# How to decide when to retire?



## Jeff (Feb 18, 2018)

Short version: I really don't know how my wife and I should be thinking about retirement or semi-retirement. Walking away from our current positions is hard for a number of reasons. I would love pointers to books, articles, anything that might help me out.

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My wife and I are both about to turn 50 and have been blessed with great employment for the past 20 years in the US. We have been taking advantage of every savings vehicle we can and entrusted our portfolio to a good wealth manager with great results. We both word hard and enjoy what we do, although my wife is starting to feel the stress. Continuing to work for 5-6 years more is certainly a viable option.

One way or another we will probably eventually leave the US and move to BC. We might stop working at that point, but depending on our age I think its more likely that I would take on a lower hours, lower stress contracting position and my wife might do likewise (or not).

My first problem is that I have no idea if we could comfortably retire today, although I think we very much could. What resources would you suggest to help me determine how much savings we need in order to comfortably retire? I've done a lot of searching and haven't yet found anything too useful.

My next problem is even if we could retire today, should we? I was just promoted last year and my total rewards are pretty great. I worry that if I retired or moved to a lower pay/stress job I might strongly regret not putting in a few more years with my current rewards.

Another issue is that if I stay 6 more years I get to keep unvested stock awards, and that would come to over a year's base pay (over 4 years). There are days when 6 years seems like a very long time indeed.

I'm really lost at the moment. On the one hand I don't have the tools to know if we could comfortably retire, and on the other hand I don't know if that is even something we should consider at this stage of our lives.


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## Plugging Along (Jan 3, 2011)

I am sure others will have resources they can recommend. Since your questions don’t provide any detail, I can only give general answers.

How do you know if you can retire? 
Answer : when you have enough money in your investments to cover your retirement expenses. You need to figure out how much you will spend in year. Look at you past spending (or start tracking) as your base line, the subtract things you won’t have in retirement, like saving for retirement, work related expenses, etc. Then add in additional expenses you see will add, such as medical coverage, additional travel etc. Then add in large event purchases you foresee such as kids weddings, or education, renovations, vehicles, etc a try to get an average on these amounts. 

I use the 4% withdrawal rule on my investments, plus other sources of income. 
If your future expenditures are less than investments you are ready.

For should you. If you don’t have enough or are really close, then keep working. If you have enough, then you have to decide what you value more the work/money or the free time. If you have more than enough money, then you have to decide is there something you would rather being doing that brings more enjoyment than work. My mother in law would not let my father in law retire until he found some hobbies and activies. She didn’t want him to just sit around watching tv.


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## milhouse (Nov 16, 2016)

Common line but money's just a tool. You have to figure out what you want in retirement and then calculate how much money you need to fund it. It's always a good start to get an understanding of your current cash flow. 

Books that had parts that resonated with me:
How Much is Enough by Diane McCurdy
Your Retirement Income Blueprint by Daryl Diamond
When Can I Retire by Andrew Allentuck
Your Money or your Life by Vicki Robin
and I'm currently reading The Essential Retirement Guide by Fred Vetesse which I'm liking.


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## Jeff (Feb 18, 2018)

Thanks!


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## Jimmy (May 19, 2017)

Another good book is 'Retirement's Harsh new realities" by Gordon Pape. He writes a lot for the G&M on finance too.


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## TomB19 (Sep 24, 2015)

A significant number of people don't retire, they give up. One day they realize they can't do it anymore and they find a way to exist on whatever they have saved.


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## Eclectic12 (Oct 20, 2010)

Some good suggestions ... but something that jumped out at me was:


Jeff said:


> ... great *employment for the past 20 years in the US* ... we will probably eventually leave the US and move to BC ...
> I'm really lost at the moment. On the one hand I don't have the tools to know if we could comfortably retire, and on the other hand I don't know if that is even something we should consider at this stage of our lives.


As I understand it - this combination has the potential to add lots of complications to the retirement process.

Examples include:
What is one's current tax residency status and what implications are there?
Will one still be subject to US taxes in addition to Canadian taxes after moving to Canada. Under the current rules, articles have said keeping one's green card will do this.
Where one is solely subject to Canadian taxes, are there US based retirement accounts like 401Ks that the plan administrator will kick one out of as they don't want to deal with being licenses in two countries?


By all means, focus on the main question but doing some parallel work/learning about these other issues is likely important, with the potential to make a big difference financially.


Cheers


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## My Own Advisor (Sep 24, 2012)

Ideally, for us, at our crossover point. When income earned from our investments > all daily living expenses. This was largely popularized in _Your Money or your Life _by Vicki Robin.


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## canew90 (Jul 13, 2016)

Why consider retiring if you:
1. Enjoy your work
2. Earn a good income which will allow you to save more for when you wish to retire
3. Feel you would be missing work, other employees and your current lifestyle

Early retirement is a major life change, especially in ones 50's and one should really look at how their life style will change and could you afford to do the things you'd want. Also if you are in good health, retirement could mean 30 or more years, almost what you've been working to date.


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## Mukhang pera (Feb 26, 2016)

TomB19 said:


> A significant number of people don't retire, they give up. One day they realize they can't do it anymore and they find a way to exist on whatever they have saved.


TomB, I have read and re-read your brief, but pithy post. But I am unsure as to the type of people referenced. I can see "giving up" and "can't do it anymore" applying perhaps to some who do hard physical labour and they simply have run out of steam. But even then, I have seen many who have done hard physical work into their 70s and, because they are accustomed to it, they can keep going. But some develop physical ills that slow them down or stop them.

There is also a group that are given up on. They get punted from a job in their 50s or 60s and have scant prospect of being hired again. They might have no choice but to exist on whatever they then have. I don't see "giving up" applying to those who have decent jobs not involving hard labour and whose employers are willing to retain them, or those who run successful businesses. I don't see much giving up going on in those circles.

I am guessing, but I suppose those most prone to giving up those who are in jobs they hate and the day comes when they cannot stand to report for one more shift. So, even though they can keep going physically, and the job is still available to them, the idea of continuing becomes intolerable and they pack it in, even if it means living in reduced circumstances. Is that the significant number to which you refer?


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## OnlyMyOpinion (Sep 1, 2013)

^+1 I couldn't relate to that post either Mukhang.
Jeff, I agree with Canew's comments. Given what you've said, I'd work another 5 or 6 years as you suggest. That should get you well beyond a careful financial independence to the point where you can retire with no money concerns at all. Living in retirement without having to budget carefully has its advantages. Meanwhile, firm up your plans, locate and buy your dream place (with cash), sort out the financial details, and enjoy the last few years of your working life. The time will go quickly.


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## Mechanic (Oct 29, 2013)

I tortured myself for 2 years deciding whether to go back into some business venture or employment after liquidating most of my business assets at 55. I finally decided that we had enough to last us for our expected lifespans and still maintain our standard of living, I could also go back to work or business if I missed it or needed to. Time flies and its now another 5 yrs later in addition to the 2. I didn`t think about investments or CPP too much but they have added to our net worth as well. Hopefully we can stay healthy and continue to enjoy doing whatever we feel like doing. The fact that you are thinking about it means a part of you wants to retire so, if you can afford it why not do it. You can always go back.


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## Mukhang pera (Feb 26, 2016)

Mechanic said:


> You can always go back.


I doubt that is possible in all cases. Here, the OP says he has a good situation going in the U.S., but is considering packing it in and moving to B.C. How easy would it be to undo that and to return to what they had in the U.S.?

I would guess similar considerations apply to a lot of people. Not easy to test drive retirement. If one leaves a well-paid job to have a go at retirement only to discover it was a mistake, I suspect it's not always easy to go back and pick up where one left off or, in one's 50s, to find and commence new employment with the same remuneration and benefits. If one is running one's own business, how easy is it to sell out and then get back into it (even leaving aside vexing issues of restrictive covenants and non-competition clauses)?


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## Karen (Jul 24, 2010)

Jeff, you seem to suggest that your choice is either to retire now or to work for another 5 or 6 years. Couldn't you just plan to work for another two or three years - that would give you a few more years of your new salary and rewards and yet it would go by much more quickly than if you were to stay on for those 5 or 6 years.

One other point - you didn't indicate that you are a Canadian, but I assume you are so you could move to BC any time without applying for permanent resident status. But are you aware of the outrageous price of housing in BC at this time? Many people from other provinces are turning down job opportunities here in BC because, in spite of what sounds like excellent salary offers, they couldn't possibly afford to buy a house here. For example, my 29-year-old, 1800 square foot, one level house in Surrey (a suburb of Vancouver) would sell for a little over a million dollars if I were to put it on the market now.

One positive point, though, is that you wouldn't have to worry about medical insurance. I don't remember exactly how long you have to live in BC to establish residence here - I think it's only a few months - and you would be covered by our government medical insurance (assuming you are Canadian or have permanent resident status.)

It's a big decision, I know, and I wish you luck with whatever you and your wife decide.


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## TomB19 (Sep 24, 2015)

Mukhang pera said:


> TomB, I have read and re-read your brief, but pithy post. But I am unsure as to the type of people referenced. I can see "giving up" and "can't do it anymore" applying perhaps to some who do hard physical labour and they simply have run out of steam. But even then, I have seen many who have done hard physical work into their 70s and, because they are accustomed to it, they can keep going. But some develop physical ills that slow them down or stop them.


It's a shame online forums are so unrepresentative of achievement. It misleads people.

I've considered the idea of this forum being heavily loaded with good life planners by it's nature, however, I tend to discount the face value of the broad impressions of financial planning.

All you have to do is have a career for 30 years making $300K per year and save $15K per month and you can have a nice little $125K per year couch potato retirement. :eagerness:

Consider me sceptical.

For office workers, ask any good friend over 50 years of age how long they have until retirement and you will get a precise answer. People you aren't close to will respond with something cute and dismissive like, "forever". I estimate the number of office workers over 50 who are watching the retirement clock to be 100%.

In a white collar environment, asking someone approximately 25-30 years of age about retirement tends to yield one of two responses. The first response is them having no idea and having not thought about it much. The second is the young professional who is sure they will be retired by the age of 35. I was one of the latter group and might have done it but it would have been an extremely thin retirement. I haven't known anyone who has actually retired at 35.

People who work in an office environment tend to have an epic emotional relationship trajectory with their jobs.

There aren't many white collar careers left. The ratio of office workers who aren't worried about outsourcing or being terminated for other reasons is pretty low.

Labour and trades tend to fall into two categories. For employees, they tend to not love their jobs but they don't define themselves by their vocation as much as office workers so they seem to be less engaged. For owners, I've rarely heard them speak of retirement. My Dad retired because my Mom was sick of waiting for him to retire but he never fully embraced it.

I've been interested in this since the early 1990s when I purchased my first apartment block and thought I would retire in one year. It's been quite a trajectory, since then.

It's interesting to watch people provide sound bite answers to retirement when so few people are able to follow a simple path. We all have our own epic journeys that seems to have a few inflection points, as such:

- bright future and career enjoyment
- change jobs a few times, perhaps by force, perhaps due to wanting a new environment
- at the midpoint of a career, most of us realize we cannot continue to do what we are doing forever
- frantically save for retirement, motivated by fear
- with each year, death and illness becomes ever more present in an individual's life causing the need for retirement to become more urgent

I look at retirement as more of a report card on how a person has managed their life finances, than a goal to be achieved on a certain date. Saving money in early years is as important of a learning tool on managing money as it is as a retirement seed. The last few years with fear motivated big savings, high income, and high RRSP contributions that matter as much as the earlier years.

We've tripled our net worth in the last 8 years. Adversity triggered fear has motivated us to move financial mountains. In my peer group, our story is the norm, not the exception.

We could continue working and piling on net worth but adversity has made each day more sweet than the last.

So Jeff, I would suggest the personal and emotional components of a decision to retire make it impossible to create a generalized formula. We just returned from Mexico where there are significant numbers of people who have retired extremely young and are now living affordably. I find myself more delighted for them than I am for Canadians who work here to an old age but, the more I think about it, the more I think I've been undervaluing the strength of people who are so happy with their lives they don't want change.

The only advice I would give is there are ways to accomplish almost anything. You could probably make a number of scenarios work so follow your heart. I wish you well.


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## Jeff (Feb 18, 2018)

Thanks all for the thoughts and book recommendations!

In the last week, unexpected but truthfully long overdue, my wife and I are divorcing. I'm not sure how this changes things for me and retirement, not yet at least.

I am in the process of getting US citizenship, which I started before my wife and I decided to part ways. My thinking in this is that if I move to Canada and have dual citizenship I will have more options available if I decide to work for a US company or decide that retirement is not for me and want to move back to the US and continue to work. I realize that I will have to file US taxes but that is fine. My understanding is that as a long term permanent resident I would have had to dual file for a period of years anyways.

I've done research into drug costs in BC and it sounds good. My yearly out-of-pocket will be something like $5k or less which is fine. Part of my desire to retire early comes from my health issues. My condition is not terminal by any means but complications may arise as I age that restrict my mobility or perhaps reduce my life expectancy.

I am about to turn 49. If I stay at my company to 55 I will receive unvested stock awards that at that time would by themselves fund 2-3 years of what I think my retirement expenditures would be as a single person. To me, this means that my choice is to retire in the next 2-3 years or stay until 55. Once I reach 52 or 53 I will be close enough to 55 that I will be obligated to stay for the stock award benefit at 55. Right now, six years seems like a long time. I do enjoy my work but I have been doing the same thing for a long time and one of the reasons why I am well paid now is that two years ago I moved to a new group and got a promotion, and my current position is fairly stressful.

I do realize that the cost of housing in BC is bordering on ludicrous at the moment. Perhaps with the divorce I will decide to retire elsewhere but my current plan is, no matter when I actually retire, to rent for a year in the Okanogan and see how I like it.

Anyways, my wait time for US naturalization is about a year from today and I really can't do anything until the divorce is finalized and I see what I'm left with and what my living expenses trend towards. So for at least the next year I'll be continuing work as I am.


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## AltaRed (Jun 8, 2009)

It will take some time to get clarity on what one's finances look like and lifestyle after a formal Separation Agreement and divorce, so it is best not to make premature decisions until that becomes clear. I divorced at 59, 2 years after retirement....although we both knew we were heading down that path as part of retirement, so it was no surprise. We both knew what the outcome was going to be and how we'd manage our individual lifestyles thereafter. We both agreed on a mutual financial guru to work out the division of assets that we both then took to our respective lawyers.

Unless there are extenuating circumstances, and family law in your current location, your soon to-be-ex may have an entitlement to unvested stock awards. You need to fully understand how all that works in your jurisdiction. I'd recommend a financial planner or accountant to help sort out the best path forward. Don't have the lawyer(s) try to work with the numbers. They just don't understand them, at least not well enough at their billing rate that a financial guru can do at half the cost. It is better if you and your spouse can agree on the financial aspects BEFORE getting too far with the lawyers. 

If you truly value the stock award, it will likely behoove you to perhaps seek a position change within your own company to last 6 more years, or find a way to change some elements of your position. The primary other option is to find something else pretty quick that is more rewarding personally. It gets tougher the older one gets.


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