# At what age did you retire?



## leoc2

My wife is 52 and is wondering at what age she should retire. Financially she is secure when she reaches 55 and could retire at that time. Let's assume health is not an issue (her parents and grand-parents made to their late 80's). Although working until she is 60 increases her financial security (bigger pension) the question becomes should she? I would like to hear the following from those retired: At what age did you retire? Was it the right choice? If you had to do it over again, would you retire earlier or later than you did? 

Thanks


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## OhGreatGuru

leoc2 said:


> My wife is 52 and is wondering at what age she should retire. Financially she is secure when she reaches 55 and could retire at that time. Let's assume health is not an issue (her parents and grand-parents made to their late 80's). Although working until she is 60 increases her financial security (bigger pension) the question becomes should she? I would like to hear the following from those retired: At what age did you retire? Was it the right choice? If you had to do it over again, would you retire earlier or later than you did?
> 
> Thanks


I can answer the first question - 56. But my age and my reasons will be meaningless to you and your wife. There are too many factors specific to her/your circumstances. I would suggest you both look for a good pre-retirement seminar that will help you both examine what do you want to do after retirement? If she is in the public sector her employer may already offer such a seminar. The federal public service has a 3-day seminar that they encourage all their employees to take, and their spouses.


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## Rico

I'm not a retiree but here's my thoughts (for what they're worth).

Financial matters aside, I'd suggest a major factor in this is "to what level does she enjoy her job?" Staying longer gives her something to do, make money, and keep engaged - especially if she likes her job (win/win). If she's at a take-it-or-leave-it point, maybe working until the "leave it" becomes more desirable is best. What are the priorities and considerations for retiring? Travel, moving elsewhere, new hobby (or more time for existing hobby), buying a boat, that dream vehicle? Some of these suggest staying, others say leave, some could be both. As with most issues, "it depends". For example, semi-extended travel is still possible with potentially lots of vacation time yet the job is still there.


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## brad

Rico said:


> Financial matters aside, I'd suggest a major factor in this is "to what level does she enjoy her job?" Staying longer gives her something to do, make money, and keep engaged - especially if she likes her job (win/win).


Exactly. My father retired at 55, but he hated his job (he used to joke that he was ready for retirement at age 20). He lived another 17 years after he retired and I think they were the happiest years of his life.

In contrast I have a friend who is 73 and still hasn't retired; in fact he just went through retraining and launched a new career. He's in great physical and mental shape, works out every day, and leads a very full life; the idea of retirement bewilders him and he has no intention of retiring until he is physically or mentally incapable of continuing to work.


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## Oldroe

I retired at 50. Don't believe I hated my job and I didn't love my job.

It's been 3 years and I'm not looking for a job. I still hate cutting grass and yard work in general the basement still isn't cleaned and I love fishing.

Life is great turned down 2 jobs in the last month.


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## marina628

My husband retired May 2009 when he was 42 and after a year he went back to his old job two days a week.He enjoyed it first 4 months as we took summer off went to Europe and back to Newfoundland for a month.Once September came ,kids are back in School , he realized he needed at least a couple days a week of something to do.It really is a individual choice and money is just one factor to consider.


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## I'm Howard

Retirement means you are doing what you are doing because you WANT to, not because you HAVE to.

I have friends who are worth many millions of dollars, but they still go to their office because they love what they do.

Retiremnet is very stressful, you have a whole day to occupy yourself, many people go into deep depressions, they were defined by what they did rather than what they were.


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## sprocket1200

I'm Howard said:


> Retirement means you are doing what you are doing because you WANT to, not because you HAVE to.
> 
> I have friends who are worth many millions of dollars, but they still go to their office because they love what they do.
> 
> Retiremnet is very stressful, you have a whole day to occupy yourself, many people go into deep depressions, they were defined by what they did rather than what they were.


I agree with Howard. these are the same people that are still working...


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## Brian Weatherdon CFP

This is a LIFE question, and I agree with all above, it's more about life than wealth. We need money. But what are the DREAMS, the LIFESTYLE you can enjoy together, and how/ when would you choose to enjoy all this more fully? 
B


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## Ihatetaxes

There is a guy who works for his own company in my building who is 93 and still comes in every day. He started his company over 50 years ago and still works a 30 hour week. Drives up in his Honda CR-V by 9:00 every morning and parks in handicapped. Takes him quite a while to make it up to the office. He doesn't really run things anymore but once in a while he comes down to our company and tries to sell us stuff (I think the current management send him out on sales excursions just to get rid of him for a while). He is obviously here because he loves it or else he just never found a hobby more interesting that his job. I don't know him well enough to ask what else he does but I doubt he is watching much Oprah or Price is Right.


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## gemma119

My wife and I retired 2 years ago. Bought a small house on a golf course in Florida. Love every minute of our life so far in retirement. Spend about 4 months in the south. We stay in touch with the family through the computer videos and our children visit for 1 or 2 weeks in the winter with the grand children. Life is good here and have made a lot of new friends down here. Time seems to go so fast when your enjoying life. 
We want to milk this retirement as long as possible so keep those dividends coming and growing. As long as the economy doesn't tank things should be fine. 
Love retirement!


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## Eclectic12

leoc2 said:


> My wife is 52 and is wondering at what age she should retire. Financially she is secure when she reaches 55 and could retire at that time. Let's assume health is not an issue (her parents and grand-parents made to their late 80's). Although working until she is 60 increases her financial security (bigger pension) the question becomes should she? I would like to hear the following from those retired: At what age did you retire? Was it the right choice? If you had to do it over again, would you retire earlier or later than you did?
> 
> Thanks


I'm not there yet but the feedback from most of my retired relatives has been that:

a) they don't know how they had time to work as they are busier now than when they were working. [ I see this as positive as my dad commented that when you look at the generation before, most were dead within a year or two of retiring.]

b) if you plan to take up a hobby in retirement - start it before retiring. 

c) have a plan. My dad thought he was indispensable at work and was disappointed when no one called for his advice. It took him a while to find his stride and quit telling mom how to boil water after she'd been doing it forty plus years.

d) take the time to match you income to your retirement plans. A gap was the most common reason to go back or regret retiring. For most, the comment was they were nervous about a smaller income but were doing more than when they had the higher income/time commitment to work.


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## Square Root

I retired at 56 and my wife at 45. Did so because we didn't enjoy our jobs anymore. I have been retired for over 4 years and it's been great. I would say if you enjoy your job don't retire unless you have something to do that you would enjoy more than working.


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## Eric

The company I was working for went bankrupt and I retired at 59. I have never been happier. I had enjoyed most of my work but the political part was increasingly unpleasant. Now I see my past work as a form of slavery. In my opinion, people should retire as soon as they can afford it.

I am extremely busy doing things I like. Software development for free, with almost no politics. Financial management for me and some relatives. Assisting kids with their homework. A lot of reading. I am thinking of taking a course in fundamental physics. Multi-hour long walks in the mountain whenever I feel like it. Several multi-month camping trips in Europe.

I consider my past life, working 10 to 12 hours a day, as a big waste although it allowed me to accumulate money. The real life started after - a bit too late, since my health is starting to slow me down.


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## hboy43

Hi:

Somewhere between 38 and 40 the contracts petered out and I came to the realization that I was done.

hboy43


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## canadianbanks

I haven't retired yet, but I'm planning to in the next 3-4 years.


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## fraser

I went at 58. I was financially prepared and was expecting to work until 59 or 60 in the hopes of snagging a 'package'. 

I was fortunate. My employer eliminated my position and I was able to take advantage of an attractive settlement...with the assistance of good legal representation.


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## warp

I "retired" when I was about 30.

I have done a few things over the years, but basically I have laziness down to an art,,,and like doing nothing.

My only regret is that I cant figure out how to do "less than nothing",
but Im working on it.

So its an individual thing. 
My friends ask if I don't get bored and my reply is that I'd be much more bored and frustrated if I had to go to work every day at somehting I hated to do.

Unfortunately for me, I have NEVER, in my entire life, "enjoyed" anything I did to earn money.
That being said..I worked hard for a few years at my own business, and was frugal and saved, and invested.

For many years, I played golf 3-5 times a week....had leisurely lunches at the local cafe, watched Tv or read a good book, and basically did whatever the hell I wanted.

I stll live frugally...live in a nice house I built 10 years ago...have everthing I need...and now take care of my son and family.
I watch my investments, and love getting those dividends every month.

I worked hard, and was lucky...I know that...but the road is always the same,,,spend less than what you earn,,,live within your means,,,dont try to keep up with the Jones's, or impress anybody.

be honest to all, and especially to yourself,,,save your money and invest wisely.

good luck to all.


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## Jungle

Wow Warp you are only 30 and retired? Talk about massive achievement. And you have family too? Good for you! 

I really enjoy reading this thread as you see the opinions, value of time and money in relation to retirement.


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## Toronto.gal

warp said:


> I "retired" when I was about 30.
> 
> My only regret is that I cant figure out how to do "less than nothing",
> but Im working on it.
> 
> I worked hard for a few years at my own business, and was frugal and saved, and invested.


So you're the real Derek Foster! 

I found your comments interesting, but not sure I understood what you meant by wanting to do "less than nothing" because I don't think that is possible; you are after all busy investing now. At any rate, congratulations on your early success, seems like you had it all actually, luck, smarts and timing & now you're entitled to live life to the fullest, well, whatever that may mean for you. 

About saving money, as the saying goes: "Without frugality none can be rich, and with it very few would be poor."


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## loggedout

Warp - That's awesome. I'm 31 and I would love to be in your situation but can't see it happening any time soon. The rate at which changes are occurring in every facet of our economy and society in general, makes it hard for me to see a time when I can retire and safely say that I don't need to work anymore. All I envision is the worst case scenario happening (I do this for a living, so I'm trained to) and envision a future of being destitute. I guess everyone has a different definition of security, and that with different needs and wants, makes the question of when should one retire extremely personal. I too would love to do nothing, and this reminds me of a Seinfeld quote about doing nothing being hard work:

_"“I am so busy doing nothing... that the idea of doing anything - which as you know, always leads to something - cuts into the nothing and then forces me to have to drop everything.”"_


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## Jon_Snow

Warp, I'm in my late 30's and looking to retire before 45... I would love a few details on how you pulled it off in your early 30's. An inheritance or a lottery win would explain alot....


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## warp

Thanks for all the kind words

I guess I should expand....

Firstly I "retired" when I was 30...but Im in my 50's now.

"JUNGLE" posted:

"Wow Warp you are only 30 and retired? Talk about massive achievement. And you have family too? Good for you! "

So i wanted to make that clear.
Also:

I did NOT win a Lottery.( I wish)
I did NOT get any inheritance. ( I wish that too)

In fact my Dad passed away last summer, unfortunately for me...and I take care of all my Mom's needs, ( although she does have some funds of her own,), and I have siblings.


TORONTO GAL posted:
"So you're the real Derek Foster!"

Many people have commented to me that I am the real Derek Foster.
Not to be too brash,( I am not a multi, multi, multi, millionaire), but my portfolio is much larger than his, I live in a nice area of Toronto, have absolutely no debts, ...and I can live on less, as I do have only 1 teenage child,,soon to go the university.
Although I could go out a buy a new Lexus....I ask myself, why I would pay $50K + for transportation.
I have a 19 yr old Lexus that still runs pretty good,,,and when I need a new car I will probably buy a 3-5 year old small car, cause I hate paying $70 to fill up on gas,

Please understand that this is in no way bragging!
I am totally aware that some of my good fortune was, and is, luck.

I am much like the people written about in "The Wealthy Barber" although I have never actually read the book. Apparently in it the authour states that many millionaires are regular quiet folks that live on regular streets, and that like to live quietly without impressing anybody.

What i was trying to point out is that the "old" rules still stand, and still apply.
I myself know many people with $1000 in their pocket, and $500 in the bank.

Save your money...live well, but frugally, and invest early.
Educate yourself about your money and your investments.
I am a conservative investor in general...like to buy dividend paying stocks.

In fact I wish I had of been a do-it-yourself investor much ,much earlier.
I have paid a price for having the beenfit of being schoolled by so called "financial advisors" in the past.
It is a hard lesson when you realize they dont always have your best interests at heart.

I would much rather keep my money to give to my kid...and to leave gifts to all my nephews and nieces, who are all great kids, and treat me like a father.
( and NOT because they expect anything)

Some of you may have read previous posts by me here talking about the "investment school" I run here at my house for all these teenagers.
We meet once a week or so, and I teach them about working, education, saving, living within their means even now, and most of all, about investing: asset allocation, RRSP's , TFSA'S , bonds, stocks and equities, etc etc.
What it all means and how it will affect their futures.
They are gung ho to learn, which is great.

Anyway , thanks for the kind words as I said,
This post became much longer than I intended. 
Hope I didnt bore you all.

I always keep in mind that I dont know everything about investing, ( i wish that too!!) and that I can learn from other posters here and appreciate all the intelligent discourse that happens on this board.

I also ALWAYS remember not to confuse my own brilliance with a bull market.

Its easy to look smart when all the indexes are going up.
I has the good fortune to have some loose cash in 2008-2009, when there were tons of bargain stocks to be had,,,and I did buy quite a few.
My conservative nature however prevented me from "going all In" as it were,
and I sure wish I had of now.

It just seems so difficult to find any interseting and good stocks these days, especially in Canada.
It looks like the markets are pretty fairly priced.....so I will again ask for advice from you others here...

What can we buy in Canada right now that is well priced for a longer term hold????


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## Jon_Snow

Nice response, Warp. I'm trying to follow a simialr path to your own...


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## Toronto.gal

I am sorry for your loss Warp.

I know very few people who don't change cars every 4/5 years [what a waste of money IMHO]; my Ford is 10 years old, but it still looks/runs like new, so no need to sell yet, but when I do, I'll buy a Mini. 

I have not read "The Wealthy Barber" either because someone told me it advocated MF's, though I did not verify myself & eventually will probably read it.

*"Save your money...live well, but frugally, and invest early"* - ditto with emphasis on living well also & fulfilling personal dreams as much as one responsibly can because life is too short. This reminds me of a former colleage, who for years kept postponing a trip to her native country & before she ever had the chance to go, sadly was diagnosed with a terminal illness.....she was not even 50 yet. 

I guess the lesson is not to push our dreams too far into the future.


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## warp

TGAL,

Thanks for the thoughts...it was a sad time, but a road we must all travel.

Its a matter of priorities.
I bought my Lexus, 2 years old, when my son was born.
I was driving a fancy Corvette...which was fun to drive, ( although a pain in the winters)
But I needed more than 2 seats so I made the switch.
I considered having 2 cars,,,but the insurance was costly for the little added benefit.
Ive had it for 17 years.....a great car, but now getting a bit old.
Like you I never understand these people who buy a new car every 2-4 years.
But like I said its a matter of priorities and what makes you happy.

I too have heard stories like your friend.
One person the family knows waited and waited to retire at 65 , saying he was going to collect his pension and relax, .....and then fell over dead two weeks into it.
So you do have to "live well..but frugally" as you pointed out.

I take trips whenever I want....but I have noticed that as I have gotten older I no longer seem to have that great desire to get "things" anymore.
I'm quite content with what I have.

Of course I am buying LOTTO MAX tickets for this $ 50 Million draw all the same!!

Last question: TGAL

Give me some good dividend stock buys here in CANADA..( or elsewhere for taht matter)


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## cannon_fodder

Warp,

Congratulations on successfully implementing your plan for so long.

I, too, subscribe to the philosophy of not falling prey to conspicuous consumption.

How did you manage to capture the attention of the teenagers to sit with you and learn from your experience? It seems to me that some people are innately interested in personal finance but the majority have inherent fears or preconceptions which prevent absorbing the concepts easily.


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## warp

cannon_fodder said:


> Warp,
> 
> Congratulations on successfully implementing your plan for so long.
> 
> I, too, subscribe to the philosophy of not falling prey to conspicuous consumption.
> 
> How did you manage to capture the attention of the teenagers to sit with you and learn from your experience? It seems to me that some people are innately interested in personal finance but the majority have inherent fears or preconceptions which prevent absorbing the concepts easily.


Again, thanks for the kind words.

As far as the teenagers go,,,I guess first they have to like you and respect you...( as they do me).
They see that I dont have to work....and I guess they like that idea.

I frame the "classes" in terms of how whatever knowledge about finances they pick up from me will affect and better their lives.
I also try to get then to read some financial boojs,,but you know how young people are,,they seem to have no time for that...always running around.

I give then real examples, and have been on my computer brokerage accounts to show how some of these things work in the real world/

Bonds were hard for them to understand at first, why they cost different amounts per $100...what the ratings mean....what the actual yields were etc.
What rising and lowering interest rates would do to bonds etc.
Hell it can be complicated even for seasoned investors.

The main thing though is when you start showing them how money and investmenst can compound with time,,,and they can accumulate a nice amount of money for their future years , ..this seems to really interest them, and they want to get started.

I always tell them this is about learning financial concepts and how it will make a big difference to them 20 years down the road,,,not next week or next month.

Thats the most important thing you can get into a young persons head ,
I think,,,,,and explain to them how fast the next 20-30 years will fly by...so they better prepare!


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## cannon_fodder

Warp,

Which book have you found that had the best chance for the teens to actually read, understand and adopt the concepts within?

I'm wondering if I should buy yet another Wealthy Barber and go through that with my daughter. I found it emminently readable and simplistic enough to minimize the fear factor.


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## HaroldCrump

warp, I may have said this before too, but what you are doing is truly great.
I'm sure many of us wish we had such a mentor/teacher when we were teenagers - I sure wish so.
Kudos on taking such a great initiative...you are making a difference in your own way.


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## warp

HAROLD:

thanks for the reply.

Like you i sure wish I had of had someone like myself to talk to me about finances when i was young.
I sure would have made less mistakes, for sure!

_ would actually like to go into my sons high school and give some free lessons on all this stuff.....bit knowing the unions and all the rules, there would prob be all kinds of hoops to jump through to do that.

Several times I wanted to "coach" my sone baskerball s teams at scholl. and was told I wasn't allowed to , even though ths kids wanted me there.

CANNON FODDER:

I will have to think on what book might be good for your daughter and you.
Its hard these days to get kids to actually read a book right through.

"How a second Grader Beats Wall Street" might be a good start.

Let me ponder the books I've read and get back to you.

good luck...teaching your daughter ..and just getting her started on saving and investing is a great start._


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## warp

Sorry for all typing errors in my last post...I am in a big hurry to meet a friend.


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## Bullseye

Warp - can you elaborate on how you managed to retire at 30 with a large portfolio, without any large injection of lottery or inheritance cash? Did you make $500k per year from 20-30, and save most of it? Start and sell a business?


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## vimmm

Well, 

I want to retire - soon, as soon as I can. Just last month I started to think really seriously about retirement. Few months ago I started to use mint.com and consolidated few accounts and now I see single view. And last month my family portfolio hit 1mln. That was kind of wake up call for me. I am 41, no debt, very good house that is fully paid off, 2 children with max RESP accounts. 
We live very frugal - I always take my own lunch to work and heat in microwave. I shop in NoFrills. At the same time my family goes 2-3 times a year vacationing south - that is important to us.
Main reason why I am not retiring - I need to save more money. If market would crash tomorrow, then I know that my portfolio would shrink a lot. I heared too many stories when after market crash people with mln dollars were left with few hundred thousand and had to go back to work. I cannot do that - If I'll retire, I cannot come back to my field - it is just too complicated - few years beeing absent in technology means a lot. So I want to be sure that when I retire - that is going to be for good.

For now I am reading stories about you happy retirees and wish I was in your place .


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## cannon_fodder

vimmm said:


> Well,
> 
> I want to retire - soon, as soon as I can. Just last month I started to think really seriously about retirement. Few months ago I started to use mint.com and consolidated few accounts and now I see single view. And last month my family portfolio hit 1mln. That was kind of wake up call for me. I am 41, no debt, very good house that is fully paid off, 2 children with max RESP accounts.
> We live very frugal - I always take my own lunch to work and heat in microwave. I shop in NoFrills. At the same time my family goes 2-3 times a year vacationing south - that is important to us.
> Main reason why I am not retiring - I need to save more money. If market would crash tomorrow, then I know that my portfolio would shrink a lot. I heared too many stories when after market crash people with mln dollars were left with few hundred thousand and had to go back to work. I cannot do that - If I'll retire, I cannot come back to my field - it is just too complicated - few years beeing absent in technology means a lot. So I want to be sure that when I retire - that is going to be for good.
> 
> For now I am reading stories about you happy retirees and wish I was in your place .


Vimmm, I believe that the biggest factor in getting to financial independence is when I decided to think about retirement constantly - what it would look like, what I needed to make that happen, and how I would get there. 

The closer I got the more I thought about it until it became an everyday occurrence - not an obsession, more like brushing your teeth.

Surprisingly, and definitely with a lot of luck and hard work, the path to financial independence began with what I expected would be a 20 year journey, then it became 15 and then to 10 and now it is ready for the taking just 5 1/2 years after I started to think seriously about retirement.

A former boss said to me, "It isn't enough to plan your work, you have to work your plan."


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## WallyK

I just wanted to tell my story.

I am now 59 years old but sort of "retired" since age of 48. I say sort of because I do spend about 2-3 hours a day reading financial news and working on my investment portfolio (mostly ETFs these days.). My wife was working as a administrative assistant and retired at age 56.

Let me back-track a bit.

I graduated from several universities (3 degrees including an MBA from Western). First job was a pharmaceutica sales rep.....a boring, mind-knumbing job where half your time is spent sitting in docter's waiting rooms. But....the one big benefit was I read every single magazine and really enjoyed the business mags....even took a few home. Those 6 years spent were a great education in Canadian (and USA) political, social and economic affairs. 

By the early 1980s I left pharma sales and entered the world of Life Insurance with a major company. This progressed to investment products (like MFs) but as anyone knows if you've ever had dealings with a Life Ins company, their idea is that Whole Life Ins is the "cornerstone" of a proper financial plan and everything else is built around the Ins (what a crock of horse hooey). When it came to the point that they issued the reps laptop computers with software and you were required to do a sales presentation according to the software (kinda like follow the bouncing ball), I left the corporation and signed up with a Mutual Funds Broker as an independent.

By this time I had my Financial Advisor credentials. Eventually, I got really tired of sitting in Ma&Pas kitchen. I also got tired of telling lies. I sold people products that paid me a decent commision (back-end loads) and reasonable trailer fees. My job was to keep finding new clients. There wasn't any time or incentive to do any serious follow-up on peoples portfolios. In fact, If you sold it correctly by stressing to the clients that there will be ups and downs and to expect them, it's surprising how few clients actually phone and want info. Touch base with them twice a year, sent a XMas card and birthday cards and you're gold.

I must have a need for change because eventually I started reading everything I could about investing. I must have spent $3000 on books (investment books are expensive). This led to Day trading S&P commodities. Can't believe I did that....I wouldn't have the guts to do that now....but I was good at it. I had developed some good indicators for the software and luck was on my side. Three years of that was all I could do ( there were some big gains but also some big losses). By now my bank account was in the 7 figures and I quit.

I don't have a single dollar in RRSPs (RRSPs are the biggest scam going). My money is invested in all Canadian large, medium and small cap ETFs, but I do have some direct stocks in Banks and some Mining companies. I will always leave my money invested in Equities.....no bonds, no dividends (although I got to rethink that one a bit cause my capital gains allowance is reaching the limit) and no foreign equities. Nobody needs them. People need to realize that MF and ETF companies have marketing departments that think of ways to convince clients why they should need a "diversified" portfolio. Hogwash.

I have my hobbies, my wife has hers. We live on about $50K per year with no debt. Yes I drive a 2010 lexus RX and why not I deserve that perk. If I need more money I draw it out. We have a 30 foot cruiser that we enjoy in the Kawarthas. We are thinking about selling our home and moving to a waterfront home in the Kingston area.

Life is good!


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## Guest

WallyK said:


> We have a 30 foot cruiser that we enjoy in the Kawarthas. We are thinking about selling our home and moving to a waterfront home in the Kingston area. Life is good!


 Check out the Gananoque area ... much better for that 30 footer ... 1000 Islands ...


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## HaroldCrump

Nice post, WallyK.
Congratulations on your achievements and having a well disciplined, debt free lifestyle.



WallyK said:


> I don't have a single dollar in RRSPs (RRSPs are the biggest scam going).


I'm curious to know why you say this.
I find myself agreeing with everything else you said except this part.
Whether to have, or not have, RRSP may depend on individual situations but why is this is scam?


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## cannon_fodder

Congratulations, WallyK. Would you mind giving a high level breakdown of your retirement expenses? That is one area that I know a lot of people who are not yet retired wonder about. 

I've tried to project what my retirement expenses would be in Canada or Panama. Having something comparable would help identify areas I've missed or underrepresented.


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## WallyK

Giving a breakdown of my living expenses is a bit misleading if you are trying to compare to your own lifestyle. I may like steak and you like chicken. My lifestyle started changing when I essentially became self-employed (Daytrading). Example I had 26 suits in the closet. Now I have 1 suit, 2 sportjackets and a few pairs of dress pants. I have 7 pairs of jeans and in the winter I luv my flannel shirts. 

I have no mortgage. My house is worth about $800K so my taxes are about $6K/yr. Heating, hydro, maintenance adds another $4K. I have no debt. I keep 1 Visa card for emergencies and ordering stuff online. My Sea Ray boat is a big expenses, about $7K/yr for docking, storage, fuel, maintenace, insurance, etc. The next cost is the Lexus. Paid cash ($48K with tax) but I just bought it one year old with 16,000Km (I always by my vehicles 1 or 2 years old). Plan to keep it for 6-8 years so there's an Opportunity Cost there. Insurance is $1155/yr. I drive 10,000Km/yr so there's gas, oil, etc. Vacations and trips are budgeted at $7K/yr. The rest is just everyday expenses like food, clothing, dental, prescriptions, etc. And we have a Golden Retriever so that's about $1K per year (food, grooming, vet). Hobbies for wife and I are about $2K/yr.

I hate monthly payment plans so things like Insurance, Taxes, etc are paid once or twice a year. The only monthly payments are heating, hydro, TV, Internet. We use magic Jack as our phone so no phone bills. I don't have a cellphone. Even the Heating, Hydro, TV etc are not paid every month. Example TV is about $80/mth but I send them lumps of $300 at a time. 

There is one thing that we do. Every 3 years we take a 6 month period. I break that down into 10 day chunks. So there are approx 18 10 day chunks. During that time we record (notebook on the kitchen table) every single penny we spend itemized as per what we spent it for. Example $12.65 groceries, $45.00 prescription, etc. At the end of the 10 days, we start another 10 days fresh recording. Etc. Etc. I enter all the data on a spread sheet. This tells me where our money goes, how much is pent, etc, etc. I can take 3 10 day chunks and that will be a month. The whole 6 months will be a year. We exclude things like house taxes, Insurance and other items that are paid once or twice a year although those items are calculated in to the overall budget.

This gives us a little "reality check" on our spending. We just want to know where the money is going.


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## WallyK

Why do I think RRSPs are a scam?

Maybe "scam" is a strong word because RRSPs have some benefit, just not the benefits that people think. Here is the short version of my thoughts.

Little history lesson. Anyone my age or older remembers a time before RRSPs (and IRAs and 401(K) in USA) when the big discussions were about baby-boomers (I'm a BB) and the fact that they will be retiring en masse and not paying taxes. They will be a "drain" on society.....never mind that these good folks were hard-working and the contributions to society were significant. The government (thru various publications, statistical analysis and general info release) made it appear that these same hard-working BB retirees will be become welfare bums and that the social security net will not be able to sustain their well-being. Thus the RRSP (in all it's forms) and the IRA/401(K) were born. The government wants the BBs to pay taxes till death and when death comes they will take a huge chunk of that money.

My rule of thumb....Anything the government really likes is usually not good for the people.

One of the selling points of RRSPs is that a person sets aside money now when they are at a higher tax rate and draws money in retirement when they are at a lower tax rate. That theory may hold true for a small group of people (exmple some self-employed), but it certainly does not hold true for those people that will be retiring with a good pension. Example, a friend is a police sgt and in 2 years will be 30 years fully-vested. His retirement benefits will be $80K/year. He has been socking money into RRSPs. Eventually he will be FORCED to withdraw the RRSP money and will pay tax at either the same rate or higher than when he put it in. Consider that his early deposits were at a lower tax rate to begin with. Ditto for teachers, gov employees. Even my sister-in-law just reired from BMO with a substancial retirement package including health/dental benefits for life.

RRSP investments grow tax-exempt. Great! So what! That might have been great when interest income was 8% but at 2% that's just keeping with inflation.....no growth. So the only smart investment is equities. In a non-registerd investment account, equity growth is taxed at 1/2 the rate (Capital Gains) and the taxation is on the NET (losses are subracted from gains). RRSP income is taxed at 100% irregardless of the source of growth. If the government wants to be fair then they should tax according to the type of growth in the RRSP account (interest income 100%, Dividend 2/3, Cap Gains 1/2). It can be tracked. It's tracked quite nicely for non-registered investment accounts.

The government offers a big carrot. They will allow you a tax deduction for your contributions. Very generous except for most people that is abused....but the government and Banks don't care. My son is a Tool&Die Maker and I do his tax forms. Every year before the RRSP dealine he phones me to ask how much tax he will have to pay. Invariably, each year he needs to pay $300-800 because of overtime pay. What he wants to know is how much he has to deposit into his RRSP to be tax neutral. This is more common than anybody realizes. The Banks know this.....Minimum deposit $500, Monthly min $50/mth....really is that serious retirement planning.

People spend their tax rebate. If the government wants to get serious about retirement savings they should deposit that portion of your tax rebate directly to your RRSP account. They can do it. They just don't really want people to re-invest the tax portion. They want people to spend it. That way they actually recoup a good portion of that money back. For example, You get back $1000 and decide to buy a new TV at Future Shop. The government gets the Sales Tax, Future Shop pays Income Tax on the profit of that sale, salesman pay income tax on the commission, etc, etc all the way down the line.

Most of the mathematics that are shown to you on RRSP versus Non-RRSP investing show the growth of each assuming you re-invest the tax rebate and assuming you pay the taxes on the NON-RRSP investment each year. The numbers are impressive. BUT.....what is really important is what happens after you retire. In Fact, it's so important that the rules are that you are FORCED to withdraw RRSP funds. And if you should happen to die (including spousal turnover) the RRSP is deemed to be fully withdrawn and the full measure of the taxman will be upon the beneficiaries. Compare that to money that's NON-RRSP. I can withdraw any amount, any time I want and not have to pay a penny in Tax. I can have a $million in the account and still no clawback for gev pension benefits. In fact, I may even qualfy for supplementary OAS. Of course I have to pay income tax on my growth. Example....I have a $million dollars invested in equity ETFs The growth is about 8% annually but I don't have to pay tax on the growth annually, only when I sell. Assuming I sell some and my Capital gains is $50K.....I have to pay tax on 1/2 that amount $25K. With my personal deductions and eventuall Old Age deduction, I pay minimal tax. They don't show this stuff when comparing RRSP to Non-Registered. And if I die, my benefiiaries pay probate fee of 1.5%....wow.

I've typed enough.....yo get the idea. I can make several more points but this will get boring fast. RRSPs are a good idea for a very small group of highly motivated, disciplined self-employed investors. For everyone else it's a scam-in-waiting.


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## steve41

I author financial planning software, and have been doing this for 15 years. Of all the financial plans I have seen... those individuals with good, so-so, or no pension.... who are normal salaried wage earners... saving inside the RRSP is almost always superior to saving outside in a taxable (nonreg) savings entity, whether the account is taxed as dividends or equities. The TFSA has changed that rule, but not by much.

I have no idea where the "RRSPs are Evil" crowd get their math, but they obviously believe it.


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## GOB

WallyK said:


> Why do I think RRSPs are a scam?
> 
> Maybe "scam" is a strong word because RRSPs have some benefit, just not the benefits that people think. Here is the short version of my thoughts.
> 
> Little history lesson. Anyone my age or older remembers a time before RRSPs (and IRAs and 401(K) in USA) when the big discussions were about baby-boomers (I'm a BB) and the fact that they will be retiring en masse and not paying taxes. They will be a "drain" on society.....never mind that these good folks were hard-working and the contributions to society were significant. The government (thru various publications, statistical analysis and general info release) made it appear that these same hard-working BB retirees will be become welfare bums and that the social security net will not be able to sustain their well-being. Thus the RRSP (in all it's forms) and the IRA/401(K) were born. The government wants the BBs to pay taxes till death and when death comes they will take a huge chunk of that money.
> 
> My rule of thumb....Anything the government really likes is usually not good for the people.
> 
> One of the selling points of RRSPs is that a person sets aside money now when they are at a higher tax rate and draws money in retirement when they are at a lower tax rate. That theory may hold true for a small group of people (exmple some self-employed), but it certainly does not hold true for those people that will be retiring with a good pension. Example, a friend is a police sgt and in 2 years will be 30 years fully-vested. His retirement benefits will be $80K/year. He has been socking money into RRSPs. Eventually he will be FORCED to withdraw the RRSP money and will pay tax at either the same rate or higher than when he put it in. Consider that his early deposits were at a lower tax rate to begin with. Ditto for teachers, gov employees. Even my sister-in-law just reired from BMO with a substancial retirement package including health/dental benefits for life.
> 
> RRSP investments grow tax-exempt. Great! So what! That might have been great when interest income was 8% but at 2% that's just keeping with inflation.....no growth. So the only smart investment is equities. In a non-registerd investment account, equity growth is taxed at 1/2 the rate (Capital Gains) and the taxation is on the NET (losses are subracted from gains). RRSP income is taxed at 100% irregardless of the source of growth. If the government wants to be fair then they should tax according to the type of growth in the RRSP account (interest income 100%, Dividend 2/3, Cap Gains 1/2). It can be tracked. It's tracked quite nicely for non-registered investment accounts.
> 
> The government offers a big carrot. They will allow you a tax deduction for your contributions. Very generous except for most people that is abused....but the government and Banks don't care. My son is a Tool&Die Maker and I do his tax forms. Every year before the RRSP dealine he phones me to ask how much tax he will have to pay. Invariably, each year he needs to pay $300-800 because of overtime pay. What he wants to know is how much he has to deposit into his RRSP to be tax neutral. This is more common than anybody realizes. The Banks know this.....Minimum deposit $500, Monthly min $50/mth....really is that serious retirement planning.
> 
> People spend their tax rebate. If the government wants to get serious about retirement savings they should deposit that portion of your tax rebate directly to your RRSP account. They can do it. They just don't really want people to re-invest the tax portion. They want people to spend it. That way they actually recoup a good portion of that money back. For example, You get back $1000 and decide to buy a new TV at Future Shop. The government gets the Sales Tax, Future Shop pays Income Tax on the profit of that sale, salesman pay income tax on the commission, etc, etc all the way down the line.
> 
> Most of the mathematics that are shown to you on RRSP versus Non-RRSP investing show the growth of each assuming you re-invest the tax rebate and assuming you pay the taxes on the NON-RRSP investment each year. The numbers are impressive. BUT.....what is really important is what happens after you retire. In Fact, it's so important that the rules are that you are FORCED to withdraw RRSP funds. And if you should happen to die (including spousal turnover) the RRSP is deemed to be fully withdrawn and the full measure of the taxman will be upon the beneficiaries. Compare that to money that's NON-RRSP. I can withdraw any amount, any time I want and not have to pay a penny in Tax. I can have a $million in the account and still no clawback for gev pension benefits. In fact, I may even qualfy for supplementary OAS. Of course I have to pay income tax on my growth. Example....I have a $million dollars invested in equity ETFs The growth is about 8% annually but I don't have to pay tax on the growth annually, only when I sell. Assuming I sell some and my Capital gains is $50K.....I have to pay tax on 1/2 that amount $25K. With my personal deductions and eventuall Old Age deduction, I pay minimal tax. They don't show this stuff when comparing RRSP to Non-Registered. And if I die, my benefiiaries pay probate fee of 1.5%....wow.
> 
> I've typed enough.....yo get the idea. I can make several more points but this will get boring fast. RRSPs are a good idea for a very small group of highly motivated, disciplined self-employed investors. For everyone else it's a scam-in-waiting.


The missing fact in your argument is that you have already paid full income tax on any initial investment in a non-registered account. So with an RRSP you can start off with a higher deposit, and any gains and reinvestments grow tax free. The impact of tax free growth over decades cannot be disregarded. Even if you pay more tax upon withdrawal your balance would be far higher than a non-registered account and you would almost certainly be in a better position. 

I suppose if you were to invest in a way that you would never close a trade or rebalance your portfolio you may have a point as there would be noncapital gains tax until retirement - however, I prefer having that flexibility without being penalized for it.


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## WallyK

All one needs to invest in is Equities. I prefer mostly Small Caps but most people will go with something like an ishares S&P/TSX 60 Index Fund with an MER of .17%. Hard to beat that (except small caps). Everyone knows that equities will outperform Bonds or Dividends so why do you need the latter stuff. Sure equities will bounce around but so will everything. Does anybody really, seriously believe that investing even a dime in Bonds is a good idea when interest rates at at their lowest and very likely to go up . As all the savy investors on this forum know....interest rates up, bonds down. Dividend stocks are fine but they are taxed higher than equities, they grossup your income level and when companies pay a dividend the stock value actually goes down (because liquidity is removed from a corporations value) Frankly, I'd rathur see a company keep their stiunking, measly divedend and re-invest it into product R&D, growth and prosperity. That way greedy me gains.

Rebalancing!. The latest greatest buzzword tossed out there by the MF and ETF marketing departments. They need people to "believe" the rebalancing hype in oprder to "sell" their products. And investors are generally pretty gullible.....looking for the magic investment or that "mix" of investments. Bahhh-Humbug! It's the same kind of hype you see with other strong marketing organizations like the WWE or NFL. I remeber when I first started in the investment game many, many years ago. I was speaking with a marketing exec at a major MF company and he was saying how investors should diversify into world MFs and in particular, emerging markets (which meant Latin countries S. America). The kicker was "and we've launched 13 new MFs targeting these markets". It wa pretty clear the hype was to convince investors that this strategy of so-called diversification was "good" so that more MFs are sold. All worked great until the S.American countries started defaulting. HaHaHa! It's all hype people.....don't but into it.

OK.....you want numbers on RRSWP investing. Here's some numbers but it's a simple example. You can change the numbers around and in most cases Non-Reg will prevail, sometimes it's even and sometimes RRSPs will prevail (when the investments are low and that's because of our marginal graduated tax rates). 

Jack buys $30,000 of equities in his Non-Reg investment account. He leaves the account alone (but even if he trades all he's doing is moving his adjusted cost base up). 20 years later the portfolio is worth 100,000 (3.33X30K) he retires and sell his portfolio. His gain is $70,000 but he pays tax on $35,000. His tax is $5,315 for a net of $$94,685 (Ontario numbers).

Bill buys $30,000 in his RRSP and reinvests $10,000 tax rebate for a total portfoliuo of $40,000. 20 years later he has $133,200 (40X3.33). He withdraws his money and pays tax on 100% of $133,200 which is $42,973 in tax for a net of $90,227.

So I know people will say that's unrealistic, nonsense, etc. But you can run the numbers several ways. Example start with a $million portfolio and withdraw $100,000....the results will be close. And I haven't included stuff like other income (e.g Canada Pension) which drives the marginal tax rate even higher.

Next time you are in a bank, look at the RRSP brochure. Everyone has seen them> The bar charts where the Non-Reg grows to $100,000 but the RRSP grows to $133,000....very, very impressive.....Not!


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## steve41

For goodness sake..... he doesn't withdraw his RRSP in one lump! He draws it down in a measured way over time. When you examine the real after tax effect of an RRSP vs a nonreg strategy (taxed at the capgains rate) the RRSP wins.

Example..... A 40 year old, earns $75K, has saved to date just $10K in his RRSP, retires at age 65, full CPP and OAS expectation. If he continues to invest going forward, in his RRSP, he will just run out of capital at age 95 if he sticks to a $43,419 annual budget.

If, instead, he decides to invest going forward outside his RRSP in a nonreg fund, taxed 100% as capital gains, that same $43,419 lifestyle will run out (he will die broke) at age 88. A full 7 (seven) years earlier than what he would have, if he had chosen the RRSP strategy.

Equity non-reg route
RRSP route


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## Sampson

steve41 said:


> For goodness sake..... he doesn't withdraw his RRSP in one lump! He draws it down in a measured way over time.


Exactly. Why do so many people over look this? In fact, he takes a sabbatical every other year before he retires, and pulls out all that juicy tax-free growth for free!


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## AshleyT

Wally, your points about pre and post retirement tax rate are fair, and for some, perhaps their average tax rate in retirement may be higher (although I suspect that would be a minority). That aside, the value of tax deferral is much more than you have suggested. The deferral of tax, even on modest gains, and especially over long periods of time has far more value than intuition allows to comprehend. Run a spreadsheet and see for yourself.


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## peterk

Wally you're making a good point. But your argument that people are being overly optimistic about RRSPs can be counted that you're being overly pessimistic about them. Yes in some very unlikely specific cases an individual could do better outside a registered account than in. But it's somewhat unlikely, and an informed investor should know not to invest in their RRSP in a year that they receive a much lower income than they usually expect
I agree 100% about re balancing, especially in non-registered where you are asking for a world of hurt from the tax man. Any investment I would make outside registered I would intend to hold for decades.


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## Daniel A.

Retired at 56 but had a few years to think about, good pension, wife still working.
Made sure I had hobbies to fall back on.
Thought about going back to work 6 months after retiring then thought WHY would I want to.
I'm in charge of my time for the first time in my life and wouldn't have it any other way.

I'm never bored play the markets for a few hours a day one of the hobbies.


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