# Mid 30's to partially retire in our 40's and fully retire in our 50's with kids



## 97acuratl (Feb 22, 2016)

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## nobleea (Oct 11, 2013)

Welcome!
I'll be following this one for sure. It's pretty much a carbon copy of ourselves (http://canadianmoneyforum.com/showthread.php/16545-Our-wealth-goals-journey-and-targets)
Same age, income, jobs, location, and similar goals.

Do you have any defined benefit pensions or is it just your savings? 100K in passive income in under 20 years is a lofty goal. Any specific ways you'll get there? How much can you save/invest on a yearly basis right now?


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## 97acuratl (Feb 22, 2016)

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## peterk (May 16, 2010)

97acuratl said:


> Hopefully stay as a professional but both my wife and I to partially retire *or find a way to earn ~$50K/year *


Ha, well that's the trick, isn't it? 

I know how to work 20 hours a week making $11/hour with no stress... and I know how to work 40-50 hours a week making $50/hour with lots of stress and lots of bull***t. What I don't know how to do is work 20 hours a week making $50/hour with no bull***t!

Be sure to let us know if you ever find the answer :biggrin:

Welcome to the forum acura.


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## 97acuratl (Feb 22, 2016)

peterk said:


> Ha, well that's the trick, isn't it?
> 
> I know how to work 20 hours a week making $11/hour with no stress... and I know how to work 40-50 hours a week making $50/hour with lots of stress and lots of bull***t. What I don't know how to do is work 20 hours a week making $50/hour with no bull***t!
> 
> ...



Lol, I got 5 years to figure it out but agree with your sentiment. I am keeping an ear out for seasonal jobs or other jobs in my profession. I think I would be happy developing PSV studies and updating P&ID's but doubt someone will pay me $50 an hour to do it.


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## tygrus (Mar 13, 2012)

You have no investments?

Anyway, its all nice to have a goal and all, but the saving oneself rich doesn't work because of taxation. You are your wife are paying 40% taxes. To save 3 million, you will need to earn 5 million. Even if you kept your entire wage, that will take 20+ years at your current salary. This is not possible and I suggest you do not try to rely on it.

You need to get some simultaneous earning working for you for the next 20 years. Investments, a rental property etc. Fill that TFSA and get it compounding, park some in RRSP and also consider using todays cheap money to buy a rental or something but make sure its in a place with a strong diversified economy with lots of jobs, maybe waterloo or something.


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## 97acuratl (Feb 22, 2016)

The table in my original posts have $960K of assets (not well formatted table mind you, will clean that up). $470K are tax sheltered investments that are generating income as well as our day to day jobs and with a current net worth of $625K. 

Hope that clears things up a bit.



tygrus said:


> You have no investments?
> 
> Anyway, its all nice to have a goal and all, but the saving oneself rich doesn't work because of taxation. You are your wife are paying 40% taxes. To save 3 million, you will need to earn 5 million. Even if you kept your entire wage, that will take 20+ years at your current salary. This is not possible and I suggest you do not try to rely on it.
> 
> You need to get some simultaneous earning working for you for the next 20 years. Investments, a rental property etc. Fill that TFSA and get it compounding, park some in RRSP and also consider using todays cheap money to buy a rental or something but make sure its in a place with a strong diversified economy with lots of jobs, maybe waterloo or something.


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## steve41 (Apr 18, 2009)

ok I ran your numbers assuming both 35, retiring at 45. Given a 4% return and assuming each has a $6K CPP by 60, your combined net income comes in at $54.8 K, dying broke at 95, living in AB. I didn't factor in any bridging salaries, either. 

So, I guess it is doable.


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## OnlyMyOpinion (Sep 1, 2013)

Not a criticism but a few of my thoughts:
I don't count a vehicle as an asset, esp for purposes of the value of my 'nest egg'.
I also don't count the value of my home for that purpose. Clearly it is an asset with value, but it is only available to me if I sell it. Then I have to find somewhere else to live with my family. It will be kept, but may fund my very senior years.
A good professional job has a lot of (future earning) value, and (in my case) was in a field I enjoyed. 
Our solution was to let the lower income spouse 'retire' to be at home with the kids, volunteer in school, garden, etc. while my well-paying job paid for great, memorable vacations each year, above avg savings and ultimately early retirement (but in late 50's).


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## 97acuratl (Feb 22, 2016)

OnlyMyOpinion said:


> Not a criticism but a few of my thoughts:
> I don't count a vehicle as an asset, esp for purposes of the value of my 'nest egg'.
> I also don't count the value of my home for that purpose. Clearly it is an asset with value, but it is only available to me if I sell it. Then I have to find somewhere else to live with my family. It will be kept, but may fund my very senior years.
> A good professional job has a lot of (future earning) value, and (in my case) was in a field I enjoyed.
> Our solution was to let the lower income spouse 'retire' to be at home with the kids, volunteer in school, garden, etc. while my well-paying job paid for great, memorable vacations each year, above avg savings and ultimately early retirement (but in late 50's).


Thanks for the feedback. My basis of the numbers are just a convenient point for me and there will always be nuances on what you personally consider an asset or not. For my tracking, I am keeping with the spreadsheets that I have already developed.

As for retirement, or how we choose to live our lives, I don't disagree that your suggestion is a possibility. I don't see anything wrong with being able to re-define our priorities or life in 5 to 7 years.


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## lightcycle (Mar 24, 2012)

OnlyMyOpinion said:


> I also don't count the value of my home for that purpose. Clearly it is an asset with value, but it is only available to me if I sell it.


+1

If the goal is to track your road to retirement, it's not that helpful to record a net worth of $1MM when $800K of that is in home equity. Not unless you are planning to sell the home and retire in Costa Rica.

Maybe break out a separate section to track net liquid assets, the kind that is able to generate that 4% SWR in retirement.


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## GalacticPineapple (Feb 28, 2013)

OnlyMyOpinion said:


> Not a criticism but a few of my thoughts:
> I don't count a vehicle as an asset, esp for purposes of the value of my 'nest egg'.
> I also don't count the value of my home for that purpose. Clearly it is an asset with value, but it is only available to me if I sell it. Then I have to find somewhere else to live with my family. It will be kept, but may fund my very senior years.


I can see not counting stuff like TVs or clothing in your assets but when you're talking about property worth tens or hundreds of thousands of dollars I think you'd be remiss not to. In the case of your home you can use a HELOC to access and invest most of its value even while you're still living in it.


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## OnlyMyOpinion (Sep 1, 2013)

GalacticPineapple said:


> ... In the case of your home you can use a HELOC to access and invest most of its value even while you're still living in it.


True. In fact OP has indicated they are going to do a Smith manoeuvre to access the ongoing equity they build up in their house, and invest on margin as well. I was expressing a conservative approach - in effect that your house is your home - especially when I have a family. The OP's approach is aggressive and not without risk.


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## 97acuratl (Feb 22, 2016)

OnlyMyOpinion said:


> True. In fact OP has indicated they are going to do a Smith manoeuvre to access the ongoing equity they build up in their house, and invest on margin as well. I was expressing a conservative approach - in effect that your house is your home - especially when I have a family. The OP's approach is aggressive and not without risk.


Including the house is useful for my leveraging strategy but agree that I still have to live in the house and a significant percentage is permanently locked up. That being said, including it more clearly shows my cash flow month to month. I have separate tables looking at investment equity and investment debt that I also use for my decisions in the future.


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## 97acuratl (Feb 22, 2016)

Updated 1st post with February numbers. It was a hard month for stocks and we took out ~17K for RRSP's. Tax return and bonus is happening in march and april so should be breaking a million in assets very soon (a psychological barrier only for fun).


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## mind_business (Sep 24, 2011)

97acuratl said:


> Updated 1st post with February numbers. It was a hard month for stocks and we took out ~17K for RRSP's. Tax return and bonus is happening in march and april so should be breaking a million in assets very soon (a psychological barrier only for fun).


Nice work! I can't remember when I hit a million $ assets, but it was a fun number to hit. Now I'm approaching a million $ Net worth ... and it's not as exciting. Mostly because I still have a long ways to go to hit my goal of FI by 55. From your household income and dedication to savings, you should hit that at a much younger age than I did. Keep up the good work ... and the updates


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## 97acuratl (Feb 22, 2016)

March update: As most people know, march was a good month for investments so everything rebounded quite nicely. I filed our taxes so our return should be deposited in April. My bonus was received today and quickly went to debt. We got 4 canadian flight tickets and an airbnb rental for an upcoming trip so our credit card is much higher than typical (family member's wedding). Should be able to sort through most of the debt in April and have a good plan to be consumer debt free in May.

We had a useful exercise of writing down all of our moderately big purchase "wants" (examples - lawn mower, fridge, patio furniture, new phone ect.). This was a simple exercise that allowed us to prioritize and push back the things that didnt make sense. It helps with communication and focusing on what is realistic given our cash flow.


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## My Own Advisor (Sep 24, 2012)

"We had a useful exercise of writing down all of our moderately big purchase "wants" (examples - lawn mower, fridge, patio furniture, new phone ect.). This was a simple exercise that allowed us to prioritize and push back the things that didnt make sense."

Money prioritization and budgeting are key to financial success. We're trying to do the same thing. We forecast expenses every 2 weeks. We also pay ourselves first. About 15% net income goes out "off the top" via RRSP contributions every month. On top of that, we save for TFSAs every year.

With your income and diligent focused on saving and investing, you'll have no problem pulling the plug in your early 50s.

VERY well done.


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## 97acuratl (Feb 22, 2016)

Updated the initial post with april's results.

Apr-16
Gross $1,008,102
Debt $(344,554)
Net worth $663,548 

We caught up on most of our bad debt this month. We have been spending a bit as well lately but this should be winding down (vehicle repairs, vet bills, kids bedroom furniture). We should be able to finish up all of our bad debt in June which will be nice. Afterwards, Ill be working on saving up for a replacement car (or at least a healthy down payment).

Our net worth is consistently improving but is still quite linear. I think the market is still correcting so hopefully will see an upwards shift soon. Regardless, everything seems to be doing quite well.


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## 97acuratl (Feb 22, 2016)

Dates Assets Debts Net Worth

Aug-12 $610,448 $(356,371) $254,077 
Jan-13 $635,811 $(346,556) $289,255 
Jan-14 $760,144 $(353,383) $406,761 
Jan-15 $849,870 $(320,823) $529,047
Jan-16 $962,386 $(337,907) $624,479 
Feb-16 $980,088 $(357,770) $622,318 
Mar-16 $1,001,751 $(364,704) $637,046 
Apr-16 $1,008,102 $(344,554) $663,548 
May-16 $1,029,539 $(348,418) $681,121 

Updated with May's results:

May in general was a good month for couch potato stocks. We are finishing up paying off bad debt and continue to increase my line of credit investment debt so the debt column should continue to increase. June will start working on our TFSA's and no significant purchases coming up. My 2008 car is starting to see some minor issues that I will repair myself day to day and am hoping to drag that along for another couple years.


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## nobleea (Oct 11, 2013)

97acuratl said:


> Our net worth is consistently improving but is still quite linear. I think the market is still correcting so hopefully will see an upwards shift soon.


I've been tracking our networth since 2008. I would have to say a linear growth in NW is more realistic. We were seeing a bit of an exponential trend occuring until about Feb 2015. If I try and stick an exponential curve fit, we're getting a growth of about 25-34% per year in net worth, annualized. I would love to keep that up, but it's not going to happen.


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## 97acuratl (Feb 22, 2016)

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## nobleea (Oct 11, 2013)

97acuratl said:


> View attachment 10417
> View attachment 10425
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> ...


Those are good, but if your looking for retirement, it should be something like net worth of investable assets rather than total net worth. I would assume your house equity is a good portion of your net worth, but when it comes to retirement, especially early retirement, that house equity is pretty useless.


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## 97acuratl (Feb 22, 2016)

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## 97acuratl (Feb 22, 2016)

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## 97acuratl (Feb 22, 2016)

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