5 Year Countdown to Retirement in 2022
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As per others, a good story. To the point at hand, consider tacking most/all of it on at the end, e.g. leave 5 weeks earlier than last day of work is one example. The manager may prefer this anyway.
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Wow this really is exciting. I'm very happy for you!
As someone who went on "sabbatical" for a bit, but then resumed working... I can say that the months where I was completely work-free were VERY pleasant. And recently, I took the second half of December off, and had an incredible time just enjoying the time and freedom. Now that I'm back to work in January, it's a bit soul-crushing.
And I knew that inbox full of work emails and never-ending tasks was just sitting there, waiting for me to come back to the [home] office.
Thanks for the supportive comments.
Wanted to hold off on replies until the end of the week to report on how handing in my letter of resignation went and give myself a chance to digest it.
Personally, I've encountered a range of feelings over the week: Relief that I announced it to my boss and can more openly start putting some wheels in motion. Excited because this was a key milestone. Sad because a significant chapter of my life is closing. Scared because I've committed to leaving my safety net of a job/employment income.
Wanted to hold off on replies until the end of the week to report on how handing in my letter of resignation went and give myself a chance to digest it.
It went as well as I could have hoped for so far. After updating me what went on with the team during my time off and how things were shaping up for work in the new year, I had a chance to share my thoughts on the upcoming year. So I just blurted out that I'm going to be resigning. That kind of caught of caught my boss off guard of course. I think he was a bit concerned because I didn't say intially say why. After I explained it was because I was retiring, he seemed happy for me. We also kind of chatted generically about the financial aspect as he's also interested in retiring early.
Personally, I've encountered a range of feelings over the week: Relief that I announced it to my boss and can more openly start putting some wheels in motion. Excited because this was a key milestone. Sad because a significant chapter of my life is closing. Scared because I've committed to leaving my safety net of a job/employment income.
We did discuss at a very high level some of the details for my remaining 3 months. My boss didn't care how I'm planning to use my remaining vacation time. I told him I'll just fit it in here and there which he was fine with. I'm currently not planning to backload it because I'm trying to finish up a couple of in-flight projects which have timing that kind of aligns with my retirement date. My boss seems to be ok with me just focusing on what's currently on my plate and not assigning me any new projects/work assignments because it doesn't make sense for me to start on something new for a month and then having to spend a few weeks knowledge transferring. He also agreed to keep my retirement in confidence, other than to my VP who needs to sign off on initiating the process to find a replacement. We'll see how keeping my retirement a secret goes.
Normally, I'd be checking email pretty frequently during vacation but I started to let it slip during the latter half of my time off over xmas. And I agree, it was VERY pleasant to de-stress from the responsibility! And similarly, it was soul-crushing my first day back when I hadn't even had a chance to get settled and reorientated before I had to jump on a zoom call to get drilled for various status updates.
Did you evaluate the difference in public pension income that it will make? Will you start it at 65?
I evaluated my early retirement at 55 (this year) using our provincial simulator; It would be -8K/yr for the rest of my life. I could still live off my investments but ... Also high inflation gives me pause.
I evaluated my early retirement at 55 (this year
) using our provincial simulator; It would be -8K/yr for the rest of my life. I could still live off my investments but ... Also high inflation gives me pause. I have a private sector defined contribution pension while the missus has the quasi-public sector defined benefits pension so I'm assuming you are referring to her pension since I'm just planning to roll my DC pension into a locked in retirement account and managing it like a self directed RRIF..
Her pension website does have a simulator tool which I've ran a few calculations on. If she works to and retires at age 62ish, she can immediately draw an unreduced pension of about $62k/yr. If she retires at age 50 or 55 but doesn't draw on her pension until around age 60ish, she will instead draw around $35k/yr or $45k/yr respectively which is a huge difference. Her pension administrators introduced significant early retirement penalties a couple of years ago to ensure the viability of her pension plan because too many people were retiring early. Her employment also provides fantastic health benefits. So she feels a bit handcuffed and doesn't want to retire so early and leave so much money on the table. She similarly says "It's going to be $x less per year for the rest of my life!"
Conversely, I'm a few years older than her so I'm not wanting her to work too much longer so that we can start on our goal to travel way more, though the pandemic has also thrown a bunch of uncertainty into those lofty plans.
Her pension website does have a simulator tool which I've ran a few calculations on. If she works to and retires at age 62ish, she can immediately draw an unreduced pension of about $62k/yr. If she retires at age 50 or 55 but doesn't draw on her pension until around age 60ish, she will instead draw around $35k/yr or $45k/yr respectively which is a huge difference. Her pension administrators introduced significant early retirement penalties a couple of years ago to ensure the viability of her pension plan because too many people were retiring early. Her employment also provides fantastic health benefits. So she feels a bit handcuffed and doesn't want to retire so early and leave so much money on the table. She similarly says "It's going to be $x less per year for the rest of my life!"
Conversely, I'm a few years older than her so I'm not wanting her to work too much longer so that we can start on our goal to travel way more, though the pandemic has also thrown a bunch of uncertainty into those lofty plans.
Not quite, I am referring to the Canada Pension Plan (CPP) that every Canadian at salary is subject to get, as early from 60 (probably included in her retirement package but also for you). Here it is topped with a Quebec Pension Plan and the combined maximum is 20K/yr I believe (at 65). If I stop contributing at 55 and get it at 65, it would be 12K/yr I believe. If stopped at 60, it would be 16K/yr. I don't know that works in BC.
Ahhh, sorry.
Yes, I've previously done some calculations around the impact of retiring early on my CPP benefit, with @Dogger1953, our resident CMF CPP expert somewhat giving his blessing to the rough formula I'm using.
(My max contribution years)/(Number of years used for max monthly benefit) x (Max Benefit) x (Earlier Reduction Penalty/late multiplier) = Rough Monthly Benefit
Retiring early, will effectively reduce my maximum contribuition years and prevent me from obtaining maximum CPP benefits which seems somewhat similiar to what you describe for QPP.
I quickly ran the numbers for my CPP again. Based on the above formula, if I start CPP at 65, I'm losing out on about $5k/yr for life by retiring early and not hitting my required max contribution years. However, I'm planning to take CPP at age 70 to take advantage of the multiplier for starting it later. This scenario has me lose out on about $8k/yr for life compared to if I met my max contribution years (roughly $12k/yr vs $20k/yr in today's dollars) but still increase my payout compared to age 65.
I have not factored in what type of impact my early retirement will have on the new Enhanced CPP benefits. However, since the additional contributions to this program started so late in my working life, I'm assuming it would not have significantly added to my CPP benefits anyways.
From an overall retirement income strategy perspective, I'm planning to use my dividend income as my base and then supplement it with RRSP and DC pension withdrawals. I'm not relying on CPP (and OAS) in my my core retirement income expectations but include it in my overall view.
The investments I'm using to generate the dividend income are dividend growth stocks so I'm hoping the dividends will at minimum keep up but preferably grow faster than inflation over the long run. Conversely, I'm planning to apply VPW to my RRSP withdrawals but tweaking it to be a bit more agressive in terms of stabilizing the nominal withdrawals even if the percentage for the year doesn't warrant it.
CPP (and maybe OAS) will serve primarily as a buffer if I burn through my RRSP too fast and secondarily if I run into issues with my dividend income (like dividend cuts, etc).
I accept the fact that this is not the most efficient strategy both from a maximizing income thoughout my retirement perspective and taxation perspective but I'm not going to sweat it.
Yes, I've previously done some calculations around the impact of retiring early on my CPP benefit, with @Dogger1953, our resident CMF CPP expert somewhat giving his blessing to the rough formula I'm using.
(My max contribution years)/(Number of years used for max monthly benefit) x (Max Benefit) x (Earlier Reduction Penalty/late multiplier) = Rough Monthly Benefit
Retiring early, will effectively reduce my maximum contribuition years and prevent me from obtaining maximum CPP benefits which seems somewhat similiar to what you describe for QPP.
I quickly ran the numbers for my CPP again. Based on the above formula, if I start CPP at 65, I'm losing out on about $5k/yr for life by retiring early and not hitting my required max contribution years. However, I'm planning to take CPP at age 70 to take advantage of the multiplier for starting it later. This scenario has me lose out on about $8k/yr for life compared to if I met my max contribution years (roughly $12k/yr vs $20k/yr in today's dollars) but still increase my payout compared to age 65.
I have not factored in what type of impact my early retirement will have on the new Enhanced CPP benefits. However, since the additional contributions to this program started so late in my working life, I'm assuming it would not have significantly added to my CPP benefits anyways.
From an overall retirement income strategy perspective, I'm planning to use my dividend income as my base and then supplement it with RRSP and DC pension withdrawals. I'm not relying on CPP (and OAS) in my my core retirement income expectations but include it in my overall view.
The investments I'm using to generate the dividend income are dividend growth stocks so I'm hoping the dividends will at minimum keep up but preferably grow faster than inflation over the long run. Conversely, I'm planning to apply VPW to my RRSP withdrawals but tweaking it to be a bit more agressive in terms of stabilizing the nominal withdrawals even if the percentage for the year doesn't warrant it.
CPP (and maybe OAS) will serve primarily as a buffer if I burn through my RRSP too fast and secondarily if I run into issues with my dividend income (like dividend cuts, etc).
I accept the fact that this is not the most efficient strategy both from a maximizing income thoughout my retirement perspective and taxation perspective but I'm not going to sweat it.
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My company has gone electronic so a recent retiree said that the congratulations email from his boss included the steps to signin to the application to electronically submit the resignation, including the date.
Talking to recent retirees and/or the pension/benefits person can avoid costly mistakes.
Less than three months notice at my company results in a period of no pension payment and losing one's retirement medical benefits for both white and blue collar workers.
Cheers
End of January 2022 Update
Savings and Investments
My investable assets: $2.226M. Down approximately $14.6k for the month.
Her investable assets (excluding DB pension): $667k. Down about $14.3k for the month.
Combined investable assets: $2.893M. Down about $29.0k (rounding) for the month.
With the rate hike fears, Ukraine worries, etc, January was a very volatile and mixed month for my portfolio.
At the low point, my portfolio was down about $70k. But the late month rally helped reduced the hole. However, looking under the hood, the dividend growers in my taxable account were solidly in the green (with some assistance from January dividend payments) while my index ETF’s in my RRSP and DC pension were down a bunch (no thanks to the US tech wreck). My TFSA was up but only because of my 2022 contribution which correspondingly put my savings in the red for the month.
The missus portfolio was red across the board too except for her TSFA but also only because of her 2022 contribution.
Spending
January spend: $4960
Our January spend is normally fairly muted after a heavy December spend. However, this year was excessively high for a couple of reasons.
In order to hit some credit card welcome bonuses, we pulled some spending forward by buying gift cards at one of our local grocery stores and loading dollars onto some eatery apps for places we regularly frequent. In theory, this should help reflect as a lower spend over the next 6 months or so. This was the biggest spend driver for the month. Other large spends included a vet bill, a charitable donation, and some home maintenance gear that was on sale.
February’s spend is going to be on the high side also because of our first property tax installment. That’s going to lift February to the $4500-5000 range. However, we’re considering booking a trip, likely still somewhere locally or across the country. That may bump up the month’s spend even more if we buy flights.
Comments, Concerns, and Issues
Savings and Investments
My investable assets: $2.226M. Down approximately $14.6k for the month.
Her investable assets (excluding DB pension): $667k. Down about $14.3k for the month.
Combined investable assets: $2.893M. Down about $29.0k (rounding) for the month.
With the rate hike fears, Ukraine worries, etc, January was a very volatile and mixed month for my portfolio.
At the low point, my portfolio was down about $70k. But the late month rally helped reduced the hole. However, looking under the hood, the dividend growers in my taxable account were solidly in the green (with some assistance from January dividend payments) while my index ETF’s in my RRSP and DC pension were down a bunch (no thanks to the US tech wreck). My TFSA was up but only because of my 2022 contribution which correspondingly put my savings in the red for the month.
The missus portfolio was red across the board too except for her TSFA but also only because of her 2022 contribution.
Spending
January spend: $4960
Our January spend is normally fairly muted after a heavy December spend. However, this year was excessively high for a couple of reasons.
In order to hit some credit card welcome bonuses, we pulled some spending forward by buying gift cards at one of our local grocery stores and loading dollars onto some eatery apps for places we regularly frequent. In theory, this should help reflect as a lower spend over the next 6 months or so. This was the biggest spend driver for the month. Other large spends included a vet bill, a charitable donation, and some home maintenance gear that was on sale.
February’s spend is going to be on the high side also because of our first property tax installment. That’s going to lift February to the $4500-5000 range. However, we’re considering booking a trip, likely still somewhere locally or across the country. That may bump up the month’s spend even more if we buy flights.
Comments, Concerns, and Issues
- Retirement Finance Prep: Although I asked to have my synthetic DRIP’ing turned off at the end of December, a few shares still DRIP’ed. I had to call up TDDI to confirm they in fact turned it off. They said it had to do with the me asking to turn it off after the date of record (?!?). Anyway, the dividends closer to the end of the month didn’t DRIP and I didn’t bother asking them to fix the ones that did DRIP.
I confirmed that my TDDI account manager will give me a hand migrating my DC pension, company options/stock, and some miscellaneous accounts to TDDI when I retire. Although I think I’m a pretty low maintenance customer, I going to have to see what other magic he can do for me.
- Work: I thought it was just going to be a pretty quiet remaining 3 months until retirement with me wrapping up outstanding assignments and projects. Well, my boss asked me if I could help with an intense 2 month project that will take me to the end of March. So I’ll be busting my rear on that until I leave. I’m now having some difficulty fitting in all my remaining vacation days around project meetings and activities so I’ve started taking a day here, a half day there, and backloading a bunch of days in April instead of taking full weeks off. I don’t really mind because I didn’t have anything planned and I’ll have a lot of time off soon anyway.
Also, no one at work seems to know about my retirement yet which I have to give credit to my boss and my boss’ boss for keeping the secret other than submitting a request to fill my position. I’ll probably need to let the cat out of the bag with some coworkers late March in order to allow time for any knowledge transfer since I moved a bunch of days off in April now.
- Health: After a very lazy December and January, I’m trying to get back into my workout routine.
- Travel: I’m trying to convince the missus to start booking some trips as I think a lot of the travel related red tape that we didn’t want to deal with is going to disappear in the relatively near future.
Countdown to Retirement
2.5 months to go.
Just over 250 hours of work left.
2.5 months to go.
Just over 250 hours of work left.
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I think it's also possible to set this up with TD so that dividends go directly to a TD chequing account. I haven't done it, but I seem to remember hearing about this at some point.
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I think what I recall is a process of sweeping up the investment income once each month and transferring to a bank account. It is easy enough though to do that manually as part of one's regular housekeeping, e.g. downloading the monthly statement.
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I think it's better to do it yourself, actually. You probably want to track how much money flows in or out of your investments, to calculate XIRR over the years.
To do that calculation properly you need to know exactly how much is withdrawn. When there are dividend or interest payments that you withdraw, those are investment withdrawals and must be marked in the spreadsheet.
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No one needs to know XIRR to that degree of accuracy at any time, never mind during 20-30 years of retirement withdrawals. Whether one inputs $2532 at the of each month into a spreadsheet rather than 15 bits of $2532 each month likely makes nothing more than a second decimal point difference in XIRR
The whole point of a sweep of investment income each month out of an investment account is for cash flow spending purposes. There is no re-investment involved in such accounts.
The whole point of a sweep of investment income each month out of an investment account is for cash flow spending purposes. There is no re-investment involved in such accounts.
Thanks for the tip/reminder. I think I recall the sweeping term from another thread.
I'm currently planning to migrate cash out from the investment account manually to start. The missus and I have a somewhat convoluted financial set up which we I suppose works for us for now but we'll likely eventually simplify.
The complexity comes from:
I'm currently planning to migrate cash out from the investment account manually to start. The missus and I have a somewhat convoluted financial set up which we I suppose works for us for now but we'll likely eventually simplify.
The complexity comes from:
- The investment account being a joint account but where we track our investments separately. We initially thought it would be simpler just having a joint account. I don't want to automatically move out her investment income with mine.
- The way we share in the expenses. I don't necessarily want the entirety of my dividends going into our joint chequing account. We each maintain our own savings accounts and use them to contribute to the joint chequing at different proportions and amounts due to various reasons. Ex. I don't want my income taxes to come from our joint contributions but rather my own savings. And my savings account isn't with TD due to historical reasons. Again, likely going to eventually simplify by setting up my own savings account at TD.
End of February 2022 Update
Savings and Investments
My investable assets: $2.274M. Up approximately $48.4k for the month.
Her investable assets (excluding DB pension): $658k. Down about $9.1k for the month.
Combined investable assets: $2.932M. Up about $39.3k for the month.
Rate hike + inflation + Ukraine = another choppy month for my portfolio.
However, the strength from major parts of my non-registered Canadian dividend growers offset the continued declines of my index ETF heavy registered accounts. And as a bonus, it was enough to put my overall portfolio back into the green YTD.
The missus’ portfolio was red across the board except for her cash savings. The 2 negative months to start the year basically wiped out her gains from last 2 months of 2021. So overall, the hit to her portfolio hasn’t been too bad.
Spending
February spend: $6090
Year to date spend: $11060
We blew past our estimated $4500-5000 February spend. It was always going to be on the high side because our first property tax installment which made up just under half the month’s spend. However, we ended up covering an extended family dinner to celebrate the loosening of restaurant restrictions in BC. And we also had another hefty charity and gift spend for various events and reasons.
March is going to be a bit on the higher side again mainly because we’re finally started on one home maintenance item. With covid cases trending down and restrictions relaxed, I'm anticipating planning a few more events that we held off on. And I may also start celebrating/enjoying my retirement a bit early. Rough guess is a $4000-4500 spend for March.
Comments, Concerns, and Issues
Savings and Investments
My investable assets: $2.274M. Up approximately $48.4k for the month.
Her investable assets (excluding DB pension): $658k. Down about $9.1k for the month.
Combined investable assets: $2.932M. Up about $39.3k for the month.
Rate hike + inflation + Ukraine = another choppy month for my portfolio.
However, the strength from major parts of my non-registered Canadian dividend growers offset the continued declines of my index ETF heavy registered accounts. And as a bonus, it was enough to put my overall portfolio back into the green YTD.
The missus’ portfolio was red across the board except for her cash savings. The 2 negative months to start the year basically wiped out her gains from last 2 months of 2021. So overall, the hit to her portfolio hasn’t been too bad.
Spending
February spend: $6090
Year to date spend: $11060
We blew past our estimated $4500-5000 February spend. It was always going to be on the high side because our first property tax installment which made up just under half the month’s spend. However, we ended up covering an extended family dinner to celebrate the loosening of restaurant restrictions in BC. And we also had another hefty charity and gift spend for various events and reasons.
March is going to be a bit on the higher side again mainly because we’re finally started on one home maintenance item. With covid cases trending down and restrictions relaxed, I'm anticipating planning a few more events that we held off on. And I may also start celebrating/enjoying my retirement a bit early. Rough guess is a $4000-4500 spend for March.
Comments, Concerns, and Issues
- Countdown to retirement: The countdown is kind of really on now because I had to backload most of my vacation time into April. The result is that my last meaningful day of work will now be at the end of March with a couple of days in April to wrap things up and drop my gear off. Hasn't really sunk in. Ask me again March 31.
Even though the markets have been really choppy, I’m currently not feeling stressed about my numbers while being this close to my retirement date primarily because my dividend income is still on track. Secondarily, my numbers are still above my original target and our anticipated 2022 spend isn’t threatened so not pressing the panic button yet.
- Work: As I expected, my boss is a decent guy and did NOT screw me on my 2021 annual bonus that was paid out early Feb even though he had some time to mess with my numbers after I handed in my resignation in early January. On the flip side, work has been ridiculously busy and I've had some late nights and some weekend hours to get things out in time. I’m going to draw a line on the number of extra hours I’m still putting in because in theory, our bonuses are supposed to compensate all the extra hours we put in. And because I don’t fit the company’s exit definition of retirement (have to be min age 55), I won’t get a prorated bonus when I leave for the quarter of 2022.
Not sure of the status of my replacement. Definitely not onboarded yet. And at this point, I won’t be the one training them because I’m too swamped.
I’m planning to start socializing my impending departure to some more people at the end of this week. That will give the teams I’m working with about 4 weeks to plan for me being out of the picture. I’ll probably also reach out to let a handful of coworkers I’ve worked with for a long time know I’m leaving/retiring too so they don’t hear it through the grapevine.
- Travel: My original plan was to book a 2-4 week international trip with departure right after my retirement date. But mainly because of the constant evolving red-tape around travel, we didn’t book anything many months in advance and were going to book something only about a month out instead. However, I’m now going to allocate the last two weeks of April doing a laundry list of items: Migrating my work accounts, setting up new personal accounts, doing our taxes, finding a new phone plan, etc. While one can do pretty much everything remotely nowadays, I think there’d be less potential headaches if we postponed our next trip to late May or early June.
- Fun: Made it out to a Canucks game. That was really enjoyable to socialize a bit. Some of the spring leagues we play in are relaunching this year so looking forward to that too.
Countdown to Retirement
1.5 months to go.
Less than 50 days away, less than 20 working days, and less than 150 hours of work left but who’s counting?
Congratulations on being almost there. I've been out since the end of last May and have not yet travelled internationally. Well, we got away to Mexico for three weeks in that small open window in November between the relaxing of the advisory and the beginning of omicrap, so not sure if that counts. I figure the pandemic has already cost us one fall Europe trip and one South America trip, where we should be right now. Our plan now is Spain/Canary Islands for almost four weeks in Sept/Oct . Wife's brother and family live in Tenerife and so we'll stay with them for about ten days and then tour the mainland. I'm currently struggling with when to book it though as we don't want to lose this trip to increased prices or uavailability if we wait until too close to the departure date. The standard canned AI tropical vacations can be booked last second but we like to book all the components separately for increased flexibility and better prices. I'm monitoring the Covid situation and trends and so far things look favourable but I guess it will always be a gamble to book the trip and takes our chances. We got lucky with cancelling our spring break trip to Mexico in March 2020 and got our full refund but I really don't want to go through that again. I'm 57 now and don't want to lose any more time to to this [email protected]#%$ed scourge. Every year is precious and significant.
Yeah, I'm kind of looking forward to doing that baseline. I'll likely do a snapshop mid-April on what I consider my official retirement date. I kind of like looking back at how things evolved. Heck, I can't believe I posted an monthly update for close to 5 years, though I kind of like the forced habit of doing a regular status check.
I'm with you there.
A few friends and relatives of ours have passed this past year and it's pushed a feeling of urgency in me to really enjoy life more. No sense of ugency in the missus tho.
But she kind of gets my point of view. Just waiting for normalcy so I can start booking trips everywhere: road trips, cruises, follow the Canucks on road trip, spring training, festivals around the world, etc.At least you've gotten away to Mexico. A trip to Spain sound so wonderful. Near the top of the list is a return for a more extended stay in Spain, with a side trip to Portugal which we haven't visited yet.
We haven't visited South America either other than as a port of call in Cartagena but I want to do a tour with the Expo Buenos Aries Jan 2023 as a core component of the trip.
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