# Retirement Angst..........



## sags

With all the discussion today about retirement and retirement income, or the lack thereof, I think of my grandparents in retirement.

My grandmother never worked, so she only collected the OAS. 

My grandfather collected a small pension from the city and OAS.

CPP hadn't even started yet, so there was no benefit there.

They had saved a small amount in Canada Savings Bonds.

They owned their small home and had no debts, credit cards, cellphones, internet or even cable television. 

Their entertainment consisted of sitting on the front porch chatting with neighbours, working in the garden or workshop and basically puttering around until the news came on. Then they went to bed. I don't think they took a single trip anywhere after retirement, except perhaps a visit or two to one of the Great Lakes beaches.

They were very happy. They were content. They enjoyed their retirement without a lot of pressure or money. My grandfather was ecstatuc to not have to get up on cold winter mornings and trudge off to work.

Today, we need at least a million dollars in the bank, if the financial gurus are correct. 

That is well beyond the means of most Canadians, who will retire on CPP, OAS and a small amount of savings.

It makes me think that maybe it isn't about the money, but the retirement lifestyle we should be considering.

Are we really going to cruise around the world at 70 years of age. If we compiled the million dollars........what would we spend it on?

As a retiree, I can tell you that (if our son, his girlfriend and their 3 year old hadn't returned home) our personal expenses have dropped right down through the floor. Our grocery bill would have gone from 1000 a month to 500. Car insurance from 500 a month to 90. Clothing budget from 1000 a year to nothing. Sports fees from 5000 a year to nothing. Car gas from 200 a month to 40. Taxes from 25000 a year to 4000. Home costs from 2000 a month to 1000.........and on and on.

So why the great angst?

Average Canadians don't need a million dollars. They don't need a huge monthly income.

What they do need is a few dollars more in pensions........perhaps double the CPP............and they would be just fine. 

Fix the problem...........double the benefits for CPP, and have employees/employers pay for it. It wouldn't hurt for the government to put 20 Billion into the fund over the next 4 years........so that it would build for the next 20-30 years.

Offer higher interest rates on Canada Savings Bonds to attract employee investment through automatic payroll withdrawal, and use the money to pay for improved infrastructure projects.

It doesn't have to be as complicated as the government seems to want to make it.

And we Canadians, should reduce our retirement expectations to what is actually going to be the reality.........staying around home enjoying life.


----------



## the-royal-mail

I completely agree and you made a lot of excellent points.

All the stuff we think we need is what's causing us to spend so much money. As well, the high-paced lifestyle of fighting to commute to congested downtown areas and fight each other for parking and an inch of space. All of this costs tremendous amounts of money and is damaging to the financial and personal health of us all. It's a hamster wheel.

As for boosting the CPP, that won't feed the banks their precious fees that allow them to post record profits year after year. It would be easy to boost the CPP, then the bankers don't get the fees they get when they sell us useless mutual funds in RRSPs, PRPs, TFSAs etc. The motivation by the gov't seems clear.

I think many around here will agree when we suggest that living below your means is an excellent thing to strive for. People don't save money anymore. Everyone wants instant gratification, shell games and will mortgage and debt themselves to the sky to get the top-notch lifestyle. Nobody wants to do without.


----------



## sags

I can't help thinking about my uncle.

He is widowed and 86 years old. He still lives in his beautiful big home.

He used to own 2 older Cadillacs but got rid of one.......because he doesn't drive anywhere anyways. He has a lifetime pass to the railroads.......but never uses it.

He has 2 railroad pensions, full CPP and OAS.......He spends 1200 a month out of that to eat out every meal. The rest of the money stays in the bank and keeps building month after month.

His plans for the million dollars plus he has built up?..................He is going to leave it to my dad someday.......who is 82...............lol.

My uncle worked hard for his money, and deserves all the luxuries he wants, but it seems silly for him to have scrimped and saved over all those years to give it away.


----------



## Daniel A.

In general I agree with your take sags.
My grandfather was in the same boat, he golfed once a week and puttered around very content.

Since retiring I'm happy to not set the alarm clock, I do like traveling with the RV though yes fuel costs, but I do have a decent pension.
I plan to spend winters somewhere warm and dry in the future which is very doable.
The government by not making changes to the CPP has done a great disservice to all Canadians. I can't help but wonder what most will do as they approach their golden years on CPP & OAS . It clearly won't cover much and our boomer generation is fast running out of time. I suppose those who have health will continue to work if they can and others will need to find new options.

I did some estimate's on my pension based on age 85 and I will collect 1.2 million worth of pensions. My wife is still working but when she retires in five years she will also have a good pension that will add another 66% .
So between us that's about 2 million over our lives.

Two people could do fine just on my pension. I remember in the seventies and eighties the number of people talking about retiring to the good life.
That dream has worked for me and my wife, some I know have down sized their homes and moved to cheaper area's.

When the majority of folks only have CPP & OAS it won't cover basic costs anywhere.

My grandparents did fine and my parents did fine requiring a small amount of help in later years.


----------



## CanadianCapitalist

@sags: Your comments remind me of actuary Malcolm Hamilton's contention that for most Canadians CPP plus OAS plus modest savings plus a paid off home should be sufficient. I wrote about this a while back and the paper referred in that post is still available.

http://www.canadiancapitalist.com/research-on-financial-circumstances-of-retirees/

Of course, the financial industry has a motive to push for higher savings rates because they can earn fees to manage all those savings. This is not to suggest that we shouldn't save just that those who counsel saving may have an axe to grind.


----------



## Square Root

It 's pretty obvious that in retirement you will only be able to spend up to your means. Many people, and I know some, actually live below their means in retirement. To each their own. I certainly intend on spending up to my means in retirement( certainly with a cushion to cover any unforeseen events). The problem as I see it is that many working people live above their means and therefore don't save enough for retirement and in fact haven't a clue as to how much they might need to support their desired lifestyle. 
So if you want to have a lifestyle spending $X in retirement you better have a plan to get there. I think most of the angst stems from the unsustainable lifestyle while working.


----------



## Young&Ambitious

A couple of points that came to mind while reading this. Companies don't offer pensions like they used to! They are much rarer to come across due to the cost of having one. Many companies have turned to RRSP matching as an alternative. My second thought is of market fluctuations and unpredictibility. For example the stock market crash/Enron incident has put a major dent in many people's retirement plans. I know I would rather over-save for retirement to have that cushion. Not to mention healthcare costs for retired people can be very expensive. An all inclusive nursing home can easily cost upwards of $7k/mo and many people will end up there. If you end up requiring support later in life, it's going to cost you and you better hope you have a nest egg of your own rather than relying on the government to provide.


----------



## Karen

I think we have to remember that we all have different ideas about what constitutes the ideal retirement. Maybe Sags' uncle has the same idea that I do. Unless I have to go into a care home, I fully expect to be able to leave my family a fairly significant estate. My daughters used to lecture me about how I should spend my money and not feel I should save it for them. I replied that I not only have everything I need, I have everything I want, and were they suggesting that I spend my money just for the sake of spending it? I am not cheap; I don't hesitate to spend money on myself if there's something I want, such as the new computer I treated myhself to last year, but it gives me a great deal of pleasure to know I'll have money left for my family.

I saw quite a lot of the world in my younger days, and I'm grateful for that because I'm no longer able to travel very far for health reasons. I have a lovely, mortgage-free house, a 2010 car, retirement allows me lots of time for the reading I love, and I go to concerts when there's something on that interests me; I have many friends whom I meet for lunch or dinner regularly, and I have a wonderful family who include me in their family activities. I'm very content with my life. I realize that many people look forward to a much more exciting retirement, and that's right for them, but I've never been a person who craved excitement and I'm not about to start now!

I sincerely hope I am able to leave my family a substantial inheritance; they deserve it!


----------



## donald

My grandpa retired with a very simple pension from(cnr)I think he retired in the late 80s.Him and my grandma lived and raised 5 children in the same house he past away in (680 sqft)I dont think he ever made more than 8 bucks an hour,drove the same car for his last 25yrs,(pontiac)push cut his grass till the day he died.

He was the happiest guy i knew(he exercised alot)he was such a simple man....He always said his wealth was his health,he had a ton of friends.(he was the guy who gave candy out to everyone,everyone remembers that nieghborhood guy)


I think when one gets older......Money probably means sh$t (as long as you get the basic covered and abit extra)Something tells me its-health,family,friends and simple pleasures....could be wrong thou lol....and im beating out my brians trying to build a million dollars...go figure.


----------



## slacker

Reminds me of a dialogue from the movie Office Space. What would you do with a million dollars?

Peter Gibbons: I would relax... I would sit on my a## all day... I would do nothing.

Lawrence: Well, you don't need a million dollars to do nothing, man. Take a look at my cousin: he's broke, don't do sh##.

If the object is to reduce living standards, then indeed, one doesn't need to save much. If the object is to smooth out income/consumption, then yes, one does need to save a decent amount during earning years.

The OP speaks of doubling CPP contributions like it's easy as a flip of a lightswitch. Doubling up would mean an additional 5% from employer, and 5% from employee. And employers are just going to pass on the cost to employee anyway, so really the burden of "simply doubling CPP contribution" is saving an additional 10% of employment income.

I think most people would have difficulty with a decrease of 10% of their income after deductions.

The problem is stagnating real wages in the last 20 years.

Those with a pension in the public sector or in union shops are, for the time being, shielded from this issue. Almost all pensions are underfunded nowadays. Public pensioners are relatively safe, as their pension burden is being shouldered by tax payers.

Private pensioners will be asked to sacrifice again and again. Pensioners don't rank very high under Canadian bankruptcy laws. See Nortel and GM pensions.

If I have to choose between trusting a company pension will remain solvent 40 years from now, and a portable group RRSP matching? I will choose the group RRSP matching.


----------



## donald

Half of it is the cost of living,if im remembering right my gramps prob paid(had a mortgage)5k for his home(in the 40s)Fast foward to now(60yrs later)Three yrs ago that same house(i know this because my moms side was shocked)sold for 230k and it wasnt even fully reno(d).Think of that spread.


----------



## sags

Inflation and wage stagnation are certainly big factors that are grinding down the middle class, and that may mean we need to reduce our retirement dreams out of practical necessity.

Maybe I am wrong, but I never found CPP contributions to be particularly onerous over the years. I haven't seen actual figures for what the level of increased contributions would be needed to "double" the CPP. Perhaps it would be worthwhile to put the question to the CPPIB and have them provide the amounts they calculate would be needed.......and then people could make an informed decision.

The government could consider putting additional annual lump sums into the fund as well, and let the fund managers use the cash over the next 20-30 years to build it up. The government should be able to do an analysis of the cost of contributing "upfront" money now, versus the increased cost of social programs in the future, if nothing of substance is done.

RRSPs are fine.......for people with discipline and investor ability, but unfortunately the statistics show that most Canadians aren't saving in RRSPs.

Some pensions have failed. The GM pension was not affected, as government loans were used to make up the shortfall, and GM has made additional payments to the fund. At present it is reported to be 80% funded.

Nortel pensioners will be receiving less benefits than promised, and GM or any other DB pension plan could find themselves in the same situation, but while the pensioners are receiving less.........they are receiving something, which isn't perfect but better than nothing.

When DB pension become underfunded, due to poor market performance, it is highly probable that those with RRSPs or DC pension plans are in the similar situation of having their capital reduced.

Has there ever been a DB pension plan that failed, and paid nothing to the pensioners?

I would rather be in the position of having my pension reduced, perhaps even temporarily until fund levels improve, than receiving no pension at all.

A combination of raising the CPP.........and lowering retiree expectations could go a long ways to solving the retirement dilemna we face in the future.


----------



## the-royal-mail

sags said:


> *Inflation and wage stagnation *are certainly big factors that are grinding down the middle class...


As well as *taxes*, fees, fines, levies, premiums and surcharges.


----------



## hboy43

donald said:


> I think when one gets older......Money probably means sh$t (as long as you get the basic covered and abit extra)Something tells me its-health,family,friends and simple pleasures....could be wrong thou lol....and im beating out my brians trying to build a million dollars...go figure.


With my health problems this past year, though not particularly old, I certainly see the merit in your opinion. On my dark days, I tend to think of my dog bounding in the bush, hot on the trail of some turkey with the gall to invade her territory. Or the antics of a 3 year old girl I know. Or the various young people my wife and I gave education funds in the last year. Big screen TVs and fancy cars never cross my mind.

My wife and I do have a long term big spending idea in the form of a sailboat, but on a day to day basis, we buy pretty much nil. Most consumer goods are junk anyhow, like the leather coat I bought at a publically traded retailer that didn't last 48 hours. I was fleeced. Turns out it was made of sheep skin which is nice and soft, but about as strong as wet *** wipe in a blender. I want to assume that material goods are fit for the purpose they were sold for. This is now a false assumption with consumer goods. We have advanced to the point that it is possible to buy a leather coat that cannot survive anything even as challenging as driving to Brantford and walking in and out of my inlaw's house. This highly taxing usage resulted in a puncture and a massive tear. If I had my way, I wouldn't buy anything made more recently than about 1970. My existing, albeit very ratty leather coat which has gone some 15 years punctureless and ripless even though often used during light duty tasks such as felling trees with chainsaws, will be repaired as needed and worn til the day I drop, cosmetics be damned.

Sorry, a rant got into my original point, but it felt good to let off this steam.

hboy43


----------



## Square Root

i agree that money doesn't necessarily buy happiness. But I am sure glad my retirement is well funded and meets my spending goals.


----------



## donald

I often wonder why so many wealthy guys in media and (we all know some personally)in circle we know.Shun all the trappings all of us or the "media" tells us what it should be like and once you arrive(a large trust say)you will do.

Like warren buffet(carlos slim)-he/they could sit on a ocean front beach naked on his own island one week and the next week be in africa doing a safari and the week after that be @ a beautiful mountain side resorts but he doesnt.Instead he lives in the same house(modest)prob drives a modest car and he prob still gets up at the crack of dawn to go to his office and sit with his other wealthy(older) buddy charlie munger pouring over investments.

I know a home-builder who has a large company(he is in his 70s)multi-millionaire and he still gets up every mourning and still(here say)counts the inventory on nails and the ''small,inventory stuff" a man in his position shouldnt be thinking about....Ive always been fascinated and always wonder WHY...I dont think id be like that but maybe when you "get there" it changes.Or your habits are so ingrianed its impossiable to change.


----------



## kcowan

Carlos Slim lives the good life in Mexico with a large guarded compound for his family. He also has several resort properties. But he does go to work every day.

I think Buffet is the exception. Gates has his 10,000+ sq.ft. place on Lake Washington.


----------



## donald

But WHY does carlos slim go to the office?Maybe a touch of "sickness" the guy own 3/4 of mexico and has proven without a doubt he is will go down as one of the greatest capitalist in history.

You would think the guy would venture into other things-He is still (seems)as hungry to take over more companies.....Youd think heis wife would say him enough already lol....But i guess thats why those guys are the 1% who control half the world.....i guess "power" will beat anything....obviously the guy wants absoulte power and domination and not $.


----------



## Charlie

donald said:


> But WHY does carlos slim go to the office?.


He enjoys it. It's what he does. Sitting on a beach would drive him mad. I knew a guy in his 90's who spent all day tracking his portfolio and reviewing investments (he was a finance guy). His daughter summed it up nicely: "that's his garden" she said.


----------



## Jon_Snow

And there are some of us who do indeed need a million dollars (or more) to acheive the retirement we desire.


----------



## Cal

And keep in mind where all of those ads and commercials about retiring with that kind of lifestyle are coming from. The companies that are making money from us investing our retirement money with them.

I am not trying to make them out to be the bad guy, as far too many people have invested too little for their retirment. Just a little perspective.


----------



## Daniel A.

Retirement is a psychological issue for a great number of folks and little is written. Everyone does worry about the money, do I have enough, what will I do, what if I'm wrong and pull the pin, what am I giving up.

Its a very personal decision that involves so much of each area of ones life.
Some can't stand their spouse so would rather keep working.
Some will have no choice but to work as long as possible due to lack of funds.

I've known many who in my opinion could have walked away five years before they did but fear kept them working.
There is a small percentage of people who have no desire to retire and see no point in it.

Having a plan early in life keeps the dream on the stove.
If I look at the changes both physical and emotional in the long road of work life just for me I'm happy that I had a plan and it worked out.

I can't imagine when I was 25 that so much would have changed. Health to me is more important than going to work later in life. Emotionally I was ready to leave work behind and have quality time for me.

Having to live by a schedule is fine to a point I did that for 40 years.
Having kids was fine after all they needed the schedule as well.

Today I don't need to plan a vacation, don't need to be anywhere, go to bed when I want, wake up when I want or when the body tells me.
No rush hour in my world, no office politics, no sitting in meetings, no going out on a cold morning, able to relax in the spring sun and smell the flowers.

Its all about having a choice.


----------



## donald

The older i get the more i realize even in the best of laid out plans they have to crossover to reality,the nature of life.It like the ground can always shift on you or a set of circumstances(you didnt forsee or anticipate)is set infront of you.

It can be both positives or negitives.A health issues of yourself or someone in your family....Or if you actually did dream of sailing say in retirement and found out you disliked it more than you realized,a spouse passes away,maybe you get re-married and it changes the course of your life,fall into a depression,a child passes ect imagine doing everything right and you and your spouse were set to retire in 2007 and you watch your portfolio get sliced in half-That would be hard because whether you like it or not "the game" changed and there is nothing you can do.

I guess what im saying is "we"(type A people/goal oriented or planners)like to think we control the outcomes but we cant.Life can dictate not us....not trying to sound glommy but it really is like that....sort of chasing a carrot that we dont ever get....i dont know if im making any sense,a dream is better in a dream.


----------



## Sherlock

I don't know about you all but when I retire I don't want to spend my days puttering around the house. So far I've never been on a plane, I've never been on a cruise ship, out of the 200 countries in the world I've been in 2... When I retire I envision taking vacations several times a year to exotic places, seeing all the wonders of the world, driving around in an expensive sports car, fine dining, etc. Are these foolish dreams of a young guy? I don't think they are as long as I continue saving as aggressively as I've been doing.


----------



## Dmoney

Why not do these while you're young and can enjoy it more? At 80 you might give yourself a heart attack going 250 in a shiny ferrari... If you can even get into the car...


----------



## Eder

I would recommend traveling when young and the rest of your life. Don't wait till retirement. Even if only for 2 weeks at a time.


----------



## Jon_Snow

The comforting thing for my wife and I is that we naturally have very low living expenses. Right now, our year living expenses are about 36k per year. This is with a mortgage (albeit a small one in relation to the Vancouver average). Remove the mortgage (we will do this soon) we can live our current lifestyle at about 24k. And we don't live like paupers... we don't go without much. Our $400 montly food bill would be our biggest single expense.

In a perfect world, our portfolio would yield about 50-60k, and we would have no money concerns whatsoever in retirement - in fact, our nest egg would likely grow. Amazing what no mortgage, car payments, expensive habits, or kids can do.  

Minimizing expenses before retirement (within reason) is every bit as important as saving for retirement.

The next 5 years are a going to be a sprint to early retirement. Assuming my wife and I remain in our current jobs and pay off our mortgage within the next year, we should be able to save about 80k anually. If a bull market should materialize during this 5 year period, all the better, but our plan doesn't depend on market returns, thankfully. And my wife isn't convinced that she wants to stop work at 45... she says she might want to work until 50 as she quite likes her job. She has no problem with me quitting work as she understands the toll it has taken on me. What a woman.


----------



## slacker

Don't delay enjoying life. You never know if you're going to kick the bucket early. At the same time, have a plan in case your life "runs long". 

Life should NOT be a journey to the grave with the
intention of arriving safely in an attractive and well
preserved body, but rather to skid in sideways,
chocolate in one hand, champagne in the other, body
thoroughly used up, totally worn out and screaming
“WOO HOO what a ride!” - unnamed


----------



## Square Root

slacker said:


> Don't delay enjoying life. You never know if you're going to kick the bucket early. At the same time, have a plan in case your life "runs long".
> 
> Life should NOT be a journey to the grave with the
> intention of arriving safely in an attractive and well
> preserved body, but rather to skid in sideways,
> chocolate in one hand, champagne in the other, body
> thoroughly used up, totally worn out and screaming
> “WOO HOO what a ride!” - unnamed


Good sentiment as long as this lifestyle doesn't hasten the arrival at "the end" One of the great advantages of having more personal time in retirement is the ability to keep much fitter-if you are so inclined.


----------



## RedRose

After reading this thread. A couple of old sayings spring to mind*..."Cut your garment according to your Cloth" and "Health is Wealth"*
So along with those $$ savings, invest in your health with some preventative maintenance to save on long term care facility fees later on.
I agree with the statements that we have great expections in our retirement. We have worked, scrimped, paid off our debts and saved...and now the pay off...no wonder we feel it's a let down. It is firmly planted in our imagination that we should be sitting pretty with a high standard of living and an unending worryfree income stream.


----------



## Square Root

RR I wouldn't say retirement is a "let down" At least not for me. There are so many opportunities for doing such interesting things. Good funding helps perhaps but there are lot's of worthwhile, interesting things to do that don't cost too much. A good friend of mine once said " only boring people are bored in retirement" If you define retirement as solely "not working" then you may have an issue, I think? Have a nice day.


----------



## kcowan

I gave up golf in retirement. At work, it was a chance to have the afternoon off. But in retirement, it was a waste of 5 hours of my time!

I do like long walks and hikes. Just not chasing a little white ball.


----------



## sensfan15

I just saw the movie "The Book of Eli" with Denzel Washington. It reminded me of this thread which I read the other day.

Solara asks Eli what the world was like before the (nuclear) war. Eli responds by saying:

*"People had more than they needed. We had no idea what was precious and what wasn't. We threw away things people kill each other for now."*


----------



## Square Root

kcowan said:


> I gave up golf in retirement. At work, it was a chance to have the afternoon off. But in retirement, it was a waste of 5 hours of my time!
> 
> I do like long walks and hikes. Just not chasing a little white ball.


Great story. We spend a lot of time working out, biking, and skiing. Trying to keep as active as possible.


----------



## Jon_Snow

The only time I am bored is at work... my free time is spent doing the things I am passionate about. I could fill half a page with the things I love to do - and work prevents me from doing these things but sparingly. That is my primary reason I want to quit working - and at an early enough age that my body can still do it.

It boggles my mind that anyone would continue working if they don't have to. I want to scream when I read about people "bored" in retirement - there must be an inherent lack of imagination in these folks.


----------



## sensfan15

Why not take your passions and turn it into a career right now?


----------



## donald

Hey jon-do you think the day retirement comes you will be able to "shut it off".Look @ what you have been doing for years know,studying markets,allocating money,building dividend streams.Its very possiable without you realizing that the path your taking is very stimulating to you?Your young,its with in reach and in the grand scheme of things your defying the odds.

Its like this your building a huge goal and its making its way into reality.The day of planned retirement are you jumping out of the markets?....You think you will still build for the next challenge?Maybe you get on the beach for 6mths at a resorts and than all of a sudden you think "i want that villa" instead of a hotel expierence?Then maybe its back to building wealth....Does wealth building ever stop once you get into it?Building a dividend stream can be more addictive than the expierences?I wonder how many diy investors ever stop....Do you know what i mean?


----------



## Jon_Snow

Donald, the day I stop working at my job will be the day that monitoring my investments will become all the more important. I have no problem admitting that I am in awe of many members of this site, and the investing knowledge they possess. Even the young twenty-something's around here speak about investing in a language I struggle to understand. My lack of knowledge and the investing mistakes I make daily are covered up by the fact that my wife and I bring in good income. Once this income stops, it is essential that I know what I am doing. That's why I hang around this site... to learn from my betters. Our financial progress up to now is pretty much solely due to an extreme approach to "living below your means". Sometimes I find myself wanting to "live up to" our income... but it eventually passes. 

Once retired, I can visualize spending a few hours a day on the deck of my cottage with my laptop, sipping my morning coffee while I tweak my portfolio and read the daily business news... I just hope I know a lot more then than I do now.


----------



## sags

One point that is often missed when discussing retirement, is the age that people start working, which directly impacts the number of years of benefit and cash accumulation.

I started working fulltime at age 15, which wasn't all that unusual back then.

GM had a "Kid's Line" in Oshawa, who performed "offline" work. Many factories employed young people under the age of 16, and just kept them on as they reached the magic number.

My grandfather joined the Canadian forces during WW1.......at the age of 15 and was supposed to be held back from being shipped overseas until age 16. It was stamped right on his "application" which is archived in Ottawa. 

Today, it isn't unusual for young people to knock around school until they are in their mid to late 20s.........or even later. They are entering into the workforce at a much older age than many of us did.

Perhaps the discussion should be around total years in the workforce........rather than solely the age of retirement at the end.


----------



## kcowan

I think most of the angst comes from the unknown. In my first 5 years of retirement, I tracked our investments closely. Now I am more relaxed about those as well. Partly it is because I have the investments positioned the way I wanted them. And partly it is because I am now used to living off the income.


----------



## Jon_Snow

If things go awry for me, I could always go back to work... although things will have to be pretty dire for me to consider it. I'll still be young enough that this will be a viable option (and I do have some sought after skillz).


----------



## KayCee

*I totally agree!*



Dmoney said:


> Why not do these while you're young and can enjoy it more? At 80 you might give yourself a heart attack going 250 in a shiny ferrari... If you can even get into the car...


I enjoyed reading this thread. In my opinion, travelling should be done when you are healthy and pain free. I love travelling and worked 2 jobs since I was 18 to finance both my adventure and my education. I have travelled at least 2x a year the last 20 years. I’m not sure what the future holds but when I’m in my 70’s or 80’s suffering from joint pains, shortness of breath, and all other disease that usually comes with all old age, I would not go too far. I would stay home closer to my family and friends. I have seen enough elderly on a cruise ship who are too weak to leave their cabins. Where is the fun in that?


----------



## uptoolate

I agree with the many posts on how little is actually needed to have an enjoyable retirement. Especially in Canada where basic health care costs are covered. Madison Avenue has made everyone believe how desperately they really must have the latest 'thing'. As you get a bit older you look at this stuff and recognize it for what it is - mostly junk. Even moreso as you start to declutter and realize how much you paid for things, how little use you got out of them and how useless they are now. 

I just took 3 months off as a bit of 'trial retirement' and was very impressed at how little I spent despite doing a fair bit of traveling and quite alot of work around the house. Very reassuring. 

For those waiting until retirement to live - don't do it! Carpe Diem! You never know when your number will come up.


----------



## Sherlock

That's why I'm gonna retire early... at 50, maybe earlier if I can. That should give me at least 20 years to enjoy traveling before medical problems start.


----------



## Jon_Snow

As I've mentioned many times before on the board, I'm aiming for 45... considering that my wife and I could live very well on 30k yearly, its not really a stretch at all. I'm hoping that by the time that both my wife and I quit (she wants to work to 50, god bless her) our investment income will be 50-60k - allowing us to splurge from our naturally frugal ways once in a while, and allow us to actually increase our net worth when we are retired.

When I see that people want to have 100k+ income in retirement I really wonder what the heck they are spending it all on. Seriously. We couldn't spend 8k a month if we tried... I'm assuming no mortgages carried into retirement. That is just a bad idea all around...


----------



## Four Pillars

Jon_Snow said:


> When I see that people want to have 100k+ income in retirement I really wonder what the heck they are spending it all on. Seriously. We couldn't spend 8k a month if we tried... I'm assuming no mortgages carried into retirement. That is just a bad idea all around...


$100k doesn't give you 8k a month of income.


----------



## Plugging Along

I have to admit, I'm one of those aiming for $100k+ in retirement, though I know we dont NEED to have that much. 

We spend alot now, mainly because of our kids. I imagine that will just transfer into other things like grandkids and such. I know my spouse, and he is looking at the same Audi as you are. One (or two) luxury vehicles like that in retirement, plus a few trips a year, a few grandkids to help with their futures and there goes $100k.

We could retire on much less if we needed to, but don't see the reason to if we don't need to.


----------



## sags

A couple who both collect CPP and OAS would have enough income to live a quiet retirement life. If they had pensions or other income, all the better.

Where it does run into trouble is when one spouse passes away. The surviving spouse will lose the OAS and likely some of their spouses CPP. They could also lose pension benefits if they elected to waive spousal benefits for higher monthly benefits.

It is worth noting the highest percentage of low income seniors is single women.

That is a scenario that should be considered, although it is seldom reflected in discussions or articles on retirement income.


----------



## Jon_Snow

Being kid-less, mortgage-less, and pretty much all round debt-less heading into retirement (albeit an early one), coupled with the fact that all our interests and hobbies are inherently inexpensive (outdoorsy, back to nature stuff) 60k in investment income would be nigh impossible for us to spend. The expensive car lust is there, but I am hoping to get that out my system before I retire... my wife thinks my desire for a nice car is actually a character flaw within me. Perhaps she is right. 

Then there is the inheritance factor... but it feels too creepy to talk about. 

PA, assuming you have no mortgage in retirement, 100k per year still seems like alot. I am thinking that those are some lucky grandkids and some pretty expensive trips you have planned during your golden years.


----------



## Spidey

Interesting thread and points of view. After a layoff, I may have been tossed into early retirement a little earlier than projected. 

I share many of Sag's opinions as I tend to be frugal by nature. Most of my older relatives lived a similar life to Sag's grandparents but I can't honestly say they were as content. Money-struggles were always a major issue, especially with the grandparents on my mother's side. 

One thing I can relate to is the adult-children issue and how that throws a large wrench of uncertainty into retirement forecasting. In my generation most of us moved out well before we were 20. My son is 22 and after graduating college is only making slightly more than minimum-wage on contract work with a tech company. My daughter is in her second year of university and is now talking about getting her Masters. And I still have another one just finishing grade-school. . . . . 

Another huge uncertainty are the markets. I've run several scenarios on my excel spreadsheet and we will be okay with minimal real-return. But what if we enter a Japan market-type situation with 20 plus years of negative returns? We are entering unprecedented territory with the highest percentage of seniors in history combined with skyrocketing personal and government debt. In fact, Japan seems to be our closest precedent to this type of situation. (Although granted not a perfect one.)

And for me, being frugal means getting the absolute maximum enjoyment value out of a dollar spent, not never leaving home. We live in a world where there are fantastic values and can experience things that would have been impossible a few generations ago. For example, while we have one car, rarely eat out and don't own cell phones, our one extravagance is an occasional trip abroad (which can also be done rather frugally) and the experiences are worth every penny.


----------



## Square Root

I can certainly understand the desire for a frugal retirement if it brings retirement sooner. This is especially true if you don't enjoy working. However, we have set our retirement lifestyle to match our resources rather than the other way around. This would be multiples of the figures discussed here but still allowed me to retire at 56. We are indeed fortunate to be in this position. Take my word for it, if you have the funding, spending it isn't too difficult. Just takes a little imagination.


----------



## kcowan

We spend what we need in retirement and then doublecheck once a year that we can still live forever based on the current portfolio performance. If not, we doublecheck the die broke date. If that is younger than we would like, then we recheck our assumptions and take corrective action. In this comparison, we assume that our expenditure will drop in our 80s. Worst case is we will end up in a government old age home.

Best case we leave a substantial legacy to our kids (who will be in their 50s by then) and charity.


----------



## steve41

The was a piece in the NP the other day by Jonathan Chevereau to the effect that $100K in savings was not enough to see you into retirement. I ran the numbers for a 59 year-old retiree with $100K in his RRSP.

With an expected market return of 3%, inflation at 2% and full CPP, OAS and GIS, he could expect to make it out to age 95 on an $18.4 K annual lifestyle.

If he owned his home, mortgage-free, then I don't see how a $1536 monthly after tax lifestyle is all that onerous. Comments?


----------



## mind_business

Steve,

The lifestyle you are describing, at $1536 per month, is a stressful one. Sure a person can 'get by' on that budget, however it leaves no room for frills, including owning and maintaining a car. The stress comes from any unexpected emergencies that can completely throw off your retirement. You'll never know when they come, but they inevitably will.

If instead of describing it as "not onerous", but rather "doable", I would agree with you.


----------



## uptoolate

Steve, I agree with MB. 

That is pretty tight. Mortgage free is good but if you live in a large city in Ontario your property taxes are going to take a big bite out of that before any other expenses. A car would be a stretch with that monthly income. Perhaps if one sold the house and rented (or moved to a more low cost setting) while using the capital for more income? I don't know just seems very thin and as MB says maybe doable but certainly stressful and not much room for many unexpected expenses.

Maybe some of our retirees with experience could give us an idea of what they think the minimum amount would be to be comfortable.


----------



## orange

Another thing people forget sometimes is that, though some costs disappear once you're retired and as you get older, such as saving for retirement, cost of raising children and work related costs, many other new costs appear. As you age you may develop health problems or problems with mobility which may require you to retrofit your home, increased costs for medications and therapies/treatments not covered by OHIP (people THINK basic costs are covered, but what is covered really is very very BASIC)...or assistance at home. Moving into a quality nursing facility when you are unable to live on your own (and don't have kids to take you in) is even more expensive than when you were young with a mortgage. A $1500/month income would not even come close to coving the costs.


----------



## Jon_Snow

Four Pillars said:


> $100k doesn't give you 8k a month of income.


Perhaps you are thinking I mean a 100k nest egg? I am talking about 100k in after tax investment INCOME.

100k isn't much to relying on... I figure I will need 10x that plus a still working spouse to even think about quitting my current job at 45. Next 5 years will make or break my dream (pipe dream?).


----------



## uptoolate

slacker said:


> Don't delay enjoying life. You never know if you're going to kick the bucket early. At the same time, have a plan in case your life "runs long".
> 
> Life should NOT be a journey to the grave with the
> intention of arriving safely in an attractive and well
> preserved body, but rather to skid in sideways,
> chocolate in one hand, champagne in the other, body
> thoroughly used up, totally worn out and screaming
> “WOO HOO what a ride!” - unnamed


I think that this quote is a paraphrase of Hunter S Thompson from his book on his time with the Hell's Angels in California. His quote had us arriving screaming 'GERONIMO' but I think that the idea is the same.


----------



## Daniel A.

In Mexico one would live well Steve, but in Canada I would say doable as well.
The house would not last as upkeep alone would force change.

I read the same piece and know of a couple of folks who are doing just as you point out. They tell me if only I had a few hundred more!

Year after year they modify their lifestyle constantly re balancing.


----------



## uptoolate

Daniel A. said:


> I read the same piece and know of a couple of folks who are doing just as you point out. They tell me if only I had a few hundred more!


Was that a couple of hundred dollars a month or a couple hundred thousand dollars more?

'Living' in Mexico seems less and less appealing.


----------



## Daniel A.

Most area's of Mexico are fine for the average person.
Yes they say a couple of hundred dollars a month more.


----------



## steve41

I am speaking as someone well past retirement age, living on the rural west coast.

I am simply looking at my expenses, including car, internet, cable, health-auto&house insurance, ferry fares, booze.... I just can't seem to spend it. I guess if I were inclined to join the cruising or going-to-Mexico masochists, I could find a way to spend more, but I am content where I am on my beach in the gulf islands. Barring an earthquake or tsunami, my housing is pretty secure.

I could always develop an expensive designer drug habit, but I guess I will pass on that for now.


----------



## mind_business

Steve, after googling Hornby Island, I can see why your expenses are so low. Unless you travel off the island often, there's not much you can really spend your money on ... aside from bad investments  You definitely live in paradise.

When I look at my housing and auto expenses ($580 and $470/mth), that uses up 68% of your proposed monthly budget ($1536). 

That leaves $486 per month for the rest of the budget (food, communications, etc). There is no way a person will be able to spend on entertainment. All entertainment will have to be free, which is difficult to find unless you live on a gorgeous West Coast Island where you just need to walk out your door to be in nature 

Note - If you look at my budget in my diary thread, I removed the reno and gardening costs when coming up with the $580 per month for housing. All this person will be able to do is budget $100 per month for repairs.


----------



## Jon_Snow

Like Steve41, my retirement years will also be spent largely in the Gulf Islands. My particular island (one of the most southerly ones) is even smaller than Hornby and thus might have even less temptations for spending money. My favorite "entertainment" would be sea kayaking... as far as I know its still free to launch off the beach and go cruisin' with the orcas.


----------



## mind_business

That sounds like a great retirement Jon. I used to do some kayaking in Saskatchewan, but since moving to SW Ontario, there's not a lot of opportunities. I recently got rid of my folding kayak 

My wife and I are starting to put some serious thought into where we want to retire. Both of us are thinking a cabin-type home near water. Hopefully we'll be able to manage that.


----------



## Daniel A.

It takes a certain type of personality to live on any of the Islands.

I've been on most of them and don't see myself living there.


----------



## uptoolate

Thanks for the info Steve and Daniel. Kind of reassuring. Obviously helps to have a frugal personality.


----------



## Four Pillars

Jon_Snow said:


> Perhaps you are thinking I mean a 100k nest egg? I am talking about 100k in after tax investment INCOME.
> 
> 100k isn't much to relying on... I figure I will need 10x that plus a still working spouse to even think about quitting my current job at 45. Next 5 years will make or break my dream (pipe dream?).


No, I meant if you have a $100k in gross income, that doesn't leave you with $8,000 of spendable $$ per month.

When people talk about income, I assume they mean gross income.


----------



## Four Pillars

steve41 said:


> The was a piece in the NP the other day by Jonathan Chevereau to the effect that $100K in savings was not enough to see you into retirement. I ran the numbers for a 59 year-old retiree with $100K in his RRSP.
> 
> With an expected market return of 3%, inflation at 2% and full CPP, OAS and GIS, he could expect to make it out to age 95 on an $18.4 K annual lifestyle.
> 
> If he owned his home, mortgage-free, then I don't see how a $1536 monthly after tax lifestyle is all that onerous. Comments?


By the way, that article was nonsense. Most of the people surveyed were well below age 61, so Chevreau completely misread the survey results.

Ie None of them are trying to retire with $100k in assets.


----------



## kcowan

On the early retirement org, they have done numerous surveys and the subsistence level comes to around $25k/year for a couple living in a paid-off home in an typical state (not NY or CA). So adjusting for CPP/OAS and the higher costs of living in Canada, around $32k is a reasonable subsistence level.

(Many gringos retire to Mexico on less by renting a $600/mo place. Or by buying a $100k house.)


----------



## MoneyGal

This is a self-knowledge problem, not an investing problem, in my view: what works for you will not be what works for me. 

There is no set amount that you can say any one person or couple "needs" for retirement - it is dependent on many variables, including how longevity-risk-averse the person is. 

I don't understand the point of articles which suggest there is a universal rule of thumb for how much income anyone needs in retirement or at any stage in the life cycle.


----------



## Four Pillars

MoneyGal said:


> There is no set amount that you can say any one person or couple "needs" for retirement - it is dependent on many variables, including how longevity-risk-averse the person is.
> 
> ...
> 
> I don't understand the point of articles which suggest there is a universal rule of thumb for how much income anyone needs in retirement or at any stage in the life cycle.


Indeed. I wrote an article earlier this year on this very topic:

http://www.moneysmartsblog.com/the-perfect-retirement-myth/


----------



## steve41

Remember, I am looking at just my personal living expenses. When you factor in my business expenses, things are much different. I suppose if I stopped doing business, I would get bored and start looking for things (possibly expensive things) to do, and all bets would be off. Interesting discussion, though.


----------



## Brian Weatherdon CFP

Sags, you definitely started a most valuable and interesting discussion of retirement and the lifestyles we can choose (related to resources we have in hand). 

There remains an under-current of caution that I'd highlight. Even if we have enough to enjoy life with a given level of pensions & savings, what of the future? Health care costs rise 10-fold beyond age 65. Personal care whether "in a care home" (Karen) or in one's own home, will face rising costs too. Sadly, people are already reverse-mortgaging their homes because they haven't sufficient other resources, or haven't found a more appealing way to unlock value of the principle residence. 

The idyllic opening to this discussion isn't how it always ends. The widow next door to "grandpa" seemed to be living "below her means" (thx Mail) yet eventually her clergy and doctor heard her confession that she would have to die.... "We never knew we would live so long!" ...or that suitable care in later years could consume so much.

Financial stress and anxiety in senior-golden years is something to avoid.

BW


----------



## Square Root

Health care costs in late retirement is the elephant in the room for many retirees. Very difficult to plan for other than through a very large nestegg that may never be needed. In many respects health care risk is greater than longevity risk we often discuss here. Ending your life in public " care" would be awful. Is anyone aware of viable insurance?


----------



## RedRose

I think they have Long Term Care Insurance in the States. 
As they do with Life Insurance, Health Insurance, and Disability Insurance. A fearful nation huh?
I agree, it is the fear  of the unknown and making important decisions that will dictate our future retirement years. I am paralyzed with fear at the moment...nuf said. I wonder if they have a phobia word for fear of decisions? LOL! 
Nortel is in the news again, unbelievable beings.


----------



## sags

Square Root said:


> Health care costs in late retirement is the elephant in the room for many retirees. Very difficult to plan for other than through a very large nestegg that may never be needed. In many respects health care risk is greater than longevity risk we often discuss here. Ending your life in public " care" would be awful. Is anyone aware of viable insurance?


I am not sure what people are referring to as the cost of end of life health care.

The cost is very high, but as far as I know it is covered by Provincial health insurance. The Province is the one struggling to deal with the increased cost......not the retiree.

As to ending one's life in "public care".......is there any other available at the final stages of life?

My wife works p/t in an upscale "retirement home" and it is costly for residents........but it is definately not end of life care. A resident must be self sufficient and only a bare minimum of nursing care is available. When residents reach the stage they can't care for themselves on a daily basis, they are moved out and into nursing homes.

To get into a nursing home in Ontario, you must apply and go on a list. We don't get to pick and choose which home we would like to reside at. We wait on the list until we are notified of an opening somewhere and then make the decision to go or not. 

The cost is somewhere around 2000 per month for a nursing home, and people contribute what they can, but the government makes up any shortfall.

My wife's place of work has 2 residences on the same grounds. 

One is the upscale retirement home and the other is a full nursing home.

It isn't so easy as to have a resident move from one to the other when the time comes. They must go on the list and wait for an opening, which could be anywhere including a nearby town or city. 

When people refer to living their last years in a private retirement home, I believe they are referring to a "non nursing home" environment and it is expensive, but it was never intended for low income retirees.

Ending up in a nursing home is the inevitable end for many people as we extend life years. We have extended life, but not necessarily the quality of life in those extra years.


----------



## MoneyGal

sags said:


> As to ending one's life in "public care".......is there any other available at the final stages of life?


Yes. You can absolutely pay for private care up to hospital levels of care. Hospice care can be provided at home. You can hire private nurses with no difficulty.


----------



## RedRose

Dr. Jack has gone now...so you won't be able to hire him.

I see a huge expansion in Paliative care and hospices as we boomers age.
The bulge in the snakes belly is here and we vote too.


----------



## somecanuck

Prescription coverage for seniors in Ontario is mostly picked up by the province, but not always. If the medication is new or not in the ODB formulary, you pay for it out of pocket. I see this daily with some newer forms of chemotherapy, which are costly.

Then again, I am in the relative minority in thinking that you're better off enjoying your final years with palliative care than extending your life for a few months of misery.


----------



## Daniel A.

somecanuck said:


> Then again, I am in the relative minority in thinking that you're better off enjoying your final years with palliative care than extending your life for a few months of misery.


My feeling as well, anything beyond 80 is a bonus in my books.


----------



## kcowan

The thing about "end of life" care is that costs double. A friend has his wife scheduled for a home (of 3 choices) and then the costs will be all duplicate to his rental costs. Another neighbour keeps his wife with Alzheimers at home to avoid the duplicate costs. But his life is very constrained. I am trying to have enough residual cash to avoid doing that (God forbid). At least I have another 20 years to plan for it!


----------



## Square Root

My father(with Alzheimers) spent about 2 years in a private home that cost about $6,000 per month. The "public" facilities are much less expensive but the quality is commensurate. I woundn't want to spend time in the private homes let alone the public ones. I believe it would be best to hire 24 hour private nursing at home but this would cost even more. The actual health care costs such as drugs and hospitals are of course covered but dying with dignity can be expensive.


----------



## Square Root

Daniel A. said:


> My feeling as well, anything beyond 80 is a bonus in my books.


That's what I thought too. The problem is as you get older the age that defines "the bonus" keeps getting older. Never actually get to it because it keeps moving out.


----------



## Leading Edge Boomer

Red rose wrote



> I think they have Long Term Care Insurance in the States.


It is available from a limited number of carriers in Canada too. However,I think what is available leaves a lot to be desired.

In 2008---The Council On Aging Of Ottawa--published a 26 page report on the ins and outs of long term care insurance. 

If you are interested you can read or download it here

http://coaottawa.ca/about-us/documents/LongTermCareInsuranceGuide-2008-English.pdf

While it was done in 2008, I don't think much has changed about LTCI since thern.


----------



## RedRose

Thank you for the report *LE Boomer*. Yes, I wonder if they have anything further to add after 4 years of this.

On another note: I've Diagnosed myself as a combination of *Decidophobia and Phobia of Finances.*

Hopefully coming here daily, in small doses, will help to desensitize the old noggin. Joking a part, the Fear is Real...the Angst is real.

Anyone else feel this way?


----------



## Square Root

RedRose said:


> Thank you for the report *LE Boomer*. Yes, I wonder if they have anything further to add after 4 years of this.
> 
> On another note: I've Diagnosed myself as a combination of *Decidophobia and Phobia of Finances.*
> 
> Hopefully coming here daily, in small doses, will help to desensitize the old noggin. Joking a part, the Fear is Real...the Angst is real.
> 
> Anyone else feel this way?


Actually I feel the opposite of you. I love this stuff. I think I would be in the minority however, although perhaps not on these type of sites.


----------



## RedRose

> Actually I feel the opposite of you. I love this stuff. I think I would be in the minority however, although perhaps not on these type of sites.


I am so happy to hear this. This what makes an ideal community then *Sq Rt.* I hope I can learn to be at ease and not feel the anxiety rising in the pit of my stomach everytime I have to make a financial decision.


----------



## kcowan

That is fear of failure RR. It is a common occurance only overcome by frequency.


----------



## pwm

*You don't need as much as they tell you*

Most of the hype you read about needing huge amounts of investments to retire, is concocted by the investment industry to make you give them your money. The fact is that if a married couple both work, contribute to CPP, have company pensions, and work to 65, they don't need to save a dime to live quite well in retirement.

Now of course this is the best case scenario, but most people who have CPP and any kind of company pension, only need a modest amount of investemnt income to augment their CPP & OAS. No pension? Then you need to save more.

I quit 7 years ago at 55, and I have more disposable income now than when I was working.


----------



## steve41

pwm said:


> Most of the hype you read about needing huge amounts of investments to retire, is concocted by the investment industry to make you give them your money. The fact is that if a married couple both work, contribute to CPP, have company pensions, and work to 65, they don't need to save a dime to live quite well in retirement.
> 
> Now of course this is the best case scenario, but most people who have CPP and any kind of company pension, only need a modest amount of investment income to augment their CPP & OAS. No pension? Then you need to save more.
> 
> I quit 7 years ago at 55, and I have more disposable income now than when I was working.


Another reality the investment folks neglect to talk about is the huge transfer-of-wealth effect.... inheritances that most individuals expect to benefit from down the road. Very seldom do you see these included in their clients' plans.


----------



## RedRose

Thank you *KevinC* I agree, and I recognize I need the frequency, but in small doses, not this huge decision. My coming here often is my frequency and de-sensitization. I hope its working somewhere in my cloudy brain.

I am money inexperienced, I need to learn investment fundamentals and learn the vocabulary, and then believe in myself...I think I'm getting there in increments.


----------



## Square Root

The whole question about how much you need in retirement is really basic. It starts by how much you want to spend which is easily determined by how much you currently spend adjusted for changes during retirement. The basic problem is most people don't know how much and where they spend their money. Many people feel tracking expenses is for anal-retentive types. Perhaps but if you don't know where the money goes how can you decide how much you need? 
Once you know how much you want to spend add up your pensions, CPP, OAS, etc. And any shortfall must come from investments. Your investments can support about 4% spend-so multiply the spending requirement from investments by 25 to get the nestegg requirement. There is obviously fine tuning you can do but basically this is the starting point. No need for angst unless you spend too much.


----------



## pwm

*Inheritance*

You make a good point about inheritance, steve41. In my case it was one factor in my being able to retire early. I was an only child, and my father was a saver/investor.


----------



## kcowan

Square Root said:


> Your investments can support about 4% spend-so multiply the spending requirement from investments by 25 to get the nestegg requirement. There is obviously fine tuning you can do but basically this is the starting point. No need for angst unless you spend too much.


Even that creates a 'live forever' scenario with no use of principal. At age 65, 25 x will get you to age 90 with no investment returns. This is why a realistic budget is so crucial to good planning.

(I kept telling belguy this to try to get him to enjoy life!)


----------



## RedRose

*Angst is Back...*

Postmedia Pension solvency ratio is 72% now, makes me feel nervous to rely on the pension.

Has anyone took a variety of products, like an annuity, investments and pension to keep your income stream secure?

Do you think moving some money from Postmedia to OMERS would be a wiser pension investment? I think they must be stronger but not sure how you find out.


----------



## Leading Edge Boomer

RedRose asked



> Has anyone took a variety of products, like an annuity, investments and pension to keep your income stream secure?


I guess one could say I have done that. I am 65 but retired earlier than that.

My income consists of:

A modest company pension (actually two smaller ones).

A life annuity.

A modest non-registerd income portofolio --a lot of it returning dividends.

OAS/CPP

I can live comfortably on this with room to spare. I can put money away each month for future major expenses as they occur. 
One problem is that a fair amount of my income is not indexed, so its purchasing power will be slowly eaten away by inflation. However, I still have an RRSP which I will turn into a RRIF when the government tells me I have to. I will bring aditional income into the mix when that happens.
I own a condo and a car and have zero debt. That helps a lot.


----------



## Rusty O'Toole

Do you know what a million dollars gets you these days? Take it to the bank and they will sell you a CID that pays 2 1/4%.

Do you know what 2 1/4% of $1,000,000 is? $22,500. That is $432.69 per week. Do you think of someone living on that kind of money as living the life of a millionaire? Because that is what it is.

You might be able to scrape by on that if your house and car are paid for. But it better be a pretty modest house and car if you are going to cover the taxes, heat bills, and gas for the car.

So now can you see why someone looking at retirement in Canada, with less than a million dollars has something to worry about?


----------



## Dmoney

So don't put it in a CID... Try for more than 2.5%.

And maybe spend some of the capital.

$1 million should be more than enough to retire on, particularly if that doesn't consider the value of a fully paid off house.


----------



## steve41

1 million split 50/50 RRSP/Nonreg, earning 2.25% will deliver a $46K lifestyle including CPP&OAS. I could limp along on 46K.


----------



## Maltese

steve41 said:


> 1 million split 50/50 RRSP/Nonreg, earning 2.25% will deliver a $46K lifestyle including CPP&OAS. I could limp along on 46K.


Steve, is the $46,000 figure before or after taxes? If it's net income it would be more than I net now so would provide me with a very nice life indeed.


----------



## Daniel A.

I would say his figure is before tax but even after the tax is paid the number works well for most. After deductions it does leave a good retirement income.


----------



## Jon_Snow

Before tax, after tax... either way it would be more than enough for the retirement I envision for myself. My wife and I live on 36k with a mortgage in Vancouver, and we don't really feel like we sacrifice much to do so.... the lifestyle we enjoy just happens to be a naturally frugal one.... thankfully.


----------



## Square Root

Again, it depends on how much you want to spend. I certainly agree that if you can get by on under $50k and have CPP and OAS you probably don't need over $1million. But many boomers desire a retirement lifestyle well in excess of that. So if you want to spend more....you need to save more. A discussion of how much you need to save is useless without a discussion of how much you want to spend. And a judgement on how much someone else should spend is also invalid, in my opinion.


----------



## steve41

OK.... here is the run:
65 yearold with $1 million


----------



## Square Root

steve41 said:


> OK.... here is the run:
> 65 yearold with $1 million


Thanks for the link. Nicely done.


----------



## Ihatetaxes

Yes, thanks Steve. Love reviewing your projections.


----------



## Maltese

Thanks Steve. I always enjoy when you pop into a thread and share your knowledge with us.


----------



## vimmm

steve41 said:


> OK.... here is the run:
> 65 yearold with $1 million


Steve,

I assume this calculation is for somebody living alone. Can you run on your software similar calculation but for a couple. My assumption is that in case of couple you will pay less tax on the same income because of the income split. Is the difference for couple substantial?


----------



## steve41

vimmm said:


> Steve,
> 
> I assume this calculation is for somebody living alone. Can you run on your software similar calculation but for a couple. My assumption is that in case of couple you will pay less tax on the same income because of the income split. Is the difference for couple substantial?


OK....Missus' plan
Mister's plan
See page 6 of Mister's plan for the combined result....($56,607)! Crap. I should've stayed married.


----------



## Maltese

I was happy to see figures directed toward a person on his own for a change. It seems that everything I read is meant for couples. Couples have so many financial advantages that aren't available to singles.


----------



## vimmm

steve41 said:


> OK....Missus' plan
> Mister's plan
> See page 6 of Mister's plan for the combined result....($56,607)! Crap. I should've stayed married.


Hi Steve,

Thank you very much for these numbers. So beeing merried does really helps - about 10k more money comparing to having same amount of money but paying penalty for beeing single. That is actually more than I tought. 

Thanks again for numbers!


----------



## Square Root

Many unretired people don't appreciate the generous pension splitting provisions available to married couples. If you have a large pension you can save maybe $5-10k in taxes by electing to split it with your spouse. In my case it causes all the planning I put into income splitting to be mostly unneccessary. As it stands now both my wife and I pay taxes at the max marginal rate so further income splitting not necessary. As an aside, there are way more significant reasons other than taxes to be in a good marriage.


----------

