2021 Financial Goals – August Update
“You are never too old to set a new goal…”
“When you’re young, you don’t learn to walk unless you fall over.”
“If something is important enough, even if the odds are against you, you should still do it.” – Elon Musk
I like financial goals. Image courtesy of Behavior Gap.
2021 Financial Goals
A reminder to readers we designed our financial goals for this year as a subset of My Financial Independence Plan here.
Those bullets are right from my/our documented plan as we works towards semi-retirement in the coming years.
So, in 2021 our goals are to:
- Max out contributions to our Tax Free Savings Accounts (TFSAs).
- Max out contributions to our Registered Retirement Savings Plans (RRSPs).
- Continue to pay off our mortgage.
- Initiate a larger emergency fund to start semi-retirement with.
Here is an update on where we are at.
2021 Financial Goals – August Update
1. Max out contributions to our TFSAs.
Although we own a number of Canadian dividend paying stocks for growing income (I should get rewarded from companies like Bank of Nova Scotia (BNS), CIBC (CM), Emera (EMA), TD Bank (TD) and TC Energy (TRP) this month in fact), we also own low-cost, diversified ETFs in our investment portfolio.
So, every dollar of our 2021 TFSA contributions were invested in iShares ETF XAW. This was done to reduce our Canadian home bias – one of my lessons learned in diversification from the pandemic.
Lessons learned in diversification – reducing my Canadian home bias
Once more TFSA contribution room in January 2022 opens up, we intend to max out those accounts once again. We’re in savings mode right now for 2022 TFSA contribution room. We’ll need $12,000 saved up by January 2022.
A reminder since TFSA account inception, these are the annual and cumulative limits assuming no withdrawals over that period were made:
|Year||TFSA Annual Limit||TFSA Cumulative Limit|
Decades from now, those TFSAs should be worth a small fortune! The same can happen for you too!
Check out this and many more FREE calculators on my dedicated Helpful Sites page.
2. Max out contributions to RRSPs.
Even though we both have workplace pensions in our future (mine is defined benefit (DB), my wife’s is defined contribution (DC)), we believe having RRSPs full of investments will provide some of that desired financial flexibility we’ve been working hard towards for the last 20 years.
So, after our TFSAs were maxed out in January 2021, RRSP contributions were made. Those RRSP accounts are now fully maxed out too.
We are very fortunate to have workplace pensions. Even then, you can retire comfortably without any pension plan.
Here is just one case study on my site about that.
This couple has $1.2 million invested but no pensions to rely on. Can they retire how they want?
3. Continue to pay off mortgage.
Goal in-progress folks.
Our mortgage is now into the high-five figures remaining. With a rock-bottom borrowing rate of 1.69%, our mortgage should be dead in another 3.5 years in 2024.
In 2024, we believe with existing assets and no debt on the books, that will open up opportunities to work on our own terms, likely part-time.
We determined our financial independence number over a decade ago. You can do the same here.
4. Initiate a larger emergency fund to start semi-retirement with.
Goal in-progress folks.
This goal remains controversial on this site. In fact, some bloggers I know couldn’t care less about an emergency fund – right Big ERN???
Early Retirement Now thinks an emergency fund is still useless!
However, stay with me here….I have my reasons for keeping an emergency fund.
- For years, we’ve kept our emergency fund at this steady amount. Our biggest reason for having it is because cash provides a great sleep-at-night factor. Your tolerance for stress may vary!
- As we age, $hit will happen. I just don’t know when. I know the last thing I want to do, as I get older, is go back into more debt when a small financial emergency hits.
- A reminder to all readers we are 100% equity investors. No bonds. No fixed income. No GICs. Nada. This means if the stock market goes down, in bunches, our portfolio value is likely to dive down with it. So, to avoid selling any equities in any terrible market conditions we will own some cash in semi-retirement to hedge against any poor sequence of returns. While most studies (including those by expert retirement bloggers like Big ERN) will show the benefits of a post-retirement equity glidepath (i.e., own more equities as you age!) we are likely to keep our high stock allocation for the foreseeable future during our asset accumulation years and early asset decumulation years. So, with our retirement cash wedge our money will be liquid and it will allow us to avoid selling any equities at the worst possible time (when markets could be delivering poor returns).
Read on – How much cash should you keep?
Most financial gurus suggest you revisit your asset allocation at least 3-5 years out before any planned retirement date. Well, with 3.5 years to go for us before semi-retirement, that time is now. We are slowing building up our cash wedge before part-time work begins.
Our goal is to have ~1-years’ worth of basic living expenses “banked” for semi-retirement. Additions to that cash wedge are slowing happening this year and will continue towards 2024.
2021 Financial Goals – August Update
I’ll keep you posted on all our goals as 2021 winds down.
Thanks for reading and let me know what comments or questions you might have about our goals this year or our overall plan. Happy to answer those. For some frequently asked questions (and my answers), check out my dedicated FAQs page.
You can also visit my standing Retirement page where I’ve interviewed many successful retirees and learned from them to tailor my own investment path.
Stay well and stay invested everyone!
Your opening caption (“Where are we now…………where do you want to go”) brought back memories of a book, written by Henry Fairfax Robert Perrin, I read back in the mid 1970’s; the title is Focus the Future – An Introduction to Long Range Corporate Planning.
His theme was that there are really 4 steps to Planning of anything; they are;
– where are we now?
– where do we want to be?
– how are we going to get there?
– how are we progressing?
He also used a saying, possibly attributed to Dwight D. Eisenhower, which is “The Plan is nothing, Planning is everything”. When your premises/assumptions change, your Plan is out of date, and you must update with a new Plan, and so forth.
I apologize for veering from the theme of your sight, but, the concept still applies.
I enjoy reading the discussions you have with the readers and with outside guests.
Thanks Malcolm. I use the same approach in my day-job:
1. Where are you now? (A)
2. Where do you want to be? (B)
3. What’s your plan to get from A to B?
4. How are you going to ensure you’re moving from A to B?
Simple stuff but never easy when people are involved 🙂 HA.
Thanks for sharing.
Great goals and great progress! I’m super jealous! Although our own goals are doing okay I didn’t start my investing journey on a good note (several bad ones in fact) but trying to “right the ship”.
Big Ern made a very compelling case for me. I do think I’ll strive for “some” type of emergency fund but I’m pretty sure I won’t stash a whole year’s worth of expenses in a savings account. Perhaps 3-6 months.
Having said that, if I do manage to get my dividend income to where I want it to be, I likely would have a change of heart for a more conservative approach.
LOL – tomorrow the pendulum will swing the other way!
Big ERN is a very sharp guy – we had a good chat at a conference a couple of years ago.
I’m/we’re convinced that a small cash wedge is smart for us, while we will remain close to if not 100% invested in equities as we enter semi-retirement. 3-6 months is still very good and seems wise James!
We’ll live off dividends to a degree and supplement that with part-time work. Keep me posted on your plans. Ha.
Doing well Mark. Having slightly larger amount of emergency fund seems to make sense as you get closer to semi-retirement.
I think so Bob, a hedge against some sequence of returns risk 🙂
Great job staying focused and on track with your goals.
You’re clearly closing in on fiwoot.
I/we are RBull. Coming along. 3.5 years for some decisions/opportunities I think. Thanks for the motivation.
Ha, it almost seems a team effort on here!
The big ones here are/will be:
Na, you told me you don’t really need the income since you’re buying trucks and stuff so defer CPP to age 70 seems like a given. 🙂 Inflation protected, fights longevity risk, AND 42% income bump. What’s to decide?
OAS is more like, shall I have more play $$ now or later? Age 65 seems reasonable.
Just my take of course.
Ya, spending small fraction of VPW suggestions. Seems consistent with retirees on this site though. LOL
CPP @ 70 = probably. OAS?
LOL, bought 2 new to us vehicles this yr.
’17 Rogue SL for wife to replace 12 yr old Mazda 3.
Me I own 2 – 14!!! year old vehicles and 13 year old one. Not exactly huge bucks. LOL
’07 Z4M Coupe
’07 F150 4×4 crew
’08 VTX 1300
Toys upon toys! Good times. Hope to get there myself 🙂
Ya, little boat too and aiming for a 4 wheeler here sometime. LOL
Did my first paid work in 7+ years lately. Couple of pro detailing jobs on 2 show trucks (you saw on twitter??), and running coaching. Wasn’t looking for anything but people paid me pretty decently. Ha.
You’ll more than get there my friend.
Yes, I did see that. Nice to see people paying you for that – well done. Small business venture in the making to keep you busy 🙂
Thanks. I didn’t go looking for any of it. People really wanting me to do it. Not looking looking for more, but I have people asking. Busy enough. LOL
Yesterday I changed the CVT fluid in my wife’s car. Dealer = $420, Deane $109. Projects like that are endless around here. Saving money is almost as good as making it. LOL
More $$ saved for craft beer and fine wine!
Yeah, great progress. Congrats, Mark.
Do you have a certain financial figure you’re shooting for? Or I think you’re shooting for a particular passive income amount.
BTW, someone gave me this advice, which may be helpful to you. To increase the font size to 18 point. It will help include more people who may have some visual impairments or visual acuity issues or older people. Right now I think you’re at a 14 or so.
Nice to hear from you Sam. Well, more about passive income. Striving for $30,000 per year from TFSA (equivalent to your Roth IRA) + taxable account. That income ($30k per year) should cover our condo fees, taxes and more here in Ottawa for life, and some groceries as well.
The rest of the portfolio is associated with our RRSPs (like your 401(k)) in U.S., should also be close to yielding about $25k per year in dividends and distributions.
I figure that with some part-time work and our future pensions should be “enough”. Hopefully 3.5 years to go!
Yes, I will try and do that for my theme. I agree, larger font is better and thanks for that.