Hi from Mike, stressed out over semi-FIRE to GTA

[shwgeek]

Hi everyone:

I've been lurking these forums for a while. Guess it's time to do a formal introduction.

My wife and I are both in our early 40s. We've been planning a move to the Toronto area for a couple of years now. A major part of the plan finally became reality: we found a buyer for our house and just signed the contract last night. Now we're faced with the big leap forward

My current assumption is that we can live on roughly $40k per year, after tax of course. That includes living expenses (food/fuel/kids) and rent. We should be able to cover that with dividends generated from our portfolios.

I would feel a lot better if we have some sort of income from jobs that can cover our expenses, and not needing to rely solely on our investments.

On top of that, dear SO is not 100% comfortable with the retirement income plan. Every time I speak to her about the dividend scheme, she reminds me about the dividend cuts by the banks. I'd have to say she does have a point, that one is never certain about how the future pans out. I don't think more time spent on my part in analyzing my stocks could have really predicted what happened last year. Just look at all the top notch value investors that got burnt by their bank holdings. (And no, my portfolio is not 100% financials, but the problem with dividend investing in Canada is that a lot of the high yield stocks are banks.)

So the compromise solution now is for me to keep my job in the states, and have her move back with the kids this summer. I would move after she's found something. Not something I'd look forward to, but according to my dear SO, it's the "sensible thing to do". The darn thing is I'm tending to agree with her on it.

I'm hoping to get her more involved in our finance next year. At the minimum I want her to get a better handle on how our inflows and outflows look like. When we used to put everything on Quicken, she was a lot more involved. But alas the kids took priority over the last few years, and we just didn't have the time to do that any more.

But back to something perhaps more relevant for the FIRE crowd: how do you cope with the uncertainty? Is there something that you did that helped you manage the fear before the leap? (I know I know, having a couple of jobs is anything but certain, especially in an environment like these days.) I imagine the fear of FIRE will go away after living it for a while, so could any one share how long it took for this dreadful feeling of change to go away?

And I imagine someone will tell me that I can't get over the fear until I go for it

Thanks for listening and best of luck to all.

 

[haha]

And I imagine someone will tell me that I can't get over the fear until I go for it

Thanks for listening and best of luck to all.

Welcome shwgeek. Something I try to remember- there is always a time before you leap when you have doubts and concerns. Sometiems you jump and all goes very well. Sometimes you jump and your chute fails to open.

Why not just keep your wife and family with you, and keep your job, and let your wife get one too? Given your age and family responsibilities your retirement plan seems marginal.

Also, how good do you feel about her volunteering you as the wage slave?

Once wife and family are gone your life can become lonely wage grubbing.

Ha

 

[W2R]

Hi, Mike, and welcome to the ER Forum.

I am planning to retire in November and I am fearlessly headed toward that day. Or at least, I would like to think so.

Some things that have helped me to control my fear are:

* having my house and car paid off, no debts
* already living on less than my expected retirement income
* arranging for several income streams from different sources
* diversified portfolio
* asset allocation appropriate to my own risk tolerance.

The recent economic collapse has provided a great test of risk tolerance and asset allocation.

I think it is great that you are involving your wife in the retirement planning, as much as possible (though I do understand her lack of time for it with children to care for right now).

It takes a lot of courage to retire in these times, but you will find a lot of our members are planning to do exactly that.

 

[Bestwifeever]

Welcome to the boards and wow, congrats on selling your house!

Is all your future income forever going to come from dividends on your investments, or will a pension or the equivalent of U.S. Social Security kick in at some point? Will the dividends grow enough to offset inflation?

Is there any reason not to work in Toronto when you first move there to help ease into a new place and a new lifestyle? You are making a lot of big changes it seems--maybe a little more gradual change would make your DW and you more certain of your plans?

 

[REWahoo]

Mike, welcome to the fourm.

Here is an interesting thread on the "coping with uncertainty" question: http://www.early-retirement.org/forums/f29/handling-the-just-one-more-year-syndrome-20091.html

Edit to add: Note the very last line of the last post on the thread...

 

[shwgeek]

Thank you all for your replies.

The move to Toronto is half motivated by getting the kids closer to the grandparents. We both want them to grow up having closer ties to the extended families. We figured, since the elder daughter will be entering middle school next year, that this is going to be the "do-it-or-never" year.

We both still plan to work, but hopefully at much reduced workloads from what we've been doing. The main trouble we've been having is looking for work remotely. That's why we're looking into splitting the move in two parts.

And to answer the question about income generation: yes, the current thinking is living on the dividend stream. I've been buying companies that historically have grown dividends faster than inflation. Of course, that doesn't mean they will continue to, hence the desire to keep working for a bit more to build up a bigger margin.

I don't include social security into my plans. We'll just consider it a bonus if the trust fund doesn't go bankrupt in 20 years. Sorry for the typical Gen-Xer response.

About the house: I suppose we're lucky. We live in a town along the commuting train line to NYC, and has excellent schools. The fact that we listed our house near the low end of the price range in town, and a brand new kitchen, helped a lot.

Please do criticize my thinking, just so I'm ready for what comes next from my dear wife

 

[Rambler]

I don't like splitting up families, but sometimes you do what ya gotta do. If it were me, I'd probably plan the phased move, with her going and getting a job while you stay in your current job, continuing to fund your expenses and add to your retirement accounts. We had planned to FIRE this year, but with the economy in its current state, kids headed to college, and my retirement accounts in their reduced state we have decided to hold on a while longer, maybe even a few years. We wanted to FIRE when DD graduates HS (39 days from now) so we could be closer to their universities, allowing us to visit from time to time. As it turns out, the kids are going to be far apart (which was not their intention at the beginning - thinking they would be at least in the same state).

If you do decide on the phased move though, I would set a certain time limit, after which you would jump in anyway, or change plans and revert back to current status quo...its not good to have families apart for too long...and I would also make sure to have a plan as to how often you would travel to your new home to be with them (once a month or so would be a good target I think).

Good luck with your decision making. I know its not easy.

R

 

[DFrancis]

Hi Mike

Hi Mike,

Welcome to the forum.

 

[jdw_fire]

Hi everyone:

My current assumption is that we can live on roughly $40k per year, after tax of course. That includes living expenses (food/fuel/kids) and rent. We should be able to cover that with dividends generated from our portfolios.

welcome! i am surprised no one asked for a few more details on your financial situation, like NW, AA, etc. if you still have a dividend income of $40k after all the dividend cuts you probably have assets well in excess of $1 million and can probably retire comfortably but this is all speculation without ur financial details.

 

[Meadbh]

Hi Mike. I would just like to question a couple of assumptions.

1. How easily can you get a job in Toronto right now? You are assuming that your difficulty is due to not being "on the ground". However, back in March, the TD Bank was predicting a 2.7% decline in the Ontario economy, and Scotiabank predicted a 2.9% decline, in 2009. And that was before the carnage in the auto industry, on which Ontario is heavily dependent. If you are jobhunting in earnest, move to Saskatchewan.

2. You say that you and your family can live on $40K per annum in the GTA. I don't know whether you mean US or Canadian currency, but I hope it's US, because I, as a single person, could not live on $40K CDN in TO. Stuff costs more here.

3. Piece of good news #1: housing prices have recently become much more reasonable in TO. However, TO remains one of the more expensive cities in Canada for property prices.

4. Piece of good news #2: assuming that you are planning to live off Canadian bank dividends, your income is not as shaky as it could be. The big five are currently considered among the most stable in the world and defaulting on their dividends is highly unlikely, though they might reduce them if the anticipated recovery does not occur.

5. Piece of good news #3: health insurance.

I appreciate all the arguments but personally I would want more financial security before making this move.

 

[shwgeek]

Hi again everyone:

Thanks for the link REWahoo. I must have seen that thread before, but I now finally 'get it'. I suppose that's a good sign that I'm getting closer to the mental state.

Rambler: love your NY accent. I'm coming to terms with it. Yes, and I did talk to SO about the keeping a cap on the time apart, and one year is what we agreed on. Right now we're still talking about moving together if one of us gets a job there... she has a phone interview today actually, wish us luck.

About finances. I was hoping to generate some interests in debating my assumptions. Right now here's what I see: I can rent a 3br apartment/townhouse for roughly $2k a month. Our living expenses (in NJ, the more expensive part of the country) is roughly $1.5k a month, and that's including food/gas/entertainment/car insurance/piano lessons. So things seem to add up.

We've both been getting interviews from places in TO. I suppose it depends on how hard you look and how lucky you are. But I don't think the situation is that dire. We're also open to doing temp/part-time work, and for those I think being there would help, no?

And about the question on total asset. Well, you can do the math. But to my mind the total number is irrelevant if you can't derive an inflation beating income stream from it. That's the question I'm grappling with. If I go with Buffet's advice in the face of high inflation, then I should seek to remain in the job market as a hedge.

Over the last week I've started visualizing the worst case scenario. Just in case my portfolio blows up (see 1930s for reference), and both of us are out of a job. I suppose I can find shelter at the old family homestead, and plant food in the back yard. So we probably won't perish...