Greetings from the Great White North

[Music Lover]

Hi. New guy here.

I'm 52 (53 in May) and will be retiring when I turn 54. Unlike many people here, I do not have massive savings and never earned much more than average (currently $50k or so), and in fact, spent most of my career earning $30k or less. BUT...what I do have is a government job with a defined pension plan, and the years of service.

I max out my pensionable service shortly after my 55th birthday. My original plan was to leave once the pension was maxed out, but I recently found out that I can leave 1 year earlier and not lose any pensionable service as long as I pay both portions of the penion contribution. I have enough savings and am willing to forgo a year of salary to do so.

The stats:
- I own a house debt free and have no intention of moving or downsizing
- no other debt
- small amount savings, pension savings, investments ($100k total)
- a defined pension plan that will pay me 70% of my best 5 years, indexed annually
- medical care is basically free in Canada, but I will exercise the option to continue extended health benefits at a low rate (about $30 per month for dental, vision, travel insurance, prescriptions, etc.)

The plan:
- take 1 year leave without pay when I turn 54 (May 2016)
- contribute both portions of pension to both top up the years of service and to avoid a penalty for leaving before age 55.
- live 1 year on existing savings
- begin collecting government pension when I turn 55

My savings are not very high, but the most important factor is my defined pension. I currently live comfortably on about 80% of what it will pay, and have enough savings to cover my expenses until my pension kicks in.

I don't forsee any major cost outlays in the near future. My car is 8 years old, but only has 77,000 kilometers (48,000 miles) on it. I expect it to last another 8-10 years. My house is also in good shape. I've spent the last few years doing extensive renovations and now all the major projects are done, and no major capital expenses are expected.

My main hobby is music...I play guitar and bass and am currently in 3 bands. I already own all the musical gear I need, so playing is basically free other than minor purchases such as strings and cables. In fact, gig pay easily covers any music related expenses.

The countdown has begun...14 months until retirement at age 54!!

 

[aaronc879]

A government pension is about the most secure retirement a person can have. 70% COLA'd should be enough to live on with a paid off home. Congrats and enjoy your retirement

 

[Meadbh]

Welcome from an ex-Manitoban! I lived in Winnipeg for many years. I loved the diversity and the wealth of cultural activities, but moved on because of the winters.

There is nothing so secure as a government pension. You are very fortunate in that respect. However, your savings are fairly low and you plan to withdraw from them in the first year of ER. How much will be left? And what are your annual expenses? Are you quite sure that all your needs will be covered by your pension? If not, I think you have a problem. Healthcare (hospitalization and doctor visits) may be covered but of course it is not "free"; you have been paying for it through your taxes, which will likely be lower in retirement. But what if you want to take up more expensive pursuits, like travel? What if you become disabled and need expensive care that is not covered? What if your house is flooded? I am just a bit concerned that there is little left for unforeseen disasters. Have you analyzed your past spending in detail?

 

[Choices]

You are braver than I! My fear is that after paying both portions of pension and living expenses for your "gap year" you will have little left. A roof, water heater, car repairs can kick a real large hole in anyone's savings.

 

[Corporateburnout]

You are braver than I! My fear is that after paying both portions of pension and living expenses for your "gap year" you will have little left. A roof, water heater, car repairs can kick a real large hole in anyone's savings.

+1

Why not work until your 55th birthday when you can immediately collect your pension and keep your savings for the unforeseen circumstances stated above by Meadbh and Choices.

 

[Music Lover]

Thank you all for your concern...I've read a lot here and know that I have very little in savings compared to most. However, I live well below my income and currently have about double what I need to last the year that I will be without income. I expect to save more in the 14 months before then as well. I did forget to mention that I am also entitled to 30 weeks of severance pay.

Travel costs are minimal...2 or 3 seat sales a year is enough for me. Home repairs is also one of my hobbies. I did all the renovations myself...so far, I have built a double garage, gutted and installed a new kitchen, replaced all the windows and doors, installed hardwood flooring, replaced the HW tank, upgraded wiring, built a sunroom, 3 decks, and a fence. All the major work is now done, except that the house needs a new roof, but I've shingled dozens of houses over the years and have money put aside for that. My only cost will be materials.

I also have an extensive network of friends and family involved in trades and other fields...HVAC, mechanics, auto-body, plumbing, etc. We all help each other and no one pays retail. I'm known as the roofing and deck guy.

 

[heeyy_joe]

Just don't fiddle away your money and you'll be OK.

 

[Corporateburnout]

Well in this case the severance will be your spending money in the year until you get your pension without having to spend down your savings so you should be good to go.

Good luck.

 

[robertf57]

Do you get a severance if you quit That would not be the norm in Canada south (USA)!!!

Sounds like you might have marketable skills should your retirement ship spring a leak. I know I wouldn't be comfortable with so little savings; but, I can't argue strongly that you shouldn't take the leap.

 

[Music Lover]

Robert:

Technically, I'm not quitting. I am taking a year of leave, then officially retiring. I have confirmed that it does not affect the severance, although it is not paid out until official retirement.

However, severance pay is currently being negotiated out of our contract, and it's been (2+) years without an agreement. As has happened with all the other bargaining groups, it will be paid out at the current level of service with a new contract and will then end. I'm at the max (30 weeks). The absolute worst case scenario is that negotiations drag on longer than next spring and I have to wait for it. HR requires a month of lead time to process the leave, so if anything bad happens between now and then, I can simply delay it.

And it does look like I'll be picking up a few side jobs here and there. I'm building a deck for a co-worker this summer, and replacing some windows for another co-worker. I've also had people ask me to shingle their house, but have turned those jobs down...you're at the mercy of the weather and it's not a one-person job. I don't want to deal with a work crew or any potential liability if someone falls off a roof.

 

[Rothman]

Congratulation Music Lover on your years of service and ability to decide your retirement date. I don't think anyone can decide such a thing for someone else, and I believe most posters here feel the same way. Although you are going earlier with less than many here would be comfortable with your plan of side jobs can certainly help given you enjoy those activities. Also I expect your leave is revocable so if you find desire or real need to return to work that would also be your choice? I wish you the best and keep us up to date on how the decision has worked out for you. I'm one who worries my delaying because I like my job and it pays real well is a bigger mistake, your path my help inspire.


Sent from my iPad using Early Retirement Forum

 

[kcowan]

MusicLover
Go for it!

You have enough ability to earn casual money both from music and also from odd jobs that you can easily fill any money gaps. I would pursue those while you are young and build up a buffer, say for 10 years or until you tire of it. The music might continue. Look at Willie Nelson!

I have been retired for 13 years and never regretted a moment. All my dreams have come true!

 

[Sunset]

Hopefully some of your retirement is in TFSA. A wonderful Canadian thing that is sort of like a Roth without time constraints.

Sounds like you have a plan, and the ability to earn extra $$ when desired, so enjoy !

 

[EastWest Gal]

You have a couple of income streams available to you after retirement if need be, with your home repair skills and music, though there's not much money in the latter. I say go for it.


Sent from my iPhone using Early Retirement Forum

 

[nuke_diver]

That pension is a huge security blanket IMO I wish I had one. That and the fact that you medical is mainly covered unlike here (which is why I still try to convince DW to move as I am also a frostbitten Canadian boy but she HATES cold weather so it's a bit like blowning at a hurricane to change it's direction)

Your skills are also very marketable should you need more $$. The low savings could impact you if you need something unexpected (new car, new teeth) but you have wiggle room for most issues and we are only talking some small %age chances

You might even pick up beer money in your bands.

I am going to start my journey at 55 to become a rockstar. If you have any advice please let me know , once I get some talent and learn some mad guitar skills I should be good to go ...

 

[Music Lover]

Thanks for all the responses. I've gone through my finances over the last couple of years and have more accurate numbers:

Fixed monthly expenses:
auto insurance - $120
house insurance - $80
property taxes - $180
cable/internet - $120
phone - $60
heating/cooling/hydro - $120
auto repair/maintenance - $80

other expenses:
grocery/eat out - $200
entertainment - $150
home repair/reno, etc - $100
misc. - $200
savings - $500

total - $1900, round up to $2000
monthly take home pay - $2900
surplus- $900

I had a line of credit (mortgage) that was paid off Sep 2013 (17 months ago). Once that was paid off, I replaced old furniture, carpet, bed, bought some musical gear, built a deck, etc., spending about $7000. None of the $7000 is counted above, and no more major outlays are planned.

My bank balance stayed steady around $10,000 while paying down debt. Out of $900 monthly surplus since then ($15,000), I spent the $7000 noted above and have saved another $6000, so all but $2000 is accounted for...other misc. costs and "walking around" cash.

I plan to leave May 2016, 14 months from now. In that time, I expect to save $1000 per month (up from $500) to add to the current $16,000 for a total of $30,000. Grand total:

RRSP's - $42,000
TFSA - $30,000
various mutual funds - $33,000
joint account with parents - $30,000
current savings - $16,000

total - $151,000. That's a lot higher than the $100k originally stated, but I never really counted the joint savings with my parents. However, they have been gifting cash to myself and brother/sister over the years by putting it into joint accounts, so I may as well count it. With future savings of $14,000 and growth, the total should be around $170,000.

 

[Music Lover]

That pension is a huge security blanket IMO I wish I had one. That and the fact that you medical is mainly covered unlike here (which is why I still try to convince DW to move as I am also a frostbitten Canadian boy but she HATES cold weather so it's a bit like blowning at a hurricane to change it's direction)

Your skills are also very marketable should you need more $$. The low savings could impact you if you need something unexpected (new car, new teeth) but you have wiggle room for most issues and we are only talking some small %age chances

You might even pick up beer money in your bands.

I am going to start my journey at 55 to become a rockstar. If you have any advice please let me know , once I get some talent and learn some mad guitar skills I should be good to go ...

You are right about the huge security blanket...that's one of the reasons I am reasonably comfortable leaving early.

Don't learn guitar...guitar players are a dime a dozen and they all play too loud Learn bass instead, because every band is looking for a bass player and bass is what makes the ladies shake their butts . I really only learned guitar to be able to strum around a campfire...but half the time it seems that all I do is show bad guitar players in bands how to play their part right

 

[nuke_diver]

Too late on the guitar part I started that maybe 30 years ago though I only really got more serious in the last 10. I was at the campfire stage for a long time

I know you are right about the bass, and drums and being able to sing, none of which I can do. I have my work cut out for me

Your plan looks pretty solid to me. While I would be uncomfortable with the savings that's because I don't have and never have had been in a situation of even a possible pension so I don't even bother to count what I will get in old age pensions because I knew I could not live on it (the result of not working a particularly long time in any one country ). So given that your stated expenses above are less than your pension it would seem that you will be able to let those savings grow and can tap them when you need to for that private jet on your world tour

Enjoy

 

[Asher Aion]

Exciting time ahead for you. With the skills you have you can pick and choose to pad the nest egg. Just don't shingle the roof in January or February! Go Jets go!

 

[Chelhxi]

Hello, from another Winnipeger.

Currently I've decided to go the semi-retirement route at 38. I'm done with my corporate job at the end of the month and the growth/interest from my savings will cover about half my monthly expenses if I chose to go that way. I plan to work for myself and/or take whatever jobs interest me, since I only have to make up the difference - around $800 a month. Ideally I'll make enough money within a year or two to just let my nestegg continue to accumulate.

I'm just so happy to be in Canada where I can have health care without a job.

 

[Music Lover]

Leaving at 38 is an amazing accomplishment Chelhxi, congratulations.

I'm going at 54, and although some consider retiring at 54 "early", it's really only 1 year earlier than I would have gone anyway due to my defined plan. It's the financial equivalent of delaying the purchase of a new vehicle.

The health care benefits can't be understated. I read a lot on this site about health care costs and sometimes forget how lucky we are to have never have to face a staggering bill or high monthly premiums. I've been lucky so far not to have had a serious illness, but have had sports related injuries...knee reconstruction (torn ACL, MCL, and meniscus), and a torn Achilles tendon that cost me next to nothing...I only paid for pain killers, crutches, and a walking boot.

One of my close friends was hit by a semi while cycling...he almost died, 27 broken bones and 6 weeks in the hospital. Of all the worries his family and friends had, money was not one of them.

 

[Nodak]

Welcome, I used to live about 80 miles south of you and have decided to return to that area. I'm a retired Federal employee.

 

[Golden sunsets]

How is it that you live so far below your income but you have saved so little?

 

[Music Lover]

How is it that you live so far below your income but you have saved so little?

I only recently began living well below my income.

1. I earned less than $30k until 2000, and less than $40k until 2008.
2. Short failed marriage with a spender in too big of a house.
3. Bought a fixer after the divorce and basically gutted it, re-doing electrical, plumbing, foundation repair, new kitchen, built a garage, sunroom, decks, etc. Total $40k in renos, but could have been much higher as I did all of the work myself, other than the foundation repair.
4. Bought back almost 4 years of pensionable service ($21k).

 

[nuke_diver]

The health care benefits can't be understated. I read a lot on this site about health care costs and sometimes forget how lucky we are to have never have to face a staggering bill or high monthly premiums. I've been lucky so far not to have had a serious illness, but have had sports related injuries...knee reconstruction (torn ACL, MCL, and meniscus), and a torn Achilles tendon that cost me next to nothing...I only paid for pain killers, crutches, and a walking boot.

Knee problems and a music lover we could be brothers from another mother I just finished having knee surgery #5

The health stuff is big. I had my last knee surgery done because I was retiring. On the company policy the surgery cost me $35. In 6 months the same operation will like be in the thousands of $$. A major illness like cancer can be crippling though I think less so now that a few years ago.