Retirement ,,, why is this not enough ?

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Retirement ,,, why is this not enough ?

Postby buteman » Jan 10th, 2018, 4:27 am

Retirement, many look forward to the day when they can " call it quits " and enjoy their well earned retirement. I tried that, no, did not work for me, I just had the need to stay busy.
I sat down with a financial adviser and discussed at length our ( my wife and I ) financial picture. I'm of the belief if one sat down with fifty different financial advisers you would have fifty different answers to " how much do I need for retirement ".

I'm a few years past the 65 mark used for retirement, I'm blessed with good health as is my dear wife. I work full time in a management position earning 54k. per year plus a limited benefit package. We also have $ 2850.00 a month in pension income.
We have 157k. between R.S.P.'s and T.F.S.A.'s. we have a small mortgage on our condo. We have a 2017 Lexus SUV clear title and we have approx. 185k. equity in our home.

I can no longer contribute to RRSP's due to my age of course, and we have 29k. set aside for my wife's RRSP's this year which will max her contribution room out. My wife and I enjoy our time at home, we don't travel much and for the most part life is quite simple. So, our total monthly expenses come to $ 2250.00 fully inclusive, all being equal I have 18 months left at my job ( an agreement I have with my company ).

I plan to have approx. 225k. in investments when I do call it a day, so in my mind if we have an income of $ 2850.00 per month ( without touching our investments or using any interest from investments ) and our fully inclusive costs per month are $ 2250.00 why would we " not have quite enough " as the financial adviser put it ? we plan to lead a simple lifestyle when I do retire. I'd be quite interested to hear other opinions.

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Re: Retirement ,,, why is this not enough ?

Postby Tony » Jan 10th, 2018, 6:13 am

I agree buteman. "Enough" is in the eye of the beholder. I'm a few years short of 65, but I'm just getting a small home based business up and running that will supplement my retirement income through pensions and RRSPs, because, like you, I don't really see myself sitting around doing nothing. My wife and I lead simple lives. Our greatest joy is camping in this beautiful country we live in, and we have a time share in Vegas we use every second year. We aren't looking to travel to world or do anything lavish, so what we have, and this is actually according to our financial guy, plus with the income from my home based project, will be enough. (He's a good guy!)
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Re: Retirement ,,, why is this not enough ?

Postby LANDM » Jan 10th, 2018, 6:43 am

The only kicker in your scenario would be if one of you died. It happens.
Would the resultant change in pension income be "enough" for the surviving spouse?

Otherwise, I agree with you. If income>expenses and you have a happy lifestyle, all is good.
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Re: Retirement ,,, why is this not enough ?

Postby normaM » Jan 10th, 2018, 6:46 am

I'd use the monies in the TFSA and maybe dip into the RSP to pay off the mortgage ( the money isn't earning what the bank interest on your mortgage is)
Every weekend in the paper they have a fin. advisor look at ppl retirement readiness. I agree seems it is never enough. 2 million usually rates a 3 star readiness.
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Re: Retirement ,,, why is this not enough ?

Postby Bsuds » Jan 10th, 2018, 8:05 am

As long as you understand that "things" happen in life.
ie: When you need a new roof, or a new furnace and hot water tank to name just a few.

These will happen at some point in your retirement and you need to be aware and ready for them.

We are both retired and are in better financial shape than what you claim and I think you will need more as well. If you can live and survive on what you have then good for you.
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Re: Retirement ,,, why is this not enough ?

Postby AlienSoldier » Jan 10th, 2018, 8:47 am

They might not think its enough because the difference between your revenue and expenses is very slim. In case of any emergency (you have to travel somewhere, medical, vehicle, home issue), you would easily have to dip into your retirement to compensate.

I would not touch the TFSA and continue to fill that as this is income that is not calculated to reduce your CPP or OAS benefits. I would look at what your investments are and what your mortgage interest is and adjust accordingly. If your investments are curning more income and at a higher rate than your mortgage, then it makes no sense to sell them to pay off your mortgage. However, locking in your mortgage to reduce risk of interest rate spikes might be a good idea.

Also, you might want to look for something part-time to keep some additional funds in case of emergency.

Lastly, talk to a financial advisor who is fee based and does not get commission or a cut for bringing you in. That means finding someone outside of the mutual fund and bank industry.
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Re: Retirement ,,, why is this not enough ?

Postby Poindexter » Jan 10th, 2018, 8:52 am

The only conspicuous error in financial management I can see with the OP is his vehicle. Lexus' are great but a Camry would have been better choice given your desire to enter into the fixed income stage of your life.

A new Lexus will cost on average about 10 grand a year in depreciation before the warrenty is done. Once the warrenty is done your 60 grand investment is now worth 20 if your lucky.

And Sudsy is right about preparing for large unexpected expenses and a luxury car out of warrenty is just asking for a major repair bill.

Luxury vehicles are for those who have money to burn, not for those who need to stretch thier dollar.
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Re: Retirement ,,, why is this not enough ?

Postby normaM » Jan 10th, 2018, 9:21 am

Might want to consider deferring your property tax, banking that money in a special acct to off set unexpected costs.. with house prices rising ( well today anyhow) you'd have the extra equity to pay off said PT when you decide to sell
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Re: Retirement ,,, why is this not enough ?

Postby Even Steven » Jan 10th, 2018, 10:07 am

It looks super tight to me. I'd be super nervous.

Your pension barely covers your monthly expenses, you're exposed to a possibility of something drastic destroying you financially. A big car repair bill, medical bill, strata assessment, anything. You don't have much in savings between two of you - $160K can't provide much of income if you re-design your portolio into income producing portfolio. The rule of thumbs is you can safely withdraw around 4% on the annual basis - so that's around $7K and that's only if the market continues doing what it's doing. They have a nasty habit of dropping and only slowly recovering.

Your breathing room between expenses and your income (pension) is basically $500. Not a whole lot. And you have a mortgage. I'd pay it off tomorrow by selling your shiny Lexus.

Stop thinking about equity in your house too. It's no use to you because you're not selling. If you could downsize then yes, these figures might have meant something, but for you, it's a cheap place to live, not an investable income-producing asset. It might as well be zero.

What do you have in terms of CPP and OAS coming your way if you both retire? Might be helpful.

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Re: Retirement ,,, why is this not enough ?

Postby normaM » Jan 10th, 2018, 1:48 pm

I pay a flat fee not commission at my Bank, maybe different rules or perks
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Re: Retirement ,,, why is this not enough ?

Postby Dizzy1 » Jan 10th, 2018, 2:09 pm

Poindexter wrote:The only conspicuous error in financial management I can see with the OP is his vehicle. Lexus' are great but a Camry would have been better choice given your desire to enter into the fixed income stage of your life.

A new Lexus will cost on average about 10 grand a year in depreciation before the warrenty is done. Once the warrenty is done your 60 grand investment is now worth 20 if your lucky.

And Sudsy is right about preparing for large unexpected expenses and a luxury car out of warrenty is just asking for a major repair bill.

Luxury vehicles are for those who have money to burn, not for those who need to stretch thier dollar.

The OP stated that the vehicle is clear and no money owned on it.
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Re: Retirement ,,, why is this not enough ?

Postby TylerM4 » Jan 10th, 2018, 2:43 pm

Not a lot to add other than what my advisor told me when I asked the "How much do I need?" question. His answer was appropriately vague as everyone's idea of "need" is different.

He did tell me: We recommend a minimum of $30,000/year ($2,500/month) of post-tax income for a couple with a modest home and little/no outstanding debt (Mortgage is paid). This would be living "comfortably frugal". Little/no travel, single modest vehicle, rarely eating out, etc. Their opinion is that $50,000/year was ideal as it allowed some extra dollars for hobbies, travel, and "fun". They also said that the younger you retire the more income they recommend simply because when you're 70yo people are pretty content to sit around the house all day. But at 55yo you're going to want to get out and do things - doing things costs money ;)
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Re: Retirement ,,, why is this not enough ?

Postby Poindexter » Jan 10th, 2018, 3:32 pm

Dizzy1 wrote:
The OP stated that the vehicle is clear and no money owned on it.


So the OP isn't paying interest, doesn't change how much thier luxury car will cost them in depreciation each year.
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Re: Retirement ,,, why is this not enough ?

Postby Ka-El » Jan 10th, 2018, 4:06 pm

Even Steven wrote: Stop thinking about equity in your house too. It's no use to you because you're not selling. If you could downsize then yes, these figures might have meant something, but for you, it's a cheap place to live, not an investable income-producing asset. It might as well be zero.

Just throwing this out there for the OP. There is another option, but it is definitely not for everyone. Liquidate everything. Put a good sum of money into an account that is completely liquid for emergency, and then most of the rest into dividend paying investments to add to your total pension income. Then ..., leave Canada, become an expat.

There is life outside of Canada. Laid back small town living on tropical beaches, or if you prefer, cosmopolitan cities (some UNESCO world heritage sites) where you will not need a car, way lower cost of living, and health care systems better than our own. From Mexico to Paraguay, Central and South America offer a plethora of choices (including areas where you will find more English), and there is way too much to say about the whole idea than I can post here.

If you are interested, this is a place you could start

http://www.expatexchange.com/

My wife and I will retire in five years (was going to do it sooner but my employer has made things interesting for me),
and that is when the next adventure will begin.
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Re: Retirement ,,, why is this not enough ?

Postby vegas1500 » Jan 10th, 2018, 6:26 pm

Ka-El wrote:
Even Steven wrote: Stop thinking about equity in your house too. It's no use to you because you're not selling. If you could downsize then yes, these figures might have meant something, but for you, it's a cheap place to live, not an investable income-producing asset. It might as well be zero.

Just throwing this out there for the OP. There is another option, but it is definitely not for everyone. Liquidate everything. Put a good sum of money into an account that is completely liquid for emergency, and then most of the rest into dividend paying investments to add to your total pension income. Then ..., leave Canada, become an expat.

There is life outside of Canada. Laid back small town living on tropical beaches, or if you prefer, cosmopolitan cities (some UNESCO world heritage sites) where you will not need a car, way lower cost of living, and health care systems better than our own. From Mexico to Paraguay, Central and South America offer a plethora of choices (including areas where you will find more English), and there is way too much to say about the whole idea than I can post here.

If you are interested, this is a place you could start

http://www.expatexchange.com/

My wife and I will retire in five years (was going to do it sooner but my employer has made things interesting for me),
and that is when the next adventure will begin.


Been exploring this idea for a few years now. I plan to work another 5 years or so and have explored moving overseas but maintaining a small condo in Kelowna. Would like to come back for the summers and to keep ties in canada. Have a friend retired in PV and he loves it!

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