# How much do you want to have saved for retirement?



## Young&Ambitious

$1 million dollars isn't what it used to be, how much capital are you aiming to accumulate for retirement? Or if you are, what was your goal?


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## bayview

Years ago, it would be a million or two. But when i reached that goal you rightly say a net worth/ capital of $1m is nothing much nowadays. 

I would say min $5m net worth, even though i have a low maintenance lifestyle.


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## Square Root

A better question would be how much do you want to spend in retirement. You then take into account CPP/OAS/other pension entitlements with the balance coming from your investmemt portfolio. Multiplg tnis income requirement by about 25 to get an approximation of how much you need to save. 

So if you want to spend $100k per year in retirement this might be $140k before tax. CPP/OAS might be around 15-20k per year so that leaves about $120 in spending covered by your investments. At a 4% SWR you would need 1/.04 or 25x$120,000=$3million invested. Pretty simple really although lots of fine tuning can be done. The key is the starting point which should be supported by several years of pre retirement spending analysis to determine a reasonable retirement spend to support your desired lifestyle. Such things as personal use real estate, cars, and other toys should not be included in the total as these are uses of income rather than creators of income. The 4% SWR is generally viewed as allowing for increases in spending inflation. Some recent writers are suggesting that for a long retirement (over 30 years) a safer SWR might be around 3-3.5%

Without knowing how much you want to spend-you are just whistling in the dark.


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## GoldStone

To take inflation out of equation, do you retirement planning using real dollars and real rates of returns, rather than nominal dollars and nominal rates.


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## Ethan

I want to save more, I will never feel like I have enough. But why would I try to answer this question when Gordon Gekko covered it so splendidly 25 years ago:



> Bud: How much is enough, Gordon? When does it all end, huh? How many yachts can you water-ski behind? How much is enough, huh?
> 
> Gekko: It's not a question of enough, pal. It's a Zero Sum game – somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred – from one perception to another. Like magic. This painting here? I bought it ten years ago for sixty thousand dollars. I could sell it today for six hundred. The illusion has become real, and the more real it becomes, the more desperately they want it. Capitalism at its finest.
> 
> Bud: How much is enough, Gordon?
> 
> Gekko: The richest one percent of this country owns half our country's wealth, five trillion dollars. One third of that comes from hard work, two thirds comes from inheritance, interest on interest accumulating to widows and idiot sons – and what I do, stock and real estate speculation. It's bullshit. You got ninety percent of the American public out there with little or no net worth. I create nothing. I own. We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip. We pick that rabbit out of the hat while everybody sits out there wondering how the hell we did it. Now, you're not naive enough to think we're living in a democracy, are you, buddy? It's the free market. And you're a part of it. You've got that killer instinct. Stick around, pal, I've still got a lot to teach you.


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## KaeJS

Of course Ethan would come up in here with a GG quote. :biggrin:

Nonethless, though. 'Tis all true. :encouragement:


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## Daniel A.

Between DB pensions for the wife and I and CPP + OAS I had little need to save much more than a couple of hundred thousand in RRSPs .

I know I'm better off than the majority of Canadians.


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## Cal

The actual amount of net worth or holdings isn't that important to me. I do have a target dividend income that I will achieve. Then I will re evaluate my position in life, work, family.....it doesn't mean I will retire then.


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## doctrine

I am aiming for one million dollars in capital for retirement. That doesn't include real estate. I will of course have my own house/land, but if I sold it then that capital would be added to the $1M. Of course, that's a real $1M in todays dollars. I'll need more in 20 years - likely $1.5M in 2032 dollars.


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## crazyjackcsa

Holy open ended question batman! I'm set to retire in 28 years I hope to have a total net worth of $2.3-million dollars. If you must, 1-million in today's funds. What do I need? About 1/3 of that to live happy. What could I get by on? CPP and OAS.


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## sprocket1200

1/2 million now, keeping expenses low (with two kids even!). glad to retire early, DB pension not worth working all those years for...


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## Jon_Snow

I am pretty much set on "retiring" when our investable assets reach about 500k. That should occur in a year or two. Not alot of money to be quitting work in your early 40's, to be sure. But my wife, who is paid extremely well in a job she loves has no desire to quit as I do, which is very good for me. I figure that a 500k portfolio will replace a good chunk of my current salary in dividends and we will continue to save gobs of money every month - and I don't rule out working again in a job or industry that I don't loathe. As I have referenced before on this board, my current job is assuredly killing me slowly.

500k is the point which I feel I can start living my life on MY terms, not my employers. It should also be mentioned that my wife and I have zero debt - 4 properties all paid off, car, etc. We could (and do) live quite well on 30k annually.


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## My Own Advisor

I'm with doctrine.

I'm aiming for $1 M in today's dollars, which does not include real estate and hopefully my paid off home in 10 years. 

I figure that portfolio, add in CPP, OAS and my pension, I'm good.


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## Karen

There is, of course, no general answer to the original question because everyone's situation is so different. I have a decent DB pension plus survivors' pensions from my two late husbands. Add my CPP and my OAS to that, and I live comfortably and would even if I had no other assets. I have a fairly substantial RRSP, but I don't plan to start drawing from that until I have to because I will lose most of my OAS when I do that. I paid taxes for too many years to give that up any sooner than I have to when I don't need RIF money to live on.


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## Square Root

Karen said:


> There is, of course, no general answer to the original question because everyone's situation is so different. I have a decent DB pension plus survivors' pensions from my two late husbands. Add my CPP and my OAS to that, and I live comfortably and would even if I had no other assets. I have a fairly substantial RRSP, but I don't plan to start drawing from that until I have to because I will lose most of my OAS when I do that. I paid taxes for too many years to give that up any sooner than I have to when I don't need RIF money to live on.


Enviable position to be in Karen. Your comment re OAS points out the overly generous nature of that program.


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## marina628

My husband retired 3 years ago after 20 plus years in the trades ,he has back issues now a knee issue from slugging in HVAC business for 20+ years.Probably he did not have enough money saved at that time to retire but I have pulled up that slack for us and I am very lucky that I have a successful business and I love my job.


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## Jon_Snow

That's nice to hear Marina... I have spent over 20 years in the trades myself, and the toll is just starting to make itself apparent in various little ways, though nothing overly serious yet. Your husband is lucky to have you, and I thank my lucky stars for having met my wife.


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## piano mom

Karen said:


> I have a fairly substantial RRSP, but I don't plan to start drawing from that until I have to because I will lose most of my OAS when I do that. I paid taxes for too many years to give that up any sooner than I have to when I don't need RIF money to live on.


Hi everyone, it's been a while since I last posted - just lurking and learning  I have a question for Karen regarding her quote: if you had a chance to go back in time, would you have quit working earlier and start drawing down on your RRSP (maybe all of it) before you qualify for OAS, CPP and DB pension? Because now, you're leaving a substantial RRSP that will be forced to be drawn once you turn 71 and then you'll definitely lose ALL your OAS and may even have to pay more taxes. If you don't finish drawing them down before you leave this world, your children (or beneficiaries) will forfeit a large part of your estate when the whole RRSP will have to be dissolved? Am I making sense??? Thanks in advance.


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## piano mom

The reason I'm asking this is because my husband wants to quit working by 50 and start drawing down his/mine and spousal RRSP after which he will receive a decent DB pension CPP and hopefully full OAS. I'm a little nervous about this since most here say they need $5 mil for their nest egg. Basically, I just need someone to concur with my husband or help me convince him that he is wrong with this theory and keep working till 65 (which idea he hates!!!)


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## Nemo2

piano mom said:


> I'm a little nervous about this since most here say they need $5 mil for their nest egg.


What I'd do, (and actually what we _do_ do), is look at annual expenditures......i.e. how much does it cost you to live, and how 'easily' can you generate that amount, (on our spreadsheet, just to give us an overall picture of what we 'could' make, e.g. on a GIC ladder, we calculate what we'd look like if we collapsed all our investments and consolidated them in that manner, and add in CPP/OAS).

I recently turned 70, my wife 60......I haven't worked since I returned from The Magic Kingdom aged 46.........our assets, (including our paid for condo townhouse, but excluding some unrealized capital gains), are currently just over $1.5 million........our average annual expenditure for the last few years is ~$35K.

We live on less than we make because we value the illusion of peace of mind that it gives us, but we don't scrimp, we don't feel we 'want' for anything, (although we do keep looking at safaris in Zambia, and IF there's any sign of lasting stability in the economy/markets we may just do it.......otherwise it's Mexico and the like), we enjoy cooking so we don't eat out.......etc, etc.

But...if you want to spend $100/$150K a year, you'll need more.


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## Sampson

piano mom said:


> I'm a little nervous about this since most here say they need $5 mil for their nest egg.


This number is just ridiculous. How many millionaire (or 5 for that matter) retirees do you know? How many non-millionaire happy retirees do you know. I know lots. No need for excessive savings unless you already live an extremely lavish lifestyle.

Look at Nemo's exactly, I'm guessing at least 20-25% of his wealth is in real estate, leaving just over 1 million. I bet if we asked him if he is happy living off $35,000 per year, that would be yes.


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## GoldStone

piano mom said:


> I'm a little nervous about this since most here say they need $5 mil for their nest egg.


Only one poster said that, I think. Most quoted around $1 million in today's dollars.

This is what I shoot for:

36K pre-tax income for the two of us
3% withdrawal rate

Ergo: we need $1.2M in today's dollars; primary residence not included.

I use conservative 3% withdrawal rate because:

1. we don't have any workplace pensions to fall back to.
2. we came to Canada at age 29 and plan to retire at 55, so our CPPs will be small.
3. the often-quoted 4% safe withdrawal rate has up to 10% failure rate in the Monte-Carlo simulations, depending on assumptions.
4. the current interest rates are very low; what if they stay that low indefinitely? (see Japan)


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## piano mom

Thanks for the responses. However, I don't believe my original question was answered. Would you stop working early so that you have a chance to withdraw some (or all) of your RRSP in order to minimize the amount of taxes paid, and to qualify for full OAS in retirement? You don't have to spend the RRSP money right away - just draw them down and invest them outside of RRSP. My husband thinks this is especially true for people with DB pensions. Look at Karen (up thread) - she is 69 years old and still hasn't touched her "substantial" RRSP. There will be huge repercussions in the form of taxes once she's forced to start withdrawing it starting at age 71. Also, whatever is left in RRSP when she passes away will be very heavily taxed, because it is all considered to be taxable income on her final tax return.


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## marina628

My parents retired 13 years ago to start pulling out their RSP but also my father got sick so rather than punish himself trying to work longer with his Colitis and side effects of the treatments they made the decision to retire early.They have lived a good life on $36,000 a year and still manage to save some of that.When he was 60 he use to say he was screwed if he lived past 80 but now at 73 he thinks he can afford to live a few years longer than that lol.I love my Dad ,such a great sense of humor and they are very happy with their life.


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## Daniel A.

I did just what you ask piano mom, I retired at 56 with my DB pension and use my RRSP as a balance to draw on. At 64 I will start taking CPP then at 65 the OAS will kick in.
I will have very little left in the RRSP by then for anyone with a good DB pension the RRSP can allow one to retire early.
I expect to have 50,000.00 a year including CPP & OAS five years from now.

My wife will also have a government DB pension and full CPP & OAS. We figure that between us the total per year will be between 80-90 thousand . 

The RRSP was simply a way for me to get out faster after a life of shift work.


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## Nemo2

Sampson said:


> Look at Nemo's exactly, I'm guessing at least 20-25% of his wealth is in real estate, leaving just over 1 million. I bet if we asked him if he is happy living off $35,000 per year, that would be yes.


- Although our condo townhouse may have appreciated slightly in the 3 1/2 years we've been here, for purposes of 'estimation' we use the purchase price of $167K*, so after yesterday's run-up it's ~11%. (*Housing is cheaper in Belleville.)

- Happy? Yes indeed......if we 'wanted' something we could likely buy it, but there's very little we 'want'.


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## Karen

piano mom said:


> ...Look at Karen (up thread) - she is 69 years old and still hasn't touched her "substantial" RRSP. There will be huge repercussions in the form of taxes once she's forced to start withdrawing it starting at age 71. Also, whatever is left in RRSP when she passes away will be very heavily taxed, because it is all considered to be taxable income on her final tax return.


You're right about my situation, piano mom, but it wasn't due to poor planning in my case. It was that my life changed very significantly in ways that I couldn't have foreseen. After I was divorced at age 40, I was certain that I would be spending the rest of my life alone. I fully expected to need the funds in my RRSP to help with my living expenses in retirement, so I was contributing the maximum amount that I could for many years. (I had no pension plan at that time, but shortly after my divorce I started a government job with a DB pension plan.) Then, much to my surprise I remarried; after 18 years my husband died, and I receive a survivor's pension from him. After that I was CERTAIN that would be it - no more husbands! But you know what they say about "the best laid plans..." I did marry again and my American husband died after only four years, so I receive a U.S. Social Security pension from him. I had retired when I married him so I was no longer making RRSP contributions, but I had about $400,000 in my RRSP already. If I had known where life was going to lead me, I would have done things differently, such as making gradual withdrawals from my RRSP over the years, but I don't think there's anything I could have done about it by the time these significant changes occurred in my life, and I don't think there's a thing I can do now to avoid the disadvantages of having an RRSP when I don't need it - on the other hand, there are worse problems one could have! 

My daughters are well aware that nearly half of my RRSP or RRIF will have to be paid in taxes, so I trust they won't go on a wild spending spree when I die!


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## ddkay

I think I could manage well with less than a million. Say 800K with 6% return after tax. Assuming your home is paid for, $25K on food, clothing & home expenses there is plenty of leftover disposable income. Spent wisely you could still afford luxuries like a new AMG every 10 years.


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## Square Root

DDKay. Studies indicate that a more realistic SWR is 4% before tax. The problem is the time value of withdrawals. In a down market(inevitable) withdrawals kill you.
Agree that we often focus on preserving OAS which in the big scheme of things is not very significant. As Karen said, a good problem to have.
NEMO Agree with your comment re expenditure vs nestegg. See my post upthread.


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## Nemo2

Square Root said:


> NEMO Agree with your comment re expenditure vs nestegg. See my post upthread.


Great minds, and all that.....in fact my lady & I are both quite happy spending less than we make, thus enhancing the 'nest egg', and if friends/relatives end up benefiting from that, then so be it, it doesn't bother us at all......._but_ if there's ever something we really really really want, (and thus far there isn't), we'll buy it....but for now we regard the money as a buffer.


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## Sampson

@ pianomom,

We certainly plan to unwind our RRSPs by taking early retirement. There are 3 benefits I see. (1) early retirement, (2) ensuring the tax advantageous nature of the RRSP, essentially having 0 income from employment, and (3) covering the period between early retirement and deferring to obtain maximum benefits our pensions, CPP and OAS payments.

I always plan using worse case scenarios. If it isn't working out (early retirement), you will still be of 'normal' working age and can go back to get a job.


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## Four Pillars

@piano mom- You haven't given anywhere near enough information for anyone to try to evaluate your situation. 

If you want better answers, I would 

1) At a minimum - start a new thread.
2) Hire a professional to help you.


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## MoneyGal

She did, last February. Well, the thread part, not the "hire a professional part." :chuncky:


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## piano mom

@Karen

Thanks for sharing your story. It's beautiful! You planned for the worst case scenario but it didn't happen. Good for you. It's people who care about their future that saves but unfortunately, the government gets to benefit from it 

@Four Pillars

I was in debate with my husband about this issue - just wanted to see what others have to say about it.

@Daniel A

Your wife and you are in a very enviable position. 2 DB pensions! Enjoy them!


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## piano mom

MoneyGal said:


> not the "hire a professional part." :chuncky:


Good luck with trying to get my husband to hire anyone. He cleans the gutters himself, fix the car himself, prune a big tree himself, etc, etc. He even created a massive spreadsheet that includes multiple variables, calculations and charts. We interviewed a few professionals but didn't see anything of value from them that we didn't know already.


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## Four Pillars

MoneyGal said:


> She did, last February. Well, the thread part, not the "hire a professional part." :chuncky:


I don't see any thread started by PM on this particular question.


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## Four Pillars

piano mom said:


> We interviewed a few professionals but didn't see anything of value from them that we didn't know already.


It's possible that they aren't in the business of giving away the good stuff for free. 

It sounds like your hubby has put some thought into it - maybe he should meet with someone just to verify his basic assumptions? Or not - maybe he doesn't need to. I really have no idea.

I can't comment on your scenario since I know nothing about it, but you have to look at your possible income sources in retirement (both early and after age 65) and figure out if they meet your goals. Or can you live with them.

IE Let's say you guys deplete all the RRSP money in early retirement (pre-65 years of age). At age 65+, will the pension, CPP, OAS be enough to live on? More than enough? Not enough? Will the early retirement income be sufficient?

It's hard to model these things with much accuracy, but you can get a sense of the logical choices.

Let's put it another way - you asked if your husband's idea was good or not. For some situations, it might be a good idea. For other scenarios, it might be a dumb idea. It depends on the situation.


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## piano mom

@Four Pillars

I did start a thread back in February regarding my husband's losing his job at 43 and wanting to retire then. Since then, he did lose his job but found another better paying job albeit temporary position with a chance of extension. Now, he has a second DB pension that he can count on. I think people on this forum has somewhat convinced him to keep working at least until 50.


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## GoldStone

Four Pillars said:


> It's hard to model these things with much accuracy, but you can get a sense of the logical choices.


One of the regular CMF posters sells software that allows you to model different retirement/withdrawal strategies:

http://www.fimetrics.com/

piano mom, you might want to take advantage of the free trial offer:

http://www.fimetrics.com/freetrial.shtml

I'm not affiliated with the company in any way.


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## loggedout

What other answer can there but as much as possible?

I have no idea what the world will be like by the time I reach retirement in ~35 years. Everything is changing so much faster than it ever has, it's extremely difficult to assess.


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## Four Pillars

piano mom said:


> @Four Pillars
> 
> I did start a thread back in February regarding my husband's losing his job at 43 and wanting to retire then. Since then, he did lose his job but found another better paying job albeit temporary position with a chance of extension. Now, he has a second DB pension that he can count on. I think people on this forum has somewhat convinced him to keep working at least until 50.


Ok - was it this thread where it appears you deleted the info from the original post? http://canadianmoneyforum.com/showthread.php/10386-Do-we-have-enough-to-retire-on

Anyway - enough guesswork from this guy. My last suggestion (and perhaps my only good one) is for you to ask your hubby to explain the spreadsheet to you, so you know what's going on.


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## Guigz

piano mom said:


> Good luck with trying to get my husband to hire anyone. He cleans the gutters himself, fix the car himself, prune a big tree himself, etc, etc. He even created a massive spreadsheet that includes multiple variables, calculations and charts. We interviewed a few professionals but didn't see anything of value from them that we didn't know already.


Are you... my wife!???? Lol.

All kidding aside, I am looking for 600,000$ in today's money and a paid off house before I think about retiring from the spinwheel. I am only 28 but I figure I will be there in the next 5-7 years.


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## skiwest

Original question. need $1,050K per calc Jan 2014 projected to have $1,200k

Have not included OAS which has NPV of ~$200K have not included wife's consulting income which may work out to $20K each year for 3-4 years


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## Sampson

skiwest said:


> Have not included OAS which has NPV of ~$200K


Wow. Surely you work in the industry. Haven't had to make this calculation yet, but interesting to know others do it.


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## Four Pillars

Sampson said:


> Wow. Surely you work in the industry. Haven't had to make this calculation yet, but interesting to know others do it.


First step is to calculate how many years you will be collecting it.


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## MoneyGal

Actuarial Present Value is the industry term. (We need a nerd smilie.)


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## Hawkdog

Four Pillars said:


> I
> IE Let's say you guys deplete all the RRSP money in early retirement (pre-65 years of age). At age 65+, will the pension, CPP, OAS be enough to live on? More than enough? Not enough? Will the early retirement income be sufficient?
> 
> Let's put it another way - you asked if your husband's idea was good or not. For some situations, it might be a good idea. For other scenarios, it might be a dumb idea. It depends on the situation.


How does other savings, ie TFSA account affect your CPP and OAS? The same way an RRSP does? 
I ask as we only put enough into RRSP's to get the maximum tax return, which is easily calculated.


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## skiwest

Sampson said:


> Wow. Surely you work in the industry. Haven't had to make this calculation yet, but interesting to know others do it.


actually Steve41 did it for me 


steve41 said:


> That OAS will reduce your $1.1M down to $930K.... not chump change IMHO.


 but its 170K not $200k but that was before it changed to 67 so now proably more like $150k


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## Hawkdog

It all depends on what you want, your needs should be a lot less than during your working years. 
It would interesting to poll what the really frugal people on this site spend in a year, i bet its not much if you cut out costs related to rrsp contributions, kids, mortgage, and commuting.
Ask a few people who are retired what they are living off. Ask them if their wants in retirement are the same as when they were 40.


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## Young&Ambitious

I find it difficult to guess what proceeds the OAS & CPP will offer in 25-35 years (my retirement horizon). I've conservatively estimated $1k a month total proceeds from those for a couple. I'm thinking of accumulating a principal investment balance of $1.5mil today's dollars, with inflation maybe $2.25mil dollars. My approach is assume I'll need more than I actually will, and tweak plan closer to retirement rather than vice versa.


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## Hawkdog

Young&Ambitious said:


> My approach is assume I'll need more than I actually will, and tweak plan closer to retirement rather than vice versa.


Smart as long as you don't sacrifice to much from current lifestyle. If you can save 1.5 mill and still enjoy everything life has to offer you doing well IMO.


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## Daniel A.

Hawkdog said:


> How does other savings, ie TFSA account affect your CPP and OAS? The same way an RRSP does?
> I ask as we only put enough into RRSP's to get the maximum tax return, which is easily calculated.


The TFSA has no affect on CPP & OAS.


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## Four Pillars

Daniel A. said:


> The TFSA has no affect on CPP & OAS.


And neither does the RRSP.


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## Khlark

Four Pillars said:


> And neither does the RRSP.


When you withdraw from your RRSP it definitely can have an effect on CPP & OAS. I'm not sure where you are getting your info..


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## Four Pillars

Khlark said:


> When you withdraw from your RRSP it definitely can have an effect on CPP & OAS. I'm not sure where you are getting your info..


I'm not aware of any effect that RRSP withdrawals would have on CPP. 

OAS has a clawback, but you have to be making pretty good money before it becomes a factor (especially for a couple). Is that what you are referring to?

I stand corrected on the OAS issue. There can be an effect.


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## Homerhomer

Four Pillars said:


> OAS has a clawback, but you have to be making pretty good money before it becomes a factor (especially for a couple). Is that what you are referring to?
> 
> .


69K per person doesn't seem like that much, however reading some of the stats apparently only 5% of retirees have it clawedback, so it is that much.

On the other spectrum rrsp does affect GIS, so of three pensions offered by the government RRSP affects two of them, although one could argue that GIS is welfare hiding under different name.


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## Four Pillars

Homerhomer said:


> 69K per person doesn't seem like that much, however reading some of the stats apparently only 5% of retirees have it clawedback, so it is that much.


And that's for a single person. If you have a couple that can split income....they can make a good chunk of $$ before any clawback occurs.


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## Khlark

Four Pillars said:


> I'm not aware of any effect that RRSP withdrawals would have on CPP.
> 
> OAS has a clawback, but you have to be making pretty good money before it becomes a factor (especially for a couple). Is that what you are referring to?
> 
> I stand corrected on the OAS issue. There can be an effect.


Seems like I need to proof read before clicking submit. Thanks for pointing out the CPP portion, I meant to say OAS and GIS. The RRSP withdrawal can trigger a clawback on those benefits. While this may not be an issue for many given the income level needed (OAS), I thought it was still important to point out as I'm sure many reading this forum are in that range.


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## MoneyGal

Well....GIS clawback starts at just under $16K of realized income. I'm not sure many of us will be optimizing retirement income to minimize GIS clawbacks.


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## Homerhomer

MoneyGal said:


> Well....GIS clawback starts at just under $16K of realized income. I'm not sure many of us will be optimizing retirement income to minimize GIS clawbacks.


I was just clarfying income affect on pension ;-), and I know for a fact low income seniors want to make sure they receive as much GIS as possible, and it happens more often than it should. 
May not apply to anyone on this forum, but it sure applies to way too many poeple.


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## My Own Advisor

Back to the figure tossed around...I think $69 K income (provided you have a paid off home, no debts) is great money in retirement.

Thinking about piano mom's question, if I can retire early, using my RRSP withdrawals as income before I take CPP and then OAS kicks in, I definitely will. Unless the rules change again, I plan on taking CPP as early as I can. OAS will have to wait, again, thanks to the new rules. Such is life.


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## Khlark

MoneyGal said:


> Well....GIS clawback starts at just under $16K of realized income. I'm not sure many of us will be optimizing retirement income to minimize GIS clawbacks.


I was mentioning it as more of a side note, obviously the purpose of my post was to correct a mistake that someone made about OAS clawbacks... Maybe I should not have corrected what was said given your apparent issue with my post?


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## MoneyGal

Uh, no issue. I was responding in the context of the overall thread, which is "how much should I have saved for retirement?" -- with people using figures ranging from $5MM on downwards.  While both OAS and GIS are clawed back as the result of withdrawals from registered accounts, there's a big difference between $15.6K of realized income and $69K - I'm not sure it is rationale or adviseable, really, to plan to optimize GIS in retirement, which is all I intended to say in my previous post. 

I'm actually at an academic conference today examining tax rates before and in retirement based on assets held in taxable and non-taxable accounts.


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## Four Pillars

MoneyGal said:


> I'm not sure many of us will be optimizing retirement income to minimize GIS clawbacks.


I am. At age 65 I'm going to give away all my registered and income producing assets. I'm going to get that GIS which the government owes me!!


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## MoneyGal

Why wait? Give all your assets away now and live high on the Ontario Works hog.


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## Young&Ambitious

MoneyGal said:


> I'm actually at an academic conference today examining tax rates before and in retirement based on assets held in taxable and non-taxable accounts.


Pretty please share any grand insights gained? :biggrin:


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## Four Pillars

MoneyGal said:


> Why wait? Give all your assets away now and live high on the Ontario Works hog.


Because I'm still working...


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## MoneyGal

Young&Ambitious said:


> Pretty please share any grand insights gained? :biggrin:


Insights: this stuff is complex. Here's the conference: http://www.fields.utoronto.ca/programs/cim/12-13/IFID-income/


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## steve41

Young&Ambitious said:


> Pretty please share any grand insights gained?


 Uh.... RRIFmetic eats this stuff for lunch.


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## Sampson

I'm taking donations.


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## sags

When the government tried to change GIS rules to include assets, rather than just income, there was enough of an uproar for the government to back down.

Maybe they didn't "optimize" their income to get GIS...........but they sure knew when it might be threatened.


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## MoneyGal

Again, that was OAS, not GIS (presumably you are speaking of the so-called "Seniors Benefit" proposed by Paul Martin).


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## steve41

I don't recall assets being involved.... like having a means test. I remember having to code for it at the time. It sure was ugly.


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## MoneyGal

Assets were not involved; I didn't respond to that point specifically. My main point was that GIS was untouched in the Martin proposals (in fact GIS was to be increased substantially), which are the last proposals to discuss substantive changes to public retirement income programs in Canada (unless you count the changes to OAS which were just implemented, which also don't relate payments to assets in any way). 

Here's the document from Finance: http://fin.gc.ca/budget96/retinc/budget4e.pdf

I'm surprised you would have coded for it; the Seniors Benefit was never implemented. 

As an aside it was starting in 1996 that Martin spearheaded the start of the major reforms to the CPP which put it on the firm footing it enjoys today and for the foreseeable future.


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## sags

The "proposal" was to change the GIS, to include lump sum payments from RRIFs as income. It was quickly withdrawn when it became public.

http://m.theglobeandmail.com/news/p...income-support/article1315681/?service=mobile

http://m.theglobeandmail.com/news/p...finley-insists/article1319097/?service=mobile

As per this article, TFSA accounts are also going to create some problems for the GIS, which is supposed to be a low income supplement.........not extra spending cash for wealthy retirees.

http://www.huffingtonpost.ca/2011/1...ealthy-gis-aimed-at-poor-study_n_1027211.html


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## Islenska

As an overview can you be worth a million on paper but still collect all the extras if your taxable income is at the low end?


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## steve41

MoneyGal said:


> I'm surprised you would have coded for it; the Seniors Benefit was never implemented.


 Yeah, I know. The problem is that the program is a future-based cash flow calculation, and at the time, the SB looked as if it was going to happen. I actually had it selectable (SB or OAS?) in the program. Plus, I do get a lot of pressure from my users, and they generally drive the program dev.


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## cannew

This thread and many of the replies, reflect the investment philosophy of accumulating a large pile of money before one retires. Then one can live off a portion of the pile by drawing down a small portion while the pile continues to generate a larger amount. 

Ask people who followed this philosophy since 2007. Their pile still has not recovered and probably their pile is much smaller if they needed to draw down the same dollar amount.

A better question for this thread would be "How much income can my saving generate before I retire and will my income continue to grow after I retire"?

That's the strategy I've followed and thanks to the advice of the Connolly Report, it's worked great for me and many others.


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## Jungle

Islenska said:


> As an overview can you be worth a million on paper but still collect all the extras if your taxable income is at the low end?


Yes. 

I mentioned something like this in another thread. You and your spouse could claim the first 20k income tax free, (rsp) rest from TFSA and receive $2500 in low income tax credits. (this is before CPP and OAS)

For someone who lives a frugal lifestyle, shops and saves money on everyday purchases/expenses, you can easily retire on 30-40k income (if debt free) and enjoy good vacations, bbq, booze, hobbies, sports, volunteer, etc.


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## Nemo2

Jungle said:


> you can easily retire on 30-40k income (if debt free)


We're on track to come in at ~ $34K for 2012.


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## Jungle

Not including mortgage interest, we are on track to come in at 22K. This includes a disgusting $4k on transit and gasoline. Ugh.


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## GoldStone

Nemo2 said:


> We're on track to come in at ~ $34K for 2012.


Before or after tax?


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## mark.goldmanning

I'm looking to have ATLEAST 150k - 200k per year for retirement, I'm looking forward to traveling to 3 places a year at the least. 

Let's say I live till I'm 85 that's 20 years I have to save up for! 

*I better get started.* :tongue-new:


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## avrex

Square Root said:


> A better question would be how much do you want to spend in retirement. You then take into account CPP/OAS/other pension entitlements with the balance coming from your investmemt portfolio. Multiply this income requirement by about 25 to get an approximation of how much you need to save.


Yes, Square Root's rephrase of the question, back on page 1, is the better question to ask for this thread.
*So, in today's dollars how much money do you think you want to spend each year in retirement?* (Of course, assuming no mortgage and work related expenses.)

Let review the thread for a cross section of those who responded with how much they need. (I'm not sure if people took CPP/OAS into account.) (I'll remove mark's outlier amount of 150k from this survey.)

1. Avrex. In today's dollars, I think myself and my wife will each need an estimated income of 25k/year (i.e. 50k) to retire comfortably. Hopefully CPP/OAS can provide a nice chunk of that, by the time I'm retired.
2. @Jon_Snow, did you say that you could live on 30k as an individual or a couple? I'll assume 15k per person.
3. Nemo2 said as a couple, their expenditures are 34k. That would be 17k per person.
4. GoldStone said 36K pre-tax income for the two of us. That would be 18k per person.
5. ddkay suggested 25k, as an individual.
6. Jungle suggested 30k-40k (presumably as an individual)

So in this very informal, small sample, unscientific poll, people have indicated that they need on average
$22,500 / year / person in today's dollars to live comfortably.


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## GoldStone

avrex said:


> 4. GoldStone said 36K pre-tax income for the two of us. That would be 18k per person.


You cannot take a per-couple number and divide it by two. Many expenses are almost the same whether you live alone or as a couple. For example, housing. 36K for two is fine by me. 18K for a single person - no way. It's not enough.


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## avrex

Very good point.
Then, in the very incomplete survey above, 4 couples say they need on average $37,500 / year in today's dollars to live comfortably in retirement.


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## RBull

After a review of our pre-retirement spending and plans in retirement indicate we can live on $42K after tax for a fairly basic but comfortable lifestyle and $61K after tax for a more generous lifestyle with more travel plans. We are on track to achieve just slightly above the generous level - using a model with age 90 depleting capital, 2.75% inflation, 5% return. One of us is retired now and the other is working P/T for another 18-23 months or so, when we plan to dip into our little pot.


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## Cal

Avrex - It is interesting you quoted SR after he has left the forum. 

It is sad how some were jealous, or in disbelief at what he accumulated in his career, and to give him a hard time over it. It made me think it is sad that it cost our community a valued member.


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## avrex

To be honest, I was unaware that SR had left the forum. That is indeed sad news.


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## avrex

The Statistics Canada Survey of Household Spending for 2010 found senior couples on average spent a combined $53,100 a year (including money paid to income tax). 

Retirement is cheaper than you think

If I assume that this senior couple has an average tax rate of 25%, this means that they are spending the remaining $39,825 on living expenses.

If we are looking at retirement type expenses only, (i.e. subtracting working life stage expenses: mortgage payments, additional car, money for savings), I would say that my wife and I spend more. Perhaps our total is approx. $45k-$50k. Anyway, interesting to know. I thought I would share.

(Sidenote: I used the Globe twitter link for this Globe article. I wonder if that counts against your 5 free article views? not sure.)


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## My Own Advisor

Hey avrex,

My wife and I are targeting $55K per year with a paid off home. That should be comfortable for a few trips per year and house upkeep.

I was also unaware that SR left the forum. Too bad. People shouldn't be jealous of others here, they should use it as an opportunity to learn and be more motivated. Just my thoughts...


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## none

Nothing to worry about with the five free articles. Just clear your cookies and you can read all you want.

If you use chrome just use this:
https://chrome.google.com/webstore/detail/remove-cookies-for-site/lmfdblomdpkcniknaenceeogpgepocmm


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## My Own Advisor

@none,

Are you spamming us?


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## none

My Own Advisor said:


> @none,
> 
> Are you spamming us?


why? i checked the link, it seems fine..... What am missing?


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## My Own Advisor

Just teasing you. I will give it a try. Thanks very much. I hate that G&M paywall.


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## avrex

My Own Advisor said:


> My wife and I are targeting $55K per year with a paid off home. That should be comfortable for a few trips per year and house upkeep.


Oh yes, I forgot about travel. Yes, that means I'll also up around your figure at $50k-$55k.

@none. Thanks for the firewall tip. I'll give it a try.


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## RBull

Is this before or after tax? I consider what we want to spend so am always thinking after tax.




My Own Advisor said:


> Hey avrex,
> 
> My wife and I are targeting $55K per year with a paid off home. That should be comfortable for a few trips per year and house upkeep.
> 
> I was also unaware that SR left the forum. Too bad. People shouldn't be jealous of others here, they should use it as an opportunity to learn and be more motivated. Just my thoughts...


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## avrex

My $50k-$55k estimate was before taxes.
Assuming my average tax rate in retirement is in the low 20% range, it looks like I'll need about $65,000 in today's dollars.


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## My Own Advisor

$55k per year after tax. I hope just over half of that income ($30k) will come from our unregistered dividend paying stocks and TFSA investments. I don't include CPP or OAS in our plan. I figure those payments will be a bonus.


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## RBull

Thanks avrex and My Own Advisor. 
We're not far off those ranges in our plans to fully retire in another 15 months or so. I'm doing the same with OAS and CPP being a bonus.


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## My Own Advisor

Congrats RBull. Very well done! Jealous


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## Rainey

*http://www.theglobeandmail.com/globe-investor/investment-ideas/retirement-is-cheaper-*

I know that debate as to exactly what percentage of income is required/ideal for retirement will continue to rage, but this article from the weekend Globe reflects my own thinking. Not only do I think that a 50% figure is more accurate for how my family lives and wants to live in retirement, stepping away from the 70% marker has -- I believe -- other psychological benefits.

My wife and I currently are in DB plans meaning we are more fortunate than many, but as I've said on this forum before, golden handcuff syndrome is real. Embracing the 50% goal suddenly changes the calculations to such as extent that mid career lots of new options are in play -- such as starting a business, or finding a job that's more about satisfaction than financial reward. 

Further, if, by chance, we're way off and we end up needing much more than 50%, having a job with real passion and real reward means hanging in past normal retirement age likely won't be the same misery that it couldbe if we were in positions we loathed.

So how much do I want to have? Shooting for a combined pension, saving, downsizing income of 120K gross.


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## Maltese

I want to thank everyone who has contributed to this thread. I've been following it since it started and it's gratifying to know that others think the same as I do. In my world I'm an anomaly since my friends and co-workers mainly live for today and make no effort to put money away for tomorrow or to even pay off their mortgages.

As a divorced female (no money or child support from ex) I know that I will need almost as much money as a couple to provide for the same comfortable retirement. My average tax rate will be higher because I will not have the benefit of income splitting. Plus of course, I will be paying living expenses etc. on my own. I'm not complaining. This is just the way it is and I have to plan for it. Most retirement articles written target couples so I am always grateful when singles are mentioned. The best article for both couples and singles that I've read so far is found at http://www.canadianbusiness.com/investing/how-much-do-you-need-to-retire-well/

I will likely be able to retire in 2 years at age 59 but may work another 1 or 2 years if the stress is manageable. If, as in the past the stress becomes unbearable, I will be out of there. I am aiming to have 75% of the amount that a couple requires to live a comfortable just above middle class retirement. I am hoping that $43,000 after taxes and indexed to inflation at 2.5% will allow me to remain in my home, to do some travelling and to pay for my ongoing medical expenses. My net income right now isn't much more than this so I expect that my plan is doable. Of course I'll have to pay a single's supplement for much of the travel so my travel budget wil be higher than I'd like it to be. I have included CPP and OAS in my calculations as I believe that they will continue.

I've always lived below my means, strived to pay off my mortgages and saved for the future. Of course I've also made plenty of mistakes along the way. Good luck to those of you who are currently working at saving enough to retire.


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## RBull

Thanks. It's not gone exactly how we had hoped but still not too bad. 

Sounds like you're well on your way. 




My Own Advisor said:


> Congrats RBull. Very well done! Jealous


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## PrairieGal

Maltese said:


> I want to thank everyone who has contributed to this thread. I've been following it since it started and it's gratifying to know that others think the same as I do. In my world I'm an anomaly since my friends and co-workers mainly live for today and make no effort to put money away for tomorrow or to even pay off their mortgages.
> 
> As a divorced female (no money or child support from ex) I know that I will need almost as much money as a couple to provide for the same comfortable retirement. My average tax rate will be higher because I will not have the benefit of income splitting. Plus of course, I will be paying living expenses etc. on my own. I'm not complaining. This is just the way it is and I have to plan for it. Most retirement articles written target couples so I am always grateful when singles are mentioned. The best article for both couples and singles that I've read so far is found at http://www.canadianbusiness.com/investing/how-much-do-you-need-to-retire-well/
> 
> I will likely be able to retire in 2 years at age 59 but may work another 1 or 2 years if the stress is manageable. If, as in the past the stress becomes unbearable, I will be out of there. I am aiming to have 75% of the amount that a couple requires to live a comfortable just above middle class retirement. I am hoping that $43,000 after taxes and indexed to inflation at 2.5% will allow me to remain in my home, to do some travelling and to pay for my ongoing medical expenses. My net income right now isn't much more than this so I expect that my plan is doable. Of course I'll have to pay a single's supplement for much of the travel so my travel budget wil be higher than I'd like it to be. I have included CPP and OAS in my calculations as I believe that they will continue.
> 
> I've always lived below my means, strived to pay off my mortgages and saved for the future. Of course I've also made plenty of mistakes along the way. Good luck to those of you who are currently working at saving enough to retire.


Thanks for that article Maltese. I am single (recently widowed), so will be in much the same boat as you are. I'm glad to see that the article says I can probably get by on the $350,000 that I hope to have by the time I am 65. We (my husband and I) liked to travel and enjoy life, and I don't regret a bit of it. He died 3 months shy of 65, so I'm glad we didn't wait to travel until we retired.

With the OAS being pushed back to 67 I may have to work part time until 67. I know I need to invest more in equities. I am a cautious investor and have a lot of my money in GIC's and HISA's. I have started putting some in an ING Streetwise index fund, and I have some in an Investor's Group mutual fund that a friend sold us. I own my own house and I'm saving everything that I can. I have cut the telephone and satellite services way back, but it's hard living on one income when you are used to two. 

I found this interesting in the article that you linked to:



> The cost of a middle-class retirement at age 65 can vary from $250,000 to $750,000 for a couple, and $325,000 to $675,000 for a single.


I am not sure how a couple can live on $250,000 at the low end, but a single needs $325,000.


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## RBull

^yes, that seems to be an error in the article, with the low numbers attributed to the wrong group.


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## Ponderling

I am a wierd one We track where all the money goes - well not all of it; about $200 a year cannot be accounted for. 
Tracking spending and income has been a habit from when I was just started working full bore after uni, and wanted to develop plans for the future after my first vehicle loan was discharged. 
So my comprehensive quicken records run back to 92. They tell us that we can comfortably retire on about $55k as a couple in todays dollars. We currently gross almost 3x this amount.
This number is based on what we have spent over the last 8 years discounting the disappearing child rearing costs and one time major house refurb costs, and adding in the desired additional travel after retirement cost. 

Thanks to RRIFmetric, the ideal tool for the job of cash flow planning into the future, a partial retirement may be in the cards for me in as little as 5 years, and my wife in about 10 years. She could retire earlier, but likes the communcation enviroment she has in her present job, and wants to work until she is 60.


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## Itchy54

Thanks to everyone for contributing...love reading all this!

Hubby and I are set to retire in one year, at age 57. He will have his pension from the provincial government, it's not huge but will give us--and this includes the annuity and the bridging benefit--about 45,000 (before tax) income until the age of 65--then it will be much reduced to about 28,000 (before tax). Not so gold plated.....

I have a very small pension that I am collecting now from an old job with the school district and it pays me 250/mnth until 65, then about 150/mnth. At 65 hubby will also collect an $82/mnth pension from an old forestry job.

By next year we hope to have around $750,000 in RRSP's, investments, tax free accounts.

We have tracked our spending for the past 2 years....and we spend about $3000/mnth but this does not include our yearly vacation that can run from 5 to 7 thousand and it is something we will continue to do....a very near death experience at 49 made holidays a must do!!

What we are pondering now is whether or not to take our CPP early, at 60.....huge reduction but we can leave our savings to grow while we use the government dollars...
We own our house(fairly new at 5 years old so no huge repairs in the near future), have 2 good vehicles, put the kid through university..no debt.

I work part time and like my job (at the local university teaching the labs....so fun) and may continue on if things remain as they are now. This could provide income of 10-20 thousand a year (2 semesters, very part time) which would be great for the holiday fund...

oh, my estimated CPP is about 330/mnth and includes the 7 year child rearing and hubby's is $900....these amounts came from Service Canada when we sent in the estimate forms found on their website (highly recommend everyone do this!!) and using the dates we wanted to retire, so the numbers should be fairly accurate.

I think this is doable...any comments? Hubby is super stressed at work and really needs to retire (wish he would do it this year....)


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## RBull

Itchy, you sound like you're in good shape to meet your goal of retiring in a year and having enough for your expenditures. You should calculate the difference with CPP at age 65 to see if it makes more sense to delay until then. 
That is great to have a PT job with flexibility and that you enjoy. It probably pays reasonably well and gives you the option of continuing with that which would help exceed your needs, continue to build CPP and delay having to dip into your savings. Otherwise your $750K should allow you to remove $35K/year (today's dollars and adjusted annually 2%/inflation 4% growth,to age 90), in addition to your husbands pension, your pension and future CPP/OAS- well over your needs. With your husband's after tax pension and your small one, you'll probably net enough to fund your current stated lifestyle until 65 when OAS and a delayed CPP kicks in. I think you're in the drivers seat to go either way with CPP.


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## My Own Advisor

@Ictchy,

Congrats on being so close to retirement!

So...

-reduced pension of $28k
-reduced school pension of ~$2k
-old forestry pension of ~$1k
-$750k investments; earning 4% yield is $30k per year.

Assuming you stay out of debt, spending about $36k per year, you'll be in great shape!

Plus, you have the part-time job to keep your body and mind busy. Well done.

Based on your near death experience, might as well take the CPP early and live life. Here is an article for reading by one of my favourite blogs:
http://retirehappy.ca/four-reasons-why-you-should-still-take-cpp-early-post-2011-rules/

Best wishes!


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## steve41

Itchy54 said:


> Thanks to everyone for contributing...love reading all this!
> 
> What we are pondering now is whether or not to take our CPP early, at 60.....huge reduction but we can leave our savings to grow while we use the government dollars...
> We own our house(fairly new at 5 years old so no huge repairs in the near future), have 2 good vehicles, put the kid through university..no debt.
> 
> I think this is doable...any comments? Hubby is super stressed at work and really needs to retire (wish he would do it this year....)


PM me your numbers in more detail... (RRSP/nonreg/tfsa broken out and by spouse) and I will show you the downside of taking CPP and OAS early.

Steve


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## GoldStone

Itchy54 said:


> Hubby and I are set to retire in one year, at age 57. He will have his pension from the provincial government, it's not huge but will give us--and this includes the annuity and the bridging benefit--about 45,000 (before tax) income until the age of 65--then it will be much reduced to about 28,000 (before tax). *Not so gold plated.....*


Not so gold plated, huh. Do you realize how much a pension like this is worth?

Back of the napkin estimate:

$45,000 * 8 years (57 to 65) = $360,000

The value of $28,000 for life is a bit trickier to calculate. I will use 3.5% safe withdrawal rate to do the estimate. The "standard" SWR is 4%. However, many retirement experts argue that 4% is not really safe in the current, low interest rate environment.

To generate $28,000 annually at 3.5% withdrawal rate, one has to save:

$28,000 / 3.5 * 100 = $800,000

Total pension value:

$360,000 + $800,000 = $1,160,000.

A private sector worker has to save *that much* to replicate your hubby's government pension.



Itchy54 said:


> By next year we hope to have around $750,000 in RRSP's, investments, tax free accounts.


$750,000 is a good number. Congratulations!!

Now consider this: a private sector couple has to save $1,160,000 + $750,000 in order to put themselves in the same fortunate position.

When you think about it this way, your hubby's pension comes in a different light, doesn't it?


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## My Own Advisor

Very different light. Like a beacon. They've done very well.


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## MoneyGal

GoldStone said:


> Not so gold plated, huh. Do you realize how much a pension like this is worth?
> 
> Back of the napkin estimate:
> 
> $45,000 * 8 years (57 to 65) = $360,000
> 
> The value of $28,000 for life is a bit trickier to calculate. I will use 3.5% safe withdrawal rate to do the estimate. The "standard" SWR is 4%. However, many retirement experts argue that 4% is not really safe in the current, low interest rate environment.
> 
> To generate $28,000 annually at 3.5% withdrawal rate, one has to save:
> 
> $28,000 / 3.5 * 100 = $800,000
> 
> Total pension value:
> 
> $360,000 + $800,000 = $1,160,000.
> 
> A private sector worker has to save *that much* to replicate your hubby's government pension.
> 
> 
> $750,000 is a good number. Congratulations!!
> 
> Now consider this: a private sector couple has to save $1,160,000 + $750,000 in order to put themselves in the same fortunate position.
> 
> When you think about it this way, your hubby's pension comes in a different light, doesn't it?


AND they have to save those funds without taking any equity risk.


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## Jagas

I want to have saved far more than we can possibly spend in our lifetime. A rough over-inflated spending figure for us in retirement is about $129K annually after tax with almost 20 years to save up to support it. A large portion of that figure is discretionary and could be easily curtailed if needed. Our plan includes leaving as large a chunk as possible for our children as well. This plan of course calls for working longer than would otherwise be necessary but I more or less love my job and feel that it provides a fair amount of value to a fair number of people so that will hopefully counter-balance the stress load.


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## 6811

"The value of $28,000 for life is a bit trickier to calculate. I will use 3.5% safe withdrawal rate to do the estimate. The "standard" SWR is 4%. However, many retirement experts argue that 4% is not really safe in the current, low interest rate environment.

To generate $28,000 annually at 3.5% withdrawal rate, one has to save:

$28,000 / 3.5 * 100 = $800,000"





“For every $100 per month of income, you have an asset worth $18,000.”

I've been using the website http://retirehappy.ca/how-much-do-you-think-your-pension-is/ to calculate the net worth of my wife's government pension and it comes up quite a bit less than the 3.5 percent withdrawal rate calculation at $419,940.00 instead of $800,000. Still a significant amount.


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## GoldStone

6811 said:


> “For every $100 per month of income, you have an asset worth $18,000.”


$100 * 12 / $18,000 = 6.67%. This is definitely not a safe withdrawal rate for an individual retirement portfolio. Someone who withdraws at that rate runs a high risk of outliving their portfolio.

The rule you quoted applies to the group pension plans, I guess. Members who die early subsidize the plan. That's the nature of group insurance.


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## MoneyGal

That's a made-up number, pulled from thin air, with no real connection to reality. Or perhaps there's a connection to reality but "use a factor of 18!" with no supporting rationale doesn't inspire a lot of confidence on my part.


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## MoneyGal

GoldStone said:


> $100 * 12 / $18,000 = 6.67%. This is definitely not a safe withdrawal rate for an individual retirement portfolio. Someone who withdraws at that rate runs a high risk of outliving their portfolio.
> 
> The rule you quoted applies to the group pension plans, I guess. Members who die early subsidize the plan. That's the nature of group insurance.


This doesn't make sense though, unless you are calculating the YIELD from the plan, not the COST of the plan.


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## 6811

MoneyGal said:


> This doesn't make sense though, unless you are calculating the YIELD from the plan, not the COST of the plan.


I agree with your calculations MG but I also think that there may be merit to the 18K factor. 

If this were not a government pension plan that we're trying to assign a net worth value to, using your conservative 3.5% annual withdrawal rate would pretty much ensure that the capital would never run out, and I expect would leave a sizable legacy dependant on the end date. 

The fact that it is a pension plan, that will end at an indeterminate date with no chance of a legacy (albeit maybe a spousal survival benefit), I think that should be a more negative factor in any calculation of up front net worth.


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## Itchy54

Thanks for all the comments, you guys are all very informed and I greatly appreciate all comments!!....I know the pension is great to have but just know that the job my husband does for about 80 grand a year would have him earning about 150 grand in the private sector. He also paid into the plan....
Right now, as of yesterday, things have changed and he may be working longer....the sweet part of pension is those 5 highest paying years...and there is opportunity for a management position and he seems happy and stress free, we shall see.
We have had far too many friends die just before retirement so if he seems at all stressed the plug will be pulled, whether he likes it or not!!
We scraped by for many years and worked on the side building our own homes and renovating, they were very lean years.
The numbers i provided are for 100% joint pension, so if he dies I will get the same amount (less any bridging benefit) which is very nice since I stayed at home with the kid and worked when he was older.

Again, thanks for the insightful comments!!


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## snowbeavers

My goal is to have between 1.5-2 million set aside for retirement but am currently 35 and hope to retire by 57. But I do not own any property and want to ensure that I leave some for my kids. Since I am not eligible for any RRSP or government/company plan, this will be solely by me and my wife.


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