I read a few articles in recent weeks that discussed some ideas to transition away from “working life” and into “retirement life”. Here’s my take on where I think we’re headed on a few subjects regarding that transition down the road.
- Applying for government benefits
I hope my wife and I are in a financial position to “retire” (i.e., work on our own terms, work part-time, other) in another 10-15 years. We will not be old enough to apply for government benefits at that age. We hope to retire from the workforce without dependence from our government; income from both the Canada Pension Plan (CPP) or Old Age Security (OAS) will be a bonus.
Based on some loose projections including some aggressive mortgage pre-payments, our mortgage should be retired in just over 7 years. I believe paying off debt prior to retirement is essential (at least it is for us). On that note I liked what Robert Brown wrote about taking debt into retirement in his witty book Wealthing Like Rabbits.
Anyone who thinks taking personal debt, mortgage or otherwise, into retirement is a good idea should put away their bong.
With no debt in retirement we hope to live off mostly our investment income. With no debt and 100% equity in our home one consideration in our future is selling our house and investing the proceeds to live from. When we’re done travelling and/or if we want a break from travelling we’ll simply rent. We’re toying with that idea but that future is still many years away.
- Understanding insurance needs
I think insurance needs have a lifecycle, insurance needs change over time. If we have no debt and some invested assets I’m not convinced we’ll need life insurance coverage in another 10-15 years, or if we do, very little of it. Our goal is to eventually self-insure as much as possible. That said if we experience health problems we might consider long-term care insurance or disability insurance if we’re self-employed. We’re simply “not there yet” but these are other considerations on the table.
- Wills and Powers of Attorney
Estate planning will be more critical for us when we figure out what our estate might be although we have wills and powers of attorney in place now. Wills, estates, trusts and powers of attorney are common tools used in estate planning – I just don’t know how it all fits together for us yet – we need some time to think this through.
We want to and need to work for a number of years still, for many reasons, but there will come a time when our transition plan will kick in. Until we need that transition plan I figure we’ll save some money, kill some debt and repeat that cycle while enjoying all the great things life has to offer.
Have you thought about your transition plan? Did you already make the transition and if so what did you think about?
I like that you’re not depending on government benefits. I’m not depending on them either. The age for CPP and OAS will probably be 75 by the time I retire. I plan to be out of the workforce long before then.
Great stuff Sean.
“one consideration in our future is selling our house and investing the proceeds to live from”. i find that statement very interesting. my wife and i have considered this idea many times since we retired almost 9 years ago. it would definitely increase our income but we have to live somewhere so by our calculations there would not be much benefit to us. if you have a very expensive home then maybe this route would be advantageous.
travel early as your travel insurance increases every 5 years … 65, 70, 75 …although if you have any health problems, look out!
good post mark …. lots to think about.
Good point by you…travel early as your travel insurance increases every 5 years … 65, 70, 75 …
Another reason to live a balanced life I think. Looking ahead is nice but you have to appreciate the benefits of youth as well, financial, health status or otherwise.
Thanks for the comment Gary!