we can't afford it?
Maybe I'm really naive or a born pessimist, but how does one retire on $25k/year? Do people have longterm care insurance or just assume they'll be healthy till death? I think a nursing home or assisted living accommodation costs an average of $2500/month (at least in the GTA it does) if one is unfortunate enough to need care. Any comments on whether or not longterm care can be subsidised if we can't afford it?
If I were to plan for every possible senario, I would NEVER retire. Quality 24/7 nuring home costs can exceed 10k/month. AFAIC, if I need that level of care,they can euthanize me. I know of several seniors that did not even know their own name who rotted away in subsidized care (ie: they had no money) for 10+ years. I'd rather leave my estate to my children! Ever wonder what the OTHER 4-5 Billion people in the world do?
24k in plenty to retire on, with a mortgage free home and reasonable health. Most working families in Canada do not have near that amount of disposable income. Given Canada's inexpensive health care and gernerous pension system it's a no brainer. Check out 'Working Dave and Dimitri' in the post 'Why bother saving for retirement'
> Ever wonder what the OTHER 4-5 Billion people in the > world do?
LOL!! Good point !!
> 24k in plenty to retire on, with a mortgage free home > and reasonable health. Most working families in > Canada do not have near that amount of disposable > income.
that is so true, and consistent with some of the other threads on this retirement forum - my husband and i were particularly struck by a moneysense article last year - entitled something to the effect of "getting by on $139k a year" - most people just do not have 24 k a year disposable income during these middle working years....
actually, the issue following that one had some letters that hit pretty close to home too - others who felt burned and in the exact same situation.
i think that 24k sounds fine...
Given Canada's inexpensive health care and > gernerous pension system it's a no brainer. Check out > 'Working Dave and Dimitri' in the post 'Why bother > saving for retirement'
and, like i said above, there are other moneysense (and globeandmail.com) articles profiling people who make good money but struggle to stay afloat. This early retirement thing is more (to me) about backing away from those types of day-to-day demands and about making other *choices*. If possible. Derek Foster did it...albeit with more than i'll ever have
Sunny, you're not naive, but very practical and thinking ahead. Going into retirement too early and survive with the minimum is like borrowing from credit cards. You're borrowing from your future.
Sooner or later, your ability to earn income will vanish. You won't be able to contribute to the socialty, and will depend on the younger generations to support you. That's very selfish. Take care of your tomorrow's finacial affair TODAY!
Rabbit, if working part-time is your idea of retirement, then you won't get any argument from me. As I said, whatever definition makes you happy. Not singling you out, but just don't critize financial advisors who suggest that you need $1 million to retire. In the traditional sense, you can go into retirement when you're financially independent. Having only $100,000 and working part-time isn't retirement according to most people's definition. People who loves their jobs wouldn't call themselves retired either.
People who claim to retire young don't know what it's like to be 70 or 80 something and unable to work and with all sort of health problems. People that young haven't gone through a REAL recession. People that young will not be able to consistently find quality companies to invest in, because most companies don't have histories longer that your life. Don't be over confident that you can beat the experts on selecting above average companies either.
> Sunny, you're not naive, but very practical and > thinking ahead. Going into retirement too early and > survive with the minimum is like borrowing from > credit cards. You're borrowing from your future.
but...many would argue about this point - ie what future? I know people who've waited to retire and then dropped dead soon after - the point that Foster makes, and others of his ilk is, that life can be lived (if one chooses) more simply and more inexpensively by careful and thoughtful spending.
> Sooner or later, your ability to earn income will > vanish. You won't be able to contribute to the > socialty, and will depend on the younger generations > to support you. That's very selfish. Take care of > your tomorrow's finacial affair TODAY!
others may argue this point too - my mom used to tell me that i was selfish because i never chose to have children - my point was, some people choose to have children for selfish reasons...what i am saying is, i've contributed a lot to society - taxes and in other ways - and once i reach 60 or 65 or whatever, how selfish is it to rely on the system? I'm not talking about relying on the system now (anymore than i already do by going to my doctor for minor things etc) - i plan to work - so i am not sure that i like your "selfish" comment - but maybe that just strikes a particular nerve.
> Rabbit, if working part-time is your idea of > retirement, then you won't get any argument from me. > As I said, whatever definition makes you happy. Not > t singling you out, but just don't critize financial > advisors who suggest that you need $1 million to > retire. In the traditional sense, you can go into > retirement when you're financially independent.
i am not criticizing anyone - my point, and foster's is more that one does not NEED the million dollars or so that is espoused by many in the financial world. I just read a book by a wall street guy, about that point exactly - think his name is Fred Brock.
> People who claim to retire young don't know what it's > like to be 70 or 80 something and unable to work and > with all sort of health problems.
true, i tend to be one who lives in the present - i have a hard time thinking about next week, let alone when i'm 70. In fact, when i do think about being older, i can't quite picture it - i come from a family that is not long-lived, so maybe i won't get to be old - in which case, i'll have blown my whole life planning for something that will never happen!! That's why i'm concerned about the near-future. But, as i've alluded to before, maybe this is all part of the mid-life thing...
People that young > haven't gone through a REAL recession. People that > young will not be able to consistently find quality > companies to invest in, because most companies don't > have histories longer that your life. Don't be over > confident that you can beat the experts on selecting > above average companies either.
i am not confident in my ability to make money without my broker and managed funds, at all.
> but...many would argue about this point - ie what > future? I know people who've waited to retire and > then dropped dead soon after - the point that Foster > makes, and others of his ilk is, that life can be > lived (if one chooses) more simply and more > inexpensively by careful and thoughtful spending.
Of course there're exceptional situations like you die 10 or 20 years before the average life expectancy. Do you plan for the most extremed scenario or the most likely scenario? You're also just as likely to live 10 years pass the life expectancy. What if you run out of "retirement" money at age 70 and you live to 95?
> > others may argue this point too - my mom used to tell > me that i was selfish because i never chose to have > children - my point was, some people choose to have > children for selfish reasons...what i am saying is, > i've contributed a lot to society - taxes and in > other ways - and once i reach 60 or 65 or whatever, > how selfish is it to rely on the system? I'm not > talking about relying on the system now (anymore than > i already do by going to my doctor for minor things > etc) - i plan to work - so i am not sure that i like > your "selfish" comment - but maybe that just strikes > a particular nerve.
When I said younger generations in my last post, I didn't mean your kids. I'm talking about living off welfare or any sort of assistance from the tax system supported by the younger generations. "Selfish" meaning that you may be out there enjoying life today at their expense in the future.
> > true, i tend to be one who lives in the present - i > have a hard time thinking about next week, let alone > when i'm 70. In fact, when i do think about being > older, i can't quite picture it - i come from a > family that is not long-lived, so maybe i won't get > to be old - in which case, i'll have blown my whole > life planning for something that will never happen!! > That's why i'm concerned about the near-future. But, > as i've alluded to before, maybe this is all part of > the mid-life thing... >
Maybe it's my fault that I brought up too many topics and not being very focused. My main point is that it was very misleading when I read something to the effect of "You don't need a million bucks to retire" or "I retired. You can retire today too. In fact, I retired 3 times already." IMO, that's a load of crap. These folks simply twisted the meaning of retirement from the traditional sense. If that's what they meant by retirement, then I really didn't learn anything new. I don't want to "retire" for 5 years until I run out of money and then return to the work force. I felt cheated when I read on because these people claim to retire when they're not financially independent. By the way, Derek. You're not financially indepedent if you only have $400k of investment. To make $35k off that, you'd need a return of 8.75%. To counter inflation, add another 2-3% which makes it 10.75-11.75%. Very aggressive, I must add. All it takes is one recession or a few bad calls to wipe out significant portion of the $400k investment. It will be okay if you plan to retire in Cambodia.
By the way, Derek. You're not financially indepedent if you only have $400k of investment. To make $35k off that, you'd need a return of 8.75%. To counter inflation, add another 2-3% which makes it 10.75-11.75%. Very aggressive, I must add. All it takes is one recession or a few bad calls to wipe out significant portion of the $400k investment. It will be okay if you plan to retire in Cambodia.
The Globe and Mail article indicates he lives on 30k: http://www.theglobeandmail.com/servlet/story/RTGAM.20050212.wxstmain12/ BNStory/SpecialEvents2/
400,000 @ 4.7% = 19000 CTB = 470 x 12 = 5640 Rental Income = 5500 (I assume) Total approx 30,000
CTB will run out in 16 years as will the income req'd to raise his children.
Rental Income will increase as will his equity and appreciation of both Condos.
Inflation can largely be controlled, especially when your home is paid off. My personal inflation rate over the last 20 years is much less than 1%. (No new cars, last minute $99 return airfares to Mexico, buying loss leaders, buying used etc) Property taxes can be deferred when you reach 60. In Fact, Derek could likely live off the principal + GIC interest, depleting to near zero by age 65, then live just as well on CPP, OAS and GIS from then on, all of which are fully indexed. He could also invest in long term provincials at about the same return with virtually NO risk, other than int. rate risk which is not an issue unless you sell the bonds.
Add, he will still have the other condo fully paid off for additional income or to liquidate for a cash windfall.
When you are retired there is much more time to search for bargins, DIY, cook from scratch, garden, make your own wine etc etc ...
I stand corrected. I kept remembering the article I read from the Vancouver Sun, which I don't think mentioned the rental properties. If he does indeed have $400,000, AND rental properties, AND CTB, then he does have enough to retire.... Then he is financially independent. If you throw his primary home into the equation, then he's worth more than $1,000,000. Who says you don't need a million to retire?
> If he does indeed > have $400,000, AND rental properties, AND CTB, then > he does have enough to retire.... Then he is > financially independent. If you throw his primary > home into the equation, then he's worth more than > $1,000,000. Who says you don't need a million to > retire?
Well it's more like 500k, 400k + 100k (approx) for the condo. Don't count the principal residence (179k) because it does not generate income.
> > Well it's more like 500k, 400k + 100k (approx) for > the condo. Don't count the principal residence (179k) > because it does not generate income.
I can get technical and argue why principal resident should be included in the calculation, however in principle, I think we pretty much agree with each other. Looking at the link, he has $500k (not $400k) on investment + $179k condo, + another condo in Ottawa. I don't know if it's really just $100k. If you add them up, the combined value is 'comparable' to a million.
Took a quick read on the article in G&M. So we, as tax payers, are funding his retirement with CTB even though he's really not poor? That's bull sh!t. That's selfish.
> Took a quick read on the article in G&M. So we, as > tax payers, are funding his retirement with CTB even > though he's really not poor? That's bull sh!t. > That's selfish.
I have mixed feelings about the CTB. Since it is an income-tested NOT asset-tested benefit, Derek is legally doing nothing wrong, however it may be argued that his morals are questionable. The creation and maintenance of his income generating portfolio is no different than someone who has built a business that generates self-employement income. Dereks hourly rate is just a bit higher. Would you like the government to dictate how and where you generate your income?
I'd be much more concerned about the 'single' mothers with 3 kids, living common-law with a spouse earning 60k and fraudulently collecting 10k/year!
> I have mixed feelings about the CTB. Since it is an > income-tested NOT asset-tested benefit, Derek is > legally doing nothing wrong, however it may be argued > that his morals are questionable. The creation and > maintenance of his income generating portfolio is no > different than someone who has built a business that > generates self-employement income. Dereks hourly rate > is just a bit higher. Would you like the government > to dictate how and where you generate your income? > > I'd be much more concerned about the 'single' mothers > with 3 kids, living common-law with a spouse earning > 60k and fraudulently collecting 10k/year!
Generally agree with the above, although it's a slap in the face when he writes a book and tell us how he's abusing the system in collecting CTB. That's not what CTB is meant for. oh well...
A few points. First off, my net worth in nowhere near $1 million - and I stand by the fact that you don't need $1 million to retire on - with myself being the proof.
With regards to how much income one needs, I did an analysis in the book, but 30K a year is really much higher than you think. How much is someone earning 75K really bringing home after spending money on CPP, EI, taxes, health premiums, union dues, profession dues, parking costs, gas, lunches on the run.... When you don't do the 9 to 5 grind every day, you save lots of money on things that don't improve your life! In addition, in my book I clearly show how certain forms of income attract a much lower rate of tax than working income. Also, once your mortage is paid off, you're saving lots of AFTER TAX dollars every month!
With regards a big recession wiping out a big part of my investment portfolio. I think this is inevitable eventually. There have been a number of large corrections in the stock market over the years and I think they will occur again. That's why my strategy focuses on the cash flow rather than buying and selling. Regardless of what happens to the stock market, the dividends keep flowing and the cash appears in the account. The strategy turns the standard dogma on it's head - don't worry about the nest egg. Only spend the dividends and the cash will never run out (keep the capital).
Cheers, Derek Foster (author STOP WORKING: Here's How You Can!
Guest
Re: our early retirement plan, a la Foster - maybe disastrous?
Two thumbs up to you, Derek! I am close to age with you, and close to bailing too - only working p/t and strictly just for fun. Can't put a price on a good day at the beach! I agree with everything you just said about 75K vs take-home. It is crazy to see how little the difference actually is...
> With regards to how much income one needs, I did an > analysis in the book, but 30K a year is really much > higher than you think. How much is someone earning > 75K really bringing home after spending money on CPP, > EI, taxes, health premiums, union dues, profession > dues, parking costs, gas, lunches on the run....
I can attest to that, we live on approx 24k and can still take a couple 2 week vacations abroad or even a few months if we wanted. Even when I was earning 70+k, we lived on approx the same amount after the mortgage and retirement savings were deducted. The key is to eliminate all debt, own a clear title home and settle for a simple lifestyle. The biggest challenge, when retired in your 30's or 40's, is how to answer the question: "What do you do".
Mexman....What do you do when you retire in your 30s or 40s? Write a book! Just kidding.
Seriously, life is pretty short. Here's an exercise that I used. Pretend for a minute that this is your very last day on earth. What regrets would you have? What things would you have wanted to do? Once you have your answer, go out and do them! That's why chapter 2 outlines "Things I want to do before I die."
One thing I am almost certain of - almost nobody will say, "Gee, I really wish I had spent more time away from my family and worked more."
> Mexman....What do you do when you retire in your 30s > or 40s? Write a book! Just kidding. > > Seriously, life is pretty short. Here's an exercise > that I used. Pretend for a minute that this is your > very last day on earth. What regrets would you have? > What things would you have wanted to do? Once you > u have your answer, go out and do them! That's why > chapter 2 outlines "Things I want to do before I > die." > > One thing I am almost certain of - almost nobody will > say, "Gee, I really wish I had spent more time away > from my family and worked more."
No, no, I meant how do you answer "What do you do (for a living)?" It is difficult to answer such as question when one is retired so early without offending or causing some jealously. I usually say "I work from home" or "do some part time consulting". Writing a book... Well considering there are 20+ holds on your book at my library it may not be a bad idea!
> A few points. First off, my net worth in nowhere > near $1 million - and I stand by the fact that you > don't need $1 million to retire on - with myself > being the proof.
Your net worth is nowhere near $1 million? Pardon me, but I don't buy it. Maybe not exactly $1 million, but I'm sure it's close.
Calling yourself the proof now is like declaring victory after running the first KM of a marathon. You have to retire and stay retired until the end of your time to be a proof. Beside, you as a test subject is contaminated because you're receving income from selling a book. Not every retiree can be a successful book author.
> Also, once your mortage > is paid off, you're saving lots of AFTER TAX dollars > every month!
I'm agreeing with you on that you don't need as much monthly income after retirement.
> That's why my strategy > focuses on the cash flow rather than buying and > selling. Regardless of what happens to the stock > market, the dividends keep flowing and the cash > appears in the account.
Why do you think a recession will not cause companies to cut the dividends? Another point, since your income is coming from investments rather than as pay cheques, you need an extra cushion. e.g. $400,000 produces dividends exactly what you need to survive, you should save another $100,000 or $150,000 just in case you made a mistake.
Sorry, I guess I misinterpreted your point. Yes, I do find the question of , "What do you do?" a difficult one. It's always difficult when you don't find the societal "norm".
Silverm,
Why would quality companies cut their dividends in a recession? There are many companies that have increased their payments for many years (without disruption) - even during recessions. Ex. JNJ has increased it's dividend for over 40 years - and there's been some recessions in there. I think the cash flow focus is key - just spend the dividends and you'll be retired forever! I do agree that many companies might cut their dividends, but those are part of the 90% of companies that the strategy in my book avoids.
> There are many companies that > have increased their payments for many years (without > disruption) - even during recessions. Ex. JNJ has > increased it's dividend for over 40 years - and > there's been some recessions in there.
What is JNJ's dividend yeild? 1.83%? Correct me if I'm wrong.
To retire today with 1.83% yeild and have $30,000 of income, I'd need $1.6 million. I think I mentioned this from a different post. My main point is, you still need $1 million net worth(or close to it) to retire. Take you as a rough example:
> > There are many companies that > > have increased their payments for many years > (without > > disruption) - even during recessions. Ex. JNJ has > > increased it's dividend for over 40 years - and > > there's been some recessions in there. > > What is JNJ's dividend yeild? 1.83%? Correct me if > I'm wrong. > > To retire today with 1.83% yeild and have $30,000 of > income, I'd need $1.6 million. I think I mentioned > this from a different post. My main point is, you > still need $1 million net worth(or close to it) to > retire. Take you as a rough example: > > condo: $180,000 > investment: $400,000 > rental condo: $120,000 (maybe?) > car: $15,000 > Other unknown assets: ??? > ------------ > $700,000+ > In Canada, you can easily retire at 65 on government pensions alone. It would be advisable to have your home mortgage free, but even then, you would only need a net worth of 50k in Winipeg, 130k in Calgary. To fund an earlier retirement, you only need enough to bridge the gap to 65. ie: to retire at 55 with an 'income' of 20k would require less than 200k. So, no I do not agree that anywhere near a million is required.
> you only need enough > to bridge the gap to 65. ie: to retire at 55 with an > 'income' of 20k would require less than 200k.
But you haven't answered my question of how. I'm focusing on early retirement for the moment. Can you expand on how you get 20k of income from 200k? Obviously JNJ will not give you that. Unless maybe you're including some other government assisted programs.
> > you only need enough > > to bridge the gap to 65. ie: to retire at 55 with > an > > 'income' of 20k would require less than 200k. > > But you haven't answered my question of how. I'm > focusing on early retirement for the moment. Can you > expand on how you get 20k of income from 200k? > Obviously JNJ will not give you that. Unless maybe > e you're including some other government assisted > programs.
You erode the principal: At age 55, $200,000 / 10 years = 20,000/year. Of course CPP is available at 60 which will reduce the erosion. Even if you invest the money in ING direct at 2.5% you will have enough left over for emergencies once you reach age 65 at which point CPP, OAS and GIC will be enough to live on.
> You erode the principal: > At age 55, $200,000 / 10 years = 20,000/year. Of > course CPP is available at 60 which will reduce the > erosion. Even if you invest the money in ING direct > at 2.5% you will have enough left over for > emergencies once you reach age 65 at which point CPP, > OAS and GIC will be enough to live on.
Wow. I don't know what to say. So this is living off the principal rather than living off the interest of the principal. Sounds a bit risky. I don't want to depend on CPP because I'll be 60 in 30 years. Too long to be sure what they'll do.
The technique you outlined is totally different from what I'm trying to accomplish. I want to live off the interest/divident/capital growth of my investments. I don't want to burn the principal. Perhaps that's why you maintain that it's not necessary to have a million to retire.
o this is living > off the principal rather than living off the interest > of the principal. Sounds a bit risky. I don't want > to depend on CPP because I'll be 60 in 30 years. Too > long to be sure what they'll do.
that's what we plan to do - we have no dependents although a few people in our will that we would like to leave whatever we can to...but we *have* to live off the principal.
Maybe 30 years is too long to know about the viability of CPP - but I think all the fears and all the press are overblown about the imminent demise of the CPP system. Maybe it's industry-driven...? I would assume that it will be around.
Just wanted to let you know that I've read your book and implemented some of your strategies by investing in Trust units. We're receiving enough passive monthly income to pay all of our household utilites. Thanks again for the great book!!!!
Hi People, A few mths back I posted on this form a subject How Much Is Enough. After reading this site I am really wondering How Much is Enough. I am 48yrs old have no pension nor has my wife . We will recive CPP an OAS. We have no mortgage. Last kid has monies in place to fund university. Like to retire at 55 Realestate 300k Present combined RRSPs 170k Other investments not registered 75k.Pesently depositing 16k / yr in RRSPs. Am I on the rite track or should I be saving more in unregistered accts. Have no other debts/ Plan to work partime 55/60 till CPPis available.Would like to have income of 3000/3500 per mth. Some suggestion would be appreciated. Thanks
> Hi People, A few mths back I posted on this form a > subject How Much Is Enough. After reading this site > I am really wondering How Much is Enough.
I remember that - I think that you guys are in better shape than we are and responders here have told me that we would be ok (we also have no pensions). However, 3k is more than we are aiming for, though it would be nice...Congrats on your progress!
> but I think all the fears and all > the press are overblown about the imminent demise of > the CPP system. Maybe it's industry-driven...? I > would assume that it will be around. > > Why would you not want to erode your principal?
I think CPP either will not be around or will be scaled down. My main reasoning is that the oldest babyboomers are entering into retirement now. As the retiree segment growing faster than the working class, there'll be less working people to support the CPP system. I'm not an economist. This is from my simple mind.
I don't want to erode my investment principal before I turn 60 and then live off CPP and the likes after ward. Too many things can go wrong, and without a safty net.
I have to go to my 9-5 jump in a few minutes :P, so here's a quick note.
I read Derek Foster's book last night, and it was a great read. I particular like how he selects the investments and explain individually why they're good pick. I'm not so keen in knowing what he actually owns, but more on how he determines which are good buys.
I think as a stock investment book, it's wonderful. As a retirement planning book, nay. I maintain that the sample portfolio he put together isn't suitable for retirement: * 75.5% of the income is coming from 42.7% of the portfolio which is all income trust. The other dividend paying companies are just for show. Income trusts are riskier investment. * The risk adjusted return on this portfolio is lower than the risk adjusted return on my pay cheques. * Income trusts generate a good portion of return on captital income, but it's only tax deferred as long as the cumulative ROC is less than the purchased price. Something like that anyway. So when you surpass that amount, you'll have a hugh financial shock of having to pay capital gain on your income. * I live in Vancouver, so my after-tax need is much higher than $18,845. * I want to make more than what I expense. So if I need $30,000 minimum to pay for my expenses, I should earn $35,000 just to be safe.
The reliance on income trusts during a time when they're booming and when we don't quite have a good grasp on their cyclical nature yet, might not be the best thing. That being said, a majority of my portfolio is currently in income trusts and it's definitley paid off so far.
I think the comments on risk are pretty fair. Some people compare income trusts to the tech boom (and burst). Others say that they differ in that there actually are underlying assets (which there were not in the tech bomm/bust).
Another good point about the Return of Capital. After all your capital has been returned, the tax situation will likely be less favourable.
I live in Vancouver also, but could easily live on $18845. No wife or kids can do that.
As for income trusts and whether or not they are recession proof-- that would depend on the trust, I think. If the underlying company remained profitable, the trust should as well.
My main concern is that all the great stocks that have consistently raised dividends are not bargains right now. Most seem to be giving a yield of around 1.5%. If I *never* sell (as the book suggests) it'll take a long time for the yield to get to decent rate of return. I think the best bet for me, is to put some money in a brokerage account and have it set to buy certain stocks if they ever hit certain prices. The book covers this a bit.
The most valuable thing about this book is that it questions the mutual funds in an RRSP and hold them till your 65 dogma.
I'm glad you enjoyed the investment aspect of my book. Thanks for the encouraging words. I would like to add to some of the other thoughts you mention:
1. (It's not a great retirement book because of the portfolio) - The portfolio I give in the book is just meant as an example. I state on page 174, "The above portfolio is merely a sample portfolio.....In practice it would be wiser to include more securities in your portfolio...."
2. (The stocks are just for show - most of the income is from income trusts) - You are correct here. The payouts of the stocks initially are quite low, but since they retain more than half thier income to grow their businesses, they increase their dividends over time. This helps couteract inflation long-term. In addition, the percentage of income from stocks will rise over time as they increase their dividends.
3. Income trusts pay Return of Capital - This is true, but you don't get hit with a huge tax bill unless you sell (against my strategy). Once your cost base reaches zero, you pay tax at your regular marginal rate - the same rate you pay for employment earnings. But once again, by the time this kicks in, your stock dividends have increased so much that they are the main income generators in the portfolio.
4. Income trusts are more risky - I don't agree with this - it all depends on the underlying business. Electrical utility trusts would be very stable - electricity demand doesn't change much with the economy. I'd rather own an income trust utility than say, GM.
> 1. (It's not a great retirement book because of the > portfolio) - The portfolio I give in the book is just > meant as an example. I state on page 174, "The above > portfolio is merely a sample portfolio.....In > practice it would be wiser to include more securities > in your portfolio...."
The purpose of having a sample portfolio is just so that we can analyze the strategy together.
> > 2. (The stocks are just for show - most of the > income is from income trusts) - You are correct here. > The payouts of the stocks initially are quite low, > , but since they retain more than half thier income > to grow their businesses, they increase their > dividends over time. This helps couteract inflation > long-term. In addition, the percentage of income > from stocks will rise over time as they increase > their dividends.
If the payout is low initially, then it doesn't help you to retire now. We're in the topic of early retirement.
> > 3. Income trusts pay Return of Capital - This is > true, but you don't get hit with a huge tax bill > unless you sell (against my strategy). Once your > cost base reaches zero, you pay tax at your regular > marginal rate - the same rate you pay for employment > earnings. But once again, by the time this kicks in, > your stock dividends have increased so much that they > are the main income generators in the portfolio.
True, but there're a lot risks here. I can't be sure that the dividends will raise fast enough to cover my capital gain tax bill in time.
> > 4. Income trusts are more risky - I don't agree with > this - it all depends on the underlying business. > Electrical utility trusts would be very stable - > - electricity demand doesn't change much with the > economy. I'd rather own an income trust utility than > say, GM.
The "business" may be recession prove, but what about the Return on Capital portion of the income? Just for illustration, if your utility income trust is yielding 10%. Maybe only 3% is income from the business, but 7% is return on capital. I was hoping you can tell me. Is Return on Capital recessio prove? I honestly don't know.
The purpose of having stocks in the portfolio is to provide future inflation protection. Yes, income trusts would yeild more at the beginning, but over time stocks of great companies reinvest their profits over time and these dividends grow. I suppose one could reach retirement earlier by just relying on income trusts, but I would be concerned that the payouts would not keep up with inflation (as trusts pay out more than 90% of income in most cases). I suppose you could merely focus on trusts to retire as early as possible, but I think that would be risky. That's why my strategy advocates both trusts and stocks.
With regards to the Capital Gain Tax bill - there won't be any. If you never sell, you never have to pay capital gains tax. I know this goes against the traditional investment dogma of buy low and sell high, but I prefer buy low and never sell! If you look at the Forbes list of richest people, most of them got their by never selling (own a business forever)!
As for the "return of capital", in many cases this is merely an accounting entry. For example, if you buy a building (or similar asset), you must depreciate the asset over 40 years. So each year, your cash flow might be X, but you would only pay income tax on (1/40 of the amount you paid). The extra is deemed a "return of capital". It is assumed that after 40 years, your asset will be worthless. I don't buy that. Hard assets usually become more valuable over time. If you have bought the Eaton Centre 40 years ago, would the value have increased or decreased? You have to pay back this "return of capital" when you sell, but if you never sell.....
The purpose of having stocks in the portfolio is to provide future inflation protection. Yes, income trusts would yeild more at the beginning, but over time stocks of great companies reinvest their profits over time and these dividends grow. I suppose one could reach retirement earlier by just relying on income trusts, but I would be concerned that the payouts would not keep up with inflation (as trusts pay out more than 90% of income in most cases). I suppose you could merely focus on trusts to retire as early as possible, but I think that would be risky. That's why my strategy advocates both trusts and stocks.
With regards to the Capital Gain Tax bill - there won't be any. If you never sell, you never have to pay capital gains tax. I know this goes against the traditional investment dogma of buy low and sell high, but I prefer buy low and never sell! If you look at the Forbes list of richest people, most of them got their by never selling (own a business forever)!
As for the "return of capital", in many cases this is merely an accounting entry. For example, if you buy a building (or similar asset), you must depreciate the asset over 40 years. So each year, your cash flow might be X, but you would only pay income tax on (X -(1/40 of the amount you paid). The extra is deemed a "return of capital". It is assumed that after 40 years, your asset will be worthless. I don't buy that. Hard assets usually become more valuable over time. If you have bought the Eaton Centre 40 years ago, would the value have increased or decreased? You have to pay back this "return of capital" when you sell, but if you never sell.....
The purpose of having stocks in the portfolio is to provide future inflation protection. Yes, income trusts would yeild more at the beginning, but over time stocks of great companies reinvest their profits over time and these dividends grow. I suppose one could reach retirement earlier by just relying on income trusts, but I would be concerned that the payouts would not keep up with inflation (as trusts pay out more than 90% of income in most cases). I suppose you could merely focus on trusts to retire as early as possible, but I think that would be risky. That's why my strategy advocates both trusts and stocks.
With regards to the Capital Gain Tax bill - there won't be any. If you never sell, you never have to pay capital gains tax. I know this goes against the traditional investment dogma of buy low and sell high, but I prefer buy low and never sell! If you look at the Forbes list of richest people, most of them got their by never selling (own a business forever)!
As for the "return of capital", in many cases this is merely an accounting entry. For example, if you buy a building (or similar asset), you must depreciate the asset over 40 years. So each year, your cash flow might be X, but you would only pay income tax on (X -(1/40 of the amount you paid). The extra is deemed a "return of capital". It is assumed that after 40 years, your asset will be worthless. I don't buy that. Hard assets usually become more valuable over time. If you had bought the Eaton Centre 40 years ago, would the value have increased or decreased? You have to pay back this "return of capital" when you sell, but if you never sell.....
Sorry, in the first post, I stated the formula X - 1/40...., but for some reason an angry face appeared. I tried to go back and erase it, but it didn't work.
Sorry, one more point. I understand if you feel you can't live on the $18k mentioned. This was not meant to give a dollar amount one should strive for to reach retirement - that depends on the individual. The point I was trying to make here is that working is not always the best way. The example on pages 170/171 show how someone earning 60K versus the portfolio holder only earning 18K. After taxes, etc, the portfolio holder wins! This is not meant as a recommended amount, but just an example to give people a different perspective to think about and to show the impact of taxation. I still think the best strategy is to eliminate non-deductible debt and then build up a tax-advantaged income stream as outlined in the book.
Derek, your book has given me a lot of food for thought. I'm definitely going to give a hard look at dividend paying stocks and starting a non-registered account. I figured out what I need to contribute and how often to buy to get the commissions to be lower than the MERs of mutual funds I'm currently invested in.
I've been expanding my savings/investment plan as my income has increased (I'm 25) over the last while. Canadian dividends are taxed so favourably that it might be worth it to start accumulating some quality stocks outside of an RRSP instead of maxing out my contribution space. I'm still going to continue to contribute the monthly amount I do contribute to an RRSP but I think any increases will be best held outside an RRSP for the time being (this will result in me using about half of my RRSP contribution space rather than all of it as I had originally planned).
I've also realised that my career choice is flexible in its application and is very very well suited to eventually switching over to being self employed or a consultant. I've also takena look at some pieces of land that would be well suited for living with such a career shift.
I've also started pouring through the recommended reading list at the back o' your book. There's definitely some quality stuff in there. What I don't decide to add to my own library, I'll definitely check out of the public one.
Your book was definitely worth the $20 and I will be recommending it to others.
> Canadian dividends are taxed so favourably that it > t might be worth it to start accumulating some > quality stocks outside of an RRSP instead of maxing > out my contribution space. I'm still going to > continue to contribute the monthly amount I do > contribute to an RRSP but I think any increases will > be best held outside an RRSP for the time being (this > will result in me using about half of my RRSP > contribution space rather than all of it as I had > originally planned).
this is precisely what i'm wondering (and started a new thread with this question) - should we pull money out of our rsp to start an external dividend-paying portfolio...our income will be very low for the next few years so we could withdraw 10k each...
i've been hearing discussion recently about this - that sometimes it's good not to have all the money in rsps.
Thanks. I'm glad you found the book helpful. Sounds like you're on the right track. Geez, if you're only 25 and have all this planned out, my moniker "Canada's Youngest Retiree" might be in jeopardy!
My wife and I have been tracking our expenses for the past 5 months. After reviewing the spreadsheet and taking out expenses that we wouldn't incur during retirement, our yearly expenses worked out to be $30,000 after tax. This is the practical minimum for us. Maybe we're just spoiled or maybe it's the cost of living in Vancouver. Even if we were to not pay income tax, to make $30,000 @ 7% yield of market value, we'd need an investment of $427,000. If we live in a decent 2 br condo, it's at least $200,000 away from downtown. That makes $627,000 net worth + the car. Remember that this is the absolute minimum. i.e. Total Income = Total Minimum Expenses, so no saving and no safety net with a very aggressive yield of 7%. There's no room for emergencies.
Anyway, enough from me.
I do have a question about the book. It didn't mention what tools you used to determine the history of dividend payments. Or, a graph/table showing the yeild (i.e. in percentage) over a period of time. That way, we can compare the return relative to past performance. Or perhaps you're reading the annual reports to get information. Thanks.
I don't think 30000 is all that high for 2 people. Let's say you have condo fees/taxes/etc., of around 600 a month. Food, if you eat out even semi-regularly, can be another 600 a month for two people. Then, lets say you both enjoy driving-- that could easily be another 1000 a month for two relatively new vehicles (payment, insurance, gas, parking, etc.,). That would only leave you with 300 a month for everything else for 2 people! Travel? Not likely. Emergency? better have something somewhere else. New clothes? Other utilities?
I happen to love public transit. I also love cooking, canning, pottery and other art projects. I generally find entertainment very inexpensive. I am also very good at making friends/connections and haven't had to pay for lodging during any of my travels in the last 5 years. So for me, I don't know what I would do with 30000 a year after tax. I'd likely end up continuing to invest and donate the excess just like I do today.
Also-- if you have a nest egg producing 30000 after tax and your expenses are that high... you'll eventually have a problem with inflation. In order to maintain 30000 in todays dollars, you're going to need more than 30000 produced each year.
But I don't think the book quite advocates a "do nothing" retirement. While it does mention 52 week a year vacation, I also got the feeling that it was more about doing what you want than avoiding having to do anything. What if you had that 30000 a year in place and between the two of you made a quarter of what you make now? Say you work part time or start your own little business or something. I know that may not fit your definition of retirement, but if you have a good head for the accumulation of assets are you really going to want to stop and do nothing?
I think another intergral part of the general strategy outlined in Stop Working is moving to somewhere that costs less or is more suited to your new lifestyle. For myself, I'm thinking I wouldn't mind popping over to the northern part of Vancouver Island, buying a temporary mobile home and slowly building my own home/pottery studio/hobby farm. My housing expenses would go way down, but I'd probably need to buy a truck (and thus have vehicle expenses). I believe Derek Foster moved to a small town outside of the greater Toronto area. Would it have worked if he had stayed in a place like Toronto proper?
Rental income is also potentially a huge part of such a plan. If you have a condo that you completely own, and the real estate market in the lower mainland finally goes through a correction, would it be a good or bad idea to use your equity to acquire an additional property? Only you can answer that question. As for myself, I have immediate family in the property management business out east-- it's a no brainer for me to invest in real estate there as I have professional people I trust to manage my property while I'm living in Vancouver.
I'm just throwing some thoughts out I guess. I kind of feel like I had a bit of an "aha" moment where I realised it wasn't about a million or two in an RRSP put about cash flow and having my expenses covered by mostly passive income. And it also seems that many income producing investments have their benefits atleast partially nullified by being in an RRSP.
Just enter in the ticker, dates, etc., of the stock you want and pick the type of info you want.
Combine this with Mergent's list of Dividend Achievers: http://www.mergent.com/publish/dividendachiever2002da.asp
The conclusion that I'm coming to is that it's really not a good time to buy a lot of these stocks. I'm thinking I'll have to set up a bunch of cash and wait for the next big correction.
For American companies, the Mergent's Handbook of High Dividend Achievers is the best source - lists them all. Also check a book called "The 100 Best Stocks to Own in America" MOST of the stocks listed here have a long history of raising dividends. You can also look at the annual reports like you mention, but usually they only go back 10 years.
With Canadian stocks, it's more difficult, but there are fewer companies that have been consistent dividend payers (most of which I list in the book). Look for the usual suspects (banks, insurers, grocery retailers, food companies,....). There is a series of yellow cards (put out by Financial Post, I believe), that I've seen at major libraries, which gives dividend history going back many years. In Canada, I don't actively look for new candidates as there are only a handful.
Naatans,
You hit the nail on the head when you say you will wait for a correction to buy the investments you want. This is one of the biggest mistakes I've made in investing, (buying great companies, but at somewhat high prices). It works out okay long-term, as the great companies eventually bail you out, but it takes a long time. This was the hardest thing I had to do - develop patience. One other point, you don't have to wait for a market correction. Sometimes bad news will hit only one stock or one sector which also creates a buying opportunity.
man oh man, my favourite column in saturday's globe and mail is always the financial portfolio and again, today, it's about a couple worried that they will not have 100k per year to spend after retirement - and they worry, even with *six* sources of retirement income (pensions etc) that they will not have enough.
i always think, yikes, then i guess our plan (like foster's, among others), sucks...
but then i read another column in the same section about a couple who live frugally and have also written an early retirement book (why swim with the sharks?) and a book by david trahair (forget the title but i've requested both from my library)...where the couple plans to live on an amount closer to what we expect to live on (ie not much).
> man oh man, my favourite column in saturday's globe > and mail is always the financial portfolio and again, > today, it's about a couple worried that they will not > have 100k per year to spend after retirement - and > they worry, even with *six* sources of retirement > income (pensions etc) that they will not have > enough.
LOL! 100 grand! I've always found it difficult to figure out where a lot of people's money goes. I know people with 6 figure incomes, 2 people earning it and no kids and they can't seem to come up with anything other than needing lines of credit and maxed out credit card balances transfered to other new credit cards with larger limits. Perhaps the couple will need 100k a year if their entire lifestyle is financed by overextended consumer debt.
> but then i read another column in the same section > about a couple who live frugally and have also > written an early retirement book (why swim with the > sharks?) and a book by david trahair (forget the > title but i've requested both from my > library)...where the couple plans to live on an > amount closer to what we expect to live on (ie not > much).
More books to check out. Thanks for mentioning them!
Do you have 100K/year now? If not, why do you need it in retirement? I suppose everyone has their own desires, but it essentially boils down to time versus money. Time is finite, so let's prioritize things properly, IMHO.
I'm making 85k/year, and expect to be making well over 100k before I retire. I don't see how that hurts my time vs. money scale.
If anything, I would argue people with more money have more time. If I'm making $100/hr, I can pay people to clean my house, mow the grass, wash the car, etc. so I can spend time on the important things.
And what is this 9 to 5 rat race that was mentioned? Some of us love our jobs! And enjoy giving to the community.
Johnny, consider yourself fortunate then! I think sadly, many people hate their jobs. I happen to love my job as well.
The 100k time vs. money scales isn't about making 100k during retirement, it's about making 100k during retirement. If I chose to retire on 30k I can do so far earlier than if I wait to have 100k a year.
In my personal case (I am 42 now) 2 kids still young 14 and 13...no spouse. I believe I will need about 125K a year to retire. I have no pension except CPP. A fellow colleague of mine who has retired (age 73) says I should have 2.5 Million saved plus house and cars etc. On that he basically gets under 100K. I am fortunate as I have always put away 30-40% of my pay in investments since I was about 25. No vacations for 10 years. So I am on my way to accomplishing the goal. Hopefully sooner than later.
If you presently can afford to sock away 30-40% of your pay in arguably the most expensive time of your life (single parent w/ 2 teenage kids and the like), are you sure you really need 125K? Do you make 179K a year now?
the 125K is in todays dollars...although I probably only spend 85K now.
I would budget housing costs (assuming 2 residences) - 30K, Food in-10K, restaurants - 10K Entertainment 10K, car(s) 20K, travel 30K, clothes 10K, health care etc. 10K, other 5 K, total 125K
current income pretax .. > 600K at corporation level. I save most in my corporations
You make 600K! (in your corporation) and you haven't had a vacation for 10 years? And you're worried about saving enough for retirement? Wow!
You earn more in a year than I have in total, so perhaps this is out of line, but I think you should get some of the money out of the corporation (I know, pay the tax), then go on a vacation with your kids. At 42, you're still pretty young, but you can't take it with you! The time will be much more valuable than any car or house you could buy IMHO.
radmanjohn -- I'm not anywhere close to the same scale as you. What you'll spend on food in your retirement would pay for everything for me. If you feel that's the way for you, then I guess you really do need 125K per year. Your situation certainly isn't typical though! More like extraordinary.
Here's mine (in todays dollars) Housing 6K, Food 2.5K Entertainment 2.5K Travel 10K, Clothes/Misc 1K, Health Care- public system mostly, other 3K - total 25K
My hobbies: pottery, playing Rennaissance recorder, painting, urban sustainability community groups, church involvement, painting, traditional/ancient food preperation, working/living in foreign countries (like the local people rather than tourists), value investing, writing, custom airbrushing, martial arts/working out, spending time with friends/family.
I could actually do all that on way less than 25K. My current month to month expenses (I've just returned to school) are about $750 not counting tuition or debt payments. I guess it all depends what you're into and what's important to you.
A story related to Derek's book: Earlier this summer I got to ride a wild horse. The owner of the horse thought it would be funny not to tell me, but I got onto a horse that had only ever been ridden for less than an hour in it's whole life. I managed to stay on through it's initial tantrum and was able to ride it around for a few hours before it finally was able to toss me (it tried every now and again). The worst thing was when it would reach back and try to bite me. Great experience!
> radmanjohn -- I'm not anywhere close to the same > scale as you. What you'll spend on food in your > retirement would pay for everything for me. If you > feel that's the way for you, then I guess you really > do need 125K per year. Your situation certainly > isn't typical though! More like extraordinary.
I am not sure it is that extraordinary. Everything costs a lot these days. I work alot about 70 hrs a week. That is the nature of my work. I like my work (I do a bit too much though). I do manage however to take off 12 weeks a year for conferences and vacation. (there was a 10 year period in my life I took no vacation, primarily when I was in university for 13 years !!). > > Here's mine (in todays dollars) Housing 6K, Food 2.5K > Entertainment 2.5K Travel 10K, Clothes/Misc 1K, > Health Care- public system mostly, other 3K - total > 25K
I am talking 2 people when I add my expenses. (My girlfriend and myself. Right now I spend 3K on my kids clothes alone. One trip to Hawaii this year was 11K alone. That is why I budget 30K. Eat out 2-3 times a week that is why I figue 10K a year. > > My hobbies: pottery, playing Rennaissance recorder, > painting, urban sustainability community groups, > church involvement, painting, traditional/ancient > food preperation, working/living in foreign countries > (like the local people rather than tourists), value > investing, writing, custom airbrushing, martial > arts/working out, spending time with friends/family.
I have lots of interests also. Just not a lot of time right now. > >
Do not delay !! I am 55 years old and came upon this site quite by accident looking for ways to retire on $25K yearly for both my wife and I. Just got out the hospital May 30th after having another 2 stents put in my heart now totalling 5. I have been told my heart is very diseased with a future by-pass in the works for 8 arteries most likely.
It is the same old story through the ages..."if I only knew then what I know now..." Well folks, it seems to this author you are on the right path. You both have 10 years on me and age is only a state of mind.
All the best and let the hamsters roam at their own pace.
glad you revived this thread - it's interesting for me (the original poster, different name due to technical difficulties a few months back) because I see this set of thought processes was happening pretty much one year ago to the day.
sad to say, i'm still here. The only difference from what I can see is a mental one - we have decided to forge ahead and to wing it and are putting things in place to begin the process (divesting ourselves of a business - which could take a few years) and getting our house ready to sell.
and, while our RSP did increase in value...the increases have pretty much been wiped out in the past 6 weeks or so.
Last Post
by:
)
1/40 of the amount you paid). The extra is deemed a "return of capital". It is assumed that after 40 years, your asset will be worthless. I don't buy that. Hard assets usually become more valuable over time. If you have bought the Eaton Centre 40 years ago, would the value have increased or decreased? You have to pay back this "return of capital" when you sell, but if you never sell.....
