# DINKs to DISKs



## Erome1 (Aug 19, 2016)

Hi all,

Long time lurker on the forums, and some posts in the past that were attached to my old account.

Anyways, just thought I'd jot down my fiscal state for tracking, feedback and such.

Current State:

Income Me $80,000, company car and 10% bonus, RRSP company contribution of $4000/year (which I'm matching to get), 2 years with current company
Income Wife $76,000, LAPP Pension, 6 years seniority. Currently on mat leave, returns to work in August.
I'm 33, wife is 32.

Assets:

$100,000 in TDW with Private Investment Broker (1% per year management*)
$160,000 in RRSPS and TFSAs (All are maxed to 2017 tax year, one TFSA holds 30,000 in TD HISA for emergency, investments are all in couch potato Index ETFs)
$30,000 in RRSP at Work
$550,000 Primary Home 
$370,000 Rental Property
$37,000 Vehicle 1 - 2016 SUV
6 years of LAPP investment for wife

*The Private Investment Broker is closely monitored, and for the last 5 years has matched or beaten (by 1-2%) the performance of my index ETFs (after MERs). So kind of just not putting all eggs in one basket, the Broker holds weird holdings such as unique bond certificates and trusts and stuff like that

Liabilities:

$420,000 Mortgage on Primary Home
$305,000 Mortgage on Rental Home
No car debt, credit card debt, etc.

So my first question to readers thumbing through these forums is what are general thoughts for where we stack up in life?
We're not high income considering we're in Alberta, but we try to be mindful of our spending and not live the high life.

We Just had our first baby who is now 8 months old. When we start considering the going back to work expenses it's starting to concern me a little. I guess this is the mid-life crunch? Or the early family crunch?

When wife goes back to work, these effects will occur:
- Parking for wife at work $220 / month
- Daycare 3 days a week $900 / month (other 2 days grandparents)

In some ways our bottom line is better when she was on mat leave then when she will return to work...

Anyways, that's about our state for now for first post. All comments/questions/thoughts welcome!


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## gardner (Feb 13, 2014)

No RESP? Better get on that.

My opinion is that you are servicing a lot of debt. A couple of percent increase could make the rental too tight to keep, as well as potentially depress prices. If you clear 750/month after interest now, that could drop to 250 or something making it hard to keep up with amortization. Just my opinion though.


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## Erome1 (Aug 19, 2016)

Sorry - left the RESP off 

Have $5k in RESP and got this year's donation ready to go

The mortgages are on a 5 year locked in til 2021 at 2.69%, perhaps we might get smoked when they unlock...?

Rental is currently cash flowing $180 / month positive after house insurance, property tax and mortgage. Renter is locked in til summer of 2019 lease (good renter, no issues).


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## AltaRed (Jun 8, 2009)

Could be a rude awakening when mortgage terms come due. Could easily be 4 or even 5% at that point. Can you handle the payments?

It is water under the bridge at this point perhaps but I have no idea why you would have gotten into a rental property when you are carrying so much in a non-interest deductible mortgage on your PR. I would not remotely have gone down that path before the mortgage on the PR was essentially gone. The one bright spot is having enough capital investments (non-reg and TFSA) to potentially buy down the primary mortgage substantially (by at least $150-200k) in 2021. I would be sure to maintain that flexibility for that potential day of reckoning.


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## humble_pie (Jun 7, 2009)

Erome1 said:


> ... the Broker holds weird holdings such as unique bond certificates and trusts and stuff like that



i for one find this a tiny bit concerning, although the overall picture looks excellent & congratulations on the new addition to the family.

it seems to me that a party such as yourself would be looking to build up quality equity holdings over time, in order to balance the seesaw against the weight of the mortgages (as others have mentioned.)

i don't see any need for exotic investment products & i'm well aware that these can often pay hidden fees to their salespersons. The new CRM regulations have brought standard trailer fees into the light of day; but there still can be other financial incentives pledged to sales personnel that an investor will not readily see.

fortunately you have the greater part of your non-RE investments in self-directed registered accounts, in ETFs & similar holdings that are free from extra fees.

it's understandable that, especially with the new 8-month-old, you have no time on your hands & you are happy to delegate part of the portfolio management responsibiliy to someone else. But i'm wondering if you have had the time to study those "weird holdings" & whether all of them are as sound & as healthy as a young father would want for his family patrimoine.


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## nobleea (Oct 11, 2013)

900/mo for 3 day per week child care seems expensive. Have you considered a day home? We love the smaller, personal care, and it's usually cheaper and more convenient. We pay 1300/mo for 4 days a week with a 1 and 3yr old (Edm).

What is the rental cash flowing after income taxes on it? Since principal is not deductible, rentals have the weird possibility of turning a cash flow positive pre tax amount to a cash flow negative after tax amount. Make sure you are putting somethign away for deferred maintenance (your cash flow would be net of this).

370K is a lot for a single rental. Common metrics say it should rent for at least 3K a month, but that's highly unlikely.

Other than that, you're doing good. The 'unusual/weird' investments at TDW is a little odd, as long as you're aware of the risks you are carrying for the extra returns as there should always be a tradeoff.

A 2016 model year SUV worth 37K now was probably a 50-55K model when brand new. That seems a little excessive for your finances.


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## MrsPartridge (May 15, 2016)

Daycare for infants is very high. It'll go down at age 2. So that'll help. For some families, they barely break even when mom goes back but they do it because at least you'll have that second job when the little one is in school full time.


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## Erome1 (Aug 19, 2016)

@Altared

The rental property is a bit of a story.

We never set out to buy a rental property - its the property that used to be our primary residence, that we ended up moving into something bigger and better.

At the time, market was depressed, and its a great property so we decided to turn it into a rental in the small probability we have need of it down the road (in laws move to town or an in law moves back to town from his sabbatical).

So we never set out to get a rental, it just turned into a rental...

As for the mortgage rate... yeah, I'm starting to get concerned about mortgage rates and the wife and I have decided to start taking some chunks out of it in the next few years. We opted to supercharge the savings over the last few years as the environment seemed to indicate rates would hold low. So we hope to hit it with whatever we would have invested into RRSPs over the next few years.

We normally can do 10-20k into RRSP / year, so hopefully this chunks the primary home mortgage a bit.


@humble_pie

'Weird' is a bad term... they are investments I understand, but not necessarily fully know enough to have chosen them myself. The investment broker is kind of another long story... So my mom saved some money for us from our involvement in a company in our university years. She gave this to her broker to invest on our behalf. When I took over the account I had 60K in Index and 60K with her, and thought "Let's see what she's got". 

Her total management is 1% of funds and I can see that on my reports. There doesnt seem to be any fund of fund fees or such. And she's always matched or beat my index ETFs so I'm not really going to look the gift horse in the mouth.

Her holdings for now are:
ATL2492
CCL551
FID269
PGF320
TDB422
FAF5805
FID665
FID1284
TDB2725

I mean, I get what each one kind of does, but not enough to have said 'I should buy this or not'.

Remember the rest of my stuff is all just indexed.

She is also not getting any new money, so she has grown that 60-> 100K in the last 3-4 years.


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## Erome1 (Aug 19, 2016)

This is great discussion everyone, thanks so much!!!

@nobleea

The wife has this 'childhood' learning center from our neighbourhood in mind, and I don't really have it in me to make this a mountain to get into it over her about. It is like 1 block from our house, supposed to be really great, brand new facility, with great reviews. Also its walking distance from my aunt who can help with pickup/dropoff and my in laws who can also help with pickup/dropoff.

So I agree, it's not the most economical, but not one I'm really willing to go to bat over.

The rental- see long story above. It's not the ideal rental, but there was a few too many variables going on to straight out sell.

Would I buy it again today as a rental? Absolutely not. Did it make sense to hold it when we moved up houses? I think so. Could I be doing something else with the equity invested into it, probably. My brother is my accountant, a CPA who I consider to be quite good. Between him and I we worked out about an 8% return of investment, not counting any capital appreciation (and factoring 10% of rents for maintenance).

In 2-3 years when the first mortgage is done and all my family have kind of 'settled' we'll take alook at it then.

The SUV - well its a Toyota Highlander. We bought the 2016 model in Feb of 2017 to save money. Also from my research, the Highlander drops about 3k of value per year (as opposed to the mega 10k drop when rolling off the lot). It was the wife's upgrade from her little corolla to something a little more family friendly.

Definitely the fastest depreciating asset in the lineup. We bought it for about 42k in 2017 for a pretty good deal (XLE class which MSRPs for 55k). Her uncle owns a share of the toyota dealership so I have to think we did ok about there.


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## AltaRed (Jun 8, 2009)

Erome1 said:


> Her total management is 1% of funds and I can see that on my reports. There doesnt seem to be any fund of fund fees or such. And she's always matched or beat my index ETFs so I'm not really going to look the gift horse in the mouth.
> 
> Her holdings for now are:
> ATL2492
> ...


Your only saving grace here is the so called 'out performance' so far. But IMNSHO, it is ridiculous to have so many funds (1 or 2 would have done) and each of those funds has an MER above and beyond the advisor's 1%. I don't know the individual symbols and am not about to look up those MERs but you are paying a lot of hidden costs on those funds. I doubt very much 'out performance' can continue with such headwinds for the long term. In any event, don't let her swap out those holdings into any new DSC type funds.

P.S. My only comment on your so called 8% ROR on your rental property seems a long stretch to me. But not here to argue that.


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## humble_pie (Jun 7, 2009)

AltaRed said:


> Your only saving grace here is the so called 'out performance' so far. But IMNSHO, it is ridiculous to have so many funds (1 or 2 would have done) and each of those funds has an MER above and beyond the advisor's 1%. I don't know the individual symbols and am not about to look up those MERs but you are paying a lot of hidden costs on those funds. I doubt very much 'out performance' can continue with such headwinds for the long term. In any event, don't let her swap out those holdings into any new DSC type funds.





yes, i thought those things too but didn't say anything for the reasons set forth below. However, now that the issue of fees being paid for financial advice has been raised, perhaps i could add that often we see a Newish investor in cmf forum who arrives with an advisor. Quite often the advisor sounds not unreasonable, although such advisor is obviously putting Newish into funds that benefit himself or herself as a salesperson.

some in the forum wlll then intervene to point out how Newish is being charged fees that are greater than he thinks.

often i go along with it, though, because often it's clear that Newish is receiving a certain value in return for the fees he is paying. 

the smaller the capital involved, the more i will go along with it. For example, a very young investor with only $15,000 to invest is paying his advisor somewhere between $300 & $400 per annum, an amount that seems reasonable to me.

in this case, most of the listed mutual funds have MERs roughly in the neighbourhood of 1.50%. To this should be added the TERs, or trading costs for the underlying portfolios, since these are not included in MER calculations.

depending on the turnover of a particular fund, TERs can range from almost nothing to something like half-a-percent of the money involved. Let us say, for the sake of argument, that TERs for the mutual funds in this list average .20%.

add the 1% that our OP is paying directly to his advisor & one finds that this $100,000 portfolio is costing something like $2,700 in financial advisory fees each year (1.50% + .20% + 1%) 

this is a normal, run-of-the-mill kind of investment management fee. Is it justified? on balance, in this case, i would say Yes, at least for the time being. It's justified because the OP is very busy establishing his young family & this advisor - who is apparently well-known to his family - is adding a degree of comfortable hand-holding. It's also justified because the results are equalling or even slightly bettering the indexing that the OP is doing on his own.

the only thing i question is that the advisor has failed to explain the true costs of the financial management fees the OP is paying. I would have thought the new CRM regulations require such explanation.



.


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## Erome1 (Aug 19, 2016)

You've all raised a great point!

I'm reaching out to my advisor for clear indication on how these fees work.

I'm not entirely new to the forum, I learned index funds from this forum 6 years ago or so and have been lurking around ever since. There is a possibility I'm paying for some churn and I don't know about it.

I'll report back what they say.


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## Erome1 (Aug 19, 2016)

Thanks for breaking out the math for me Humble (sincerely!)

Its probably worth noting that, if this is the case, then $2700 is what I'm paying in fees.

This is not the cost of this option, that would be reflected by taking this amount, and deducting from it the 0.4 or 0.5% from the index fee cost (which would normalize down to $2200 or so).


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## OnlyMyOpinion (Sep 1, 2013)

With respect, you know the score, you know about etfs, and such. 
So if you haven't, look up these funds. It's a dog's breakfast - us eq, cdn eq income & growth, monthly income, small cap, sci & tech, reit, cdn growth, us eq, low volatilty.

I like diversity as well as anyone else, but ask your advisor how this 'portfolio' is likely to compare to something like a diverse etf like VBAL or VGRO that will cost you about $250/yr. On $100k, that's an uptake of ~$2500/yr just in fees. Or even a 3-etf a couch potato.

Do they rebalance (churn) these MF's or are they static (I hope)? Does your advisor suggest that they can actively manage these funds? Are any of these MF's front-loaded?


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## AltaRed (Jun 8, 2009)

WADR, the difference of the current advisor option is circa 2.7% vs about 0.5% for index... or a difference of over 2% in fees. That said, there has been some value to you in that time given fund 'performance'. As Humble has said though, your advisor should be disclosing to you, all the fees you pay her, plus noting the funds themselves have management fees.

I am more concerned with the number of funds your advisor has you in. Not justified in my opinion for an account of that size and I wonder how they are structured. Front end load? Deferred Sales Charge? F series, A series, B series. With an advisor being paid 1% of AUM, the funds should all be F series (no trailer fee) and No Load (no sales charge). If that is not the case, you are being overcharged...double dipped.


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## humble_pie (Jun 7, 2009)

Erome1 said:


> I'm reaching out to my advisor for clear indication on how these fees work ... There is a possibility I'm paying for some churn and I don't know about it.



i don't believe that you are paying for "churn," which is too-rapid turnover of holdings in a portfolio. The advisor here seems to have bought appropriate mutual funds for you (a few too many, as altaRed mentions, but that's another issue.)

all that is happening is that you are paying standard fees for mutual fund plus advisor management, along with many millions of other investors. I don't feel you are being overcharged (for example, in the pender capital small cap, madame advisor has chosen the lower MER model that permits her to charge a fee, without the aggregate of fees going beyond the normal 2-3%)

i can't help thinking of everything you have buzzing around on your dinner plate rightr now. Your infant. Helping your wife get ready for her return to work, which will be a huge adjustment for her & for all of you. Your own career. Even your tenant. It seems to me that, as long as the managed portfolio is equalling or besting your ETF indexes, & provided you are receiving some personalized service & help from this lady, then you have a very reasonable & workable situation for the time being.

things would be different with a larger amount of capital - the fees would be so much higher - plus an advisor who was offering unsuitable advice or worse. But this doesn't seem to be the case.

so far, so good, as they say.


.


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## AltaRed (Jun 8, 2009)

humble_pie said:


> i can't help thinking of everything you have buzzing around on your dinner plate rightr now. Your infant. Helping your wife get ready for her return to work, which will be a huge adjustment for her & for all of you. Your own career. Even your tenant. It seems to me that, as long as the managed portfolio is equalling or besting your ETF indexes, & provided you are receiving some personalized service & help from this lady, then you have a very reasonable & workable situation for the time being.
> 
> things would be different with a larger amount of capital - the fees would be so much higher - plus an advisor who was offering unsuitable advice or worse. But this doesn't seem to be the case.
> 
> so far, so good, as they say.


I tend to agree this is not a burning issue currently. There is no serious underperformance so far. But a few notes in the margin for when it is appropriate to pursue further.


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## james4beach (Nov 15, 2012)

Erome1: have you considered putting this on a spreadsheet and running some "what if" scenarios to see what happens to your net worth when there's volatility in your assets? I don't know the investment mix you're using but this might be worth trying. For example, what happens to your net worth if there's a 40% decline in equities? Real estate and equities would probably decline together.

You're leveraged overall, so a % move in your investments or real estate gets amplified.

One example of this is that a 30% decline in real estate would cause at least a 52% decline in your net worth. Probably more, once you consider your equity investments and exotic investments your broker has gotten you into. This is an important scenario to consider because a slowdown in Canadian real estate could be a significant risk to your household.

I don't know who makes your investment decisions in your household but you also have a duty to make sure that you wife is fully onboard with these risks and exposure your household has to declining equities & RE.


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## AltaRed (Jun 8, 2009)

A good exercise to do some 'what if' analysis for significant capital and RE valuation changes, but I suspect the OP already did that when keeping the original property as a rental property. Given the OP disclosed that spouse has a LAPP (Local Authorities Pension Plan), it means they are AB residents, likely in one of the 5-6 main cities. Housing has obviously been soft for about 4 years now for various reasons and there is considerably less risk of a step decline than would be the case in a number of other ex-Alberta locations.

As OP acknowledged, they will have to get some of that mortgage debt paid down before current 5 year terms are up.


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## Erome1 (Aug 19, 2016)

Hi all,

Thought I'd post an update and ask some questions - mostly are we on track? 

Here's our updated snap:

Current State:

Income Me $86,000, company car and 10% bonus, RRSP company contribution of $4000/year (which I'm matching to get), 3 years with current company
Income Wife $81000,000, LAPP Pension, 6 years seniority. 
I'm 34, wife is 33.

Assets (all values are approximates, not discussed to track returns but more of snapshot on life)

$100,000 in TDW with Private Investment Broker (Please don't focus on in reply - I reviewed this well last year after everyone's excellent comments and I'm quite content to leave this amount here!)
$130,000 in RRSPS and TFSAs (All are maxed to 2017 tax year, one TFSA holds 30,000 in TD HISA for emergency, investments are all in couch potato Index ETFs)
$140,000 in Wife's RRSP and TFSA (I must have missed this last year!)
$42,000 in RRSP at Work
$575,000 Primary Home 
$380,000 Rental Property
$30,000 Vehicle 1 - 2016 SUV
$25,000 in company shares
7 years of LAPP investment for wife


Liabilities:

$410,000 Mortgage on Primary Home
$295,000 Mortgage on Rental Home
No car debt, credit card debt, etc.


So I've been tracking our 'Net Worth' as well as I can and it's doing decently - I would estimate we're at about $850k or so of Net Worth.

I'm starting to wonder about retirement. Online info says it largely depends on lifestyle etc. My parents have a nice lifestyle in retirement I want to emulate - they enjoy their grandkids and go on a cruise for 14-21 days a year. Aside from that they stay around at home, help with the grandkids, spoil them with McDonalds, etc. They income $120,000 between the two of them in retirement, but they also gift generously to their grandkids.

So first question - let's use the 70% of income and set that as my target - is this total income...? Like what my T101 says? If so, then we'll have to use $101,000 for me and $95,000 for my wife. 

So target is ~$140,000 / year in retirement income.

Let's assume the principle and rental residences are paid off.

Is the estimate still like 20X or 25X that value is what we need saved up in fiscal assets? Cause that's like 2.8 million to 3.5 million!!!

I've no clue how we'll ever save up that much (considering we have only 1/10th of that saved up now!).

Someone who dabbles in retirement math, can you let me know if I'm on track, if my calculation is on track, or there is faulty logic somewhere?

Thanks!


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## Erome1 (Aug 19, 2016)

Ok in thinking about this I'm realizing CPP and OAS is the part I'm missing (and my wife's pension).

So working backwards what I need is $140,00 - My CPP/OAS - Wife CPP/OAS - Wife's pension per year

Assuming wife works there til retirement, she'll be at what, 65% of income?

Maybe that's the bit I'm missing.


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## AltaRed (Jun 8, 2009)

You are young yet. Stay out of consumer debt and focus on paying down at least the mortgage on your primary residence. The building of net worth will come rapidly when you are no longer bleeding mortgage payments and can invest that money instead in the financial markets. 

Personally, at some point, but maybe not now while AB real estate is down, I would sell the rental property. I don't see the point of being a landlord on one property, especially if it is not now significantly cash flow positive, after all costs including a maintenance reserve. I think the oil industry will not see another true boom. I see it recovering in a few years allowing for modest growth in RE prices but nothing extaordinary. There is no $100 oil price in the future on a sustained basis.

$140k income across 2 incomes is quite a lot in retirement when there are no longer any debt payments. $100k across 2 incomes will buy a great retirement including cruise travel, etc. Forget about the 70% of income factor. It is an old and tired cliche trotted out by financial planners to get you to strive for an even bigger portfolio that they can earn fees on. Back out CPP/OAS for both and spouse's LAPP pension, and see what the difference from $100k/yr or $120k/year looks like and multiply that by 25. I will bet the nest egg looks a lot closer to $1-1.5M.

You have basically 20 years to get there....to retire early. I suspect you will do it just fine.


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## Dilbert (Nov 20, 2016)

^Ditto what AR said. You’re in great shape!


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## Mukhang pera (Feb 26, 2016)

AltaRed said:


> $100k across 2 incomes will buy a great retirement including cruise travel, etc.
> 
> You have basically 20 years to get there....to retire early. I suspect you will do it just fine.


I will take it AltaRed is referring to $100K as net of taxes. 

Of course, not everyone is the same. For some, they can be happy with about $4k a month net income for a couple, or even much less. I think many here on cmf spend that much (and some a lot more) just on travel. But there are actually some not addicted to travel, so that expense is, for them, modest to non-existent. In our house, we are comfortable with about $10k net to spend every month. I am sure some would see that as near destitute. 

We know a fellow who receives an allowance from the BC government under the heading "Persons with Multiple Barriers to Employment", or some such pc term, and it amounts to about $1,100/mo. He's in his 50s and has been "retired" on that "pension" for over 20 years. He travels the world, many months each year. He knows how to connect with folks who will offer free accommodation, etc. He thinks employment, or any kind of work, is for total losers. He is happy living on his shoestring budget. Beer is probably his largest budget item. So it comes down to a very personal choice. By some standards, Erome1 could easily retire today. Indeed, there are many (not likely to be found wandering the hallowed halls of cmf), who purport to hold the pursuit of wealth with disdain and who believe that a monkish existence will set you free.


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## AltaRed (Jun 8, 2009)

It depends on lifestyle whether 2 incomes equals $100k is BT or AT. I'd say on an AT basis, but income taxes shouldn't be that much across 2 incomes particularly if much of the investment income is eligible dividends or cap gains. At age 34, it is not practical to make such precise assumptions about preferred lifestyle 20 years from now.

I think what is more important is to continue the plan to LBYM, pay off the mortgage and keep TFSAs and RRSPs funded, etc. The salaries are there to build a nest egg. Re-evaluate every 3-5 years and tweak as necessary. For most people, retirement lifestyles are always a compromise of when is enough enough to stop working and it becomes a lot more clear when one is within a few years of decision point (it's never that precise anyway).

Added: The 25 multiple is a 'rule of thumb' but is not all that precise. Net of CPP/OAS/DB pension income, it is likely better the OP use VPW methodology near decision time to see just what nest egg is desirable to provide the standard of living they want in retirement. It makes somewhat of a difference depending on where one is geographically as well, e.g. big city, smallish city, recreational locations, or off-grid. Don't think anyone at age 34 can know that. I certainly had no idea at that age how/where I'd end up in retirement.


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## Mukhang pera (Feb 26, 2016)

AltaRed said:


> It depends on lifestyle whether 2 incomes equals $100k is BT or AT. Income taxes won't be that much particularly if much of the investment income is eligible dividends or cap gains. At age 34, it is not practical to make such precise assumptions about preferred lifestyle 20 years from now.
> 
> I think what is more important is to continue the plan to LBYM, pay off the mortgage and keep TFSAs and RRSPs funded, etc. The salaries are there to build a nest egg. Re-evaluate every 3-5 years and tweak as necessary. For most people, retirement lifestyles are always a compromise of when is enough enough to stop working.


I am not sure I was suggesting making "precise assumptions" about lifestyle 20 years hence. Also, I maybe missed it, but the OP has not stated a target retirement age. Venerable member Longtimeago says he retired at age 40, if memory serves. If the OP here is thinking along those lines, it's not too soon to be thinking about how the landscape will look at age 40. 

I was somewhat serious when I referred to packing it in very young and living on the cheap. Not an idea that has ever appealed to me. But there appears to be a fair number out there doing just that. They seem quite content to live very close to the ground. What is it that causes people to gather at places such as cmf and to discuss ways to have more and sooner? Should that be encouraged or discouraged? Are there any forums (fora?) where the common goal is to be happy living with signal frugality for the bulk of one's lifetime? 

There is a motif that permeates forums such as this that working for a living is unpleasant, antithetical to anything worthy of one's time, inimical to one's happiness and something to be grudgingly endured for as brief a time as possible. Perhaps the biggest favour some of us here who have been around for awhile (now in my 60s I think I am in that league) can do for those much younger who tarry here is to encourage them to bail now. Encourage a revision of thinking. The OP has a present net worth of $850k. On a straight line calculation, that's $1,000 a month for 70 years (leaving aside inflation as a consideration). There are places in the world I have visited where one can live quite well on $1,000/mo. Many manage it right here in Canada.

I would guess that most here who are in their mid-fifties and beyond and retired have net worths of $2 million and up and annual incomes for couples of at least $100,000. But are we really retired? We have substituted one form of work for another. Most of us do not have so much wealth that we can pay no attention to managing our resources. The more we accumulate, the more of our attention it takes. Investment portfolios cannot be trusted to manage themselves. Our real estate has to have the taxes and insurance paid and maintenance done - in my case, even the bit of forest land I own needs periodic tending. Those who own companies have to keep up with annual filings, not just of taxes. Lots to keep track of. It is burdensome, is it not? We have to bother about such pestilential matters as obtaining and the cost of medical insurance when we travel. Our motor vehicles, motor vessels and aircraft demand attention. They don't license, insure and maintain themselves. Even if one has staff to deal with all that stuff, then who deals with the staff? Would not living a life stripped to its essentials be a better course?

In my case, I am probably where I am because of my upbringing. I am following in my father's footsteps. He would not have approved of me arriving at, say, age 40 and deciding I had sufficient resources to live out my days quietly. He would have asked "Have you no ambition?" Things might be rather different for me today if he had raised me in a tent on a beach somewhere. Would I be worse off? Probably not. For sure I would be consuming less of the earth's resources. That might not be all bad.

Anyway, I hope I have not utterly laid waste Erome1's thread with my somewhat peculiar musings. I am in just that kind of mood this morning.

Now back to our regular programming.


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## AltaRed (Jun 8, 2009)

I made a few tweaks to my opening sentence, so your quote didn't catch that, and added a section that provides more context on choices. 

I was more focused on the OP's desire to retire in the somewhat similar style to his parents, assuming certain levels of income, and lamenting (despairing?) how much net worth might be required for that lifestyle. Firstly, his net worth assumption is wrong and secondly, income 'needs' could be wrong. Getting to some 7 digit number either takes methodical time to get there through the powers of investing savings and compound growth, OR one gets very lucky with a windfall or a high compensation career opportunity. It is more important to enjoy life as one travels on the journey because the preferred destination could very well change as well.


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## Spudd (Oct 11, 2011)

To guesstimate your needed retirement income, you can take today's income, and then subtract out mortgage payments and contributions to RRSPs/other savings. The assumption would be that your mortgages are paid off by the time you retire, and since you're retired you will be withdrawing from savings rather than adding to them. 

So as a rough example, you and wife make 170k. You spend 40k/year on mortgage payments. You save 30k/year between all your RRSP/RESP/TFSA/pension. (these numbers are totally just guesses, fill in with your real numbers). So if that were the case, you would have a retirement income need of 100k. Now, this includes buffer, because if your income was 100k then your taxes would be lower than if you made 170k, and also, after a certain age you can start getting CPP, OAS, and your wife's pension. 

Then the rule of thumb would be 25x the needed income is what you need to save. So if you plan to wait to retire until you're old enough to get all those pensions, then take your 100k and subtract out the expected pension amounts, and multiply the result by 25. 

It's over-simplifying and it's on the conservative side, but it gives you a starting point.


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## Erome1 (Aug 19, 2016)

Hi all,

An update from me:

Current State:

Income Me $92,000, company car and 10% bonus, RRSP company contribution of $5000/year (which I'm matching to get), 4.5 years with current company
Income Wife $80,000, LAPP Pension, 7 years seniority. Currently on her 2nd maternity leave.
I'm 35, wife is 34.

Assets:

$120,000 in TDW with Private Investment Broker (1% per year management*)
$280,000 in RRSPS and TFSAs (one TFSA has 25K in HISA for emergency/layoffs)
$60,000 in RRSP at Work
$550,000 Primary Home
$370,000 Rental Property
$37,000 Vehicle 1 - 2016 SUV
$50,000 in company stock
RESP Child 1 (3 y.o): $13,000
RESP Child 2 (<1 y.o): $4,500
7 years of LAPP investment for wife

Liabilities:

$400,000 Mortgage on Primary Home
$285,000 Mortgage on Rental Home
No car debt, credit card debt, etc.

A friend of mine ran a retirement estimator that says if I draw down a little bit of the principle, I'll be able to retire at 55 with a gross income of about $130K. Does this make sense?


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## Erome1 (Aug 19, 2016)

Hi all, 

Quick update/ask for advise- I fired the private equity manager and moved all the funds over. There was one TD money note fund that was transferred in kind, and I'm trying to decide if I should sell it or not.



https://www.tdstructurednotes.com/snp/noteDetails.action?noteId=2279



Bought 31,000 units at average cost 1.00 ($31,000 value).

Currently sitting at $21,313.43.

Before I fired the financial adviser he was saying that the 21K is not the real value, that there is some kind of floor etc and the real value is higher by a couple thousand.

I don't need to know how it works, I have a general idea (if it performed well it would give the 4.5% per half year etc.).

Question: Would you sell this now or ride it for a bit and sell it later?

Thanks!


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## Erome1 (Aug 19, 2016)

Hi all,

An update from me:

Current State:

Income Me $150,000 (solid job switch last year), company car, RRSP company contribution of $5200/year (which I'm matching to get)
Income Wife $83,000, LAPP Pension, 9 years seniority.
I'm 36 wife is 35.

Assets:

All RRSP/TFSA for both of us = $640,000
$550,000 Primary Home
$370,000 Rental Property
$37,000 Vehicle 1 - 2016 SUV
RESP Joint - $34,000
9 years of LAPP investment for wife

(Liquidated the company stock when I switched jobs)

Liabilities:

$360,000 Mortgage on Primary Home
$275,000 Mortgage on Rental Home
No car debt, credit card debt, etc.

Realized that 2 x daycare is eating up $2600 a month, can't wait til the kids are older and we can redirect those funds!
Overall, pretty content with how we're doing, hopefully we can keep these numbers growing (and liabilities decreasing) on a steady rate.


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