Soo Close

[toosoon]

Hello All: Have been lurking on here for months and have gathered some fantastic info. Here is my situation: age 47,married with non working wife, two kids, age 15 and 13. I am bored and burnt out in my profession I am canadian so my finances are in canadian dollars and they go something like this:
stocks 50%/ bonds 50% 1.16 million
RRSPs 382 K
The stocks are mostly large cap that pay small dividends and the bonds are all "real safe" but only pay 4-5% intrest. I have no debt and spend 50-60k in living expenses per year. I am by habit a saver and a DIYer. I will have a government pension kick in at age 60 of aprox. $750. I would like to keep the RRSP till age 69 at which time convert to an annuity so my question to all you succesfull ERs is how could I arrange my finances to meet living expenses?? Any suggestions are greatly appreciated.

[Jarhead*]

Quote:

Hello All: *Have been lurking on here for months and have gathered some fantastic info. *Here is my situation: age 47,married with non working wife, two kids, age 15 and 13. I am bored and burnt out in my profession *I am canadian so my finances are in canadian dollars and they go something like this: * * * * stocks 50%/ bonds 50% * *1.16 million * * * * *RRSPs * * * * * * * * * * * * * * *382 K The stocks are mostly large cap that pay small dividends and the bonds are all "real safe" but only pay 4-5% intrest. *I have no debt and spend 50-60k in living expenses per year. *I am by habit a saver and a DIYer. *I will have a government pension kick in at age 60 of aprox. $750. *I would like to keep the RRSP till age 69 at which time convert to an annuity so my question to all you succesfull ERs is how could I arrange my finances to meet living expenses?? *Any suggestions are greatly appreciated. * * * *

First off, congratulations on your net worth at your age, and especially impressive with a one income family and two teen-agers.
If your home is paid for, at first glance, it appears with your net worth, you could probably get by with your income requirements. (If you were highly motivated).
If you were single, or had no family obligations, it would be much easier to green light it.
However, having gone through teen-agers myself, they are just reaching the stage where expenses will probably be much higher for you in the next 7 or 8 years.
You mentioned that you were bored, and burned out of your current occupation. Bored, is one thing but when you say burned out, does that mean stressed to the point of not being able to function properly, (sleepless nights, etc.). In other words, if your current job is seriously becoming a major health problem, you should not continue on that track.
Ideally, I would recommend that you hang in there for a few more years, and then re-evaluate at that time.
In any case, if you are bound and determined to "pull the pin" now, and wanted specific advice, you would need to supply a lot more information. (Home paid for?
Assets Pre-taxed? Not familiar with Canadian retirement.
You mentioned that you will receive $750 monthly at age 60. Is this the total you can count on?
You should be justifiably proud of your accomplishments at your still young age, and if you care to follow-up with more information, there are lots of well informed, and well intentioned posters on this board to help you out.
Regards, Jarhead

[toosoon]

House is paid for and all assets are after tax. The current high cost of living is due to teenagers, they are expensive but worth it. The job has got to go, I am not ruling out part time employment or a contract work but do not want to have to count it. We also have to dissolve RRSPs in our 69(70?) year so what I am trying to determine is if 1.16 mil will last for 22 yars till I turn 69.

[Zipper]

toosoon is probably talking about CPP at 60. Full benefits are around $750/mo. at 65 but would be higher by the time he got there because CPP/OAS are inflation adjusted. If he accessed at 60 there would be a reduction from the full amount due at 65. In addition he is entitled to a drop-out period before further reductions would occur, meaning he probably could go at ~ age 54 without any damage being done. At age 65 all qualifying Canadians are eligible for another ~$500 OAS. With toosoons assets, I'd be out of there in a heartbeat!

[AltaRed]

Per Zipper's comments, I would suggest SooClose needs to sharpen his pencil a bit more before taking the plunge. He has not done enough research to fully understand that the $750 will be discounted for dropping out of the workforce before about 54.

Also, SooClose has not said how his $382k in RRSP funds is currently invested. If he selects a laddered bond portfolio now, he should be able to double its worth by time he is 69. Then he needs to figure out whether an annuity is better than an RRIF at that point.

What he needs to do at this point is to take his $1.16 million, plug it into one of many free retirement calculators available and see what he can spend monthly from now to age 65. SooClose has to decide what factors he plugs into the calculator (try a number of scenarios), but one of them should assume about a 5% BT return on investments and a 2.5% inflation rate.

[toosoon]

Yes what I am trying to do is fiqure out "worst case" situations. For example 1.15 mil invested in bonds should generate an income of aprox 65k for 22 years at which time I would still have 382k (todays dollars) to last to my funeral. Are there any 70 year old canadians out there? Is 382k enough to last for 10-20 years?

[nfs]

Quote:

Yes what I am trying to do is fiqure out "worst case" situations. For example 1.15 mil invested in bonds should generate an income of aprox 65k for 22 years at which time I would still have 382k (todays dollars) to last to my funeral.

Assuming that $65k is supposed to cover your expenses (were you even including taxes?), what are you going to do about inflation?

Quote:

Is 382k enough to last for 10-20 years?

Short answer: Not if you are spending $50-60k a year.

Long answer: Use a retirement calculator.

[toosoon]

In the worst case situation the 1.15 was invested totally in bonds at 5% interest which is 3% inflation plus 2% growth. The 65k was before taxes. Where can I find a good retirement calculator? Theone I was using seems to simple.