# How am I doing - 37 yo



## kimblehcc (Mar 13, 2015)

My wife and I are novices when it comes to determining how we're doing with RSPs/TFSAs for our age group. We both earn a good living however it is easy to live up to that income. Would appreciate any insight into our current affairs. Thanks in advance for your comments:


Combined RSPs - $220,000
Combined TFSA - $29,000 (Currently on a $600/month payment plan into TFSA account)
LIRA - $13,500
Other Savings - $130,000

Both will qualify for CPP. We also will have the house asset which is substantial for the area we live in however for this post, I'm really most interested in our RSP and other savings etc.

Thanks in advance


----------



## Just a Guy (Mar 27, 2012)

So, what is the other half to the story, what are your debts?

You could have a million in savings, but if you owe $2 million, you're in big trouble.


----------



## avrex (Nov 14, 2010)

This sounds like a thread that should go in the 'Money Diaries' forum.
But, since it's posted here in the *'Retirement'* forum, I'll answer with,

no, you can't retire, yet.


----------



## My Own Advisor (Sep 24, 2012)

Agreed with Just a Guy, if you owe a bundle, then that's different than being debt-free.

Based on what you wrote, assuming you own about 50% equity in your home (?), I would say you're doing quite well with the assets in those accounts.


----------



## Spudd (Oct 11, 2011)

I would ask why you have 130k in "other savings" but are on a 600/mo payment plan to your TFSA? Why don't you just max out the TFSA immediately from the other savings?


----------



## steve41 (Apr 18, 2009)

Without knowing your 'career assets' (both salaries) and, as mentioned, any loans, then it is impossible to derive a plan.


----------



## kimblehcc (Mar 13, 2015)

Ok. Thanks for the replies. To give you a better picture. 

We only have mortgage debt at 500k however have about 60% equity in the house. 

Wife makes 150k and I'm at 175. We've been in this earning bracket the last 4 years or so.


----------



## CalgaryPotato (Mar 7, 2015)

Well you make a ton of money, more by 37 for both you and your wife than most will ever make. You have a million dollar home more than half paid off, and a large amount of savings.

I guess the question is, what are your next goals. Even with the impressiveness of your house & your investments, I'm figuring you probably spend a fair bit of money per year. (Depends on how much your income leaped from prior to the past 4 years). If so you may need a much larger nest egg for retirement to maintain your lifestyle than the rest of us would.

That being said, once your house is paid off, you'll accelerate your savings quite fast.

When do you want to retire? Do you anticipate any other major expenses along the way? And like others have said, be very careful with all that unregistered savings, if you can get as much of that into your RRSP & TFSA as possible, that would be ideal. 

Of course the next question, is what are you invested into in each of those accounts...


----------



## OldPro (Feb 25, 2015)

This is primarily a money forum and I understand that but even so, I find the emphasis on money overdone. 

Kimble, I retired at 43 and had less equity than you currently do in terms of actual $ but perhaps around the same amount in buying power back then (1989). There is a question that you have to ask yourself that matters more or should at least precede 'how am I doing?' That question is 'how much do I need?' The answer to that question depends entirely on how you want to live your life after you retire and how much you value time vs. money.

I don't care how you have invested your money and would question the comment by CalgaryPotato (no offense intended CP), "you may need a much larger nest egg for retirement to maintain your lifestyle than the rest of us would." I question it on the basis of the assumption that if someone has X income while working, that they will need MORE income when retired than someone else. Why should they?

I find all the formulas etc. that people are told to use to determine how much income they need in retirement are based on their income while working and the ASSUMPTION that they will need to maintain a similar lifestyle in retirement. When I was in my last years as a member of the working class (which includes anyone who works) and before I became a member of the leisure class (which includes everyone who does not need to work to earn a living), I jetted around, stayed in 5 star hotels, etc. but I did NOT find it necessary to maintain that lifestyle in retirement. That makes all the formulas people use worthless.

There have actually been studies done that show that beyond a certain income, more money does not buy more happiness. You can find plenty of articles on the subject, here is one to start with: http://www.wsj.com/articles/can-money-buy-happiness-heres-what-science-has-to-say-1415569538 In it you will see mention of comparing say buying a car to trekking in the Himalayas for example. The point being the experience will provide more long term happiness than the material object will. Which to me translates to not just being about how you spend your money as that article is focused on, but also points towards how you spend your TIME.

A book worth reading which while it might seem extreme in some of the writer's ideas, might provide you a different perspective on how you value your time vs. money, is Your Money or Your LIfe. http://www.professionalwealth.com.au/admin/file/content3/c2/PW Your Money or Your Life.pdf

I've spent the last 25 years retired. What I have done with that time while not always(but sometimes) unusual or exciting has been worth more than I can see any amount of money every being. 

So I would say in answer to your question, 'how am I doing?', you're doing fine and can retire any time you choose to now.


----------



## RBull (Jan 20, 2013)

You have significant assets for your age and extraordinary household income, although are overweight in real estate IMO. Not atypical in today's world. 

Your TFSA's should be topped up immediately and full contributions made at the beginning of each year to maximize growth potential, as Spudd mentioned. Same with RRSP's if they aren't currently maxed. Use the "other savings" if needed. Get a form T1213 (if you haven't already) to reduce taxes at source for your RRSP contributions to be made asap.

It would seem with your incomes you should be able to save some amounts beyond TFSA max and RRSP max monthly, if this is a goal. The amount of RRSP tax savings could be diverted to unregistered savings after TFSA shortfall is topped up. Some additional amount should be allocated to unregistered savings. 

As mentioned above more useful/accurate advice could be offered if people also knew understood your actual expenses, investments and goals.


----------



## CalgaryPotato (Mar 7, 2015)

OldPro said:


> I don't care how you have invested your money and would question the comment by CalgaryPotato (no offense intended CP), "you may need a much larger nest egg for retirement to maintain your lifestyle than the rest of us would." I question it on the basis of the assumption that if someone has X income while working, that they will need MORE income when retired than someone else. Why should they?


No offense taken at all. I had a couple of assumptions in there, based on how much I'm guessing they are spending now based on their net worth to income (and that the original poster noted that they "live up to their income") and the value of their home (unless they intend to downsize, even when paid off it will have a considerable tax bill, insurance bill, utility bills etc. which will continue indefinitely). 

I'd say that you would be the exception rather than the rule as far as changing your lifestyle significantly at retirement, but I could be wrong there. Most people I've known haven't change much one way or the other (unless forced to by less available funds).


----------



## OnlyMyOpinion (Sep 1, 2013)

OldPro said:


> So I would say in answer to your question, 'how am I doing?', you're doing fine and can retire any time you choose to now.


Oldpro, you appear to be suggesting to OP that they can retire now, at age 37 with a total of ~$392k (?) saved, and that should last them for ~60 years. 
It might be helpful if they understood how you retired in 1989 with ~$200k (based on same purchasing power) and how you managed your investing and spending so that sum will last you through retirement. I recall you mentioning that after 26yrs of retirement, you currently spend ~$30-50k/yr and that it is 80% inflation protected. 
I wouldn't suggest someone should 'pull the pin' without providing some insight.


----------



## Just a Guy (Mar 27, 2012)

Their liquid assets don't cover their mortgage debt, so they have a ways to go before retirement. I think, to be fair, that the OP isn't doing very well based on their income. Compared to the average 37 year old, earning an average salary, they are doing quite well (most 37 year olds are probably close to having a $0 net worth, to a small positive one having just managed to equalize from the negative net worth of their 20's). 

When you look at a multi year income of $250k however, and I'd say that their net worth should be significantly higher at this point in their lives. If we were to see their actual spending, we'd probably find much of it wasted but, because they have more savings than average, we are ignoring the fact that they should be doing much better. 

Everything should be considered relative to their situation, not to their peers who earn less.


----------



## OldPro (Feb 25, 2015)

Well by my count OMO they have around $370k in investments plus 60% equity in a house with a 500k mortgage to still pay. So if that means they have $600k in their house then they have just under $1 mil in equity. If he meant to say that he has 60% equity of a 500k house then they have around $600k equity. That last part is a bit unclear but the OP can clarify it if he wants.

Either way, they can retire now. Most people can retire much sooner than they think they can if they just get away from thinking like that indicted by Just a Guy (again, no offense intended) who looks at a formula that says assets that don't cover mortgage means they have a way to go before retirement. When you get locked in to looking at things in only one way, you can't see anything else.

Where is it written that they can't retire and continue to grow their capital? If you live off say 75% of your income generated, why can't you continue to invest 25% of income? The only question then is how much equity you need to generate enough income that will result in 75% of that income being enough to live on. That question brings you to the next assumption most make when looking at 'do I have enough' or 'how am I doing'. They assume some low and safe ROI based on current norms. First, why do you have to look at low, why can't you look at high and relatively safe? 

For example, I invested in commercial and industrial real estate before I retired. I did it directly through contacts which meant eliminating the middle man but anyone can do it with REITs (real estate investment trusts). Here is a link that will show you how they have done on average over the last 20 years.
https://www.reit.com/investing/reit-basics/guide-equity-reits

If a $100k investment returned only 4% (my investments did much better in 1989 OMO) then that would be $4k per $100k invested. So if the OP invested $600k it would net $24k income. Live on $18k and re-invest $6k and your capital continues to grow obviously. Look at the numbers taken from the graph in the link for how much the initial investment would have grown even if you had taken out ALL the income and re-invested nothing. Answer, tripled it's value. So even without living on less than !00% of income, the capital continues to grow.

When you can retire is all about 'how much money do I need' with NEED being the important part to figure out. Having enough and investing it so it will continue to provide you with enough plus cover inflation can be done in many ways. I've only suggested one way. You could as easily buy some hot dog stands, pay someone to run it and live off the proceeds which would go up with the price of hot dogs and cover inflation.

So put how to invest and how to cover inflation aside. As I wrote on another thread and you are referring to OMO, I take it for granted that everyone is trying to figure out how to have an inflation proof income, not just a given income today. Look instead at 'how much do I need', that is the question. In looking at that, I am suggesting that you start valuing time over money. Saving another $100k at the cost of say 3 years out of your life to save it, is not a good trade in my opinion. I've had 25 years of retirement so far OMO and what value would you put on that in $$$? 

Do some reading here: http://earlyretirementextreme.com/ The author attibutes changing his life to 2 books. Rich Dad Poor Dad and Your Money or Your Life. I've already suggested the latter above for reading. Read the Wiki page here: http://earlyretirementextreme.com/wiki/index.php?title=Main_Page You mention I live on $30-50k OMO. That's correct. But I earn MORE than that every year. Let's go back to the OP. With an income of $250k, how much could they save in just ONE year if they chose to live on $30-50K? How long would it then take them to get to enough capital figuring on a 4% return to generate $50k of income and retire at that income level? They can do that if they want or they can retire now on $18k a year if they want. The point is they can retire any time they want now as I said.


----------



## My Own Advisor (Sep 24, 2012)

Currently reading Your Money or Your Life OldPro.

Some good comments in this thread.

BTW - just noticed this in Jacob's blog:
http://earlyretirementextreme.com/comments-have-been-disabled.html


----------



## OldPro (Feb 25, 2015)

OnlyMyOpinion, you asked me to provide some insight and that's a fair thing to ask. I am trying to do so. It really is about a paradigm shift. Moving from valuing everything in terms of money to valuing things in terms of time. For example, I can buy a car or I can live life for 2 years, it's a choice. 

Let's suppose you could retire and have an income of $18k a year right now. What can you do with $18k? Well, I can tell you that you could move to a Greek island, rent an apartment and live life as a beach bum if you want. My Mother had a real fear of that when I was living on a Greek island. 'Oh my God, my Son's become a beach bum. He gave up a six figure (in 1989) income, a big house full of expensive persian carpets and original art works on the walls, gave away his Rolex, etc. etc. and now he bums around on an island. How am I supposed to brag about him now?' Somewhere we get this idea that money/income equals success in life. The more you have the better you are. What you do for a living and how much you are paid to do it come to define who you are.

But let me ask you this. Which would you prefer to do, work 5 days a week and enjoy your 2 days off OR not work and enjoy every day of the week? There only seems to be one logical choice to that question in my opinion. But of course we live in the real world where unfortunately, we do need some money to eat etc. Why though do we think we need more than enough to eat? Where is the logic in buying a $50k car for example? You can buy a car that goes reliably from A to B for $12k brand new or a used car that will do it for $5k if that's all you want to spend. The answer of course is that people would rather be SEEN in the $50k car than the $5k car. What does that say about their values in life? They value things over what it costs them in time out of their life to get them. 

We can't bank time. Put a tape measure on the floor and lay out 87 inches. One inch for each year of the average non-smoker in Canada's average lifespan. Now anywhere along that tape, mark out 2 inches. That's how much of their life they probably pay for that $50k car. Then consider what they could have done instead with those 2 years but will never have the time to do if they continue to chase money.

Look at it the other way. Try to put a $ value on an experience that mattered to you. For example, I sat within 20 feet of a group of about a dozen California Bighornn Sheep and watched as two large males banged horns (I had no idea just how loud that would be) together asserting their place in the pecking order. How much $$$ is that worth? Have you ever heard that sound? If you hear it once, you will recognize it for the rest of your life. Meanwhile, someone else was at working paying for a car. No car could mean more to me than having been there. It cost me nothing in terms of $ and only a half day of my time to hike to that spot and back. Of course you can't really put a $ value on it but if you think about it, the person working two years to pay for a car is saying the car is worth 729.5 days MORE of their LIFE than my experience was worth. I could have many experiences like that over 2 years that will be with me for the rest of my life. They'll have a car for a few years. That to me is an easy choice to make. I have had countless things in my life like the example of the rams, over the last 25 years, but I couldn't have had them if I had continued chasing money and valuing things over time.

Studies have shown that money does 'buy happiness' up to a point. You have to have enough to buy food and clothes etc. But beyond a certain point, the studies have shown that MORE money does not buy MORE happiness. Happiness plateaus as money increases and it is other things that increase happiness beyond that point. A good relationship, giving to others in some way, experiencing things of interest, etc. More money simply results in spending more. Most people would agree that 'the best things in life are free' and yet they spend their lives working to buy things. Where is the logic in that?

I think it is extremely difficult to somehow induce a paradigm shift in your thinking. Either the light bulb goes on or it doesn't. I always remember a friend saying to me a few years after I retired, 'I'm so busy living a lifestyle, I have no time to live life.' He was making lots of money, I was living on $12k a year and being a beach bum on a Greek island. We all get to choose.


----------



## Just a Guy (Mar 27, 2012)

No offence taken oldpro. 

The difference is, are his assets income producing?

Most of his net worth is tied up in his non-income producing house. In fact, he owes money on it, so it's a negative income producing asset. 

Next, what happens if, as I believe, real estate corrects significantly. In general, higher prices homes correct more as there is less market for them, so his assets will be chopped significantly.

Then there is the fact that he's been earning a significant income yet, as I pointed out, he does not really have equivalent savings. This leads me to believe that he enjoys his money (nothing wrong with that) and wouldn't enjoy changing to a more frugal lifestyle (again, nothing wrong with that). 

Now, if he had $1m worth of rentals, with 40% equity producing a positive cash flow as well as his current savings and no other debt, my opinion of the poster would be completely different. He could probably easily retire and not worry about it.

Judging by the op's numbers he's probably not a great investor (he's given no indication of returns, so I gather he's probably got his funds in something recommended by an advisor). Again, based on his income, I'd have expected more savings and sources of passive income.

As I said, each person should be evaluated based relative to themselves. I admit I made a lot of assumptions, but there are indications that the op is not able to retire the way they want using the numbers provided. It's not to say someone else in the same situation couldn't.

This isn't about what you or I would do in this situation, but rather the op. Personally, I agree with you about not making money important, however, the OP can afford to do the same things by working, so it doesn't make his way wrong, just a different path.


----------



## daveo (Jan 29, 2015)

without going outside, you may know the whole world.
the wise man knows without travelling;

without looking through the window, you may see the ways of heaven.
the farther you go, the less you know.

thus the sage would rather have a really nice car.

—tao te ching


----------



## OnlyMyOpinion (Sep 1, 2013)

Oldpro - thanks for the additional comments. I hope the OP will consider them and find some takeaways that will help them.
I think I understand where you are coming from. The big difference may be that I've never considered my job to be taking time out of my life and life experiences. It hasn't been something to escape from ASAP to 'get on with life'. The job and the many people I've worked with are part of life. 
Now at the same time, we have been disciplined savers and have reached financial independence. This means that work is even less about the pay. You can take it or leave it at any time. Along with this has been a work/home life balance through the years. While I appreciate simple pleasures, work has allowed our family to travel many places and enjoy many experiences we could never have otherwise afforded. You seem to enjoy wildlife up close - I would encourage you to visit the Galapagos islands on a small boat and tour both the islands and the sea (scuba), or the Serengeti in January - you've never seen so much wildlife up close. 
Both of my kids have learned DIY skills during our four years of living in the garage and basement while gutting and renovating our house from top to bottom. The paying-job-part-of-life made that possible. And unlike Jacob Fisker of ERE, we put new shingles on the roof of our house, rather than buy a used vinyl AT&T sign to cover the leaks in an RV roof. 
So from my perspective - life doesn't have to halt for work, and work doesn't have to halt for life.


----------



## Cal (Jun 17, 2009)

I am more curious to know what the actual holdings are. I mean, if it is all in cash or GIC's, depending upon your lifestyle expenses, your concern should be running out of money. When would you like to retire, what % of your income actually gets invested, what are your investment holdings?


----------



## OldPro (Feb 25, 2015)

gJust A Guy, what his money is in today has nothing to do with where it could be tomorrow. If he chose to retire he could sell the house and invest all his equity as he pleases. Again, I don't care how someone invests their money. There is no one right way or any 'you must do this or that' to it. As I said, someone could choose to own and operate a dozen hot dog stands in downtown Toronto and make a living off it. 

Admitting to making assumptions doesn't make any difference, they're still assumptions. I'm not assuming anything when I say the OP can retire now. The operative word is CAN. I'm not suggesting he would want to, only that he CAN. That is based on the simple fact that others have in fact retired on less and therefore proven it is possible. If it's possible then logically the OP can retire. No assumptions, no guessing. I totally disagree with your statement that, "there are indications that the op is not able to retire the way they want using the numbers provided." There are NO indications of that at all, only an assumption being made. If I went from earning $100k to living on $12k, so CAN the OP. That's a fact, not an assumption. Whether the OP wants to or not is of course another question.

Underlying this is another assumption. That assumption is that you need more money to be able to do what you want to do if you retire. That is not necessarily so. There is a saying, 'you can't see there from here', meaning you can only see as far as the horizon from where you are and not beyond it. The same is true of retirement. You can't see how it will work until you are there.

Let's say you want to take a 2 week sailing vacation in the British Virgin Islands. You go online and book it with someone. I go to a friend who owns a sailing school and he PAYS me to go down for 8 weeks as an instructor(I'm qualified obviously) for liveaboard courses. I can do that because I have the time to do it, you don't. What cost you thousands, gets me paid thousands. Not everyone can do that of course but it is only an example of how something may be different when you are retired. I've been paid to sail in France, Norway, Greece and the Caribbean. You don't always need more money to 'retire the way they want'.


In Greece, I ended up living in a fully furnished (luxury by island standards) 2 bedroom apartment on a big property with a swimming pool and surrounded by orchards. In return for 3 hours a day of helping my landlord with maintenance of the property, I lived rent free. I had a girlfriend who taught English and she bought the groceries. Each night in season, I would go to a friends' bar and play pool, have a few drinks and socialize with the tourists. I was paid to do that. Think of it as a kind of undercover public relations job. Keep the tourists happy, let them win at pool, give them advice on where to visit on the island, where to get the best deal on a car rental, etc. and keep them coming back and spending money. Become their local friend, just don't let them know you are getting paid to do it. Not in a 'taking advantage' kind of way, just actually be a friend while they were there. Everyone wins.

One year I made a birthday card for a friend who owned a hotel. It's hard to find English birthday cards on a Greek Island. So I made one using a deskptop publishing program and printed it out. She liked the card and asked if I could design and print menus for the hotel bar and restaurant. I said I supposed I could but I ddn't particularly want to so I quoted her what I thought was a ridiculous price to do it, hoping to discourage her. Next thing you knew, I was in the menu business simply by word of mouth and had more business than I could handle. Fortunately, there is only about a 6 week window at the beginning of the tourist season, when anyone wants new menus. So it paid very well and lasted only a short time each year for the 3 years that I did it. 

I had an investment income of around $20k/year but was living a life that would 'normally' require an income of double that or more. What's more, I was re-investing half of my $20k investment income. I had more money than I needed! Opportunities that you would either not even see or would dismiss as not possible when you are working for a living, happen. But you can't see them from here.

In Scotland(I moved there from Greece and got married), a chance conversation with a guy in a lumber yard ended up in a guy offering to pay me cash to design and sell decks. A relatively new thing in the UK but old news to any Canadian. For 5 years, I would do out on 4-6 pre-qualifed (they had the money to buy) appointments that took up around 8-12 hours per week and with a closing rate of better than 2 out of 3 (I'm a good salesman) I would earn enough cash to pay for 2-3 vacations in Europe each year. We would drive my 1980 Triumph TR7 to the ferry and then enjoy hiking in the Alps of Switzerland or wine tasting in the Alsace region of France for a few weeks at a time.

There is nothing to say you cannot supplement your income in retirement. What I won't do is trade time for less than I think my time is worth. I'm not going to be a 'Walmart greeter' for minimum wage. But if someone will pay me enough or what I get in return for my time is valuable enough to me(like spending a few weeks living on a sailboat or living rent free), then I will trade my time for it. 

Necessity is the mother of invention as they say but it doesn't even have to be necessary, just available to you to take advantage of. Let's suppose you want to drive a nice sports car. You can go out and buy a brand new Ferrari or you can buy a classic sports car for far less and still all the same enjoyment a Ferrari will give you. Decide what you want, then figure out how to do it on LESS money.

Classic sports cars are a favourite retirement idea of mine. Let's face it, cars are just a cost but most people consider them a necessary cost. So the question then becomes how to get the most for the least cost. My answer is classic cars. Some of course cost far more than a new car would but not ALL do. Some look great, are great to drive, even induce envy in others if that matters to you and yet cost LESS than the average new car. So what you want to do is identify which are under-rated and cost less yet still have all the pluses you want. Here's an example but bearing in mind that what appeals to one person may not appeal to another person but the point is you can find something that will appeal to you. http://www.hemmings.com/classifieds/carsforsale/triumph/tr7/1724119.html?refer=blog

Here are some of the pluses to driving a classic car. It will cost less if you do your research and find out what is under-valued compared to others. For example, generally speaking a Triumph TR6 will cost you more on average than a TR7 and yet the TR7 is better engineered. The 6 is simply considered more 'collectible' than the 7 is. If old enough you can plate it for less as a classic. Insurance will cost less. You can do most maintenance yourself if you wish. It not only does not necesarily depreciate in value it may well increase in value over time. Now go back to the 'retire the way they wan't' comment and see how you don't need more money to retire and have what you want. On the road, top down, wind in your hair, etc. etc. doesn't have to cost more money.

OnlyMyOpinion, I agree there are some people for whom their means of earning a living is not 'work'. Some lucky few enjoy great satisfaction and joy from their 'job'. But they are the lucky few, most are not in that category and for most work is 'work'. Getting out of it is the goal and obviously what we are discussing here. 

I disagree with your statement that, "work has allowed our family to travel many places and enjoy many experiences we could never have otherwise afforded." That again is an assumption. As I hope I have demonstrated above, there is more than one way to do what you want to do. your 'work' did not 'allow' you to do something you would 'never have otherwise afforded'. But I understand that you THINK it did. It's only an assumption though. Working for a living didn't allow me to visit Switzerland a dozen times to hike in the Alps. Not working allowed me the time to do it that often. All work(and therefore more money) would 'allow' me to do is stay in more expensive hotels, eat in more expensive restauarants, etc. But it doesn't allow me to go and not working doesn't stop me from going. I just need to figure out how to do it on what income I have. We will be visiting Switzerland again next year. 

Re the Galapagos, I've never had a desire to go there. As noted above, I've done a lot of sailing and all that goes along with that, in many parts of the world including the Pacific. Re the Serengeti, well it's another story but at age 25 I spent a year in Africa crossing from north (Algeria) to south (S. Africa) with a friend and had many adventures along the way including seeing some wildlife up too close and personal.


----------

