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Discussion Starter #1
Hi all.

I'm a 37 year old male who lives in the Prairies and works in the legal profession. I registered for this website about 5 years ago but never really posted. I'm a long time lurker.

My goal is to retire at 56. I have a common law wife. We have no children and don't plan on having any. I have a cat, he's enough for me.

I won't include my common law wife's assets with my updates. We keep our finances separate. She is also in the legal profession. She was never given any financial literacy lessons before meeting me. She also helps her extended family financially quite a bit. Her assets are not as sizable as mine but I have set her up with a questrade account and I use a couch potato portfolio for her TFSA and RRSP. She is starting to consistently build her investment assets. She earns about the same as me, but I predict she will eventually be elevated to a position in the legal profession that is extremely lucrative and pays far in excess of what I make.

Assets:

RRSP - $227,329.54
TFSA - $98,314.35
Non registered - $149,470.31

Cash - $288,739.10

Current Value of work DB pension - $129,712

2015 honda civic - for the sake of ease I will use half of the $15,000 purchase price we paid with cash (I understand there is probably some depreciation 2 years later) - $7,500

Liabilities:

My share (50%) of our monthly rent - $914.375 - we rent a 3 bedroom apartment that suites our lifestyle (includes a 2 story gym, close to running and bicycle trails) We have no interest in owning a house.

Monthly Cable/internet bill - $200 (she pays our hydro bill - about $30-$40 per month as well as our annual car insurance bill - $1500)

Personal worth - $899,950.92

My investments are divided between Mawer balanced fund, XIC and XAW. I invest with quest trade.

I understand I need to deploy far more of my cash. My desired cash reserves would probably be around $100,000. I plan to deploy more cash soon, however I forsee potential turbulence with the American election in November as well as COVID. I understand that trying to time the market is a fool's errand, but I will likely invest a good part of my cash reserves at the end of this year.

I have little in the way of expenses. I like to ride my bicycle (for fun and often to commute to work), workout, watch sports, play video games and I love to eat. I get takeout far more than the average person, but I'm fine with it. I don't drink, smoke or have any other money wasting vices.

When I plan my financial future, I don't count on my DB pension being there in it's current state. I recognize DB pensions are unsustainable and I expect big changes. I will consider my future DB pension as "a tip".

Using my pension plan's estimator, If I retire in 19 years at 56 years of age, I can expect a pension of $5,686.75 per month ($68,241 per year) if I select the option of 2/3 going to my beneficiary upon my death.

My wife and I enjoy travelling. We had plans to go to Europe this year, which obviously won't happen. 2021 seems to be the most optimistic timeline for international travel to resume for us.

Thanks for reading. Any feedback would be greatly appreciated.
 

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Off the top of my head.

You already admit the cash is far too high, and timing the market is tough, and if you examine the Canadian market year-to-date, I see the Financial sector down -20%, Telecom sector down -15%, Energy sector down -50%, Consumer Discretionary down -12%, but you want to wait until the end of the year to deploy that cash? Those vaccines look fairly promising, and as soon as it's a go, watch out.

A Defined Benefit pension of $68,241 per year seems to me to be a bit better than a tip - I guess you're telling us it isn't near fully funded?

ltr
 

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Congrats! You seem to be in good shape for your goal. You have not mentioned how much you will be saving going forward, but if you save at least 20k per year for the next 19 years, you will have a 2m nest egg to draw upon in retirement. With a conservative 3% withdrawal rate, that is 60 k per year in addition to your pension. Given that your expenses seem very reasonable, your expenses could be covered by either your pension or your portfolio, which is a great financial position to be in.

If you could up your savings to 50k per year, then you would have a bigger nest egg, which will also give you the additional option of buying a house if you decide to do so at the time at the same time preserving a good-sized portfolio.

I have assumed a 3% real return in my calculations, so you could potentially take less risk by adding some bonds to your portfolio or using ETFs that contain bonds such as XBAL or ZBAL. If you are comfortable with the stock market risk, then you could keep investing in XIC and XAW. I believe MAW104 has some bonds already.
 

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Discussion Starter #4 (Edited)
Off the top of my head.

You already admit the cash is far too high, and timing the market is tough, and if you examine the Canadian market year-to-date, I see the Financial sector down -20%, Telecom sector down -15%, Energy sector down -50%, Consumer Discretionary down -12%, but you want to wait until the end of the year to deploy that cash? Those vaccines look fairly promising, and as soon as it's a go, watch out.

A Defined Benefit pension of $68,241 per year seems to me to be a bit better than a tip - I guess you're telling us it isn't near fully funded?

ltr
I recognize what you're saying about the Canadian market. I will try to dollar cost average some investments. I understand my cash amount is unproductive.

The pension plan I belong to is in decent shape, relative to other large gov't pension funds. I just have no confidence that it will be there in it's current form in 20 years the way things are going with pension plan short falls and government deficits. I think the current projections, without a corresponding rise in contributions, is unlikely.

I've also been one who plans for worst case scenarios.
 

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Discussion Starter #5
Congrats! You seem to be in good shape for your goal. You have not mentioned how much you will be saving going forward, but if you save at least 20k per year for the next 19 years, you will have a 2m nest egg to draw upon in retirement. With a conservative 3% withdrawal rate, that is 60 k per year in addition to your pension. Given that your expenses seem very reasonable, your expenses could be covered by either your pension or your portfolio, which is a great financial position to be in.

If you could up your savings to 50k per year, then you would have a bigger nest egg, which will also give you the additional option of buying a house if you decide to do so at the time at the same time preserving a good-sized portfolio.

I have assumed a 3% real return in my calculations, so you could potentially take less risk by adding some bonds to your portfolio or using ETFs that contain bonds such as XBAL or ZBAL. If you are comfortable with the stock market risk, then you could keep investing in XIC and XAW. I believe MAW104 has some bonds already.
Thanks for your comments.

I currently save between $35,000-$40,000 of my income annually, I forsee that number going up.

I have no interest in real estate, and firmly believe I never will. The thought of being tied down to a piece of property petrifies me. I like the comfort in knowing I could leave town tomorrow if I had to. I've moved around a lot so far in my career, as I get bored pretty easily.

My dream retirement would be spending 6 months in Canada, and another 6 months during the winter months somewhere else in a different country or region of the U.S every year, renting and exploring.
 

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Discussion Starter #7
Question for others:

Do you keep your finances separate from your spouse?

My common law wife has lots of TFSA room and RRSP room. I could theoretically contribute to hers as I have no room left in my registered accounts. That would be tax advantageous. We've been together for 10 years, and I dont forsee us separating, however.....I'm a pretty cautious person and have seen too many people part ways and then have issues with the intertwined finances....
 

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Discussion Starter #8
August 29, 2020 update

Assets

RRSP - $231,654.13
TSFA - $100,605.77
Non Registered - $154,475.92

Cash - $294,366.99

Current value of DB pension - $133,894

Vehicle - $7,500

Liabilities

Rent - $914.375

Cable/Internet - $200

Total Net Worth = $921,382.43
 

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I am 59 and thought the same think in regards to retiring early, age 60 was the plan but after being off work for 5 months due to COVID I am having second thoughts. I am looking forward to going back to work, go figure.
 

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Discussion Starter #11
With the economic downturn have you found it easier to negotiate on your annual lease for your home?
Yes. When we renewed our lease in May, we received one free month included for our next 12 months.

We pay our rent on time every month, never cause any problems, and rent the more expensive 3 bedroom apartment layout that seems to be difficult for the management company to fully lease in this building.

When the lease expires next year I will be seeking another free month included. If we moved out, it's likely the suite would sit empty for a few months, meaning much more lost revenue for the rental company. I'm happy to point that out to the leasing people.
 

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My dream retirement would be spending 6 months in Canada, and another 6 months during the winter months somewhere else in a different country or region of the U.S every year, renting and exploring.
That's similar to what we're working towards too. We appreciate all that Vancouver offers but wouldn't mind spending some time away to get away from the rain during the winter along with some other trips all over the place while keeping our provincial health benefits. Looking forward to eventually having enough time to do a month long rental somewhere and fully exploring the area.

Do you keep your finances separate from your spouse?
We do a split with an equal contribution from our incomes going to a joint chequing account for standard expenses while maintaining our own savings accounts that we used to fund our own savings and investments along with the rare purchases/spends that we don't think should be funded from the joint account.
 

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Discussion Starter #13 (Edited)
Sept 27, 2020 update

Assets

RRSP - $228,288.03
TSFA - $98,699.74
Non Registered - $149,237.53

Cash - $300,460.14

Current value of DB pension - $127,798

Vehicle - $7,500

Liabilities

Rent - $914.375

Cable/Internet - $200

Total Net Worth = $910,869.06

Obviously I miscalculated the value of my pension last month in my analysis. In any event, rough month for stocks, so no surprise that my numbers are down.

I plan on deploying about $200,000 in the markets after the U.S election. I currently invest in XAW, XIC and Mawer balanced fund. I will continue to index, but maybe I'll also purchase a U.S total return fund in US $ on the NYSE in my RRSP to avoid foreign withholding taxes.

I have no plans of ever buying a house, so the cash sitting in my bank account is not productive.

While I don't include my wife's financial numbers on here, she has a recent $35,000 contribution sitting in her Questrade account that I need to deploy. I will wait until after the U.S election.
 

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Discussion Starter #15
Nov 23, 2020 update

The government (my employer) passed a new bill that significantly reduced the amount of money that members of my DB public pension would be entitled to in lump sump format, rather taking the monthly pension. This has no affect on current or future employees' monthly pension amounts.

The reasoning was that the formula used for the lump sum payment calculation was resulting in big payouts which was potentially jeopardizing the health of the plan if too many members opted for it.

The result is that members are now only entitled to a sum which is approximately just less than half of what they would have been entitled to about a month ago if they took the lump sum either at retirement, or termination. I guess if enough public servants opt for the lump sum, those millions can add up pretty quick, although about half of that amount would be a lump sum that would be significantly taxed and go back in the gov't coffers. Additionally, it motivated a few employees I know to quit and take the lump sum.

I believe this pension plan change is just the beginning of chances that will be made to the plan. Future changes I could anticipate are: using the average 5 years of an employee rather than the 5 highest paid years, and of course eventually shifting to a shared risk model like the government of New Brunswick did, even retroactively on retirees (again just like government of New Brunswick did). By reducing the lump sum option, the government has gained the upper hand by limiting the main option for employees to "opt out" and take the money and run if they don't like future changes. Smart.

This is why I tell my colleagues they should be investing and looking after their own personal finances for retirement. No one really listens to me when I say that.

On my personal investment front I deployed $100,000 in the marketsrecently, mostly for couch potato indexing. I did put some money in Mawer global small cap fund, as some "fun money". I need to deploy some more money.

Assets:

RRSP - $240,644.11
TFSA - $103,803.09
Non registered - $258,863.73

Cash - $210,164.75

Current termination Value of work DB pension - $58,939

2015 honda civic ) - $7,500

Liabilities:

My share (50%) of our monthly rent - $914.375

Monthly Cable/internet bill - $200

Personal worth - $878,800.31
 

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If you go back over your last 4 months, would you think that perhaps you might have been better off deploying your money earlier? This might help:

 

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Discussion Starter #17
I know time in the market beats timing the market. Leaving cash on the sidelines is counterproductive. Absolutely I should have just it in a year or two ago, never mind 4 months ago.
 

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I seem to always second guess myself. Realistically, it's better to dump it in and let compounding do it's thing but I always hate it when whatever I buy take a bit of a dive within a few months of me buying it and I could have bought it at a discount.

My wife's in quasi public sector and her pension plan has made a bunch of changes to her db pension the last few years to ensure the viability of it. Too many people retiring early and living long so the hit on starting benefits before the magic number for full benefits is more significant now.
 

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Discussion Starter #19
Year in review:

1. Both my spouse and I each had our pay reduced by 5% by our employer due to the pandemic. I predict the government will try to extend that at the beginning of the next fiscal year (April 1).

2. I finally deployed most of my big pile of cash. I should have done it earlier, but you live and you learn. Time in the market beats timing the market. I learned my lesson.

3. I do not include my spouse's personal finance numbers in my posts, but I'm happy she's starting to build up her own investment account on questrade (which I handle for her).

4. 2021 looks like it will be another year of just saving and investing as travel looks extremely unlikely. Travel is my only significant expense beyond rent and cable/internet. I'd like to buy a road bicycle in the spring. I cycled to work quite a bit this summer on my mountain bike, but I'd like to get a road bike so I can go much faster.

5. Most importantly I'm healthy and so is my family.



December 31, 2020 update

Assets

RRSP - $245,879.71
TSFA - $106,084.65
Non Registered - $400,910.19

Cash - $78,514.68

Current termination value of DB pension - $60,429

Vehicle - $7,500

Liabilities

Rent - $914.375

Cable/Internet - $200

Total Net Worth = $898,203.85
 

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Discussion Starter #20
February 21, 2021 update

I finally put most of my cash to work in December.

I bought a new road bicycle this week at a cost of $1500. I enjoy riding a bicycle to work and can't wait for the warmer weather in order to ride my new bike.

My spouse had a job interview last month for a job that would see her income increase to about double what mine is. The wait has been a bit stressful. Fingers crossed. I heard that she was very impressive in her interview, which was great to hear.

Assets

RRSP - $252,651.75
TFSA - $115,285.35
Non Registered - $421,015.31

Cash - $78,446.75

Current termination of DB Pension - $62,317

Vehicle - $7,500

Liabilities

Rent - $914.375

Cable/Internet - $200

Total Net Worth = $936,101.79
 
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