# 2040 Retirement



## illions (Jul 27, 2021)

Investing has been a hobby for me since the early 2000's. It started when I had a summer job in front of a computer with literally no work to do. The older gentleman that was managing me spent most of his time on investing forums. That man (and the boredom of the job) was what made me to walk into the nearby bank during lunch one day and open my own trading account. Interest in investing quickly grew to personal finance, and since then, I've been tracking my net worth, first single and then as a family. One of my favourite things to do each month is update my net worth tracker.

While my wife and I are still relatively young, our thoughts have turned to retirement. 2040 is the target year as that’s when my DB pension kicks in without penalty. We’ll be 57 and 51 then. The date could move forward or back, and there’s other things to consider, but at least we have a starting point to plan. Beyond that, no net worth goals, but we have a stretch milestone in mind that would be neat if we are able to meet.

One of the reasons for wanting to retire early is that I have worked with enough older individuals to feel ageism as a real thing. I don’t want to ever be in a position to worry about money as I enter the late stages in my career.

As of the end of August 2021:

Age: 38 M and 32 F
Combined income: $259K
2 young children
Living in the GTA

Cash & Cash Equivalents: $57K
Non-registered: $705K
TFSA: $48K
RRSP: $450K
DB Pension: $204K (for purposes of tracking, this is contributions by me and employer, not the commuted value)
RESP: $47K
Home: $2.629M

Mortgage: $943K

Net worth: $3.195M

Nifty chart tracking the years as a family:










Majority of our investments are in individual companies rather than funds. Nearly two decades of investing and I have had my share of ups and downs. Luckily, much of it was up and not down.

We have $235K of contribution room in our TFSA currently and need to pay back $64K to our HBP. We have considered selling some of the non-registered investments and recontribute to the TFSA, but there would be significant capital gains tax from that. It is unlikely we will be able to contribute to our TFSA otherwise as cashflow for the next few years has been earmarked. During this time, our only savings is in the form of DB Pension contributions, Employee Stock Purchase Plan, increase in home principal from mortgage payments, HBP pay back and employer matched RRSP. I've never calculated it, but this is likely around 15% of our pre-tax income. Edit: turns out it's closer to 35% of pre-tax income including employer portions.

Not buying a home when we were single or when we got married was both good and bad. Good because it gave us the flexibility to move as our family grew without hassle and free up cash for investing. We felt wealthier back then too because of all the liquid assets and cash that we held. Bad because a lot of money is tied up in the house. We've never been big spenders, so our actual quality of life hasn't changed, but every larger purchase has us hesitate more than before. There are reasons for how much house we decided to buy, which we don't regret, but not being able to access that money easily takes away the feeling of wealth.

However, this is our forever home so we have no plans to move and we were lucky to have bought before covid hit. As a leveraged investment, our original down payment has effectively doubled in two years. Downsizing in retirement and when the kids move out is always an option to free up money.

I admit, I was a little hesitant to post this as I don't talk about finances with friends and there are very few posts on the Internet of higher net worth couples with kids.

If people find this journey interesting, I’ll continue to update monthly and answer questions.


----------



## scorpion_ca (Nov 3, 2014)

What is your wife's and your professions? What is your expenses and passive income yearly?


----------



## illions (Jul 27, 2021)

scorpion_ca said:


> What is your wife's and your professions? What is your expenses and passive income yearly?


My wife's a manager in technology consulting. I'm a manager at a government entity doing business analysis type work. 

Our expenses projected for the next year is around $150K, which is basically our net income after employment contributions are taken off. 😮 Roughly 1/3 mortgage, 1/3 day care and schooling, 1/3 everything else. We do have additional expenses not budgeted, like renos, home maintenance, vacations, that we would like to do in the next several years, and selling investments would fund that if needed.

We get about $7K in foreign dividends, but it is DRIPed so we don't consider it income. Other dividends are negligible. My wife gets a yearly bonus which I didn't mention. Last year it was $10K, but normally it is not that high.


----------



## Juggernaut92 (Aug 9, 2020)

illions said:


> Non-registered: $705K


One question from me. Do you have that much in non registered because of some sort of stock options? Would it not be ideal to max out TFSA first?


----------



## peterk (May 16, 2010)

On one hand, it would seem you might fit the profile of a typical high income, high spending "house poor" family, which would usually by followed by the standard advice that you're in a risky situation, need to cut spending, 1 job loss could ruin you, etc. Though you already say you're not "big spenders", so $150k/year is a one-off for next year and you usually spend far less?

On the other hand, you've seemed to amass a huge wealth already, and have put $1M down on a $2M home, and still have mega cash and investments (I assume you aren't just in cash and "cash equivalents" means stocks to you??)

What is your mortgage amortization? Really I don't know why your retirement goal is 2040 and 57. It seems clear you can do it much sooner than that. As soon as the mortgage is paid off out of your incomes and your housing and child care expenses drop dramatically, what would stop you? You'll have $2M in investable assets in another 10 years easily, plus a small deferred pension or LIRA to kick in later on if you retire early in your late 40s. Surely 1 of you can stop working, if not both, as soon as the mortgage is paid.


----------



## illions (Jul 27, 2021)

Juggernaut92 said:


> One question from me. Do you have that much in non registered because of some sort of stock options? Would it not be ideal to max out TFSA first?


It's shares in the company my wife is employed at currently, but not stock options. Some of the shares have been held for about 15 years now from when I was there. I've always seen the company as a value play and it has had continuous growth since then so it's always been a no brainer to buy as much as possible since there's a discount. Being employed and holding shares in the same company has not been a concern so far. 2008 people were being laid off fast, but everything scaled back up with new employees as the markets recovered.

We sold about 25% of the company stock to buy our house. It was tax advantageous at the time as my wife was on mat leave. The TFSA also got completely emptied. As our expenses are high right now, the only way to free up money to contribute to the TFSA is to sell some of the company stock, but that would mean high capital gains tax. But our taxes won't get any lower until we stop working, so it's either sell some now, or believing the company will continue to rise until retirement and sell then.

This is what I've been thinking about this year. I'm leaning towards selling just enough to not move up to the next marginal tax rate to begin refilling the TFSA.


----------



## damian13ster (Apr 19, 2021)

Having both employment income and savings tied to fortunes of one company is definitely a case of concern. Sound like you have enough assets elsewhere though so should be all good.

Honestly, it is kind of hard to advise since our life situations and expense are completely different. I would retire on 1/5th of what you got without any stress at all.
Only thing is I would suggest higher diversification. You don't get wealthy by diversifying, but you also don't get poor. You are already wealthy so taking some risk off the table would be advisable


----------



## illions (Jul 27, 2021)

peterk said:


> On one hand, it would seem you might fit the profile of a typical high income, high spending "house poor" family, which would usually by followed by the standard advice that you're in a risky situation, need to cut spending, 1 job loss could ruin you, etc. Though you already say you're not "big spenders", so $150k/year is a one-off for next year and you usually spend far less?
> 
> On the other hand, you've seemed to amass a huge wealth already, and have put $1M down on a $2M home, and still have mega cash and investments (I assume you aren't just in cash and "cash equivalents" means stocks to you??)
> 
> What is your mortgage amortization? Really I don't know why your retirement goal is 2040 and 57. It seems clear you can do it much sooner than that. As soon as the mortgage is paid off out of your incomes and your housing and child care expenses drop dramatically, what would stop you? You'll have $2M in investable assets in another 10 years easily, plus a small deferred pension or LIRA to kick in later on if you retire early in your late 40s. Surely 1 of you can stop working, if not both, as soon as the mortgage is paid.


It's funny, because "house poor" is a term I've used recently to describe how it feels right now to my wife. When we rented, we felt like we could buy anything. The mortgage interest + property tax now is not much more than what it would cost to rent. Of course, it doesn't take maintenance into account. The value of the house has also appreciated since purchasing. But can you really be considered house poor when you have investments to draw from?

Our house expenses are under the recommended 35% of income. I mentioned, a third of the $150k/yr is childcare and schooling. We made a recent decision to send one kid, and possibly the other when the time comes, to a private school. Likely, a few years. It's definitely not cheap. The way we see it is that if we have the means, we should give our kids (arguably) the best foundation possible. We don't wastefully spend, but where we feel it's worth it and adds to quality of life, we do.

Our mortgage amortization is 25 years, which puts it at 2043, 3 years after "retirement". I would like to have these dates align so that retirement is debt-free. Depending on where mortgage rates go, this may happen soon or near the end.

I have just started thinking about retirement, so only beginning to learn about decumulation and retirement planning. Up until this point in life, it has been just make sure there's enough money for retirement. But we have never defined what enough means to us.

I believe my pension has a bridge that is only paid out if I retire with my employer, so I would be leaving money on the table if I don't retire with them. But one of us retiring first is something we haven't thought about. Ideally it'd be me but there's no way my wife will work if I'm not. 😆


----------



## Juggernaut92 (Aug 9, 2020)

illions said:


> It's shares in the company my wife is employed at currently, but not stock options


What would be the difference between a company that gives out shares at a discount vs stock options?


----------



## illions (Jul 27, 2021)

damian13ster said:


> Having both employment income and savings tied to fortunes of one company is definitely a case of concern. Sound like you have enough assets elsewhere though so should be all good.
> 
> Honestly, it is kind of hard to advise since our life situations and expense are completely different. I would retire on 1/5th of what you got without any stress at all.
> Only thing is I would suggest higher diversification. You don't get wealthy by diversifying, but you also don't get poor. You are already wealthy so taking some risk off the table would be advisable


I agree with everything you said. Employment and savings tied together is a risk. I don't think I would be of the same mindset to hold long term if the industry was something like retail or oil and gas. But I see the risk of an implosion like an Enron or a Worldcom as a very low chance. While my wife would not be considered an insider, she at least has some insight into how things are doing.

Actually, the one thing I don't agree with you is that you can't advise because your goals and circumstances are different. I've only been called wealthy in the thread. Outside of this, my net worth is unknown to anyone and I'm always reading and considering the advice of everyone. Except the "I am a software engineer working for one of the FAANGs making $600K/yr in total compensation, can I retire at 35?" folks. Those guys won the lottery as far as I'm concerned.

I feel like I can take greater risk because I have a DB pension. We likely could live on that alone once the mortgage and kids are gone. Putting the money into investments is the best move, I believe. If I ever lost my job, my investment style would change. I am planning to diversify away from the company stock so money can be put into the TFSA.


----------



## illions (Jul 27, 2021)

peterk said:


> On the other hand, you've seemed to amass a huge wealth already, and have put $1M down on a $2M home, and still have mega cash and investments (I assume you aren't just in cash and "cash equivalents" means stocks to you??)


Realized I didn't answer this. I consider cash equivalents things that can easily be converted to cash. Things like foreign currencies I never converted back to CAD after vacations, 2 oz of gold we got for a wedding gift (would it be bad if I actually sold this?), about $2K in gift cards/store credit (no I'm not the guy pretending to be the CRA), almost $9K in loyalty/reward points (used to travel a lot from work, have had difficulty spending it the past while for obvious reasons), $1K in NFT/crypto. Tracking the value of this stuff reminds me when points are expiring and to spend gift cards when I visit those stores.

Edit: also, reason why there was so much cash up till Q3 2019 was that for many years we held a lot of straight cash in HISAs as it was our house deposit. Little did we know how many years we would end up having it as cash (and many years where before that when I was single) waiting for the right time to buy.


----------



## illions (Jul 27, 2021)

Juggernaut92 said:


> What would be the difference between a company that gives out shares at a discount vs stock options?


I can't speak to stock options any better than what you can google, but with ESPP, public companies often allow for employees to purchase shares in the company at set times during the year up to a certain percentage of your income. They will offer a discount on this, like 15% off the market price on the purchase day. That 15% discount is treated as a taxable benefit on your T4. So it's like getting a bonus. Once the shares are deposited in your account, you are free to sell whenever. Some people sell immediately to lock in that extra 15%. If your company ever offers this, definitely buy as much as you can if you don't think you can get a better guaranteed ROI elsewhere. Sell right away if you don't believe it is a good investment. Otherwise it's money you are leaving on the table.


----------



## bigmoneytalks (Oct 3, 2014)

I have something similar...RSUs. over the years, the company has done really well but then my RSUs became 40 percent of my total portfolio. It was a hard decision (I am on the highest bracket -54 percent tax bracket) bit sold most of it so I maintain only 10 percent of my total portfolio. It was painful but it was the right choice. Stock has dropped 20 percent since then and who knows where the stock will be in the future. I did it to be more diversified....and not be too tied down to one company.

Also ..I tend to switch jobs every 4-5 years...and yes , I am in tech too.


----------



## james4beach (Nov 15, 2012)

I have always dumped RSUs and other company stock as fast as I can get my finger on the 'sell' button.



bigmoneytalks said:


> Also ..I tend to switch jobs every 4-5 years...and yes , I am in tech too.


Me too. Jobs don't seem to last very long in tech. In my field, if someone stays at a company for 5 years, that's impressive.


----------



## off.by.10 (Mar 16, 2014)

illions said:


> I agree with everything you said. Employment and savings tied together is a risk. I don't think I would be of the same mindset to hold long term if the industry was something like retail or oil and gas. But I see the risk of an implosion like an Enron or a Worldcom as a very low chance. While my wife would not be considered an insider, she at least has some insight into how things are doing.


Still, with this and the fact that you have a lot of unused TFSA room, I think it could make sense to take the tax hit on some of those stocks and reinvest in something else inside the TFSA. You should at least run some numbers on "pay tax now and invest in TFSA" vs "invest in TFSA several years later". Make sure to consider the tax you'll eventually pay on those stocks anyway. Looking only at the big tax hit you'd take now is myopic.


----------



## bigmoneytalks (Oct 3, 2014)

james4beach said:


> I have always dumped RSUs and other company stock as fast as I can get my finger on the 'sell' button.
> 
> 
> 
> Me too. Jobs don't seem to last very long in tech. In my field, if someone stays at a company for 5 years, that's impressive.


I usually stay away from hiring people who have been in the same tech company for more than 10 years. You have to move around in this fast pace industry. Those who stick around ,don't bring fresh ideas or perspectives. That's just in my experience...


----------



## illions (Jul 27, 2021)

off.by.10 said:


> Still, with this and the fact that you have a lot of unused TFSA room, I think it could make sense to take the tax hit on some of those stocks and reinvest in something else inside the TFSA. You should at least run some numbers on "pay tax now and invest in TFSA" vs "invest in TFSA several years later". Make sure to consider the tax you'll eventually pay on those stocks anyway. Looking only at the big tax hit you'd take now is myopic.


Yeah, I'm working on doing the math and doing some this year and some next. Likely my cap gains tax rate won't be that much lower in retirement so really the benefits aren't there but the risks are. Filling up the TFSA, setting aside some for taxes, and some to cover some of our extra expenses is the logical thing to do.


----------



## illions (Jul 27, 2021)

bigmoneytalks said:


> I usually stay away from hiring people who have been in the same tech company for more than 10 years. You have to move around in this fast pace industry. Those who stick around ,don't bring fresh ideas or perspectives. That's just in my experience...


How do you feel about hiring someone 50+ in tech? Is there a perception that older folks can't contribute as well or are asking for too much salary?


----------



## off.by.10 (Mar 16, 2014)

illions said:


> How do you feel about hiring someone 50+ in tech? Is there a perception that older folks can't contribute as well or are asking for too much salary?


It probably depends which part of tech you're in. You could either have accumulated valuable expertise and insight into difficult problems. Or now have an obsolete skillset.

To put it another way: someone who's really good will probably become more valuable with age, provided they can find similar work. Someone's who's just average, likely the opposite.


----------



## bigmoneytalks (Oct 3, 2014)

illions said:


> How do you feel about hiring someone 50+ in tech? Is there a perception that older folks can't contribute as well or are asking for too much salary?


No problem hiring people in their 50s. It's not an age thing. People who work for several different companies over their careers, those people are valuable and those people might be in their 50s. Why? They are adaptable , they like change and the bring ideas from different companies..all things I would consider as a hiring manager. valuable especially in the start up scene.


----------



## illions (Jul 27, 2021)

Alright, first update! September started off pretty good in the stock market. Then things peaked and began to look real ugly. September is historically a good month for real estate and our home’s price increased just enough to eek out a positive change in net worth this month. This was actually surprising given how down our portfolio was for the month. I use TRREB’s HPI for our area to calculate home price changes. It’s a far from perfect measure, but it does the job.


*Last Month*​*This Month*​*Change %*​*Cash & Cash Equivalents*$57,000​$58,000​+1.8%​*Non-Registered*$705,000​$672,000​-4.7%​*TFSA*$48,000​$43,000​-10.4%​*RRSP*$450,000​$420,000​-6.7%​*DB Pension*$204,000​$207,000​+1.5%​*RESP*$47,000​$44,000​-6.4%​*Home (net of mortgage)*$1,685,000​$1,756,000​+4.2%​*TOTAL**$3,197,000*​*$3,200,000*​*+0.1%*​

We made the decision to hire a housecleaner. I have always been of the mindset of not paying someone to do something you can easily do yourself. But it frees up time and takes away a stressor for my wife and me. The housecleaner comes in every two weeks for four hours and does some of the more laborious cleaning.

We own two cars, but they’re not included in our net worth. We’ve recently been thinking about selling one of them because it has pretty much been sitting in the driveway unused. It’s 11 years old and worth about $4-5k. While that’s a good sum of money, having never sold a car privately before, it seems like a huge hassle to get top dollar. Selling to a dealership is the obvious alternative for less money, but then maybe just keeping the car around just in case might make sense.

October is looking like a repeat of September on the markets so far so not expecting a positive change for this month. Not planning to make any major investment moves. Feb 2020 I thought I was a genius selling some things right before the pandemic crash. Didn’t buy back in till much later in the recovery. So this time taking a wait and see approach.


----------



## illions (Jul 27, 2021)

End of October update:


Asset*Last Month**This Month**Change %*Cash & Cash Equivalents$58,000$61,000+5.2%Non-Registered$672,000$737,000+9.7%TFSA$43,000$42,000-2.3%RRSP$420,000$431,000+2.6%DB Pension$207,000$209,000+1.0%RESP$44,000$45,000+2.3%Home (net of mortgage)$1,756,000$1,869,000+6.4%*TOTAL**$3,200,000**$3,394,000**+6.1%*

Surprising gains this month. This was the biggest monthly dollar gain for us, driven by a combination of stock and real estate gains. What amazes me is our first million that we gained together took 60 months. The last one took 10 months. The roaring 20's are back, baby! Hopefully it ends differently this time.

It's only a few days into November and already down quite a bit due to one stock and not so great quarterly results. I learned at a young age to stomach losses. I remember the third stock I bought was a pharmaceutical that had a bad trial for a promising drug which had the company plunge 50% in one day. I was down $800 which was a big percentage of my portfolio. Since then, there's been a lot of bad days over the last 20 years and I learned that portfolios recover. 

On the brighter side of things, wife will hopefully get a salary bump and bonus soon which will help with cashflow a bit. Fingers crossed.


----------



## Walksing (Oct 16, 2012)

10 months 1 million! Wa, wonder if you can share how you run your investment to reach such impressive result, thanks !


----------



## illions (Jul 27, 2021)

Walksing said:


> 10 months 1 million! Wa, wonder if you can share how you run your investment to reach such impressive result, thanks !


I think our results come form the fact that we aren’t very diversified in our investments. That and a stock and real estate market that's on an insane bull run. We have nearly 60% of our investments in 1 stock. Conventional wisdom would consider this risky, especially with the amount of money we're talking about here. But it’s in a growth stock that has had steady gains over the 15 years we've held it and continues to look like a solid investment. It's gained about $200K in the last 10 months.

Another $200K is from other investments. Our second largest stock holding is about 12% of our portfolio and it has also experienced some big gains. But this one tanked recently and it’s taken a big bite out of November but still up overall. During the last 10 months, I bought leap calls in a stock that I expected to slowly recover as the covid cases dropped, but it ended up turning into a meme stock. Probably one of the luckiest investments I've made.

In general though, I follow Buffett's investing philosophy. Buy good companies that are undervalued or are growth companies or in growth sectors and just hold forever. I'm not much of a fan of diversifying for the sake of diversifying. But we do have about 11% of our investments in mutual funds.

Our house is responsible for the other $600K when you factor in the decrease of mortgage debt. We bought our first home just before the pandemic. Who would have thought so many people would want to live in the burbs all of a sudden? Timing of when we bought the house was strategic and we bought as prices were consoldating and starting to climb.

That's about it. Not sure if you can really learn anything from me. "Everyone's a genius in a bull market."


----------



## illions (Jul 27, 2021)

November 2021 Update


*October 2021*​*November 2021*​*Change %*​Cash & Cash Equivalents$61,000​$63,000​+3.3%​Non-Registered$737,000​$769,000​+4.3%​TFSA$42,000​$30,000​-28.6%​RRSP$431,000​$379,000​-12.1%​DB Pension$209,000​$211,000​1.0%​RESP$45,000​$40,000​-11.1%​Home$2,807,000​$2,899,000​+5.0%​Mortgage-$938,000​-$936,000​-0.2%​*TOTAL*$3,394,000​*$3,455,000*​*1.8%*​

I separated out the home and mortgage numbers for the post. House prices continue to go up. It’s the only reason why our net worth is up this month instead of down. Because of the house, it’s now the 13th month we’ve had consecutive net worth gains, a new record, which is kinda neat. The house price doesn’t mean much at this point, just makes the number look nice. I have considered using a more localized neighbourhood mean but the houses here vary so much that it can be skewed based on what sells.

November was definitely a heavily negative month for our investments. We made a small TFSA contribution that's still sitting as cash, with part of the bonus my wife received, but you wouldn’t know it from the change in balance.

One good thing is that our combined yearly employment will be increasing for December, courtesy of my wife. That will help with the cashflow.

I’ve brought up the idea to my wife that we could both retire today with some big changes to lifestyle. She’s totally for it. She’s always wanted to be a stay at home mom. I could too, these last 21 months of COVID have really changed what should take priority in these years of our lives. On the other hand, we do find value in the things that the money affords us, so it is unlikely that retirement will happen tomorrow. 2040 is considered the latest date for retirement as it is tied to the date we'd start collecting on my early pension.


----------



## nobleea (Oct 11, 2013)

I don't think you can accurately estimate the monthly increase in your house value. If you want to re-calibrate every year based on comp sales or similar, that's probably fine, but you have to do it both ways when the market turns south. Many people will keep the value at their purchase price (maybe + capital improvements over time). As you've mentioned if the house value is your predominant source of NW gain, it may hide issues in the other investments.


----------



## peterk (May 16, 2010)

illions said:


> I’ve brought up the idea to my wife that we could both retire today with some big changes to lifestyle. She’s totally for it. She’s always wanted to be a stay at home mom. I could too, these last 21 months of COVID have really changed what should take priority in these years of our lives.


Nice - Yes have you calculated out your wife's true marginal tax rate of money gone out the door for her to work?

Consider the daycare of ~20% of income, consider the child benefit clawback (if you even get anything) of 5.7%, consider the extra transportation and work expenses, consider the CPP contributions wasted as pure tax (also 5.7%, coincidentally) since your wife is throwing away CPP dropout years with children <7 years old, consider the basic personal amount from her tax return that transfers to you if her income is 0.

We're just on our second child now, wife has stopped working. Won't go back to work after a year like everyone expects... Maybe she'll think about working again in the future, but because of all the above listed things, it would have to be a pretty good gig to make it worthwhile.


----------



## illions (Jul 27, 2021)

nobleea said:


> I don't think you can accurately estimate the monthly increase in your house value. If you want to re-calibrate every year based on comp sales or similar, that's probably fine, but you have to do it both ways when the market turns south. Many people will keep the value at their purchase price (maybe + capital improvements over time). As you've mentioned if the house value is your predominant source of NW gain, it may hide issues in the other investments.


Yeah there's no accurate way to do it. I like HPI because it's easy to get every month and gives me something to write down. IMO better than purchase price or looking for comps. If for instance I got a max HELOC, with the prices having moved so high, valuing the house at purchase price would throw things off.

I just did some quick math and both house and investments have gained roughly the same percentage-wise in the last year. Dollar-wise, the house has gained more.

I'm the kind of person that looks at their portfolio many multiple times a trading day so have a good tab on how things are going. Adds some excitement (up or down) to an otherwise regular workday.


----------



## illions (Jul 27, 2021)

peterk said:


> Nice - Yes have you calculated out your wife's true marginal tax rate of money gone out the door for her to work?
> 
> Consider the daycare of ~20% of income, consider the child benefit clawback (if you even get anything) of 5.7%, consider the extra transportation and work expenses, consider the CPP contributions wasted as pure tax (also 5.7%, coincidentally) since your wife is throwing away CPP dropout years with children <7 years old, consider the basic personal amount from her tax return that transfers to you if her income is 0.
> 
> We're just on our second child now, wife has stopped working. Won't go back to work after a year like everyone expects... Maybe she'll think about working again in the future, but because of all the above listed things, it would have to be a pretty good gig to make it worthwhile.


Wow, good for you and your wife to make that decision. When I was the same age as my oldest now, my mom did home daycare for a few kids, so she was always there to greet me after I got home from school. I've always hoped that my kids could experience the same, to have at least a parent at home when they got home.

Now with COVID and WFH, my wife and I are home, but often we are in meetings and can’t give the kids the attention we think they deserve. While my wife wants to be a SAHM, she also wants to move up in her career once the kids are older, but that means she needs to keep working, so a bit of a conflict there.

Ultimately, what bodes well is we are both aligned to FIRE and not work till the end. In 2040 we'll be 57 and 51 and kids will have started their careers. We'll see how early we can bring up the timelines.


----------



## Mechanic (Oct 29, 2013)

After reading this thread, I would suspect that your wife could "retire" and be a SAHM ? Or at least work part-time from home ? She could look after the home and the kids and you would save money on daycare and the hose cleaning service. Tax situation would also improve with only one full time income. You could keep your gov't job and build your pension and wealth through investments. You could probably easily retire in 10 years or less.


----------



## illions (Jul 27, 2021)

Mechanic said:


> After reading this thread, I would suspect that your wife could "retire" and be a SAHM ? Or at least work part-time from home ? She could look after the home and the kids and you would save money on daycare and the hose cleaning service. Tax situation would also improve with only one full time income. You could keep your gov't job and build your pension and wealth through investments. You could probably easily retire in 10 years or less.


My wife has the higher income between us and also the higher earning potential. My income is no slouch but it wouldn't be able to support the expenses as they are right now. Only 1 kid is in daycare. We actually got rid of the house cleaning service as they weren't doing a great job. Now it's back to me doing the toilets! Takes about 10 min each but it stays clean for much longer than when the cleaners did it.

I like all the advice on how we could make SAH work. It's making me look at the numbers more. It may not be tomorrow or even the next couple years, but we want to FIRE. I think we're what's considered as coast FIRE currently? To FIRE right now, we need to make some permanent changes to our lifestyle which we aren't ready for just yet.


----------



## illions (Jul 27, 2021)

*December 2021 Update*

What an interesting year 2002 this has been. A lot of craziness with assets going in both directions. Net upwards for us, so that’s always good.











*Dec 2020**Nov 2021**Dec 2021**Monthly % Change**Yearly % Change*Cash & Cash Equivalents$40,000​$63,000​*$62,000 *​-1.6%​55.0%​Non-Registered$540,000​$769,000​*$882,000 *​14.7%​63.3%​TFSA$26,000​$30,000​*$26,000 *​-13.3%​0.0%​RRSP$319,000​$379,000​*$376,000 *​-0.8%​17.9%​DB Pension$186,000​$211,000​*$213,000 *​0.9%​14.5%​RESP$34,000​$40,000​*$40,000 *​0.0%​17.6%​Home$2,224,000​$2,899,000​*$2,991,000 *​3.2%​34.5%​Mortgage-$964,000​-$936,000​*-$933,000*​-0.3%​-3.2%​TOTAL$2,405,000​$3,456,000​*$3,656,000 *​5.8%​52.0%​

There’s rounding so the total doesn’t add up exactly. 


*The Good*

My wife received a sizeable raise along with a promotion in December. Our combined income is now $287,000. While the raise was hoped for, it never played a role in our financial planning. Her salary increase will improve our cashflow so we should be able to funnel a few dollars into the TFSA this year.

Our non-registered accounts has increased quite a bit in the last few months which is of course nice. But it’s already showing some pullback for January. I do expect it to continue going up in the long term though, at what speed, who knows?

Overall the Non-Reg, TFSA, RRSP and RESP together beat the 26.9% of S&P 500 index so that’s good. One caveat is that the % change includes contributions into the accounts, but it’s a good enough estimate for my purposes.

Home prices keep going up somehow as everyone knows. Ultimately the investment accounts that matter to retirement at this point.

Net worth excluding house and mortgage: *$1,599,000*

Excluding DB pension*: $1,386,000

The Bad*

I’ve mentioned this before, our RRSP and TFSA has a large percentage in growth companies and they have been pummelled the last few months. At the beginning of 2021 the investments paid off handsomely. The last few months have seen some losses that have diminished the gains. I don’t really have concerns on this front despite the losses, but it did put a damper on things to close off the year.


*The Ugly*

TFSA was down $15K for the year. It looks flat in the table above because there was also a $15K contribution. So not great when you look at it in isolation.

1.8 years of pandemic has reared some of the really bad aspects of work. Our department has had huge turnover, something that isn’t seen in a government organization. Poor work culture and toxicity has caused a down spiral of morale. Some people just have a tough time adopting to WFH. Things have been stressful and not in my control for a long time now and mentally I’m drained and uninspired to continue. I’m considering my options and seeing what’s out there. Not looking for a salary increase, just will be happy to work somewhere with a better culture. Having said that, I would expect a higher salary in private for a number of reasons. If I lose my pension, it would for sure change retirement plans and the mix of investments we own.


*Looking Forward*

We should have more cashflow this year, I’m waiting for the first paystub of the year so I have a better estimate of the net salary this year. Extra money will be funnelled into the TFSA. We have $240K in contribution room as of Jan 1, 2022. It will take some years to fill. The only way to do so would be selling some non-registered stock. Will think more about selling some in 2022.

January we’ll be depositing money into the TFSA, RESP and RRSP for HBP payback. Partly the reason why we have so much cash reserve right now.

Possibly earmark $20-$30K for renovations and home maintenance.

Which such a strong 2021, I full expect 2022 to be more tempered in our investments.

18.3 more (but hopefully less) years until retirement!


----------



## illions (Jul 27, 2021)

*End of 2022 Update*

Happy new year? Well it has been quite the year. Felt like I needed to focus on life more so didn’t make any public updates.

I took stress leave from work in May which with full pay. I let my mental health suffer for far too long before doing something about it. In August, I found new work while I was on stress leave. Made it my new job to find a new job while on leave. New job also has a pension and I merged my former pension with it. I took a 2% pay cut and vacation went from 5 to 4 weeks, but I have to work less hours a week, work environment is better and it’s less stress. Plan for now is to stay here for the next 17 years until retirement.











*Dec 2021*​*Dec 2022*​*Yearly % Change*​Cash & Cash Equivalents$62,000​*$68,000*​9.7%​Non-Registered$882,000​*$634,000*​-28.1%​TFSA$26,000​*$14,000*​-46.2%​RRSP$376,000​*$318,000*​-15.4%​DB Pension$213,000​*$241,000*​13.1%​RESP$40,000​*$39,000*​-2.5%​Principal Residence$2,991,000​*$2,610,000*​-12.7%​Mortgage-$933,000​*-$902,000*​-3.3%​*TOTAL*$3,657,000​*$3,022,000*​-17.3%​
Note: forgot some amounts in 2021 which changed the total from last year’s post.

Our combined salary has grown a little from $287K to $298K in a year. Not enough to keep up with inflation and just shy of a big milestone.

Last year, I posted about selling some of the company stock that my wife and I both own since it makes up such a large part of our portfolio. It’s down about 30% YoY now. Not horrible in this market, but not great. I do believe it will continue to do better than the S&P 500 once things recover as it has been for the last 20 years. On the other hand, if my wife were to be promoted again, her position would require her owning x% of her salary in stock, so it may be prudent not to sell her cheaply purchased shares. Her plan is to keep working at the same place until she retires.

Net worth dropped this year, surprise, surprise! Sold off a lot of holdings in Jan and May of this year, but by May, most of the losses were already baked in. We had a few very risky investments which were held on for too long causing a slide in all our accounts, but most noticeably in our TFSA. The slide began in August of 2021, captured my old posts, so by the time I sold in May, it had already taken on significant losses. Have had some short term plays since then and have bought back some things I felt were oversold, but have basically been just watching the markets.

We peaked in March at $3.85M thanks to a quick run up in the value of our home. Also thanks to the housing market our net worth quickly dropped right after. Net worth was down $963K from March to September! Things seem to have stabilized since then but only time will tell.

We didn’t do any of the renovations I talked about last year after all. With markets getting shaky and a recession looming, we avoided spending unnecessarily.

Having said that, our expenses this year remain relatively static at about $153K. We should have about $30K cash surplus this year. We still have $248K of contribution room remaining in our TFSA. We are planning to do the house maintenance and renovations which we deferred this year. It will be about $35K, which will negate any surplus. We may even spend more since the government is offering grants and no interest loans for certain home improvements. We would like to take advantage of that if possible.

Mortgage comes up for renewal in about 21 months. Hopefully interest rates will have gone down by then. We are on a fixed rate so have come out unscathed this year. We may consider a lump sum payment before renewal depending on how things are.

I was provided with a commuted value for my pension since I was leaving my previous employer. This made me realize I have valued the pension too high in my calculations. But without a consistent way to calculate the commuted value, I can’t determine the pension’s worth each month. For now I will continue to use my current formula (my contributions + employer’s) but may recalibrate my historic numbers, to just what I contribute as it seems like I’m over inflating the number when I include the employer’s.

17.3 more years until retirement!


----------



## londoncalling (Sep 17, 2011)

Congratulations on the change in jobs. It's nice to see salary increases and earnings go up each year but never at the expense of one's sanity. losing a week of holidays sucks but if the rest of the weeks at work are more enjoyable it is a great tradeoff. Cheers


----------



## Johnny199r (May 20, 2014)

Why don't you utilize your TFSA?


----------



## jlunfirst (1 mo ago)

Johnny199r said:


> Why don't you utilize your TFSA?


I agree, it looks abit wierd.


----------



## illions (Jul 27, 2021)

londoncalling said:


> Congratulations on the change in jobs. It's nice to see salary increases and earnings go up each year but never at the expense of one's sanity. losing a week of holidays sucks but if the rest of the weeks at work are more enjoyable it is a great tradeoff. Cheers


This totally. The new job has a lot more flexibility during the work day which makes up for things. Also an understanding boss. My last employer really had me utilized near 100% during the week, or at least stressing out when I had extra time and that caused significant burnout.


----------



## illions (Jul 27, 2021)

Johnny199r said:


> Why don't you utilize your TFSA?


Yes, this is a legit question and I've been asked this before IIRC. Why it's pretty much empty now is because we cleared it out when we bought our house 3 years ago. We haven't filled it up again for two reasons. First is that after putting in money to RESP, RRSP and Pension, there's little to no spare cash remaining each year. The only way to get more cash is to lower our expenses, which should happen in a few years once our kids begin to go to public school.

Second reason, which is complicated but probably seemingly insane and not prudent: 100% of our money in the non-registered account is in a company stock that is also my wife's current employer. Super risky sounding isn't it? Especially in a climate of possible recession and job losses.

We both hold some in our individual accounts as I used to work there too. We could sell some to fill up the TFSA. There would be significant tax that we'd need to pay at a high marginal tax rate and a low ACB.

I admit I haven't done the math on this to calculate tax savings by selling now and investing it tax-free in a TFSA instead. I also believe the stock will recover stronger than the S&P500 in the next few years, which is why it's still being held. So the TFSA remains empty.


----------



## Forebiz (May 31, 2018)

Sorry to see it was a bad year but it's nice to see some similar misery when it comes to net worth decreasing over the year (misery loves company). Diversify if you can.


----------



## bigmoneytalks (Oct 3, 2014)

900k mortgage. I wouldn't be able to sleep at night ... Also I would maximize your tax deferral as much you can resp and TFSA lots of room there to fill.


----------



## peterk (May 16, 2010)

Just a curiosity - I don't see how your DB pension value rose year-over-year with the interest rate increases... Wherever does that $241,000 come from compared to the year before? Get ready for it to plunge at your next statement update when the new interest rates recalculate your CV. Mine went from $149,000 Dec 21 to $114,000 Dec 22.

Not that it matters at all, since you said you're long haulers and planning to stay in your currents jobs until retirement.

EDIT: Oops - I see you sorta answered that in your last paragraph


----------



## illions (Jul 27, 2021)

peterk said:


> Just a curiosity - I don't see how your DB pension value rose year-over-year with the interest rate increases... Wherever does that $241,000 come from compared to the year before? Get ready for it to plunge at your next statement update when the new interest rates recalculate your CV. Mine went from $149,000 Dec 21 to $114,000 Dec 22.
> 
> Not that it matters at all, since you said you're long haulers and planning to stay in your currents jobs until retirement.
> 
> EDIT: Oops - I see you sorta answered that in your last paragraph


Yes, I admit I'm not tracking it accurately at all. When I first got my DB ~11 year ago, I didn't know what CV was and just added my contributions and employer contributions, so it's kinda stuck. I'd love to recalculate it if I can.

I guess yours provides you a report on the CV regularly? The best I have is a yearly number that tells me my total contribution + interest.


----------



## illions (Jul 27, 2021)

Forebiz said:


> Sorry to see it was a bad year but it's nice to see some similar misery when it comes to net worth decreasing over the year (misery loves company). Diversify if you can.


Haha we're all just riding the coat tails of the market makers. Some of us, e.g. me, are also the makers of our own misery at times.


----------



## illions (Jul 27, 2021)

bigmoneytalks said:


> 900k mortgage. I wouldn't be able to sleep at night ... Also I would maximize your tax deferral as much you can resp and TFSA lots of room there to fill.


Haha, well it started at $1mil. We bought as much house as we were comfortable. I do see my principle residence as an investment of sorts. If needed or desired at retirement, we could downsize.

We do $5K for our 2 kids to max the government grants for RESP. While we don't max our RRSPs, wife contributes 6% + 6% company matching, and I contribute to a DB pension.


----------



## bigmoneytalks (Oct 3, 2014)

illions said:


> Haha, well it started at $1mil. We bought as much house as we were comfortable. I do see my principle residence as an investment of sorts. If needed or desired at retirement, we could downsize.
> 
> We do $5K for our 2 kids to max the government grants for RESP. While we don't max our RRSPs, wife contributes 6% + 6% company matching, and I contribute to a DB pension.


You're allowed to add more than 5k just there is a lifetime grant of $7200 so leverage the tax deferral as much as possible


----------

