Feeling Financially Trapped
Are we there yet? You know, this early retirement thing?
Those are questions I’m asking of late…
That could be because we’re inching closer every month to realizing one of our huge, rather, monstrous personal finance goals. On the other hand, maybe that’s because I’ve finally recognized that early retirement isn’t the be-all and end-all.
Let me explain…
This would be great:
Financial Freedom Updates
A couple of years ago, I got inspired to share more details about our financial goals here. They were admittedly very lofty goals at the time.
Fast forward from that initial post, I provided an update on our journey in July 2018 here.
I still continue to dream about some of these goals for 2023…but I’m starting to wonder if I really need to realize them on that date or if at all. First up, a recap of the goals.
Projected assets by the end of 2023 ~ age 50:
- Principle residence = $600,000 (very conservative value). I’ve assumed our
house value(condo value) will be worth this amount in the coming years. I mean, it’s hard to predict real estate or anything else. Regardless, we are not counting on our house for a retirement plan. If the condo appreciates substantially in value over time – great. If not, we will enjoy it anyhow as a place to live. We have to live somewhere. I’m optimistic we can be mortgage free in another 5 years. Debt is our biggest anchor now.
- Defined benefit pension (mine) = $450,000 (estimated commuted value). I haven’t changed this value since early summer 2018. You might already know that calculating commuted defined benefit pension values is not straightforward but for the sake of this post I’ll say my 17-year pension today should be worth quite a bit more in 2023. *I hope to work at my current place of employment for another 5 years.
- Defined contribution pension (wife) = $400,000 (max value). I didn’t bother changing this value either since early summer 2018. *Assuming my wife will continue to work full-time for another 5 years; contributing to her DC pension, we might be lucky, it could be close to this value. We’ll see if markets are kind to her pension. She cannot touch this money until age 55 (if put into a LIRA).
- Personal investments = $1,000,000 (big hairy audacious goal). I’ve already highlighted this above. To date, realizing 60%+ of this goal has been a huge achievement over the last 20 years with saving and investing – but there is more work to do.
*Financial Freedom Reflections
The asterisk is there because I’ve been thinking, rather deeply, about what really matters in my life, our lives, and what all the rushing around is really for.
What if I took a slower road, career wise?
What if we didn’t max out our RRSPs anymore? Maybe we’ll just focus on investing in our TFSAs instead? Heck, maybe we’ll just focus on debt and a more minimalist lifestyle?
While I’m looking forward to our upcoming condo move, that comes with new stressors as well and I’ve often wondered: will it be worth it?
What if I simply focused on growing my blog business or got more engaged in other passions that could be enjoyable part-time jobs like something in the golf or travel industry?
What if I took a leave of absence from work? Won’t I just get replaced to get work done anyhow? Does it really matter in the big picture?
With a mortgage still to pay for at least 5 years, a move to prepare for, and a job that is often challenging for various reasons I’m feeling financially trapped of late. One foot in one direction; one foot in another. It would be nice to get out from any financial vice.
Thoughts? Words of wisdom? Other? Do you ever get stuck in a rut? If only a temporary feeling?
As human beings, we need to be striving towards a goal more than we need to be achieving a goal.
For example, if tomorrow you had your mortgage paid off, 5 million in savings and no need for work, what would you do?
If you had everything you wanted, you or anyone in that spot would have to find something to do or risk going crazy.
Slow it down if you want to work for longer, speed it up if you want to get out and travel, do charity or just relax and start some other hobby.
Interestingly enough Duane….I would still work but I would do it at my own pace. I’ll never really “retire” per se but it would be nice not to deal with workplace politics and headaches as much as I do. I would definitely volunteer more, devote more/new time to hobbies and more.
I would have no problem finding stuff to do. So, hence my feelings. I could gut it out for the next five years or take a different path. We’ll see, I’m mulling it all over this fall.
Very interesting blog Mark!
Here’s some ‘Inside information’: starting July 2019, retirees at yours/mine workplace, retiring after that date will get $1500 per year coverage for family, for ten years, and it will include dental that we don’t get today. So you can put that part to the side. Check.
Knowing a bit about your goals that you have shared on here, Maybe look at things in categories: you are doing well and way better than most, on health, finance, family, personal areas of life (personal being travel, hobbies, golf , whatever). You might be feeling stuck in career category. But that’s just today’s outlook, perception, feeling. Stuck means a decision is to be made? Or coping?
You dedicate a lot of time to this blog, no doubt you can further monetize your skill set and expertise. How many of us have a side hustle ready to go like you? Another check.
We can’t be firing at ten out of ten in all aspects of life all the time. In reality, you might just be one of few who is.
My two cents.
By the way, your blog has helped me tremendously to focus on finances in a much smarter way. My portfolio is in better shape. $$$$. Thank you!
Well thanks Pam. Nice of you to leave a comment.
I think you know me, I try and work hard and do the right thing for the right reasons for the right people as much as I can. I care about the process and the people. I think that’s why I like personal finances and investing – it takes accountability, commitment, discipline and patience over time.
Work is a challenge – that’s not always there or at least I don’t see evidence of that in some things. We all have challenges at work I know…
Good to know about upcoming changes. My wife and I were planning to get an additional health and dental plan following work around age 50 (since it will be needed for travel anyhow) but good to know some of it will be available in the future.
We are very fortunate to date. I know that. I always try to keep things in perspective. I look at these feelings as an opportunity to re-asses and re-focus on what’s important. I can only control and/or influence so much. No point in trying to do anything more as a detriment to my health and outlook.
The blog is a fun hobby. Sure, maybe monetize it more but not right now. Likely a career change in the future as a fee-only-planner to help others and work on my own terms; potentially consult on other things. Time will tell.
I just know that the frustrations I face today (from time to time) ultimately lead to choices and other opportunities. That’s a good thing. Change is good.
Happy to hear you like the articles.
BTW – keep up your driven efforts. It’s more than a pleasure to work with/see folks that are driven, accountable and committed.
How come you don’t invest more into your TFSA’s? Do you max them out every year? Are they maxed out up to date? Just curious b/c when you take your money out of your TFSA you don’t get taxed on them as oppose to RRSP. They are both great ways to invest your money
Thanks for your comment…
I have a maxed out TFSA and RRSP Jen. The TFSA is a great account for all the reasons you might already know.
I think your reflective questioning is indicative of your hard work and good planning – you have the luxury of entertaining different avenues ‘now’ because of your careful planning ‘then’. The potential of Escape routes are important in all aspects of life (especially in ever increasing crazy commutes)- only those who have planned for contingencies can even consider changing courses. Hope those thoughts make sense…
I was in a very similar position last year. I ended up taking a hiatus from a demanding career to regroup and rethink our plan. At the end of it( and lots of 3am panic and doubts) we now have recommitted to our plan to retire in 3-5 years. Having said that, NOTHING is worth risking your health for. If you are not healthy, then all the planning and forecasting in the world can’t help you. Stay well Mark! Doubts are good and they help to sharpen your perspective and life direction. They serve an important role. Oh, and I agree with the post recommending a wee edible every now and then to nibble as you ponder life’s mysteries….
Thanks Karen. I found it interesting what you wrote…you have the luxury of different avenues from some good fortune and hard work to date. Sometimes you can make your own breaks!
I also agree with the health is wealth mantra. Sacrificing my physical and/or mental well-being is not worth any job in the world. I’m fortunate to have a good job with good people to work with. It’s simply some days and some circumstances that are rather painful. I just have to make sure the good days outnumber the bad ones. Otherwise, it’s going to be the wrong fit for me. Doubts are good for reflection – just not too many.
A wee edible…yes….maybe eventually! All the best and thanks for your detailed comment.
Im 87 & my spouse is 74. We are ‘retired’ and still working… We left regular jobs once we had NO mortgage or other debts. Suggest you do the same – then leave job and change your life. Don’t wait any longer than that.
Blunt, honest and to the point. I love it. Thanks for sharing.
Is it possible your angst has been brought on by the upcoming change from your house to a condo — sort of downsizing? A move of any kind generally increases stress, even if it is ‘good’ stress. In this case, it is part of your plan — a $600,000 chunk — and you may be anxious about it: are we doing the right thing? will something go wrong and mess up our goals? …. If that’s what’s happening, any irritations at or about work get magnified and make us question whether we can continue on the path we’ve set (like working for another five years). Carry on as planned and see whether it settles down after the move. Only warning: if that’s what it is, you’re likely to go through the same thing when it’s time to retire. Good luck.
I’m sure it’s a stressor Pat, in fact, I know it is. I wouldn’t call my situation ‘angst’ as in unfocused on the state of things, but I’m simply a bit frustrated with some things and trying to work through them. I’m not sure I would be human if I didn’t react to anything from time to time…
Moving is stressful, even with a positive change like this one will probably bring.
You raise a good point to try and potentially see things through until the move and see if the dust settles a bit more after that. I also need to work on how I react to poor situations; I have the power to control my reactions and the better I am at that the less things should bother me.
I appreciate the response.
Financially trapped. There is a substantial reduction in the government pension between 55 and 59. So I thought I would leave before 60 and take the pension at 60. However, the retirement course suggested this was not a good idea to do because I would need to reapply for medical and dental at 60. Somehow, I suspect this advice is wrong. I’m also running into people that say “You can’t retire until you’re 60 (at least)”
I enjoy your posts and the comments.
There are major penalties with taking my pension at 55, or 60 – basically anything before age 65. I prefer not to do that but my mind might always change! I have no medical or dental with my retirement plan/pension plan.
Thanks for the comment and being a fan.
you and your wife are doing great mark. stop worrying and follow your plan and if a wrench gets thrown into it do as cannew says ” adjust and move on”!
Thanks Gary and point taken. We have been very fortunate, I know that, I guess I’m just struggling a bit with one foot over here, one foot over there. As you say, I can only do what I can do and if something happens out of my control – dust myself off and move on 🙂
For myself, I find thinking about all the good things in my life help to offset some of the built up stresses. When you are 60/65 with CCP and OAS, with company pensions, my quick calculation shows you and your wife will have roughly $70,000 (low estimate) per year income. Add $20,000 from 4% of estimated low, $500,000 savings, your laughing…probably better then 95% or more of our population. You look fit, healthy, young, smart. You’re present financial situation allows you options so many don’t have. Take your time. (Find an edible that will take the edge off!) did I just say that? No matter what you decide to do, you’ll do well.
Note: lots of time in retirement to try projects, but, often lots of returns for an entrepreneur.
Assuming we work until age 60 or so, yes, potentially around $70k per year at age 65 including CPPx2 + OASx2 + pensions. With inflationary powers, that won’t be that much in 15 years. Still a good chunk of change – it will pay for many things for sure – but we can’t retire on that alone given what future expenses will be.
I guess I feel like I should make a change sooner than later and our anchor is debt.
Sure, add in $20,000 from 4% of estimated low, $500,000 savings – that would be great but we’re servicing some debt for the next 5 years. Once that is done we should be good. That is where our focus will be in the coming years – kill the mortgage.
Yes, overall, we are very fortunate but we have worked for it as well – it’s not like we were given these jobs.
I appreciate the kind words…some good advice here too!!
I’d start by not thinking about “What If’s ”
You’ve got a plan, it moving along smoothly, but if circumstances change, adjust and move on.
What if is for losers.
Fair point cannew on the what ifs.
You are doing fine with a well thought out plan and financial objective. If you enjoy what you are doing and are in good health, follow through for the next 5 years. It will be worth it. You will reach the enviable position where you then choose how you spend your time: doing work you enjoy, playing golf, volunteering in a meaningful way, travel, writing, you name it. Reaching your financial objective is only the enabler that allows you to LIVE however you want to spend the time you have left. That does not necessarily mean you stop working. It means if you choose to work, you can but you will not have to be a slave to your pay cheque.
We retired gradually starting about 25 years ago with real estate assets that we have downsized twice since then to reduce our workload. We are fortunate to enjoy good health and I often work very hard still but only doing what I want to do, not what I have to do to earn a living You only live once. Enjoy it!
Thanks Peter. We have been pushing hard and been on a good path but to your point, I’m strongly considering that: I do not want to stop working but simply doing something different. You do only live once.
Kudos to you…re: We retired gradually starting about 25 years ago with real estate assets that we have downsized twice since then to reduce our workload…..you had a plan and you saw it through!
As Gretzky said…I miss 100% of the shots I never take. So you are doubting about this shot (FI)
I recently built my own house. Acted as GC, did a lot of the work myself….I was standing in the attic, holding the hose spraying chewed up fibre insulation that my fiancee was feeding bags into the hopper when I noticed at my feet….no electrical wires going into that exhaust fan.
so we had to shut down the insulation project (had planned on being done that Sunday to return blower) and pull out my wiring tools and complete the wiring into the exhaust fan from the switch downstairs. Yes i was pissed at the electrician that missed it (me) and the insulation installer that was going to have another day’s rental (me) . that passes…keep taking shots on goal !!
Years later…it’s an amusing story to tell visitors…..even when you are up to your ankles in insulation…keep your eyes open. and yes…I Did It Myself…with her help of course.
Built your own house? Wow, impressive but mistakes happen!
I’m not really doubting FI at all, I’m just doubting if I have to do it in my early 50s vs. follow some other passions.
Mark – at a different point of my life…i retired at 45 and moved to BC. Sadly…i mistook a bull market in Jr Resource stocks for brains….didn’t have a real plan other than doing more of that. it worked until it didn’t and 2008/2009 was rather painful & I went back to work. I did buy some RBC stock at $19 PP. had I gone to cash in 2006-7 and put 100% into bank stocks paying 10% div’s…2009 (if my memory is correct)..would still be in BC.
I also remember Income Trusts and…Gov’t can never be trusted. Liars and thieves. Think about how you also protect assets…not just grow them.
We all have lessons learned shredder…my investing approach is not perfect either and I’ve made some major money mistakes as well. I try to live and learn. It sounds like you do too and kudos. I think that is where I want a blend of dividend paying stocks (some protection; some growing income) and ETFs for growth, and some cash in the bank. We’ll see if I can hold on when the next major financial crisis comes. It’s coming….
Thanks for being a fan.
FI isn’t an end. Its a means to an end. A lot of the details around pension fine-tuning, taxes etc. as with many other aspects of life or business distract from the big picture. Whats’s your VISION? What’s the BIG PICTURE? The details will sort out when the VISION or the Big Picture are more clearly defined. They are never perfectly defined but even a foggy vision leads to better direction and more satisfying outcomes. (and I wrote this without the aid of any about-to-become-legal mind altering substances:))
Great point Herman and I’ve know that for some time re: FI. It’s not something to run towards only to be at the end of something.
I think I have to strongly consider what’s really important to me, and work from there. I know these things actually (it’s not that I don’t know them) but it doesn’t make the decision any easier.
The vision? enjoy life of course, work part-time in the coming years, and have far less stress.
The big picture? my health and our collective wellness is the most important thing I/we will ever own.
Wow, a lot to unpack and think about. It’s good to reflect on all of this with your wife to rechart a new course or simply keep pressing ahead.
Your financial goals are obviously very important to you and your wife, but your sanity and happiness is paramount and thinking through and checking out options is always good.
I’d probably buckle down, ignore the crap and focus on the end game but a lot of people probably aren’t built that way.
Maybe you can maintain both by reinventing yourself elsewhere for 5 years (my vote to check into as I have zero doubt you are a valuable asset) …or door # 2 just cutting back lifestyle, backing off savings and work on your own gig, but my suggestion would be that is for a little later on if you want.
How about a good fed job in capital city for 5 yrs or so building up a little more pension benefits? Might be worth looking into.
Yes, I’d want to keep the DB pension if I could.
Yeah, a departure from other posts for sure….but it’s my blog so I can write what I want when I want 😉
Kidding though my friend…I needed to write to express some stuff I was struggling with and the blog is definitely an outlet for that so thanks for reading amongst others.
“The crap” comes and goes and I’m very fortunate for my job and support over the years but certainly some things in recent years have been a real eye-opener and I realize what I’m looking for, my values, may not be aligned to other things. Nothing wrong with that – but that’s where tension and stress evolves: the delta between expectations and reality.
“…focus on the end game but a lot of people probably aren’t built that way.”
I am and I’m not. I guess I have too much integrity to do the right thing more often than not, get it right the first time, etc. so when that is tested (or rather few others just a $hit about that) – it’s harmful to my health.
“Maybe you can maintain both by reinventing yourself elsewhere for 5 years (my vote to check into as I have zero doubt you are a valuable asset) …or door # 2 just cutting back lifestyle, backing off savings and work on your own gig, but my suggestion would be that is for a little later on if you want.”
I’m tempted to pursue my CFP actually. I could be my own boss, still work with people and be passionate about results.
We’ll see. My wife and I will likely talk about it extensively this weekend over some wine!
Thanks for sharing, I appreciate it.
It’s a worthwhile post for you. Great to have a place to put some thoughts out there and sift the results.
Good response. Got it. I came from a world of sales (mostly management) where daily results mattered and trying didn’t. I can relate to eye opener and testing values….. believe it or not! Health = pay attention.
CFP would work nicely. Cool option. Fee for service planner.
And the wine part is especially good. Shared a good carmenere last night with my wife.
That’s a LOT of questions…..but I have one. Is it your intention to take the commuted value?
Ya. If I work another 5 years…probably not Lloyd. I think a DB pension is generally golden so best to leave it there and collect the money without penalties at age 65.
Okay. I know you’re aware of the effects of rising interest rates on calculating commuted values so it is very important to keep that in mind. I took a commuted value albeit a small one. Some days I regret it, some days I don’t. If I die young it will turn out to be one of the best moves I made. 🙂
I hear ya. I mean, I’m just assuming that might be the value. My understanding is commuted values take into account, beyond age:
• Genders of those involved
• Assumed commencement date of the pension
• Reduction factor, if applicable, for the pension starting before the earliest date when it can start to be paid without any reduction for early retirement (which would apply to me)
• Form of payment (i.e., takes into account any guarantees and whether the pension continues in some form to someone else (typically a spouse) on the death of the pensioner)
• Consideration for any automatic increases to the pension after it has started to account for increases in inflation
• Interest rates and mortality rates in accordance with actuarial practice
• Pension legislation at the time of the calculation.
And blah blah…
The general formula I’ve read about is monthly accrued pension times 12 times the annuity factor. I know my monthly accrued pension income should be close to $2,500 per month at age of retirement before taxes. If that is supposed to last ~20 years (say age 65 to 85) then that’s $2,500 x 12 x 20 for a decent pension value. A good chunk of money but there is not way the commuted value wouldn’t be nearly that much. Unless I’m totally wrong which is entirely possible.
The best advantage of any CV pension is financial control. Then again, there is also personal investment risk going that way too.
Our deciding factor was survivor benefits. Upon death, the spouse was entitled to 50% of the pension payment. With a locked in vehicle, the spouse gets 100% of the investment and becomes unlocked. The pension specialist I went to said in a nutshell, a CV is a calculated amount required to replace the amount the pension would pay. Interest rates are a large part of it along with other factors. Similar to how a pension plan has a going concern calculation and a solvency calculation. If interest rates rise as expected by many, it might have a substantial effect.
The other factor was that I’d still have a DB pension and associated benefits (medical mostly) with the new pension plan. If a person took a CV and gave up benefits that might be a large consideration.
Ya, I have no medical or dental benefits post-employment with my work. On our own. Something we need to plan for.
I meant to add, good point about survivor benefits. Ours is 66% for DB plans. You are correct, locked-in is 100% of LIRA, etc.
I should have added…yes….as interest rates go up commuted values go down/payout becomes smaller.