What's Your Number? (For Retirement)

[GGG]

Originally Posted by CaptainYooh

I have spoken to many colleagues and friends who retired early (before 65). Without exception, not a single one of them was happy about making that decision. Boredom being cited as the most common reason. Underestimating the costs was the close second. As one of them said, "after the initial "yeah, I can do anything I want now" excitement, there comes "why bother getting out of bed?". In order to retire early and happy, one needs to be healthy (first) and busy (second) with things they want to do which fully occupy their days, weeks and years. Financial capacity to do the above is a variable calculation based on the cost of doing those things until you hit the age of physical incapacity to do/enjoy them. Most people tend to grossly over-estimate their capacity and ability to enjoy things later in life based on what they enjoy when being younger. Traveling to Nepal could be fun at 22, but physically exhausting, dangerous and financially ruinous undertaking at 70. I enjoy photography, golf, collecting, music, fine dining. I might think now that I can enjoy all of that when I am older. But that's just a wild guess. Wanna make G-d laugh, make some life plans.

Yes you definitely need something to retire to. For me it will be a transition into unpaid or poorly paid volunteer type for a variety of organizations.

The not enough money thing is interesting. What things are driving their costs that they didn’t expect? Health or general living. Based on the Pandemic I have found even just WFH substantially cheaper than the office.

[stone hands]

Originally Posted by you&me

You make a great point about being financial able and physically able to enjoy retirement, and that just gets more difficult due to the fact that you're trying to make long term plans for what's usually the most uncertain period of your life.

It's definitely a balance and I'm witnessing the fragility of well-laid plans fall apart - My uncle did well in his career, but he was basically a professional saver. Frugality was his skill set. Since retiring, he and my aunt haven't really travelled, haven't taken up any major hobbies and have basically coasted for the last 15 or so years. Recently my aunt was diagnosed with what is likely terminal cancer and they'll never have really enjoyed their retirement together. That's terrifying to me.

Not spending your time exactly how you want to,with the people you want to is more terrifying to me

To me, it sounds like your uncle spent the last 15 years of his life on his own terms. Just because he doesnt have anything to show the jonses for it doesnt meant was wasted, more like the opposite

Obv this post isn't the whole story, but some people are just fine with that type of life, and he wasn't outwardly displeased with his situation(doesnt sound like it,if he spent 15 years doing it) then I wouldn't judge

[CliffFletcher]

We’ve projected we can live comfortably on a household income of $70-80k a year in retirement. About a third of that will come from OAS and CPP. Also a high likelihood of inheriting around $200-300k between both families (one-third of two houses). So the sum set aside for retirement doesn’t have to be huge.

People have different expectations about what retirement means. For some, it’s finally time to reward themselves and live the high life. Lots of travel, dining out, golf, etc. But as others have pointed out, it’s not always the case that people have the health or even energy to live that lifestyle when they’re elderly.

And even active seniors tend to wind things down once they hit 75. Both my parents and inlaws used to go south every winter, but had to stop because people could no longer get health insurance. So even if you want an active (and costly) retirement in your 60s, you’ll almost certainly be less active and spend less in your 70s and 80s.

As for boredom, that’s what hobbies are for. Boardgames, RPGs, and day-drinking a couple times a week sounds fine to me.

[Johnny199r]

Originally Posted by CroFlames

Smart investments (Amazon and Apple at $20), or you have a high salary right now to project that high?

ETF couch potato investor. Started in my 20's, stayed disciplined.

[8sPOT]

All I know is a lot can happen in life that drastically alters retirement plans. Divorce, kids, family emergencies etc.

Getting divorced cut all my assets (including RSP's) in half, that was a massive impact on my perceived plan at the time. However, divorce also taught me to truly live now. Have fun, spend some money, enjoy life. So I think now I will be working a lot later than I intended 15 years ago, but now my life is way more enjoyable as well. So working extra years doesn't seem so bad because overall I'm enjoying myself (and my job).

Plus, my years in banking made me scared to be the guy who pinches pennies to retire early only to then either die right away or just keep pinching pennies. My definition of fun and adventure is going to be much different in my 30's compared to my 60's. The mosh pits, snowboard trips, long weekend camping trips, will likely slow down as I get older and slower. I don't have a whole lot of bucket list items because it doesn't make sense to me to wait. Life is short and unpredictable, you wanna do something, do it!

[edslunch]

I’m retiring at 60 at the end of the year and pretty much dead on OP’s numbers plus CPP and OAS. We will be comfortable but not luxurious. The saying that your expenses expand to meet your income is definitely true in our case, not because we have a lavish lifestyle but because we never had to have a frugal lifestyle, if that makes sense. We drink $20 wine but lots of it

I’m not worried about early retirement. My job has depleted my sleep bank so much over the years that I need to seriously recharge. I have a great music hobby that could pay tens of dollars a year if I’m lucky. I can also take on contracts if I get really bored but I don’t enjoy working much anymore.

As far as rich goes it’s probably in the eye of the beholder. According to the PBO $1.5M in net worth is the 97.5th percentile in Canada, and the 99th (e.g. the 1%) is just under $10M. That’s total net worth but also at a snapshot in time not specifically retirement.

[Kybosh]

As a society we badly need to rethink what it means to live and retire. The model for retiring comfortably in North America is absurd an unattainable for the majority of people.

[bizaro86]

Originally Posted by GGG

About 60k per year plus CPP/OAS so 1.2 million with paid off house retire at 50 or so.

An interesting question is that you could double your net worth in exchange for 7-10 years of time. At what point does that become too large of a trade in terms of life left vs work.

I think 5% rule is a bit aggressive especially if you plan to retire at 50. There is a longer tail of inflation you need to outpace then. And sequence of returns risk becomes a very real thing with a retirement period that long.

[CliffFletcher]

Originally Posted by Kybosh

As a society we badly need to rethink what it means to live and retire. The model for retiring comfortably in North America is absurd an unattainable for the majority of people.

Yeah, the common depiction of what retirement should look like is even more out of whack from the reality than the depiction of what a typical middle-class lifestyle should look like.

[CaptainYooh]

Originally Posted by GGG

...
The not enough money thing is interesting. What things are driving their costs that they didn’t expect? Health or general living. Based on the Pandemic I have found even just WFH substantially cheaper than the office.

Combination of things, usually. "Downsizing" into a nice condo will likely result in higher monthly costs. Medical insurance for traveling to sun destinations is very expensive for a couple. And those sun destinations are becoming much more expensive to go to; especially, if you go for more than a week or two. However; mainly, any serious illness results in a huge financial disruption of one's life.

Originally Posted by you&me

...Recently my aunt was diagnosed with what is likely terminal cancer and they'll never have really enjoyed their retirement together. That's terrifying to me.

Lots of examples like this one. Those fortunate enough to have work pensions usually need to go through a very difficult discussion and decision on how to draw their hard-earned pension, i.e. taking a lump sump payment vs. lifetime annuity. My wife's former colleague at the school retired at 58 after working for 36 years at CBE and, being frugal and responsible, chose a lifetime monthly pension payments. Died in less than two years of sudden terminal illness.

The point is, you can be very frugal and very astute, but it will likely go in a way you can't predict. There is no sure answer to HOW, unfortunately.

[marsplasticeraser]

I really like this thread, and it reminds me of a discussion I had with a professional coach who worked with business people, many of whom were senior execs.

I thought I'd share some insights of his, that I felt were really interesting.

He said that retirement is incredibly hard for virtually all his clients, and they struggled a lot as they retired. There were four main reasons, and in fact many dealt with all four issues!

1. They were used to everything being perfect for them - life was easy. A good example is that their assistants would call ahead and make sure everything was just how they liked whenever they travelled / went out to eat. Once they retired they were just a regular senior citizen at hotels/airlines/restaurants.

2. They struggled not being important on a day-to-day basis. Before they were 'celebrities' in their business, important people that the rest of the company and others wanted / needed to know. The day they retired they lost almost all that value and importance. It was a huge ego hit and their social network dried up.

3. Related to #2, they often put their energy into work and relationships with colleagues and clients. When they retired they had weak relationships with family/spouse. Many reflected they wished they had spent more time with their spouse and children and they'd never have the relationships they wanted to have.

4. Finally, they didn't know what to do with the time. They were so one-dimensional and work focused that they had no real interests. They'd golf a bit, travel a bit, but it didn't really bring any joy. They felt it hard to get interested in a new hobby at 60 or 70.

Ultimately, many of them reflected that they would have done things differently and dramatically lessened the energy they put into their careers if they did it over again.

TLDR: Focus on your family, friends, your own interests and don't let your career be how you define yourself.

[troutman]

Originally Posted by Torture

Up early for an EST conference call...didn't have enough coffee apparently.

Personally, I don't understand how somebody would get bored in retirement. Go do stuff. Have hobbies. Just because you're retired doesn't mean you have to sit around at home all day every day. *shrug*

My Dad for example had heart surgery, bowel surgery, depression and dementia. He couldn't do all the things he dreamed of doing. When he retired he had no purpose, after being a very respected figure in his industry.

[GGG]

Originally Posted by bizaro86

I think 5% rule is a bit aggressive especially if you plan to retire at 50. There is a longer tail of inflation you need to outpace then. And sequence of returns risk becomes a very real thing with a retirement period that long.

Yeah it certainly is an aggressive number that has a real chance of failure.

A few things balance that. One is that I’m targeting yearly expenses to be 60k so OAS and CPP are bonus/contingency funds so in theory as long as I have 1000k left at 65 I would be well set up for a 4% SWR. That allows for 60000 withdrawal rate for the first 15 years with a 4% post inflation return.

Also in the first 5 years I should still have good employability if I need to go back to reduce withdrawal rates due to sequence of returns that is an acceptable risk. If your first 5 years are successful usually you are good.

I also doubt I will have 0 earnings over the early part of retirement.

Then I have a paid off house to cover end of life care beyond 85 or 90 or so.

[prarieboy]

First off thanks to all who have posted real world data on this topic. No one really talks about it in detail.

Like the OP my targets are the same but don't know if I want to work till 60 to get there.
If and when I get fed up with work I'll retire and hopefully the wife will keep working to pick up the slack!!

[RichieRich]

Originally Posted by bizaro86

I think 5% rule is a bit aggressive especially if you plan to retire at 50. There is a longer tail of inflation you need to outpace then. And sequence of returns risk becomes a very real thing with a retirement period that long.

I posted a link on the first or 2nd page of this thread that takes you to an actuarial based website that looks at all the sequences of returns over many time periods. Well worth looking at if you’re concerned.

[Dion]

Originally Posted by bc-chris

that was my dad after he retired - he didn't know what to do with himself and was driving my mom nuts! ha!

he enjoyed woodworking so he really immersed himself in that and would spend hours and hours in his shed "making sawdust". some of my best and fondest memories with him are when the two of us worked on projects together. i'm still amazed at some of the stuff we were able to accomplish.

My dad was much the same as yours. He had to be doing something, weather it was working on his wood projects to running the driving range at Shawnee Slopes.

[Erick Estrada]

I'm worried about turning into an alcoholic in retirement. Normally I only drink on weekends and maybe Thursday night. When I'm not working it's almost every night.

[Red]

My best advice about retirement plans is to stay in good enough shape to be able to work.

Most people that retire get very bored and develop unhealthy lifestyles. A lot of them get part time jobs just get busier.
If you can work in retirement, even just a few hours here and there, you stay active, mentally sharper and of course you don't need as much $$$ saved up. Social interaction etc. Lots of upside.

As for magic number? A lot less than any publication tells you. You are unlikely to golf and go cruising all the time in to your 80s or 90s. Don't need a 5M balance.

[boogerz]

Agreed on needing to reframe the western world's vision of retirement.

One way to spice up retirement is to set the time of your own death.

None of this "how can I plan my retirement burn rate/annual income if I don't know how long I'll be alive after I retire". Instead we should be picking the age we want to be MAID'd at... and live a retirement life full of reckless abandon until that date/age arrives.

[Fuzz]

Originally Posted by boogerz

Agreed on needing to reframe the western world's vision of retirement.

One way to spice up retirement is to set the time of your own death.

None of this "how can I plan my retirement burn rate/annual income if I don't know how long I'll be alive after I retire". Instead we should be picking the age we want to be MAID'd at... and live a retirement life full of reckless abandon until that date/age arrives.

OK, I choose 200.