# Age 50. Checking In On My Progress



## Eager Beaver (11 mo ago)

Hi everyone. I’m new here. I hit 50 yrs old in 2021. Long term planning is becoming more important to me. I am learning more each year, but I am far from fluent in the language of investments and retirement income.

I am beginning to understand there is no magic number. There is no secret formula to ease our minds when it comes to figuring out “Will I have enough?”. It seems there are just far too many variables beyond our control. How long will we live? What type of lifestyle are we accustomed to? With inflation going crazy lately, what will basic necessities cost when I retire? How much interest earnings will my investments make? Hard to pin down firm answers for sure.

I am interested in hearing some feedback on our progress so far. Your experience and comments are appreciated.

We are pretty simple folks. Pretty frugal. We know how to stretch a dollar and make a little extra cash on the side. We save a bit too. We don’t drive nice new vehicles. Nor head off on distant vacations every year or two. We do all our own home maintenance & renovations. We do do all of our own vehicle repairs and and maintenance too. No loans. No car payments. No credit card debt. All these years later it seems to be paying off. If at least a bit.
Our kids are grown up. Married & have their lives very well sorted. We have no dependents.

Current retirement savings situation:
Our home is valued at $1,200,000 currently. We own it. No mortgage. We like it here but don’t have plans to stay here upon retirement. Its fairly large and unnecessary for 2 people. We are thinking we don’t want to have to rely on our home equity to fund us into retirement. We have about $750,000 cash invested up to today in RRSP’s, TFSA, & Defined Contribution Pension Plan. We currently tuck away $50,000 each year in retirement savings. Putting it into the investments listed. We like our jobs. We don’t have a problem working up to 60 or longer as needed, If our health is good. There are no defined benefit pensions coming to us. We are not expecting any inheritance. We max-out our Canada Pension Plan contributions every year. We don’t expect any loss of income in the next 10 years. But hey, things can happen. We are long term employees at our current jobs.

I’m wishful thinking my current $750,000 savings doubles in 12-ish years based on market growth. That’s maybe 1.5 million when I’m 62? Assuming I save another additional $500K in 10 years, plus compounding interest. Rough and dirty, am I out of line here? $2 million. House value not factored in.

We don’t have big ($$$) dreams to fill at retirement. We travelled earlier in life. We aren’t holding off our desires today until “some day later when we’re retired”. No plans to buy a massive RV and tour North America.

A quaint home with a garden and a workshop would do us just fine. In reality a downsize from what we have now. Being around our family. Peace of mind. Sounds just dandy.

I am working with a professional investor. I don’t see him very much. I just give him money and I read my quarterly and annual statements. I think I’ve been to see him twice in 8 years. With the thoughts going through my mind lately , I guess it is about time to go see him again.

Thanks for listening.


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## cainvest (May 1, 2013)

Just a glance at your numbers and you seem to be doing well ... especially if a frugal lifestyle continues. If your investor person does retirement planning it would be good to start looking at some numbers for the future.


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## AltaRed (Jun 8, 2009)

I echo the comment you are doing well and will have plenty at the time you retire. You have not said much about how your $750k in investments are doing, and how your investment advisor is benchmarking your results against a relevant index. If you want to double the value of that $750k in 12 years net of any additional money, your portfolio will have to have a CAGR (Compound Annual Growth Rate) of about 6% per year (rule of 72 for doubling 6% x 12 years = 72). Has the annual posted returns of your portfolio been delivering that return over the past 6+ years? If not, why not since 6% per year for a balanced portfolio over the past 10 years has not been difficult to achieve.


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## prisoner24601 (May 27, 2018)

Welcome EB, I think you'll find this forum to be a great resource. From your story it seems that you are doing very well so far and you are likely on track for a nice retirement. One suggestion I have is to try and answer the question of _when_ you have enough to retire. It may not be when you hit $2M invested after 12 more years of work and savings. It could be earlier (or later). A simple tool I used to answer this question was tracking my actual monthly expenses compared to my expected retirement income. When you are regularly below the line you are ready to stop working or FI as they say now.

To get a rough idea of what retirement income you can expect, I'd use the assumptions here and a couple of simple, well known formulas: PV( ) and PMT( ). From the calculations below, the 50 year old hypothetical and frugal couple might consider retiring now if their monthly expenses were $3,500 and the 62 year old couple could afford after-tax monthly expenses of $7,000. Note these calculations allow you to account for CPP/OAS, the size of legacy and fees charged by your advisor. Most of the other assumptions are taken from the IQPF guidelines for consistency year to year as you update your expected retirement income.


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## AltaRed (Jun 8, 2009)

FWIW, while the methodology of post#4 is good rule of thumb for setting goals, I would not actually use it during withdrawal post-retirement due to its arbitrary assumptions and inflexibility to deal with real life variables and vulnerability to sequence of return risk. 

I much prefer the Variable Percentage Withdrawal methodology that takes into account, variability of portfolio returns from year to year.


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## prisoner24601 (May 27, 2018)

AltaRed said:


> FWIW, while the methodology of post#4 is good rule of thumb for setting goals, I would not actually use it during withdrawal post-retirement due to its arbitrary assumptions and inflexibility to deal with real life variables and vulnerability to sequence of return risk.
> 
> I much prefer the Variable Percentage Withdrawal methodology that takes into account, variability of portfolio returns from year to year.


I just wanted to clarify that the post#4 method is almost identical to VPW and calculated on the portfolio balance each year. The recommended withdrawal results with my method are very similar to VPW but a wee bit more conservative. This is mainly because I use the real return guidance that IQPF publishes annually instead of the fixed VPW "growth trends" which are US-centric. I don't think it makes a great deal of difference either way and the published VPW tables/spreadsheet are another way to go for sure.


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## AltaRed (Jun 8, 2009)

Okay thanks. I did not know this was comparable to VPW. However, please be aware there is a US version of VPW on Bogleheads forum and there is a Cdn version of VPW on Finiki/FWF. I have not done a side-by-side comparison because I only use VPW as a guideline (ceiling) for withdrawals.


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## Eager Beaver (11 mo ago)

Thanks for reading and responding to my post folks. It is reassuring to learn I am headed down the path to get where I want to go.

I don't quite understand the % rates that are shown in my investment statements.

For example one states rate of return (5 years) 11.1%
Another reads rate of return 9.6% 3 years.
Another 8% 5 years

Wondering if that is an annual average per year? Or am I getting 5% growth over 5 years? Seems like a crappy rate of return.

My $750K is diversified into several different funds. Hard for me to give you 1 average rate of return. Heck the statements are pretty impossible for the average consumer to read and understand.


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## AltaRed (Jun 8, 2009)

Those rates of return are annual averages for the periods mentioned. For example, for the 5 year period, they take a starting point for Jan 1, 2017 and the end point for Dec 31, 2021 and calculate a CAGR (Compound Annual Growth Rate) for that 5 year period.

The problem with these calculations is they are done on a 'per account' basis and while that is clearly useful, you should also be asking your advisor for an aggregate CAGR for a complete picture. After all, you don't retire on the basis of one slice here, and one slice there. It is the aggregate that tells you how you are doing.


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