[ian]

Whatever your number I believe that you need to build in some flexibility for the unexpected. Not only inflation or a decrease in equity or equity returns but also things like medical, dental, etc. Unexpected expenses occur. You need to decide whether you plan for to cushion these expenses or deal with them from an existing budget amount.

We have only had one year in the past nine retirement years where we had medical deductions. But one was enough. $23K plus between dental implants, lens implants etc. Unexpected as line items but we did envisage larger heath care costs in our retirement years that we had during our working lives. We fully anticipate that there could be more in the future. Who really knows? The trick of course to get as much of those big medical/dental expenses in the same 12 month period as possible.

We are getting a roof replaced next month. I would hate to have to pay for that out of our typical retirement/travel run rate expenses.

 

[My Own Advisor]

Great discussion.

I'm a big fan of the "cash wedge" strategy but I've got mine modified.

How much cash should you keep? - My Own Advisor

Investing my way to a million dollar portfolio includes having cash ready to access. How much cash should you keep? Is $50,000 too much?

www.myownadvisor.ca

Targeting 1 years' worth of cash and then staying with mostly/100% equities in semi-retirement.

As per previous comment:
"Nothing is perfect but the cash wedge is a system where you select a time frame for stock market recoveries."

Indeed.

I think 3 years is too much cash but I wouldn't go less than one. I guess it really "depends".

I/we've been running some projections for folks of late and it seems by default, the best way to draw down is taxable > then TFSA > then RRSP. Doing so, leaves "RRSPs" until the then to grow the most, compound the most, and provide the most, desired "max spend" to age 100 or so.

It's not a hard and fast rule, but seems to work for most.

The next most popular draw down approach seems to be taxable > RRSP > TFSA. The latter, max out CPP until age 70 and OAS as you wish (age 65 or 70) for built-in inflation protection. The challenge is there is not much TFSA assets for many but as the years go by, in the coming years, it's not inconceivable that some couples won't have > $500,000 in tax-free money. That's a pile. That's a solid $25,000 to $30,000 from the TFSA(s) alone for 20-30 years or end of days. Add on modest CPP and OAS and that's > $50K per year.

So....there is a "good case" to taking taking cash produced by dividend earners from a TFSA to fund pre-retirement?

Just some thoughts!

 

[dubmac]

Great discussion.

I'm a big fan of the "cash wedge" strategy but I've got mine modified.

How much cash should you keep? - My Own Advisor

Investing my way to a million dollar portfolio includes having cash ready to access. How much cash should you keep? Is $50,000 too much?

www.myownadvisor.ca

Targeting 1 years' worth of cash and then staying with mostly/100% equities in semi-retirement.

As per previous comment:
"Nothing is perfect but the cash wedge is a system where you select a time frame for stock market recoveries."

Indeed.

I think 3 years is too much cash but I wouldn't go less than one. I guess it really "depends".

I/we've been running some projections for folks of late and it seems by default, the best way to draw down is taxable > then TFSA > then RRSP. Doing so, leaves "RRSPs" until the then to grow the most, compound the most, and provide the most, desired "max spend" to age 100 or so.

It's not a hard and fast rule, but seems to work for most.

The next most popular draw down approach seems to be taxable > RRSP > TFSA. The latter, max out CPP until age 70 and OAS as you wish (age 65 or 70) for built-in inflation protection. The challenge is there is not much TFSA assets for many but as the years go by, in the coming years, it's not inconceivable that some couples won't have > $500,000 in tax-free money. That's a pile. That's a solid $25,000 to $30,000 from the TFSA(s) alone for 20-30 years or end of days. Add on modest CPP and OAS and that's > $50K per year.

So....there is a "good case" to taking taking cash produced by dividend earners from a TFSA to fund pre-retirement?

Just some thoughts!

 

[dubmac]

much to reflect on there.
My approach thus far is: taxable (taking $ from dividend earners) > RRSP > TFSA (dividends) > PT work.
I may move PT work around further up the queue if needed.

Thanks to some comments above, I am also scheduling medical/dental visits to ensure that I max out on some of the medical plan well beforehand.

We did the roof 3 months ago. waterline replaced. Next is to paint the house and sell it in a year.

 

[londoncalling]

Great thread! Sound advice from those that have already retired and those who are planning. The biggest take I got from the posts was one needs to have a plan, be prepared to deviate from the plan in the event of unpredictable misfortune and that most will get by especially if they own their home. Those that have posted here already know this but I will add for those who may be new viewers seeking advice down the road. I strongly suggest one retires their debt before they retire themselves. I am a decade or more from entertaining early retirement but consider these now should assist me when the time comes.

 

[dubmac]

Great thread! Sound advice from those that have already retired and those who are planning. The biggest take I got from the posts was one needs to have a plan, be prepared to deviate from the plan in the event of unpredictable misfortune and that most will get by especially if they own their home. Those that have posted here already know this but I will add for those who may be new viewers seeking advice down the road. I strongly suggest one retires their debt before they retire themselves. I am a decade or more from entertaining early retirement but consider these now should assist me when the time comes.