I don’t believe I’ve ever shared an age-related date in a post on my site about our financial journey – until now. Inspired by Robb’s post here today’s post highlights some of our lofty financial milestones in the coming seven years.
Projected assets by the end of 2023:
- Principle residence = $600,000 (conservative value). I’m assuming our house value will increase by about 2% per year going-forward to reach this amount but I’m not betting on it. We are not counting on our house for a retirement plan.
- Defined benefit pension (mine) = $450,000 (conservative, commuted value). I’m very grateful for this pension. I hope to work at my current place of employment for another seven years however nothing is guaranteed.
- Defined contribution pension (wife) = $400,000 (conservative, commuted value). Her defined contribution pension plan is not as good as mine but remains very valuable. I assume my wife will continue to work full time for another six to seven years until 2023. Again, employment has no guarantees.
- Personal investments = $1,000,000 (big hairy audacious goal). We recognize a modest and consistent savings rate is our key to financial freedom. Money we save now, in the markets, will be put to work sooner and will continue to work for us. We figure we need to max out our contributions to our TFSAs and RRSPs, every year, until the end of 2023 to have a hope of reaching this goal. There is optimistism we can derive 3-4% real returns from our portfolio for the foreseeable future. There is no point worrying about what the stock market does or does not do, or what the inflation rate is. We can simply control our savings rate and keep our investing costs low for as long as possible. After savings are set aside each month we have some fun with the rest – fun that includes international travel.
You might recall from reading my site, we employ a two-pronged approach for our personal investments.
One – we invest in mainly Canadian dividend paying stocks for passive income. Our goal is to earn $30,000 per year from Canadian companies in taxable and tax-free accounts by the end of 2023. This goal is aggressive but within reach.
Two – we invest in a couple of low-cost, diversified Exchange Traded Funds (ETFs) inside our RRSPs. Although we have a bias to owning dividend paying stocks across our portfolio (for income) I’ve learned to appreciate the lazy, simple but effective approach that passive investing can bring. We use ETFs for mainly international investments.
Projected liabilities by the end of 2023:
- None. Another goal of ours is to pay off the mortgage by the end of 2020. We currently have only a small car-loan on the books for another 6 months. That’s all the debt we have but it’s enough. As we get older it would be nice to pay cash for our (used) cars.
Ultimately our goal is to enter semi-retirement without any debt and some passive income derived from our investments to pay for all basic living expenses (those are, property taxes, home maintenance, household utilities, food and insurance). There is a great deal of discipline ahead of us but there’s also some optimism we’re on a good path while taking time to enjoy today – that’s important.
Any financial freedom goals you have set for yourself? Have you already realized the fruits of your labour?