How much do you need to retire on $5,000 per month?
In a previous post on my site, we discussed the desire to retire at age 55 with higher inflation. I’ll link to that case study and others later on. So, for today, how much do you need to retire on $5,000 per month?
How much do you need to retire? It’s all about the math and some assumptions
“The future is uncertain but the end is always near.” – Jim Morrison
Yes, fair stuff Jim.
I don’t know about you, but my financial crystal ball is always VERY cloudy!
Sure, I’ve made some educated guesses about what stocks will raise dividends again in my portfolio (when based on historical facts) but I’m more than happy to be vulnerable when it comes to predicting some long-term financial outcomes.
In some cases, our predictions do work. It wasn’t too hard to predict that some stocks could flourish coming out of the pandemic. In other cases, it’s simply a gamble.
How much do you need to retire on $5,000 per month?
Generally speaking, gambling with your financial future is not wise. However, for any financial plan to start working we must make some assumptions about what the future holds and then consistenly and diligently re-plan from there.
I have to plan and re-plan in my line of work everyday – so that comes quite natural to me. I can appreciate not everyone has the re-planning muscle to flex.
But you can practice and at least be mindful of the need for re-planning…
In any complex system, nothing is for certain because it becomes impossible to predict all the occurrences and interactions amongst those occurrences. Human behaviour along with our financial needs and wants are essentially a complex system that is always subject to change.
In other complicated systems, such as manufacturing cars, in which there is a high likelihood that an event will result in the same outcome time after time based on consistent or planned conditions; us humans and our subsequent behaviour can be VERY unpredictable. Our feelings change constantly for one. The financial environment around us changes for another. As such, our financial situation is constantly in motion.
My point is: don’t fight this ever-changing paradigm.
Embrace financial uncertainly. That’s the muscle I speak of that you need to flex. It takes practice and it takes time. It continues to take me some time and effort too!
That’s why I love doing these early retirement and retirement case studies on my site. There is an endless set of permutations and combinations that might apply to any financial plan – and those change over time too!
Recently, following these posts below, readers asked for yet another case study on my site related to my title for today:
Can I retire at age 55 with 3.5% sustained inflation?
How might you invest when time is no longer your friend?
So, as always, I try and accommodate here on My Own Advisor. 🙂
Without further ado, let’s get after this new case study….
Rebecca and Wayne want to retire on $5,000 per month – how much is enough?
In our case study today, Rebecca and Wayne have done well – very well in my opinion. Without any workplace pensions, they’ve amassed a sizeable portfolio. They want to retire later this year and disappear to The Sunny South for a few months to kickstart their retirement.
Can they retire at age 50 with what they have?
How much is enough to spend on average $5,000 per month in retirement in their “go-go” years?
What might their portfolio drawdown order be for optimal / less taxation?
I have those answers. See below!
Here are their assumptions…
- My fictional retirement couple, Rebecca and Wayne, want to retire later this year (age 50).
- They are worried about inflation, so I’ve pegged inflation at 3% sustained until age 95. It could of course be higher near-term and likely will be for the coming 1-2 years. Historically, our Bank of Canada has set inflation targets at just 2% but, in my opinion, they’ve totally dropped the ball and shouldn’t be counted on to help consumers curb inflation – so watching what you spend and where you spend your money increasingly falls on you!
- Rebecca and Wayne are sharp because not only do they read My Own Advisor all the time but they know with inflation is running higher, they will need more stocks than bonds over time to generate returns. So, I’ve put their portfolio mix at a 70/30 stock to bond asset mix, including some individual REITs, energy and commodity stocks to help fight inflation.
- They keep 1-years’ worth of cash in savings and do not intend to touch that stash-cash unless there is a major emergency and/or they absolutely need the money for living expenses as part of their drawdown order, i.e., they are running out of cash before selling their house in their 90s.
- Like previous case studies, since pensions are like the dinosaur and becoming extinct, they have no workplace pensions to fund retirement.
- Since they wanted to retire early, they didn’t have max contribution years to CPP. I’ll assume they will get a conservative 40% of CPP maximum benefits normally provided at age 65 – but they will defer those CPP income benefits getting a 42% income boost at age 70.
- Because they plan to remain residents of Canada, full OAS starts at age 65 but again, I’ve deferred that too until age 70 for another 36% income boost.
I’ll assume somewhat of a die-broke plan for them, until age 95. That means beyond keeping their paid off home here in Ottawa, they want to spend $5,000 per month on average with 3% inflation and only keep their house for estate planning.
Rebecca and Wayne can bank on ~ 5% rates of return for the coming decades. Anything more is a small bonus!
Finally, in reading other case studies on my site while they want to spend $5,000 per month, they know one of the best ways to accomplish that is a retirement drawdown order of “RNT”.
That means: RRSPs first, then non-registered assets, then TFSAs left “until the end”.
I won’t get into too many details why that RNT retirement drawdown order is helpful but I can share briefly why that works for many because:
- RRSP/RRIF assets are a tax liability. Therefore, slow, methodical drawdowns tends to work to smooth out taxes before tapping any government, inflation-protected benefits like CPP and OAS. In our case study today, that means age 70 for both.
- Non-registered assets can be tax efficient, so it makes sense to keep those intact whereby Canadian dividend paying stocks and/or capital gains are an efficient form of taxation as assets are sold over time.
- TFSA assets have no tax liability. This makes TFSA withdrawals not only tax-free but it also makes keeping TFSA assets until later in life, an excellent estate planning tool! Remember you heard that estate planning idea here first 🙂
How much do you need to retire on $5,000 per month?
After running some math, I can conclude that the following, if achieved by most Canadians at or around age 50 is “enough” to spend $5,000 per month in retirement until age 95:
- x2 TFSAs = $150,000 each.
- x2 RRSPs = $400,000 each.
- x1 Joint Non-Registered Account (Rebecca) = $250,000.
- Taking both CPP payments, at 40% of max. value at age 65 and deferred to age 70.
- Taking both OAS payments deferred at age 70 at full benefit.
- Keeping 1-years’ worth of cash ($60,000) as an emergency fund/cash wedge just in case things come up in retirement that you absolutely didn’t see coming.
Here are the charts!
Net worth starting at the end of this year – in outstanding shape!
And let’s look at after tax spending increasing at 3% inflation for decades on end:
And let’s look at sources of income, where this $5,000 per month will come from:
How much do you need to retire on $5,000 per month summary
The math doesn’t lie.
If you save enough, have modest overall spending needs, earn modest rates of return, you can retire early and still have a few million in the bank to liquidate the house in your 90s.
With a portfolio value of $1.3 million or higher, that’s plenty to spend $5,000 per month from age 50 to age 95, increasing spending by 3% inflation for sure.
I look forward to posting more case studies over time.
Do you have some ideas for a case study? Got something on your mind? Leave a comment and ask away. I will do my best to accommodate some more!
How to invest for higher inflation.
When to take your CPP benefit?
Should I take the commuted value of my pension to help fund my retirement?
These millennials want to achieve financial independence at age 50 – can they do it?
There are free calculators for your retirement drawdown ideas on my dedicated Helpful Sites page here.
All figures, tables and assumptions above are for educational and illustrative purposes only and never implies any financial or tax advice. I look forward to posting more case studies over time.
There are other case studies on my Retirement page here.
You can also consider hiring me by contacting me on this site below for your low-cost retirement income projection report!
We currently have about 200000 in rrsp and are 52 and 57. I have pension (15k at 55, 35k at 58 and 45k at 60 …or 70k at 68). It does have bridge benefit. My husband has no pension. We both will get full cpp and oas. We don’t own our house and are maybe at 50% equity. Willing to move. We can both work part time no problem (I am a registered therapist so can make decent money if I take on clients). What would we be looking at if I retired at 58 Vs 60??
First of all, congrats of the $35k pension at age 58 – that’s a good base.
I can consider that information for a future case study, retire at 58 or so vs. a few years later. Certainly, it all comes down to what you want to spend in retirement but back of the napkin math says you could live off about $5k per month = $60k per year if you retired at 58 assuming the sum of the following:
1. $35k pension base is indexed for inflation or at least 75% indexed to help offset costs; leaving a $25k per year shortfall to fund.
2. Assuming you both get full CPP and full OAS in your 60s, both indexed as well, then taking both at age 65 should yield >$24,000 per year combined or >$12k per year as individuals since OAS alone is about $600 per month per person.
3. Between ages 58 – 65 you could draw down RRSP assets to make up the $25k shortfall per year between when CPP and OAS kick-in at age 65. You could also work part-time to cover any additional spending needs between these ages which would be wise as you draw down RRSP assets by around age 65.
Again, back of the napkin stuff but assuming no debt, doable for sure.
I find investing to be very personal and so I rather like to do my own investing. I have invested my money over the last fifty years and have made some mistakes along the way. One recent mistake is not investing in the market today. Although the market has come down I find some stocks still expensive. My brother finds this strange as I have a six figure account in my cash account but I can’t see spending on stocks that are way up high. All the banks are up high expect ScotiaBank and the stocks that are low are ones that very seldom raise their dividend or distribution like REIT’s. One I am looking at is Brookfield Asset Management after they spin off the Manager.
This is great to know! I had the same perception about retirement as most others until I read this article https://seasonsretirement.com/early-retirement-in-canada/. It really intrigued me and I knew I had to start acting on it. This post also helps me a lot since my income is within this range! It’s definitely useful and I’ll make sure to use what I learned well!
Thanks for the link, Diana.
I don’t mind the budgeting rule but the 70% rule makes little sense.
The variable rule has a bit of merit, but variable on what?
Unless you know what you will spend, on average, to cover some expenses with some buffer designed-in for major expenses, inflation, taxation changes, etc. I don’t think you can arrive at any meaningful retirement number. Everything is just a wild estimate which is not very smart 🙂
In regards to the order of withdrawal your suggest (“RNT”). I’ve tried to project different withdrawal strategies for my situation and the option to withdraw from TFSA for a few tax-free years at the beginnig of retirement is tempting (in my case that would mean to only withdraw from a LIRA and small pension plan up to the personnal basic amount and the rest from TFSA). But you’re suggesting to instead withdraw from RRSP first, which would be more taxable income from the start. Do you mean to say that RRSP withdrawals early on would be more tax effecient than waiting to have to withdraw bigger amounts later on when RRIF withdrawals become mandatory?
Thanks for your reply.
In some cases, the TFSA withdrawals first make sense if you need your RRSP to compound more, if you want to take advantage of the loophole that is GIS and TFSA income at the same time. You would likely be in a lower-income bracket for that.
Otherwise, very slow, methodical RRSP/RRIF withdrawls (R) + non-registered withdrawals (N) if you have taxable income make the most sense for longevity risk and to be generally speaking, tax efficient.
So, yes, that means making slow RRSP withdrawals in my 50s and 60s personally, before RRIF is required in the year I turn age 71, make great sense since once anyone establishes RRIF at 71 = 5.28% withdrawal is forced in Year 1 and only goes higher from there. If you can withdrawal less % and pay less % tax on RRSP withdrawals that helps.
This is not for everyone but generally speaking, smart. Check this out:
Thanks for your quick reply Mark.
Since I’m planning to wait ’til 70 y.o. before taking OAS, I will likely not take advantage of the loophole and collect GIS.
But this is exactly the information I needed to ease my mind and stop debating with myself which option to take as far as withrawal goes. The option to start with RRSP withdrawal early has also the advantage of minimizing AOS clawback at 71 since some of my RRSP will have been withdrawn before I’m forced to convert my RRSP to RRIF.
Will keep on reading your smart advises. Cheers!
Absolutely correct Paddy re: “The option to start with RRSP withdrawal early has also the advantage of minimizing AOS clawback at 71 since some of my RRSP will have been withdrawn before I’m forced to convert my RRSP to RRIF.”
You can reduce personal assets (a bit) in your 60s and defer inflation-protected “big bond” CPP and OAS benefits to age 70 – getting a 42% income boost (from CPP) and 36% income boost (from OAS) in the process. Not a must, just something to think about!
Here is another case study about CPP and/or OAS in particular:
Fascinating post! One aspect that I feel is underrated is optimizing for reduced spending without lowering your overall quality of life. There are a plethora of ways you can do this. One of the greatest realizations is that some of the most meaningful experiences are free (or nearly free) such as going for a walk along the beach, a hike in the woods, a picnic outdoors or meditating. You can also consider spending a few months abroad each year, in destinations, where the cost of living is less than Canada. There are just so many ways to shave expenses while potentially even enhancing the quality of your life.
Nice to hear from you Nomadic!
The idea of living on less, has always been important but I don’t think to your point many people really consider this.
“There are just so many ways to shave expenses while potentially even enhancing the quality of your life.”
Yes, very well put 🙂
Do you do any of those things?
Thanks for this. Great reading and a kind of confirmation for myself and my husband. We are retiring at end of May this year at 63 with about 1.6 million in a 70/30 mix, of the 70% most are dividend paying, no private pension, no debt, and a mortgage free home worth 1.350 million. Breakdown for the 1.6 is 600k RRSP, 450k TFSA and the rest non-reg. We’ve been tracking expenses for a number of years and are quite happy living on about $70k gross a year in the gta. No plans to take early cpp and are thinking to wait until 67 or so to take both CPP and OAS. In the meantime will be drawing down in RRSP, then non-reg and lastly TFSA. That’s the plan now anyway.
First off, congrats on your TFSA success. Very impressive.
Secondly, this is an even better case study for what I was trying to get at with my post. I hope I’m not intruding but here’s something to potentially think about.
If you held an even split of AQN,CPX,EMA, ENB,PPL,TRP, BCE,T, and RY,TD across all your accounts, you’d get an average yield of 4.57%. That would generate total dividends of TFSA=20.565, RRSP=27.420, non-reg-=25,135 for a total of 73.120.
In order to meet your $70k goal, you could withdraw all the non-reg and TFSA dividends as the year progresses and then withdraw a total for the year of $25k from the RRSPs. I did a quick taxtips check for Ontario using an even split for the two of you for the non-reg divs and the RRSP withdrawal and the taxes would only be $300 each.
For additional options, you could always withdraw more from your RRSPs to draw them down and put the money into the TFSAs at the start of the next year for the new contribution room and to replenish the dividends you withdrew, and the just pay some additional tax. You could also do an in-kind transfer from the non-reg to the TFSAs and pay the capital gains tax.
Also, eventually you’ll have your OAS and CPP to add to the mix.
Anyway, I think you guys have it made in the shade and should be able to live comfortably without touching your capital (if that’s what you want).
Take care and good luck.
Hey Don. We’re pretty happy where we are. No intrusion at all. FYI we already hold T, AQN, ENB, TRP, TD, BCE, RY along with BMO, FTS, TRI, ACO and APPL (which we bought at $93.95 way back before the last 5 for 1 split) plus a few other odds and ends. Although the mix is not even, our total dividends in 2021 were quite good given that 30% was basically not doing much. I am intrigued by your mix suggestion though. As we have no children we’re not concerned with dipping into the capital. We just want to ensure that we always have enough funds to enjoy life, take care of ourselves if we have health issues and whoever is left will never ever have financial issues. And at the very end the rest will go to a few charities we support now that feed, house and help women in distress and homeless people.
Cool stuff and a marvelous plan. You are definitely set-up well and in a very comfortable position.
I imagine the APPL is what’s really helped turbo-charge your TFSAs. Congrats.
We hold a full position in 16 TSX listed dividend income/growth stocks that are evenly distributed based on book value, and have a medium position in one ETF (ZWB). Definitely quite similar to you. Main difference is we don’t have any fixed income or GICs. We decided that bonds just don’t fit for us as we think we can generate more income from dividend paying stocks. We’ve been 100% equities since we retired in 2013 and it has really worked out well.
Good stuff on your charity giving. We also believe in that and have 5 World Vision foster children spread throughout the world.
Hey Don …Thanks. It was a combination APPL, BMO & RY that turbo charged the TFSA’s. Mostly APPL though.
I really find it intriguing that you’re at 100% equities. Don’t know that we could tolerate that risk level. Kudos to you.
Well done with the stocks Christine. You’ll find folks that visit my site (like Don G.) have done VERY well for themselves by sticking to a plan of what they know and what has worked for them re: many CDN dividend paying stocks and a few ETFs where warranted for extra diversification. Years of compounding/time has now put higher income into their pockets by simply sticking to the plan.
I suspect if you continue to own those companies mentioned you will absolutely realize your goal. Time is the main ingredient beyond patience. 🙂
For most of the work I do with my buddy Joe over at Cashflows & Portfolios, we find a slow draw down of RRSP assets in 50s, 60s and forced into the 70s, deferring CPP and OAS, and keeping TFSAs “until the end” works very, very well for most.
As Don has properly mentioned, any RRSP $$$ not needed for spending can be used to fund the TFSA(s) every year.
Happy to provide any general scenarios for you of course, anytime via that site and the work we do.
Interesting case study and very interesting comments. Different people will certainly have different cash flow requirements.
I like the comments wrt outdoor activities being very cheap and lower a person’s annual cash requirement. My wife & I are in that group with walking, running, hiking, camping, etc, and family being our main activities.
As a bit of an exercise, I exported all our banking info for 2021 to Excel and totaled all our expenses which amounted to $54,2k. Normally we’d have two 3 week camping trips per year to the States so I added another $1.8k to cover that (we usually random camp so our camping and firewood fees are usually $0. Gas is the man expense. We exclude food costs as they are the same whether we’re camping or at home). The adjusted total would therefore be $56k so that fits right in the area that a lot of people are reporting.
For reference, we live in Calgary and our house has been paid off since Jan, 1991.
Our portfolio has an average yield of 4.62% so to cover all expenses without ever having to touch our capital, we would just need .a total portfolio of $1.21M. That would mean no need for a withdrawal strategy or having to think about buying & selling, etc.
Love it: “My wife & I are in that group with walking, running, hiking, camping, etc, and family being our main activities.”
I love walking, hiking, cycling, etc. myself 🙂
That seems about right Don re: $60k for a couple in retirement is a good amount – it’s not luxury but hardly in poverty!
Based on my case study:
x2 TFSAs = $150,000 each. ($300k total)
x2 RRSPs = $400,000 each. ($800k total)
x1 Joint Non-Registered Account (Rebecca) = $250,000.
$1.35 M at age 50 to retire on to spend $60k per year without fail.
Pretty impressive really with just 5% returns on average for the next 45 years. Anything higher is a bonus for this couple.
They still have (in this case study) almost $4 M in real estate at age 95 if they live that long….a pretty big estate.
This was a nice exercise to run through. One that has you pulling out your phone and doing some simple calculations to compare. $5000/ month x 12 x 30/40 years… A daunting number for sure.
I own my house free and clear. But even so, probably most people here are in a similar situation where their property tax and car Insurance are the biggest yearly recurring costs. I collect cars as a bit of a hobby so, a little higher insurance than most people.
So my minimum average month cash flow required to pay all my basic bills and food is $2500.00. That also includes gas, car repairs (which i do 99% of the labor), food, including dine in meals, and I threw in a monthly $250 for “whatever”. Everything beyond that basic usually just winds up in savings or is invested.
I like Jeff’s post here. I feel like what he describes in one part of his post. I probably have enough already but i just have difficulty in pulling the plug and leaving the workforce. Plus I don’t hate my job, I like it, but in the end it’s still work, not quality life time if you know what I mean. The turmoil in the world, the deliberately created inflation, and travelling being “iffy” for the last 2+ years and even right now makes retiring now less attractive. You could book a 2 month trip somewhere only to have it cancelled or ruined by another lockdown either here or at your destination. So i figured I might as well just keep working and padding the nest eggs.
Another question is what do people do with their homes if they go 2-3 months somewhere to another country. Not everyone has kids to drop by every few days. Even the nicest neighbor can watch your house for a week, but not for 12 weeks, I worry about that too as a big retirement travel hurdle. I envy people that are not attached to their “stuff”. It’s going to be hard to break some old habits.
Great stuff Paul re: “I own my house free and clear.”
We’ve estimated about 1-1.5% for all condo/house maintenance costs. So, on a $900k condo in the city, that’s about $9,000 per year. That would be part of my $5k per month spend.
To have most of your costs/expenses under $3k per month is GREAT.
In terms of travel, yes, for insurance and other reasons, you normally want and need to have someone check on the home. Condo living or apartment living is generally good for that type of travel lifestyle and we intend to travel 1-2 months per year in the coming years. We’ve tried to downsize quite a bit over the last few years but still have a 2-bed, 2-bath condo which is a nice size (1,200 sq. ft. inside) + some nice terrance space outside and that seems to be good enough for us (re: turn the key and travel).
Got any destinations on your mind, Paul?
Re: I probably have enough already but i just have difficulty in pulling the plug and leaving the workforce. Plus I don’t hate my job, I like it, but in the end it’s still work, not quality life time if you know what I mean. The turmoil in the world, the deliberately created inflation, and travelling being “iffy” for the last 2+ years and even right now makes retiring now less attractive.
Same here. Plus kids still at home. I have been struggling with the question of when to retire for a while now. Right now with the high inflation I think well, maybe just work a few years more. Cannot go anywhere anyway with kids going school.
If you have a really nice neighbor, you can trust them to take care of your house for 12 weeks no problem. We used to take care of the house of our neighbor a few houses down. The old lady goes away for almost half year each year.
My situation is very close to your case study. (but a decent pension on the side). My projections on tools like FIRE CALC generally show crazy levels of success with a few showing modest success and very low percentage show failure.
“History and societies do not crawl, they make jumps” – Nassim Nicholas Taleb
Knowing the above, and that projections are fraught with fallacies I have assured my spouse that if we find ourselves in financial trouble then our society will be a complete mess and we will have much larger problems than income in retirement.
Based on three years experience $5000 a month and owning home is tightish for a couple. I would recommend that a person shoots for $6000 if their work environment\health is tolerably positive.
Taxes are a factor so good Canadian Dividends and split income really mitigates it. Owning your Home keeps income needs down so less tax.
I want to die broke so annuities may be something to look into later into the future if interest rates normalize, it would be interesting to have a set amount of income and just blow every penny with no future market worries.
Fred Vettese recommend that you see the house as your “Long Term Care” insurance, as most people only last a few years in LTC, so if you hit that wall sell the house to pay for it.
We use our Home equity LOC to smooth out any income blips and act as an emergency fund. We do RRSP lump sum withdraw in December so we can get most of the withholding tax back in the Spring.
Canadian winters are long, dark and cold. In retirement weather becomes a huge factor. Be ready to need long periods somewhere else.
Canadian house prices are insane, at this time we are trapped at our current location (Calgary) as any place we may want to retire to has gone up in price so much to be out of reach and financially dangerous.
One day I hope my actual money will be more valuable as It seems to be always competing with borrowed money….
Last thing, not working is great!
Great stuff BK and very good comments.
I think it really “depends”. Home ownership, no debt, one car, modest overall expenses then $5k per month is very doable IMO.
$6k per month affords international travel.
$7k per month provides some extra luxuries like newer cars every few years.
Once you get to $8k per month spend you are usually living very well in retirement.
“Taxes are a factor so good Canadian Dividends and split income really mitigates it. Owning your Home keeps income needs down so less tax.”
Very smart and something we also plan to do.
I would agree with Vettese to a point to keep that for any “nuclear” LTC decision.
I hope to enjoy the semi-retirement crowd in a few years 🙂
One year anniversary Mark. Woo hoo. One year since you ran my financials( amazing job, kudos) and we waltzed into early retirement. Strange times especially due to Covid. Been tracking the budget for a year now so wanted to wade in helping others. Just a recap. Sold handsomely in Brampton, Ontario in Feb 2021 at ironically not the peak however benefitted by like one week buying in Southwestern Ontario before total craziness in market down here. Neighbour paid 35k more for brand new build one week later. Plan was secure when you detailed it however think my current new home is plus 180k in the year already and an additional 100k increase conservatively on the rental selling next year. With lake 25minutes to the North, lake 15 minutes to the South and Detroit river 45 minutes to the West enjoying free outdoor activities helps keep cost down and enjoyment high. Spoilt myself with a brand new truck(so I can fit it to farming community). Full cash from my TFSA and recontributed that the very next year. I’ve grown my TFSA…which like you I hype the value as an extremely valuable asset in investing and more so, retiring and final life planning, into 180k. As in your article, old fashioned bond retirement planning is a dinosaur. I’m still 100% stocks and ETF’s. I’m the biggest proponent of RNT deaccumalation of assets however one year in I’m only just setting that up now. Just completed our first taxes in retirement and taxation is so key in the process, as another reader promoted, at minimal taxes it adds so much dollars back to your pocket. Appear poor on paper, hiding under tax thresholds and you are rich in pocket. I changed out my entire investing strategy away from mainly growth to now 75% passive and 25% growth. I’m still comfortable with probably more risk than most and back it with a one year cash wedge. Wait for this Mark….112k passive income per year, just over 9k a month. My expenses…. On average for all the things necessary in life. $3900 to high of $4600, averaging $4300. And get this…..in there a $1400 mortgage payment as I elected to refuse to have money sitting not working when the bank was giving me 1.41% and in my opinion I could earn 7-8% “safely”. Lol, the word is relative IMO. Found all kinds of value and savings in retirement with my free time. We Costco shop and split with the neighbours, saving on gas, bulk prices and we entertain ourselves in Windsor at the Casino with free rooms to do all this each week or two. Mini vacation too, yes. Insurance? Almost two third savings from the GTA…Shout out to CAA who unlike other insurers gives you “retiree” savings and status not based on age but recognizes the non income, non employment phase for early retiree’s. So life can be enjoyed by making some life changes. Leaving the GTA, family and friends has been hard but new friends, experiences and quality of life supplant all of that and…..we still hit the bright lights up once a month or two and three hours drive in retirement is a “nothing burger”. My god in retirement we eagerly await flyers every week to maximize grocery savings and it’s honestly a part of weekly shopping enjoyment. How priorities change. Sadly, many people in life think if I couldn’t maintain my inflated style of life and luxury with my current budget, life wouldn’t be fulfilled. Very possible to adjust our lifestyles to a smaller budget and still have a satisfying life. My numbers now don’t allude to that, the naysayers will say, however how do you think the wife and I got to early retirement. I never had the fancy cars, fancy house, designer clothes and five star vacations but I had a version of each that was sufficient. Would I do it different…what do you think, lol.
Save, invest, invest, invest, the journey is only as complicated as we make it or the number of excuses we make not to do it. Don’t let the big numbers and fear of longevity make you a slave to the system past where you can still enjoy it. It really can be done for $3500 to ………your needs I guess.
Thank you again Mark
Ha. I remember Jeff 🙂
re: “One year since you ran my financials( amazing job, kudos) and we waltzed into early retirement.”
Yes, that full TFSA is a gift to every adult Canadian if they can take advantage of it 🙂
I too, remain 100% stocks and equity ETFs. Building up my cash wedge as well!
Love it: “hiding under tax thresholds and you are rich in pocket.”
OMG “Wait for this Mark….112k passive income per year, just over 9k a month. My expenses…. On average for all the things necessary in life. $3900 to high of $4600, averaging $4300.”
Jeff, again, you are in incredible shape.
Thank YOU for sharing back Jeff.
Outstanding and was only happy to help out.
Once the kids are out of the house, 5K / month, damn. Would be hard pressed to blow through that kinda cash monthly. Got all the toys, climbing gear, back country ski gear, half dozen bikes, kayaks, windsurfer, SUPs, boat. At this point in life, being on the water in the yak is a pleasure that money can’t buy. Cost, zip. Walk the yak down to the water, and I can paddle for hours.
In Ottawa, the Rideau canal would be a great place to enjoy, either walking/cycling along side, or in a canoe/kayak/SUP/boat (skating in the winter months) Winter skiing in Gatineau Park, beautiful spot.
Interesting that some readers and folks that emailed to say “that’s not really that much” and others like yourself say that’s very darn good.
I’m in the latter camp with you David – I think without any debt, kids out of house, etc. spending $5k per month on average is pretty good for retirement.
Being on the water is awesome and I’m a big fan of that as well – speaking of which – replying to this email from Punta Cana 🙂
The Rideau is very nice and I walk and cycle along it all the same in the spring, summer and fall. I live just 1 min. from the Canal.
Thanks for your comment.
I don’t know Mark.
The only reason i can see needed that much dinaro is because they are retiring early and drawing down their RRSP’s pre-retirement.
I am retired so the situation is not the same but my Fed gross was $81K and $80K net. Will get a slight clawback on the OAS so I may be destitute next year. LOL
I was fearing a higher return but it turned out not so bad. Had enough money in the bank to pay them off and still have a nice cash wedge left over.
By the time I have paid the Fed/Prov taxes, some approx $21K, I am pretty well just below the $60K spending money yearly. My pre-retirement budget, some 8 yrs ago, called for $43 net per year. And i had put in higher figures (inflation hedge) for that budget. Only last year, 2021, did i spend that amount of money because of a major expense.
If the stock market keeps going bonkers and the divs keep coming in (re-invested) I’ll be higher gross for 2022
At any rate it just seemed like a lot of $ to fund their retirement. But that is maybe necessary for FIRE.
Will PM you at the beginning of next month for the mthly divs. I have a few who pay on the last day.
Bought a sizable amount of stocks in Jan and some in March as well so divs are going up. Nice snowball effect.
PM away…I enjoy reading about your updates and those from others…
I hope to earn more than $27k in dividends from a few accounts in 2022. A good goal and I hope we surpass it 🙂
I suspect if you own the dividend growth stocks that tend to increase their dividends, you’ll be in a great place to keep that snowball rolling.
I personally believe without any debt, spending $5k per month for 45 years is pretty darn good for most people.
Thanks for your comment,
That’s just over a thousand a week after tax for an Ontario resident, assuming you are able to split the income to a decent degree. That might be a little tight for two people that want to do things, have a house and two cars etc. You’ll be able to get by, but you’ll have to budget carefully, which might take out some of the fun.
Fair enough John, but that’s also to age 95 in this case study and they have a house they can liquidate in their 90s worth $3 million in future dollars. That’s pretty good 🙂