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45 year old from Canada hoping to retire in 2017
Old 01-23-2017, 06:45 PM   #1
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45 year old from Canada hoping to retire in 2017

Hi,

I have been a lurker on this forum for a couple of years. I truly enjoy this community of like-minded people.

I am 45, working for the government. DH is 52. He will FIRE in July 2017. I plan to take a one year sabbatical also in July. If all goes well, I might not go back to work, or decide to work for 6-12 months to increase my pension somewhat and keep open the option of going back to work in case of a major stock market crash. We are both dissatisfied with work and looking forward to more leasure time and freedom.

We have two children at home, 19 and 16 years old. Both plan on university degrees (masters degrees). Education costs are accounted for in our budget. And health care costs are limited in Canada.

We spend about 63000$ a year (excluding taxes) plus 15000$ on travel.
We have no debt and a paid for house.

We have investments of 2.4 M$. AA is about 70% stocks, 20% bonds and 10% cash.
When I turn 65 I will have a Cola'd pension of 30000$ a year and social security 7000$. DH will have social security of 16400$ at 65.
Firecalc gives our plan 100%. Even with a 30% market crash scenario early in our retirement and a conservative 2% real return, our Excel spreadsheet says we are ok.

I would appreciate any thoughts on our numbers.

Thanks
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Old 01-23-2017, 06:56 PM   #2
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My only thoughts seeing your current investments/expenses is to wonder if perhaps you've been excessively conservative in working this long...

Congrats on the hard work to get here and enjoy it!
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Old 01-23-2017, 11:52 PM   #3
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Welcome. Assuming you pay ~$10K in taxes, I estimate your WR at ~3.5% at the time of ER, which is reassuring. The key to success here is your COLA'd pensions, albeit they are 20 years in the future. Your expenses seem reasonable and you have the education and health care issues covered.

I did not see a breakdown of tax-sheltered versus taxable investments. If most of your investments are in RRSPs, remember that every withdrawal will be taxed as income. Given that you will have decent pensions and CPP, early withdrawals from your RRSPs may be a great idea to reduce RMDs later. Save any excess in your TFSAs.

Overall, assuming no surprises, you seem to be in good shape to ER. What are you going to do all day?
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Old 01-24-2017, 12:30 AM   #4
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OP - if you don't have a TFSA already, open one with a dollar deposit, especially if you don't plan to use it for a few years. Because the allowed contribution limit is cumulative.

Your wife and kids should also open one for the future now.
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Old 01-24-2017, 01:00 AM   #5
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OP - if you don't have a TFSA already, open one with a dollar deposit, especially if you don't plan to use it for a few years. Because the allowed contribution limit is cumulative.

Your wife and kids should also open one for the future now.
Every Canadian over 18 should have a TFSA. However, one of the kids is only 16, so won't be eligible for two more years.
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Old 01-24-2017, 06:01 AM   #6
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Thanks for your answers. About 30% is in RRSP's, 7% in TFSA's, and 4% in education savings plans. The rest, 58% is in taxable investments. We have maxed out our TFSA's and opened one for our oldest son.

As to what we are going to do all day, we have many projects: travel, gym, skiing, hiking, reading the classics, house improvement projects, learning another language, taking music lessons, taking up online classes, taking care of our aging parents, and the list goes on...
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Old 01-24-2017, 06:11 AM   #7
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What is most difficult is staying somewhat motivated at work. I have coutdowns for number of days, number of work days, number of mondays, and for intermediate steps until July.
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Old 01-24-2017, 07:54 AM   #8
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Congratulations on living the life. I think your main challenge would be dealing with your peers. Be strong and make up a story.
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Old 01-24-2017, 08:01 AM   #9
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What is most difficult is staying somewhat motivated at work. I have coutdowns for number of days, number of work days, number of mondays, and for intermediate steps until July.
Impressive financial position. However, my experience is that these kinds of "countdowns" make the time go slower.
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Old 01-24-2017, 12:13 PM   #10
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Are you a federal employee? In some federal departments, you may be allowed to take a sabbatical but continue to fund your pension for up to a year, which, of course will increase the amount of your pension. It may be worthwhile to take a close look at your pension/leave provisions and run a few calculations to see if this option (if available) fits your needs.
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Old 01-24-2017, 03:48 PM   #11
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Congratulations on living the life. I think your main challenge would be dealing with your peers. Be strong and make up a story.


Hi Keith,



You are quite right. I do feel uncomfortable asking for a sabbatical knowing that I might not come back or only for a short while after. And itís even worse because I have been in my current position only for a little less than a year although I have been working for the government for 17 years. My boss and colleagues will certainly not be pleased to see me leave so soon.

However, in my experience, it is never a good time to ask for a leave of absence. Thereís always a good reason to wait : new assignments, other colleagues leaving, reorganizations, etc.

My story is that we have been planning for a sabbatical for a long time and that now is the best time for DH at work. I will mention the need to help out my parents and maybe also the need to step back and think of my future. Iíll see how it turns out.
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Old 01-24-2017, 03:51 PM   #12
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Are you a federal employee? In some federal departments, you may be allowed to take a sabbatical but continue to fund your pension for up to a year, which, of course will increase the amount of your pension. It may be worthwhile to take a close look at your pension/leave provisions and run a few calculations to see if this option (if available) fits your needs.


Unfortunately this option is not available to me. The only option I have is to buyback the one-year leave of absence, if and only if I go back to work after the sabbatical.
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Old 01-24-2017, 04:43 PM   #13
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OP - if you don't have a TFSA already, open one with a dollar deposit, especially if you don't plan to use it for a few years. Because the allowed contribution limit is cumulative.

Your wife and kids should also open one for the future now.
Actually the TFSA contribution limit accumulates whether you open a TFSA or not.
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Old 01-24-2017, 10:39 PM   #14
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Actually the TFSA contribution limit accumulates whether you open a TFSA or not.
Took the words right out of my mouth. There is no real reason to open a TFSA account until one is ready to actually use it Ö the contribution room does not disappear. "You will accumulate TFSA contribution room for each year even if you do not file an income tax and benefit return or open a TFSA" (emphasis in original).
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Old 01-25-2017, 10:32 AM   #15
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Took the words right out of my mouth. There is no real reason to open a TFSA account until one is ready to actually use it Ö the contribution room does not disappear. "You will accumulate TFSA contribution room for each year even if you do not file an income tax and benefit return or open a TFSA" (emphasis in original).
Except that any accumulated gains within the TFSA are not taxable, so if you have dividend/interest earning investments outside the TFSA while you have contribution room, said investments are subject to tax.
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Old 01-25-2017, 11:18 AM   #16
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No one has suggested that investing outside a TFSA is tax-advantaged.

If funds are available for investment purposes, it makes sense to use all available room inside a TFSA before accumulating assets outside.
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Old 01-25-2017, 11:50 AM   #17
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No one has suggested that investing outside a TFSA is tax-advantaged.

If funds are available for investment purposes, it makes sense to use all available room inside a TFSA before accumulating assets outside.
It appears I misinterpreted your previous comment. Sorry.
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Old 01-26-2017, 08:33 AM   #18
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No worries!
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