Originally Posted by Canadian Girl
CF - being a fellow Canadian to another, what do you think is a realistic goal to retire by 45?
CG - I'm not sure what your exactly asking. But I suspect your curious about my numbers for retiring at 45. First off I'm turning 28 this month. To make this a bit easier to understand I break it off into two phases. Phase 1 - 45 to 65 and Phase 2 - 65 and up.
First I figured out how much I need to save for Phase 2. Based on the Government's Retirement Calculator I got estimates of our OAS and CPP for me and my wife if we stop adding money to CPP at 45 and starting taking CPP at 65. That will produce for us about $19,692 a year in today's dollars. Then I have a company pension that I will cash out at 45 and move to a Lock-In RSP. I should have about $100,000 from that. So if that grows at 6% for 20 years I can pull off a safe withdraw of 4% I should be able to have another $13,240 a year. So I will have a total of $32,932 which would cover the basic living expenses fairly easily. Then the RSP's should be around another 294,000 by 65, so that should spin off another $11,760 (4%) for extra things.
Then for Phase 1 - My current expenses are about $2000/month (income is about $3600 after tax), so I should be able to hit up the mortage for an extra $1000/month after DW student loan is gone by Dec. So if I don't overspend on the next house I should be able to finish paying off the current house in 7 years. Then it's save all that mortage money and the regular mortgage payment for 10 years at $2000/month. That should give me about $355,000 in 10 years @ 6%. So I will invest that in 1/3 income trusts, 1/3 blue chip divident stock, 1/3 ladder bonds or GIC's. I fingure I can spin off about 7% of that a year since I don't care if I draw down everything over the next 20 years. So that should leave about $25,000/year for living expenses. Also I intend to keep doing some other activities that will generate some side income for fun things. The great thing is getting 2/3 your income in dividents mean my tax rate should be around 5% overall. God bless the Canadain tax system for that little trick.
I hope that gives you a clue of what I'm planning.