Quote:
Originally Posted by CliffFletcher
The amount of money some people expect they’ll need seems excessive to me too.
I recently took over my parents’ finances as they succumbed to dementia. Their fixed expenses at age 75-80 are less than $3k a month for the two of them. That’s property taxes on a fairly typical Calgary home, utilities, insurance, and operating a seven year old Toyota Camry. That’s all covered by CPP and OAS.
So savings have to cover the rest. Grocery bill are less than $800 a month. Dining out maybe $600 (or was pre-covid). Clothes and misc shopping maybe $400. And for home maintenance and unexpected expenses, let’s throw in a liberal $500. So we’re at less than $3k a month total for the two of them needed from savings.
Travel was two trips a year at $5k each. So call it another $1k a month.
So $4k a month total (or $2k each) beyond CPP and OAS affords a retired couple what I consider a comfortable retirement. And that number will drop by age 80.
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I think you are being very generous here. That's 70K after tax money a year. More than majority of working Canadians bring home. And that's Canadians with mortgages, car payments, student loans and kids to raise.
Fixed expenses you listed at 36K a year seem really high. 2K for home and car insurance, 3.5K property tax, 7K for utilities + 2K for cable/internet. That's less than half of that 36K.
Then you have 900 for misc. spending + 600 for eating out while spending 800 on groceries. Probably on the high side as well.
I mean what you presented is a pretty good retirement. Much better than most would need.
The way I see it people can live on much less than we see proposed here.
Your CPP+OAS will cover your home expenses. So tax+ utils, cable etc.
Your spousal CPP and OAS will cover the food and miscellaneous.
So all you need is "fun" money. Vacations, spoil the grand kids, bingo
, a wine tour here and there. So how much would that be a year? 20-30K? 2 vacations at 7K each, then a few hundred a month for the wine and golf.
If you have 1M and that earns you 4%, that's more than enough to cover those fun expenses. And that's without touching the principal.
But even if you don't invest it and just start taking cash out, that's 30 years of fun money. Most people are not spending that, not when most of it would be funding their fun in your 80s and beyond. Very few will have the ability to have this fun at that age.
I don't want to sound like I am discouraging people from saving for retirement, but if you top up your RRSP and TFSA from a young age, say 25, and invest it somewhat conservatively you will die with a crap lot of $$$ in the bank. Which is great, but not a need. Use both vehicles and you will be more than fine. No need to double up on your work pensions or saving for retirement outside of that.
So don't stress it, have fun now
