How do I compare?

[retire1day]

Hey everyone,
I'm a 44 year old from Ontario,Canada.
I currently save 15% for retirement (hoping for 20% in 3 years depending on economy and job)
I am the sole income with a wife and 3 children(I have a 12 and 15 year old at home.)
I expect approx $1500/mth. from Canada pension/old age benefits upon retirement.(inflation factored in)
I currently have $220,000 saved in rrsp's.
My current salary is $110,000.House is paid for(but needs fixing)no credit card debt.
The only major debt is $42,000 line of credit that I'm chipping away weekly.
Is it possible to retire at 60 modestly and a little traveling but nothing extravagant.
Any feedback or suggestions would be greatly appreciated.I just want to find out if I'm on track.(don't trust online calculators unless you know of an honest one)
Thanks in advance.
retire1day.

 

[David1961]

Welcome!

If you are saving 15% of your salary, can I assume your expenses are about $93,000? How much do you expect that to go down when your kids are on their own?

To maintain withdrawing $75,000 per year (93,000 minus your expected pension), you'd need about $2 million as a ballpark figure.

 

[retire1day]

Thanks for your response.
I expect child related expenses to drop approx.$1000 a month due to food/clothing ,education funds and misc.
I have also recently started a separate mutual fund/stock account which I manage myself that I've been putting aside $200/mth towards for 2 years.
My short term goal is to pay off the line of credit in less than 3 years then increase savings to 20%.
Let me know how this will change my outlook,and if possible,could you tell me which calculator is most accurate to use.
Much appreciated.

 

[David1961]

I prefer FireCalc, but I suggest you use several and see how they compare. I think Fidelity has a pretty good one. Maybe others can suggest others to use.

The way I see it, your assets are currently $220,000 (not including your house) plus whatever is in your mutual fund /stock account.
When you retire, you will need about $60,000 (in today's dollars) per year.
If you use the 4% withdrawal rule of thumb, you'd need about $1.5 million when you retire at 60. So your portfolio would have to grow by a factor of about 6.8 (1.5 mil divided by 220,000) in 16 years.
Are these assumptions correct? If so, your portfolio will have to double about every 5-6 years.

 

[REWahoo]

You may benefit from this: http://www.early-retirement.org/for...-answer-before-asking-can-i-retire-69999.html

 

[retire1day]

Thanks David1961

Yes your assumptions are correct.do you think 20% savings will be enough?
I have a wife that fights me on this subject .
I try to explain to her that these times are different in the sense that the large company pensions are for the most part gone and if you done put away extra yourself,you can count on working for a very long time.If you lived a little closer I'd have you over for dinner to help convince her.
...........ha ha ha.

 

[David1961]

retire1day:

Your portfolio would have to grow by between 12 and 13% for the next 16 years assuming the 4% withdrawal rate rule of thumb (by the way, you should research this to make sure you are comfortable with this - there are many threads here on the 4% WR). Of course, you will be adding about $22k to it per year if you go to 20% savings, so that will help. Obviously, the more you add, the easier it will be.

I agree with your points about needing to save more, but you also need to make sure you have a good quality of life while you are working. It's a tough balance. I'd suggest someone start keeping track of all of your family's expenses for several months and categorize them (food, gas, household expenses, entertainment, etc). And also talk about how your expenses will change when each of your kids leaves home. Then you and she can sit down and decide if you are willing to give up enough to reach 20% savings. The important thing is both of you have to be on the same page with this. Good luck.

 

[retire1day]

David1961,
Thanks so much for your words of wisdom.
And good luck to you as well.
Regards.