[AltaRed]

The question itself is clear. No ambiguity. The reason I think it seems to default/slide/degenerate into a spending discussion is because portfolios have been positioned to deliver certain levels of investment income to meet cash flow desires.

A portfolio can be skewed more to income than capital growth vs the other way around. Example: Someone answering $10k/month might have $6k in annuity income and $4k in investment income. They could just as easily have picked holdings that deliver $1k in investment income with the rest of the total return coming in the form of capital growth.

 

[milhouse]

You may want to take a look at these threads over at FWF to get a sense of VPW in practice.

Growth of the Vanguard Balanced ETF Portfolio (VBAL) and its components - Financial Wisdom Forum

A Simple Retirement Using Variable Percentage Withdrawals (VPW Forward Test) - Financial Wisdom Forum

Thanks, I'm going through the threads.

I can't even imagine what we could do with $10k+/month without mortgage, kids, savings, debts, etc. I mean, that's enough to be traveling 365/365 days per year, with hotel everyday, restaurant everyday and activities everyday.

Our targeted retirement travel budget kind of served as the basis for what I was calculating our retirement numbers to be. I've kept track of our spend for the last dozen or so of our bigger trips where a flight is involved and it's kind of worked out to about $300-$400 a day with the lower end being cheaper destinations in Asia and the upper end being cruises. That's in the ballpark of $10k/month. We generally don't travel extravagantly either other than the occasional splurge: economy class flights, a lot of budget hotels (I try not to do AirBNB), walking or public transit where we can, a lot of street food, few paid attractions, etc. I think what adds a lot to our overall trip costs is regional transportation like rail pases. However, I suspect in retirement, we can take longer trips which would help averaging the cost of airfare over more days and getting better rates on accommodations for extended stays.

I suspect our trips costs will become noticeably more expensive over the next few years. Who knows where travel costs are going with pent up demand and inflation. As we become softer, I'm pretty sure we're not going to be able to hack some of the crazy things we do to save a buck when travelling.

 

[hboy54]

We just sent off our tax returns today, and I didn't even pay attention to the actual income numbers. I don't know them unless I go look LOL.

In a sense it doesn't matter, we spend what we want. If my wife's pension, our dividends, and cash float doesn't cover it, then I hunt around for a capital gain to take, or do a partial RRSP withdrawal.

 

[HappilyRetired]

A retired couple today could have $22k each in CPP plus OAS for a total of $44k. A $2M portfolio will generate another $80k. That provides $10k/month gross (BT), perhaps $7k net. A number of current boomers aged 58-76 today will also have DB pensions albeit the younger boomers not yet retired are in that diminishing crowd of either no, or reduced, DB pensions.

Sure, you can get $44k if you contribute the max into CPP and wait until 70 to collect that and OAS. Some people won't live that longs, and those that do, many of them will be too tired to do anything more than sit on their couch by age 75.

I retired at 53 and will be collecting CPP this summer when I turn 60. I have no desire to wait until 70 to squeeze out a few more dollars. If I really wanted more money I would have just worked longer.

You can always earn more, but you only have so many years to enjoy it. The real accomplishment is knowing the difference between more and enough.

 

[AltaRed]

The point was that is not difficult for those responding to the poll to have $10k/month of after tax income, given the amount of CPP and OAS a couple could receive plus potentially DB pension (most retirees responding to the poll would be boomers...currently aged 58-76) plus investment income.

 

[HappilyRetired]

Sure you can potentially have that much. Or you can retire earlier with a little less and stop chasing the almighty dollar. I'd rather retire on $5k a month at 55 than wait until 70 to get $10k a month.

 

[AltaRed]

Sure you can potentially have that much. Or you can retire earlier with a little less and stop chasing the almighty dollar. I'd rather retire on $5k a month at 55 than wait until 70 to get $10k a month.

Many of us, including me, retired early since 'more' was not motivating enough to stay working for the man. That said, I don't understand the sensitivity of some of the responses in justifying their position. It is not relative to the question asked and why anyone here care?

 

[Retiredguy]

I didn't vote because I don't know how much the monthly income will be after income tax , but I do know how much the monthly income will be before income tax.

BT-T=AT/12.

 

[TomB16]

Many of us, including me, retired early since 'more' was not motivating enough to stay working for the man.

I appreciate this type of insight into other people's retirement trajectory. Thank you.

There were a few years in the late 90s and early 00s that we did not max out our RRSPs due to saving money for down payments on property. By the late 00s, the property was fueling it's own expansion faster than we could onboard new RE and we had long since caught up with our RRSPs (it pinched but I forced us to max everything out at the first opportunity).

In the late 10s, we started selling RE and our unregistered money was bringing in dividends that were killing us every April 30. I looked for growth companies, and we have quite a bit of CAR, but the companies I see most value in are highly distributing companies that I will not part with. Retirement was basically forced on us, to get us out of the top tax bracket. This was by design but it felt like a little bit of freedom was taken away, as I was enjoying the final period of my working career. It's a first world problem, to be fair.

 

[ian]

Our retirement finances and f'cast income changed dramatically between age 50 and age 58/59 when we finally retired. And changed again to the better over the past 10 years of retirement.

The stars were aligned for us. I say it was luck, spouse says stewardship, good decisions, and patience. Combination of both I suppose. We had no desire whatsoever to accumulate more-financially or physically. Our children are/will be the beneficiaries of our good fortune.

I am forever grateful to the example my parents set when it came to education, grabbing opportunities and life with both arms, and personal financial management.

 

[TomB16]

The stars were aligned for us. I say it was luck, spouse says stewardship, good decisions, and patience.

The flip side of the sequence of return risk. This is why the original question is impossible to answer. Until the market has a major correction, most retired people will probably have to significantly increase their withdrawals each year.

 

[afulldeck]

Many of us, including me, retired early since 'more' was not motivating enough to stay working for the man. That said, I don't understand the sensitivity of some of the responses in justifying their position. It is not relative to the question asked and why anyone here care?

Well said, there are many reasons to work and many to not work. It's a personal decision. Your reasons to not work might be to find a reprieve from the veal fatten cubicles and the micro managers. Your reason to work might be that your interested in it and your the master of your own destiny. Money might not be a driver...

 

[ian]

I believe the trick is to be able to work as long as you want to...... not as long as you have to.

And to achieve the retirement income that provides you with the lifestyle and the security that meets your requirements and your needs.

 

[afulldeck]

I believe the trick is to be able to work as long as you want to...... not as long as you have to.

And to achieve the retirement income that provides you with the lifestyle and the security that meets your requirements and your needs.

You should add the bold to your signature

 

[james4beach]

I believe the trick is to be able to work as long as you want to...... not as long as you have to.

And to achieve the retirement income that provides you with the lifestyle and the security that meets your requirements and your needs.

Nicely said. I started working pretty seriously at a young age when I was a teenager. At this point I've been working for about 25 years. Some will say 25 years isn't a long career but I'm pretty sick and tired of work. I keep saying "it would be nice to take 3 years off from working" but never do it.

I realize some people are workaholics or get a real "zing" from working, but I have a million other things I'd rather be doing. Sadly, I am stuck doing work until I have enough to retire... and I just don't have enough money yet.

If I had CPP + OAS, I might actually be able to retire today (there'd be enough cashflow) but I'm a long way from being eligible for those, so I don't even think about them.

One of my coworkers retired in his 30s but I think he made a huge mistake. The guy lives on a shoestring budget and I don't see how he's going to be comfortable as he gets older. But he was burned out from work, and over-reacted. Learning from that, I'm now trying to take it "easier" with work so that continuing to work is more sustainable for me.

 

[wayward__son]

One of my coworkers retired in his 30s but I think he made a huge mistake. The guy lives on a shoestring budget and I don't see how he's going to be comfortable as he gets older. But he was burned out from work, and over-reacted. Learning from that, I'm now trying to take it "easier" with work so that continuing to work is more sustainable for me.

Some FIRE types are probably sweating a little now, but in a labour market like this pretty much any 'retiree' should be able to dust off the old resume and go back to work no?

 

[james4beach]

Some FIRE types are probably sweating a little now, but in a labour market like this pretty much any 'retiree' should be able to dust off the old resume and go back to work no?

Well that's a good point, yes, many jobs are available. But that won't always be true.

 

[wayward__son]

fair enough. this market could actually be a nice little mulligan for regretful FIRE people. usually portfolio down = rough job market. maybe you should give this guy a shout and let him know to strike while the iron is hot lol

 

[wayward__son]

I suspect our trips costs will become noticeably more expensive over the next few years. Who knows where travel costs are going with pent up demand and inflation. As we become softer, I'm pretty sure we're not going to be able to hack some of the crazy things we do to save a buck when travelling.

This is the one area of lifestyle creep that got way out of hand for us some time ago, and we don't regret it at all. I have found that the most memorable experiences tend to be either cheap (camping, street food, etc) or eye bleedingly expensive. The nice thing about the latter is you don't get as much of a permanent hedonic adjustment because you just come back to your regular apartment or whatever and life goes on but the trip becomes an unforgettable lifetime experience.

 

[james4beach]

fair enough. this market could actually be a nice little mulligan for regretful FIRE people. usually portfolio down = rough job market. maybe you should give this guy a shout and let him know to strike while the iron is hot lol

Good point actually. Many people have retired (or semi-retired) during covid... for sure this had to do with the wealth effect from stocks and real estate going up like crazy. Some people saw their paper wealth balloon incredibly. As you know, some young people became rich off crypto speculation.

Thinking they've become rich and have enough to retire, these people said "good-bye" to the office.

The Federal Reserve and Bank of Canada are now hammering down asset prices, and this is partly deliberate, as one way to help combat inflation is the negative "wealth effect". Declining stocks and real estate will change people's psychology... this is probably going to start happening this year.

Some of the people who retired during the pandemic are going to see their declining assets and think again. Some may go back to work. I suspect that portfolio values (the stocks + real estate) play a big part in financial behaviour and confidence.

There are many people out there whose investments did amazingly well over the last 2-3 years, and who are extrapolating that and feeling confident about early retirement due to it. I'm somewhat in that camp myself.

Pulling away the punch bowl and draining liquidity out of this system, to knock some sense into everyone, is a very good idea.