Quote:
Originally Posted by Devils'Advocate
Okay, so I was talking to a financial guy yesterday about my situation.
I'm going to do some rounding here to make the calculations easier. Let's say I make $100,000 per year. If I work to 60, when I retire my pension will pay me $70,000 per year. So the financial guy asked me how much I WANTED to make each year. My response was that I would preferably like to be making the same - $100,000. He said, well, no, most people need much less when they retire. My thought was, uh, WHY? Wouldn't you want MORE in retirement? What if I plan on travelling the world? I most certainly don't plan on sitting at home watching TV 16 hours a day.
I was told that to make $100,000 in my retirement, I'll have to start putting $3,000/month into a 3% return RRSP. Which obviously means I'd have to live like a hermit between now and retirement.
So I guess my question is - why do people have their expenses go DOWN after retirement? Like I said, I would think people would be going on MORE vacations; MORE entertainment outings; etc.
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It really depends on who you are and what your interests are. I know a lady who takes six cruises a year, which is an expensive retirement, and another lady who likes fishing in the back 40, which costs about $1.49.
Are you an expensive guy?
Is your pension indexed after you retire, or fixed at $70,000 for life? A $70,000 pension is like having roughly $1.5 million in sustainable savings, although illiquid.
Did your advisor acknowlege the existence of CPP as another source of income?
The expensive retirement years used to be prior to the "70-yard line," after which the will and desire to be active diminished through time. However, that is definitely changing and people are staying very active past 70.
Another very prominent trend is that people are no longer flat out retiring, but rather gradually fading out of the work force. Your worry about being bored after 60 fits that pattern very well. A great many people go back to work as consultants with diminished hours and greater freedom but still earning a very liveable income which combines with their pension. All because they're bored and they want to continue to contribute and yes, they might need the income.
Most likely, you will prove to be this type of person, which would obviate a bit the need to live like a monk in today's world.
From your other description, it sounds like you will be supporting your mother and secondly, not owning your own residence are two weaknesses in your picture. Those are reasons you may have to continue to render yourself somewhat employable in quasi-retirement.
You should concentrate on building a pool of capital, preferably accessible outside of a pure RSP environment, simply for the freedom and flexibility it would provide you. Is that $3,000 per month? Probably not. Enjoy your life today because you never know how short it might be.
Just rambling.
Cowperson