# Check my Math -- Homer and Marj - Are they FIRE? scenario....



## Petee_C (Jan 13, 2017)

Is 3% growth realistic? Conservative/Aggressive?

Homer is 45, Marj is 47....

Lisa is 14 and Bart is 11 with good size RESP (don't have specifics but $2000/yr since birth + gov't credits)

Homer is looking to wrap up life in the fulltime work force.... Marj is parttime and happy to stay there for the next 5+ yrs.....

please see attached image....


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## pwm (Jan 19, 2012)

3% is quite conservative in my opinion. Over the years I've done much better than that, but who can see the future? I plan using 5% as a rule of thumb, and I've been getting over 7% for the last 7 years.


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## AltaRed (Jun 8, 2009)

pwm said:


> 3% is quite conservative in my opinion. Over the years I've done much better than that, but who can see the future? I plan using 5% as a rule of thumb, and I've been getting over 7% for the last 7 years.


It depends on one's asset allocation and product mix. For DIYers with a fairly high equity strategy, 6-7% is a pretty good assumption. Howver, a 50/50 portfolio of high MER active managed mutual funds may only return 3% a year, albeit more like closer to 4%. If one is as conservative as my parents were, then it is essentially 100% fixed income and 3% will be all it is. The fatal flaw one can make is NOT taking into account investing strategy and execution.


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## OnlyMyOpinion (Sep 1, 2013)

As noted, identify the makeup of each account - FI, Equity, the nature of the 'wrapper' (bond, GIC, etf, MF, stocks) and apply an appropriate real rate of return for the growth of each component. 

I'd also choose several scenarios to gain comfort. If you have sufficient savings if FI only grows at 1% and equity at 3% REAL ROR then you can be more confident than if you need 2% and 4%, etc. Does your growth also include new contributions/savings along the way?

The question of Homer retiring isn't just about the growth assumptions, it is also about their projected spending - have you looked at it in detail as well?


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## My Own Advisor (Sep 24, 2012)

"Is 3% growth realistic? Conservative/Aggressive?"

If in GICs, very aggressive. 
If in 100% equities, conservative.

I would go with pwm and AR and Only on this - likely higher but not much depending upon their bond allocation.

Depending upon their spending patterns going forward, assuming no debt and never-again-major-debt, they look to be in great shape - especially if Marj continues to work.

To me a good test of FIRE is if you can spend less than the income generated from your capital, you're likely golden. This is because any capital withdrawals should be offset by CPP and OAS you cannot collect yet. Then you still have capital/assets in your home in a disaster scenario. I.e., Trump coming to power


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## Petee_C (Jan 13, 2017)

Hi, Homer here.....

Homer would like to go part time (60% of fulltime) as soon as possible... If he can only get 2 days a week, that might work too, but 3 days is preferred.... I feel obligated to be in the workforce until 52 - 55.... By doing so, allows us to build our portfolio for a while longer...

Expenses

The Simpsons haven't been super big travellers, but would probably go away for a few weeks a year in retirement.... probably a couple flights a year, or alternate between road trip and flight depending on destination....

Marj's family has a cottage on Lake Muskoka and will get 50% of that someday... Homer's parents have a place up on the same lake about 15 mins away by boat which will inherit 33% of.... 

Only big spending plan is to come up with a way to buy a cottage on their own when the time comes and sell the remaining stake in both family cottages, and come up with the 17% to buy a place to share with Lisa, Bart and grandkids. Both Homer and Marj's siblings would be able to buy out the cottage property.

In 20 years or so, when grandkids come, likely treat them to a trip to Disney, or a family cruise every other year, or every 3rd year....

The 'Winston' rental property only has a tiny mortgage, and we've had it for 15 yrs, ... We probably would keep it into our 60's and then gift it to one or both kids if they stay local... The 'Columbus' property was gifted by Homer's parents between 3 siblings... It doesn't run as smoothly as 'Winston', and we would likely get rid of it sooner..... Depending on how easy it is, we might keep the rental income from 55-65 of retirement.... and then supplement with OAS or CCP from 65 onwards....

I've only started thinking about FIRE in the past 6 months, and only really been researching it in my spare time over the past couple weeks.... A lot to learn.... I'll run some of those numbers at 4%, 5% etc.

If long term care is required down the road, then the primary residence goes up for sale to fund that.... When we die, there should be a nice nest egg left for Lisa and Bart.....


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