[milhouse]

I want to track my progress towards my retirement in 5 years and get some feedback along the way. I thought this forum might be simpler than creating a blog.

Background
Married couple: Me = 45yo. Her = 39yo
No kids. Still TBD but unlikely at this point.
Goal to each retire at age 50. Not exactly sure what I'd be doing during the 6 years between my retirement and her retirement.

Current financial situation
Me
Cash Savings ~ $10k
Non-Registered Investments ~ $625k

• Yielding approximately $25k in dividends this year. Primarily individual Canadian dividend growth stocks.

RRSP ~ $310k.

• Mix of US, EAFE, EM index ETF’s with about 20% Canadian bond ETF.

TFSA ~ $75k.

• Mix of Canadian, US, EAFE, EM index funds with about 10% corporate bond fund

DC Pension ~ $220k

• Mix of Canadian, US, and International index funds with about 25% Canadian bond index fund.

Total ~ $1.24M

Her
Cash Savings ~ $40k
Non-Registered Investments ~ $160k

• Mix of US and Global index ETF’s and Canadian Dividend Fund.

RRSP ~ $70k

• 75% in a bond fund with rest in a balanced fund, dividend fund, and global fund.

TFSA ~ $65k

• Primarily a balanced fund with US low volatility ETF, US Index, and 10% in a bond fund.

DB Pension

• Based on her pension statements, if she works to age 50 but holds off from collecting her pension until age 55, she’ll get approximately $35k/yr plus a $5k bridge to 65.

Total ~ $335k + DB pension
Combined Total ~ $1.575M and her DB pension.

House ~ $1.5M per BC Assessment.

Liabilities: None

Current Annual Spend
$45k-$52k depending on how much we travel.

• Food & Eating Out ~ $13k
• Housing and Utilities ~ $11k
• Transportation ~ $4k
• Personal ~ $5k
• Entertainment ~ $1k
• Travel ~ $10-18k

Goals

• We each retire at age 50.
• We want to travel 6 months per year once we both retire.
• Base target combined retirement spend ~ $60k after tax to maintain current lifestyle (allows for major one off expenses like house repairs, health issues, car replacement, etc.)
• Stretch target retirement spend ~ $85-95k+ after tax to allow for our travel goals.

Plan

• Grow the dividends in my non-registered portfolio to approximately $50k/yr by age 50 and maintain that level by taking the occasional capital gains.
• Grow my RRSP to $450k by age 50.
  Will withdraw ~$40k/yr (~$30k/yr after tax) from age 51-71
• Grow my DC Pension to $350k by age 50.
  Unsure when to start withdrawing from LIRA but the tentative plan is to let the DC pension grow and then withdraw ~$40k/yr once the RRSP is exhausted.
• Grow my TFSA to $135k by age 50.
  Perhaps use the TFSA for car replacement, major house repairs, major health expenses, etc. Perhaps use it for an additional income stream.
• Overall, I’m hoping my non-registered portfolio dividends and RRSP withdrawals will generate approximately $75-80k of after tax income annually. Supplemental cash not needed for annual spend would likely go into a HISA or GICs ladder.

• Clean up her portfolio so it has a more unified strategy/direction.
• Grow her non-registered portfolio to $500k by her age 50.
• Grow her RRSP to $100k by her age 50.
• Grow her TFSA to $200k by her age 50.
• I’m hoping her non-registered portfolio and RRSP withdrawals will generate $25k/yr and then her DB pension kicks in with $40/yr at her age 55.

Comments, Concerns, and Issues
I feel pretty confident about being able to meet our base target to maintain our current lifestyle and corresponding spending in retirement. It’s more of a situation of being able to stay the course for the next 5-10 years to be able to meet our stretch targets due to occasionally shaky employment situations at both our workplaces.
I likely need a more efficient retirement income plan. My dividend income is going to impact my ability to withdraw funds from my RRSP and DC Pension in a tax efficient manner. It will likely also prevent me from collecting any OAS.

 

[My Own Advisor]

Geez....impressive. So you have > $2.75M in investment assets + $1.5M home with no liabilities?

You don't want to "retire" now or at least work part-time now? I could probably answer the other questions but this is the first one that came to mind after reading your post!

Very, very well done.

Re - Grow the dividends in my non-registered portfolio. Sure, but you don't need much more do you?
Re - Grow my RRSP to $450k by age 50. I can see the benefits of that but geez, you have plenty amongst other assets.
Re - Grow my DC Pension to $350k by age 50. I can see that, fixed-income security hence the desire to keep working...

Re - Clean up her portfolio so it has a more unified strategy/direction. I could see that for both of you since although you've done very well - simplicity will help you sleep better.
Re - Grow her non-registered portfolio to $500k by her age 50. Another impressive milestone.
Re - Grow her RRSP to $100k by her age 50. As above, I could see that.

Both TFSAs could certainly serve as a massive emergency fund since I suspect you'll kill off RRSP, etc. before TFSAs.

 

[gardner]

You don't want to "retire" now or at least work part-time now?

I am in about the same boat, only 8 years on. I am *still* working and I am trying to retire in the next 6 months.

On the one hand I am feeling like a chump, working to earn income that I basically don't need and will likely leave to her majesty when I pop my clogs.

On the other hand, I have to work out what I would *do* with myself if I retire. I don't have infinite cash, so really expensive hobbies are likely out. For now working fills the time, but I am getting sick of it.

 

[milhouse]

Thanks for the feedback.

We only have $1.57M in combined investment assets plus my wife's pension. If you're trying to add a present value of her pension, the issue is that if she doesn't work a minimum number of years, the pension is significantly reduced. If she quit today and left the money in the plan to 55, she'd only get about $12k/year.

The home valuation is indicative of how ridiculous Vancouver house prices have risen. We were lucky we purchased just before the boom.
I remember during the 2000's when people were buying pre-sale condos and selling their unit just before the building was finished. A lot of people made a lot of money from that. We wanted to get in on the action but were too risk adverse thinking there was a bubble and instead just focused on paying down our mortgage as quickly as possible. After paying down the mortgage, it allowed us to supercharge our savings.
There's obviously a lot of equity in our house but we only want to consider it a home instead of an investment and only tap into it as needed like in an emergency later in life like a health issue.

I'd love to retire now or work part time.
I've casually thought about working part time but I don't know what I'd do that would be enjoyable and have a fairly high degree of flexibility.
This is extremely dumb which I freely admit but psychologically, I feel I need a larger nest egg from a safety perspective and an ego/lifestyle inflation perspective. We're kind of due for a bear market and I'm not sure how confident I'm going to feel about retiring if I see my nest egg take a 20-30% haircut. I would just feel more confident going in with a portfolio of around $2M and/or yielding $50k in dividends, and "enduring" another 5 years of work isn't that unpalatable yet. (Of course, now I'm going to get hit by a bus tomorrow...)
And I know this goes against all personal finance logic and is simply stupid... but we have a few friends and relatives (basically on my wife's side) that have done really well capitalizing on the housing boom and it'd be nice to say that we haven't made out too badly with our save and invest approach. I'm going to blame my inferiority complex with respect to my extended in-laws. But I also have a couple of friends who are doing fairly well and the discussion has always been a $2-2.5M nest egg. The number is mainly pulled out of thin air but would loosely translate to a $80-$100k income in retirement.

The missus is pretty apathetic with regards to planning our finances even though I try to give her monthly updates. She's a great saver though. She's pretty conservative in that she wants to be absolutely sure we don't run out of money but doesn't know what's the parameters around that would be. I originally pointed her to a larger bond allocation because she was very risk adverse. However, she complained that my portfolio was getting better returns so I've been easing her into a more equities but also ensuring she understood/accepted the risks. However, she also has the luxury of a DB pension so I think she can afford a little more risk.
Depending on how things play out, maybe she can retire earlier than 50 even though she hates the idea of further reducing her DB pension.

Although there are a few dissenting ideas, yes the plan is the burn down the RRSP and DC Pension/LIRA before touching the TFSA. That's plays part and parcel to my TFSA question in the Retirement section.

 

[milhouse]

I am in about the same boat, only 8 years on. I am *still* working and I am trying to retire in the next 6 months.

On the one hand I am feeling like a chump, working to earn income that I basically don't need and will likely leave to her majesty when I pop my clogs.

On the other hand, I have to work out what I would *do* with myself if I retire. I don't have infinite cash, so really expensive hobbies are likely out. For now working fills the time, but I am getting sick of it.

Similarly, I don't think my numbers allow for excessive splurging. While we don't have to worry about the budget if we decide to go out to eat, it's not like I can buy my Porsche 911. I don't mind working a bit longer to give myself a little more rope but I do endure stress and anxiety from the deadlines and deliverables.

 

[redsgomarching]

Similarly, I don't think my numbers allow for excessive splurging. While we don't have to worry about the budget if we decide to go out to eat, it's not like I can buy my Porsche 911. I don't mind working a bit longer to give myself a little more rope but I do endure stress and anxiety from the deadlines and deliverables.

You sir are changing the way people think of Milhouse! Congratulations on your hard work to get to where you are. Have you considered trying to pursue part time work or a reduced working hours arrangement where you can maintain a decent pay but with a lot less stress? Unsure as to your job situation and if it would allow this. But that would be a great supplement to your income with your dividends and rrsp withdrawals!

 

[TK.61]

I want to track my progress towards my retirement in 5 years and get some feedback along the way. I thought this forum might be simpler than creating a blog.

Background
Married couple: Me = 45yo. Her = 39yo
No kids. Still TBD but unlikely at this point.

One thing that struck me, that I am genuinely curious about is this comment.

I am curious about the decision (assuming it was a choice) to not have children. Do you regret not having children? How do you feel about it? Did you feel alienated from your friends that had them? You mention it's still TBD so it seems that it is not fully off the table for you two.

I ask because it is something that I am having an internal battle with. I have always said I don't want children, and don't plan on them, however, there is a small voice inside me that is slowly getting louder telling me to at least consider it.

 

[milhouse]

You sir are changing the way people think of Milhouse! Congratulations on your hard work to get to where you are. Have you considered trying to pursue part time work or a reduced working hours arrangement where you can maintain a decent pay but with a lot less stress? Unsure as to your job situation and if it would allow this. But that would be a great supplement to your income with your dividends and rrsp withdrawals!

Cannot see being able to work reduced hours in my current position. However, the wife has suggested I that find another role in the company that has less responsibilities and less stressful. That's somewhat reasonable but my company is kind of in an overall belt tightening and evolution cycle right now so openings are kind of limited. I'm not even sure in my current role if I can survive from being booted off the island. In some ways, getting pushed out is not a worst case scenario as I hear my company provides a fair if not generous severance package.

I've considered picking up part time work elsewhere but it's kind of scary making that leap. People (me included) generally suffer with what they know instead of embracing the risk that comes with change. I kind of want to hit my 2022 numbers which I consider my safety net and then find a random part time job if just to keep me active.

 

[milhouse]

One thing that struck me, that I am genuinely curious about is this comment.

I am curious about the decision (assuming it was a choice) to not have children. Do you regret not having children? How do you feel about it? Did you feel alienated from your friends that had them? You mention it's still TBD so it seems that it is not fully off the table for you two.

I ask because it is something that I am having an internal battle with. I have always said I don't want children, and don't plan on them, however, there is a small voice inside me that is slowly getting louder telling me to at least consider it.

I do wonder how life would be if we had children earlier. We even had a false alarm. I'm not sure how practical it would have been for us to have had kids really early on as we were pretty selfish, focusing on our careers, etc. While thinking about having a kid has come into more focus over the last few years, we're still pretty selfish and want to travel. We basically need to make a choice: travel or kids. And I do occasionally feel something is missing in our lives; not completely fulfilled. While I'm not regretting it just yet, one situation that regularly comes to mind is how I helped care for an aunt and uncle that didn't have their own children and that was kind of sad in some ways. Ending up in a similar situation does concern me a bit. Also, my siblings have kids and their kids are all great young adults. They make me want to have kids like them.

Funny that one group of our friends all baby'ed up relatively quickly. However we also have another big group of friends/couples that don't have kids except for one buddy who got divorced. It's just obvious, we hang out with the childless friends more often since we all generally have the freedom to do various activities and travel together. We don't intentionally avoid the friends with kids but it's harder for the parents to free up time for non-kid related activities particularly when both parents are working. There are only so many hours in a day/week and it ends up being all about the kids, which it should be. Parents hang out with parents because there's safety in numbers and economy of scale in terms of supervision.

I don't know what the right answer is but I think couples should lean towards having kids because it probably is a more fulfilling life. But only if they are ready to make significant lifestyle adjustments to focus on their kids. That's kind of what we're grappling with.

 

[OnlyMyOpinion]

Children are definately a choice that you must make for your own reasons. There is no right-wrong, only what is right for you as a couple.
I did want to suggest that while they alter your travels, we never felt that they limited them. In many settings children act as a catalyst to get to know local folks better.
We didn't have multi-month trips since my job limited vacation time to a month at most. But showing the kids the world remains the greatest of our memories. They were scuba diving at the earliest possible age and we used that as our excuse to travel throughout Central America (Mexico, Belize, Guatemla), Caribbean islands, Hawaii, the Galapagos, the Amazon, Machu Picchu, etc. All were self-planned adventures, local accommodations and self-driven (vs all-inclusives/tours).
Great fun.

 

[nobleea]

In the history of humanity, you could probably count on one hand the number of people who regretted having kids. No one ever thinks they're ready for it. You adapt. But you could find a lot of people who regretted not having kids.
If there is any remote possibility you think you might want kids, you need to get on that wagon now. At your ages, you will definitely need fertility help. We needed the full IVF for both our kids and we were younger when we started (also held off due to traveling, etc). I would say of all our friends, close to 50% of them have needed a visit to the fertility clinic. A few were not successful and ended up adopting (which is even more expensive and time consuming). These are all professional couples who started trying for kids in their mid thirties or later. IVF has come a long way, but it's not a magic bullet. At some point you just can't harvest enough eggs or they don't fertilize properly.

We have not stopped traveling with the kids. Hawaii a couple times, Iceland, Scotland, Mexico, all over CAD/US. They do so well on the plane.

 

[Mookie]

Hey Milhouse, your retirement plan hinges 100% on whether or not kids are in your future.

Without kids, I’d say you’re totally on track for retirement at 50, if not sooner.

With kids, you’d still be fine financially, but it would most likely end up delaying your retirement. There are many costs to raising kids, and they would will also monopolize your time for the next 20+ years, which will most definitely sink your plans to travel 6 months of the year in retirement. Also, think about how old you would be by the time your kid(s) graduate from high school / university.

I’m 49, and my wife is 48 (and a stay at home mom). Our daughters are now 14 and 16. We probably would have been able to retire by now if we hadn’t had kids, and my wife continued working instead, but I wouldn’t go back and change it if I could.

You and your wife will have to decide very soon which path works best for you.

 

[milhouse]

I don't think we'd completely stop travelling if we had kids but the original plan of travelling so much would likely be modified. Kind of hard to tell how well kids would handle travelling if just all the pre-teen years. Plus we're constantly planning our next, if not next two trips months out and have them in the hopper. So we pretty much have to make a decision, stop, and focus.

Yup, had the fertility and IVF discussion. Haven't looked into IVF in detail yet though.

Also had the discussion about kid and being "old" parents as they go through school. Just as an aside, I was chatting with a coworker who had kids at a pretty young age, around 20yo, and they were pretty much out of the house, going to university around the time he was 40. It was a bit of a struggle early days but he feels good to be a bit "free" while so young.

I'm not too concerned about the financials of having kid(s) and would still target to try to retire in 2022. The travel buffer that we're kind of building up would just get reallocated.

 

[milhouse]

End of August update

Savings and Investments
My investable assets: $1.24M. Up about $8k for the month.
Her investable assets (excluding DB pension): $345k. Up about $5k for the month. (I kind of rounded bit for the initial post)
Combined investable assets: $1.585M. We had a peak in May but then a fairly bad June. Have not recovered to our May highs yet. Holding our breath for the scary fall months.

Overall a slightly positive month for us. Our investments were fairly flat to slightly positive. The bulk of my gains were from my savings and work benefits. Her gains were fairly balanced between saving and investments.

Spending
Aug spend: $4900
YTD spend: $30k

August was a somewhat heavy spend month for us. We had a small unexpected home repair. But the bulk of the spend ended up towards a bunch of travel and hotel costs for a vacation in September and a short getaway in October which ended up being 60% of our spend. I think we're still going to be on target for a yearly spend of $45k to $50k pending how much we spend on the ground during our trips.

Countdown to Retirement
55 months to go.

 

[My Own Advisor]

You're in phenomenal shape millhouse...

What dividend and distribution yield do you think you can live from now? With > $1.5M in investable assets, I would think earning $50-60k per year pre-tax should be easily done without touching the capital.

Killer work.

 

[gibor365]

You're in phenomenal shape millhouse...

What dividend and distribution yield do you think you can live from now? With > $1.5M in investable assets, I would think earning $50-60k per year pre-tax should be easily done without touching the capital.

Killer work.

Yes , if all your money in equities,but I wouldn't be comfortable to have all in dividend stocks/equity ETF in retirement. Currently we have 50% in FI and Cash. Without "loans" (or maybe gifts ) to my mom and my son and without my daughter RESP, out total assets = 1.34M, total dividends/interest is about 40K/year

 

[gibor365]

Goal to each retire at age 50. Not exactly sure what I'd be doing during the 6 years between my retirement and her retirement.

Very similar sitution , only we ahead in 5 years... I partially retired at 50, planning fully retire in half year at 51. But my wife is younger than me 8.5 years.... . I plan that she will retire in 8 years when turns 50 or earlier (sometimes she agrees with it, sometimes not ). For now I'm more busy than I was while working full time , don't know what will be in future....
Our older son at last year university and hopefully soon will be completely independend financialy, our daughter is going to grade 11 , so hopefully she will be independend in 6-7 years....
Like your wife, mine has DB pension and if she retires at 55 , she will be getting additional 23K per year. Currently , include loans to our son and my mom and RESP), we stand at 1.43M. Fully paid house in GTA , have no idea what is market value.... estimate that at least 800K.
The major challange I have, to prove to my wife to retire at 50 or earlier.
P.S. If you decide to have kid, you don't have to worry what you will be doing in those 6 years lol

 

[milhouse]

You're in phenomenal shape millhouse...

What dividend and distribution yield do you think you can live from now? With > $1.5M in investable assets, I would think earning $50-60k per year pre-tax should be easily done without touching the capital.

Killer work.

Not sure if I totally understand the question. But to maintain our current lifestyle which includes a bit of travelling, I think we're needing about $50k/yr +/-$5k. However, we probably could cut our annual spend to $30-35k/yr if we cut out the travel but splurge a bit around town. Combined, our non-registered accounts are forecasted to yield about $26k this year. To hit $50k, the rest of about $30-35k would likely come out of our RRSP's which don't yield a lot. Figuring out how to limit the tax is the other piece of course.

With $1.5M of investable assets, I think we would be targeting a yield of about $45k/yr. If you're heavier on the equity side of things and focus on yield, yeah I think you can fairly easily get into $50-60k range pretax. However, as gibor365 alludes to, I suspect we'll also trend more towards being more conservative, hold more cash, etc which would put a drag on the yield from the overall portfolio. I was pretty close to 100% equity previously, though the missus wasn't, but I'm trying get it down to around 75%.

 

[milhouse]

Very similar sitution , only we ahead in 5 years...

Yeah, sounds like it. I would love to watch your progress and get ideas from it.
While she's a natural saver, my wife isn't into the whole personal finance thing so she doesn't really have her head wrapped around what kind of numbers could support retirement at 50 or earlier either.

P.S. If you decide to have kid, you don't have to worry what you will be doing in those 6 years lol

Yup, no argument there!

 

[gibor365]

Not sure if I totally understand the question. But to maintain our current lifestyle which includes a bit of travelling, I think we're needing about $50k/yr +/-$5k. However, we probably could cut our annual spend to $30-35k/yr if we cut out the travel but splurge a bit around town. Combined, our non-registered accounts are forecasted to yield about $26k this year. To hit $50k, the rest of about $30-35k would likely come out of our RRSP's which don't yield a lot. Figuring out how to limit the tax is the other piece of course.

With $1.5M of investable assets, I think we would be targeting a yield of about $45k/yr. If you're heavier on the equity side of things and focus on yield, yeah I think you can fairly easily get into $50-60k range pretax. However, as gibor365 alludes to, I suspect we'll also trend more towards being more conservative, hold more cash, etc which would put a drag on the yield from the overall portfolio. I was pretty close to 100% equity previously, though the missus wasn't, but I'm trying get it down to around 75%.

From my estimation, we need a bit more , 60K +/- 10% for comportable living. As per The 4% Retirement Withdrawal Rule, 1.5K will be exactly 60K ... I think we can withdraw a bit more until my wife's DB kicks in (when she's 55). Yeap, we coould cut a bit this estimation, just in this case instead of European trip in specific year, we gonna opt for Caribbean one . In 1-2 years I plan to convert all my RRSPs to RRIFs and withdraw non-taxable RRIF minimum, the proceeds will be deposited to a new SRRSP, thus we gonna have a big savings on tax .
FI not always yielding less than equities...just months ago I both 3y GICs at Oaken at 3.05% and 2 y - 2.95%, last year I caught Tangerine promo with 3.25% on HISA....