Canadian looking to retire soon at 44 yrs.

[fire161007]

Hi there,

This is my first post. I have been lurking for many years and would like to thank the community for inspiration to become financially independent.

I am 44, married with 2 pre-teen kids living in Canada. My wife and I have been fortunate enough to be able to buy a house in 1997 when prices were reasonable. We also are fortunate to both have 6 figure salaries in IT ($170K for me and $130 for her). In the last few years I have become increasingly unmotivated at work (megacorp) and am planning on leaving within the next 3-9 months.

All $ are in Canadian.

Net worth is around $3.8 Million, which consists of our primary residence with about $800K and the rest invested in Stocks, ETF's and preferred shared. Our asset allocation is about 80% equities, 15% fixed income and 5% cash. We have no debt. Our $3M investments currently yield about $80K in dividends. Most are Canadian Dividends which are tax favourable.

Our annual spending is about $100K. This includes $15K that goes to our financial advisor that manages about $2M of our portfolio. I am considering leaving our financial advisor as the $1M I manage myself with ETF's consistently out performs him. This can take our annual expenses down to $85K.

Healthcare is not a huge concern as Health care in Canada covers much of our needs. My wife still enjoys her job and plans to continue working for at least a couple of years. We will continue to get dental and vision coverage through her benefits plan from work. Once she retires, we will look into additional health care coverage, but I don't anticipate it to be much.

I believe we are at the point of financial independence assuming a 2% inflation and 5% return, but would appreciate other's opinions.

I don't expect our spending to go down once I retire, in fact it may go up with the kids approaching their teen years. We plan on assisting our children with their post-secondary education and have set up an RESP plan currently valued at $150K (included in our $3M portfolio).

I also believe this is a good time to spend more time with the kids. The extra attention with school and studies that I will be able to afford once I retire will be invaluable. I want to spend as much time as I can with them before the teen years when they will want to have less to do with their parents.

I know that many will be asking what I will be doing with my time, but in addition to family, I do have many projects and hobbies lined up.

I plan on regularly updating this thread to keep you in the loop. Any feedback on our plan would be appreciated.

[MBAustin]

Welcome. If you haven't seen them yet, check out these two helpful items:

http://www.early-retirement.org/foru...ire-69999.html

and

Early Retirement FAQs - Early Retirement & Financial Independence Community

As I'm sure you realize from your lurking, there are a number of Canadians who post regularly, and also a number of folks who have ER'd with school age children. And the vast majority would tell you to fire your FA immediately, especially since you are already comfortable managing some of your investments.

If you aren't tracking expenses closely, that would probably be a good idea, in case you need to reduce discretionary items at some point.

It sounds like while your DW is still working, you can live on her salary without drawing on your investments, which would certainly be a good thing. I assume you are reinvesting your dividends, so you also have that source of income if needed which would not touch your investments. So as long as you keep your expenses in check, you look to be in pretty good shape to pull the plug, IMHO.

We'll look forward to you posting more in the future as one of your new hobbies

[DrRoy]

Definitely fire the FA. Why pay good money to get a lower return? I did the same thing a couple years ago. Your situation looks pretty strong. You can get more analytical about it by running the numbers through Firecalc.

[timemoveson]

great to see a fellow Canadian story.

For context, I have considerably more than you do in assets and liquid worth but I also need considerably more and am a little older.

In your case, I think you are in outstanding position given your age and stage. Your $3M in productive assets (assuming a mix of RRSP, TFSAs and taxable, but mostly taxable) should produce closer to $$120K in dividend income if properly invested by you, without paying a financial adviser. $120K would deliver over $100k net in most if not all provinces. As you point out, the treatment on taxable dividends is exceptionally favorable at your level particularly if the assets are owned jointly by you and your spouse. You could be in position to pay nearly zero tax.

Health care is not a concern and kids RESPs are fully funded. Well done.

Your portfolio will move with inflation and you should never have to touch principle unless your spending needs rise considerably.

The only slight concern I would have for you is longevity and the uncertainly it creates. If you plan to be open to supplement income along the way if you have to, or do an encore career, consult, dabble, or whatever for money later on, you are completely financially independent now and can do what you want. PM me with questions if you would like. Happy to share additional insights that might be specific to Canadians.

[swakyaby]

Quote:

Originally Posted by Fire161007 Our annual spending is about $100K. This includes $15K that goes to our financial advisor that manages about $2M of our portfolio.

Call me cheap, but I cringe at paying $15K annually for management advice on a $2M portfolio.

[Sunset]

Welcome, You seem in fine shape.
Yes dump the FA and save the money instead of paying for poor expensive advice.
Sounds like with the RESP your kids have University covered assuming they go within Canada (which is fine and respectable and affordable). I know some Yanks that have gone to Canada to attend University (and they had to pay double the Canadian rate as foreign students).

Have you considered how many years you currently have in CPP to make sure you are eligible ?

[Spudd]

Quote:

Originally Posted by Sunset Have you considered how many years you currently have in CPP to make sure you are eligible ?

Pretty sure there's no minimum for CPP. It's just that the amount they pay you will be less if you have less years of contributions.

[fire161007]

Thanks all for the replies.

@MBAustin - Great points. I have been diligent in tracking my expenses to the penny since 1999 using Microsoft Money. Our spending in the last few years has been: $100,089; $110,587; $96,862; $111,402; and $107,344. M Wife is happy with her work and she expressed that she would still like to continue working for a few more years. Also by leaving our Financial Advisor, it will drop out annual spend by $15,000.

@timemoveson - I would be very interested to find out how to get a 4% yield without having too much risk in the market. I will PM you for details. I am open to other work in the future, though probably not in my current field as I find it too stressful and once I leave I have no plans on returning.

@Sunset - I'm not really factoring in CPP or OAS in my calculations. Thought I have been working 20 years in Canada and have lived here all my life, retiring early will have an effect on what CPP will pay out, though I'm not sure how much. Additionally, I don't have confidence that our government programs will even be around (at least in this form) by the time I hit 65 or 70. If I do get something, I will treat it as a bonus.

Finally, my original estimate of packing it in between 3-9 months might be accelerated closer to 1-4 months as work conditions are not improving, and I see no point in drawing it out. I will keep you updated.

[highlow65]

Sounds good as long as you lose the financial adviser and closely watch your spending increases. My only question is wife totally on board with your retiring while she works? If so she is a keeper.

[fire161007]

Quote:

Originally Posted by highlow65 Sounds good as long as you lose the financial adviser and closely watch your spending increases. My only question is wife totally on board with your retiring while she works? If so she is a keeper.

Yes - definitely a keeper!

[fire161007]

My original thoughts of retiring next July moved up to March 2017, then to Dec 2016, then end of Oct 2016.

However, I saw no point in extending it any further. There were a number of projects that I was being asked to commit to, which I really had no interest in working on. So, I formally tendered my resignation last Friday and my last day will be Oct 7.

I'm wrapping up all my existing engagements, but it feels great knowing that in 2 weeks, I can leave all of this behind. I did provide constructive criticism to my management team in hopes that it may prevent others from leaving in the future but overall I am leaving on a high note.

It seems to strange to use the term retirement when announcing it people since I'm only 44, so I am saying "I'm taking a break from the workforce to spend more time with the family." However I have no plans on returning. Perhaps once my kids leave home I may be interested in finding part time work, but not in the IT industry.

[Meadbh]

Well, that escalated quickly! Congratulations.

[timemoveson]

Yes, that did move fast. I'm certain you will come up with the balance formula you need to either take a significant or permanent break from work.

[kcowan]

Congratulations! You will find many challenges so please come back here for more guidance.

[Markola]

Quote:

Originally Posted by fire161007 "I'm taking a break from the workforce to spend more time with the family." However I have no plans on returning.

I plan to say I'm taking a "sabbatical", one that anyone who pays attention will eventually notice never ends. Bravo for saving so well and congrats!

[fire161007]

Another step forward. We have left our financial advisor and started the process of transferring out our portfolio to self directed accounts.



Sent from my iPhone using Early Retirement Forum

[fire161007]

Today was my first official day of retirement. Friday was my last day at work. Since I work mostly from my home office, there wasn't a big fanfare - It was actually anti-climatic and didn't even see anyone from work as I had already wrapped everything up. The guys on my team did take me out to lunch earlier in the week.

I sent my goodbye email to people I have worked with over the past 20 years and got many warm wishes - probably close to 100. I also got 5 job offers in different departments and external. It's nice to know that I do have options if I ever decide to go back, however, chances of that are extremely slim.

Yesterday was Canadian Thanksgiving, but today was the first day of freedom. It was actually pretty busy. I have a very long to do list, but it was nice to know that I have a lot more time to complete it and there really is no pressure, like the kind you have with work deadlines. I could really get used to this.

I did get 1 phone call from a former colleague regarding work - I guess some people don't want to let go, but it was alright. Overall, I was feeling nervous but now that it's here I feel a great weight lifted off my shoulders.

[Meadbh]

Congratulations. I hope you had a wonderful Thanksgiving! Lots to be thankful for.

[fire161007]

It has been 1 year since I have retired and I have been enjoying every moment of it. I still have a regular routine as I have a pre-teen and a teenager at home and I prepare their meals, make sure they get to and from school and manage their extra curricular activities.

I have been busy with many home improvement projects as well as more exercise, gardening and hobbies. Funnily, I had expected more time to catch up on some TV and movies, but that has not happened. I'm just too busy. The days seem to fly by. We also managed to go on 2 great family vacations.

When I entered retirement I was concerned about the financial aspect, but with the nice bull run, our investments have gone up over 400K and our net worth is now $4.240M. My dear wife continues to work and her paycheck covers all of our expenses including an unexpected furnace replacement earlier this year.

I have also left our Financial planner and our portfolio is structured such that our dividend yield also covers all of our expenses, however it's currently set up as a DRIP. I will revisit this once my wife decides to retire as well.

Overall the transition have been really easy and I do not miss the workforce one bit. Sometimes I have to take a step back and realize that I can now set my own deadlines and if a project I'm working on doesn't get done today, no problems.

It's Canadian Thanksgiving this weekend. I have a lot to be thankful for. I'm also thankful for this community for it's support and insight. Happy Thanksgiving.

[Sunset]

In Canada, often the mutual fund MER fees are really high, so I'm just wondering if you have considered decreasing fees, but either owning low fee funds, or directly owning stocks (making your FA work harder) , or getting rid of your FA to save on the $40,000 (at 1% FA fee which is low) per year.

Perhaps your FA is hourly only ?

Do you have recommendations for Canadian low cost funds others might be interested in?