Weekend Reading – What does your retirement look like?
Welcome to my new Weekend Reading: what does your retirement look like edition.
Thanks again for your readership!
This site now has almost 6,000 dedicated email subscribers. That is VERY much appreciated. I enjoy engaging and hearing from you and I do my best to answer every single email and every comment on this site.
Before my theme for the week (what does your retirement look like?) some quick links to some recent reads:
I shared my personal better way to budget to allocate money to saving and investing while still enjoying things life has to offer. Let me know how you budget in a comment on the site – curious about other methods!
I also posted a recap of the 5 stocks I bought in 2022, along with a few other portfolio changes to share and why.
Weekend Reading – What does your retirement look like?
What does your retirement look like?
Or, what do you envision your retirement to be like?
As a DIY investor taking control over our personal finances and investing, doing my own taxes, managing my own insurance needs and more as My Own Advisor (for almost 15 years now….) I think often about my/our answers to such questions.
I’ve tried to overcome many retirement planning mistakes but I’ll be the first to acknowledge I’m far from perfect. I wrote about many retirement mistakes some folks make here – check out that older post to see if any might apply to you right now…
As My Own Advisor, complete retirement has never really appealed to me. I don’t get how some folks can work 40, 50 or 60+ hours per week for decades on end and simply cut everything off – just stop working altogether to be retired. That approach definitely works for some – it’s just not me.
Passionate readers will know I’m much more about FIWOOT (Financial Independence, Work On Own Terms) vs. FIRE (Financial Independence, Retire Early). It more accurately describes what I’m pursuing without misleading others that I will “retire” in my early 50s and avoid working for some income.
FIRE is great, and fine for a few but don’t kid yourself when it comes to the marketing madness done by many 30-somethings on this subject. They work hard for income even though they are retired. Go figure.
In previous generations many individuals would work well into their 60s only to have a life expectancy of mid-70s. This means retirement, if any really, was short-lived. Company/factory workplace pension plans were common as was healthcare benefits provided by the employer to cover elder care.
A great deal has changed as we know…and more personal finance headwinds will occur:
- People are living well into their 80s and 90s now – at least some are. Longevity risk is an issue for some seniors and your portfolio will need to ensure you have funding for decades beyond government benefits.
- Many company pension plans are going away. Employers are shifting the investment burden to employees or individuals via defined contribution pension plans, if those exist with your employer at all. More and more, individuals will need to fund and make decisions about their own retirement dreams.
- Healthcare is getting increasingly expensive and our system as a whole is in dire need of systemic repair. As such, you’ll need to factor in elder care or various forms of senior care as you age which are far from trivial.
To hedge against those retirement headwinds, while living my life to the fullest as best I can, semi-reitirement has and does appeal to me.
- I can continue to keep my mind engaged – working in some capacity albeit with fewer hours and with less mental fatigue.
- I can continue to earn some income to fight expense headwinds above.
- I will have more time to enjoy things today or try new ambitions – things I have put off or feel I could not accomplish in previous years or decades due to full-time work constraints.
My sensible (???) retirement plan is designed to ensure we don’t outlive our money, first and foremost, but we also don’t hoard assets until the end. The pandemic has triggered a renewed inspiration for me to get to semi-retirement sooner than later – given that’s always been the plan.
Your mileage may vary!
Here are some of my semi-retirement building blocks as part of our comprehensive financial plan:
- Cashflow – This remains the #1 important part of our financial plan. Our cashflow will come from a variety of sources as part of semi-retirement/FIWOOT in the coming years:
- Dividends and distributions from our taxable accounts.
- Dividends and distributions (and some withdrawals) from our RRSPs.
- Part-time work.
- Retirement planning/projections – This is arguably priority #2. If you don’t know how much you want to spend in retirement, as you age, this will be problematic for you. 😉 After our part-time work is done, we’ll also rely on the following income sources for retirement income:
- Pension and/or LIF (Life Income Fund) incomes.
- Complete withdrawal of remaining RRSP/RRIF assets in our 70s to zero.
- Complete withdrawal of remaining taxable accounts to zero.
- Slow withdrawals from our TFSAs in our 80s and 90s.
- Government benefits (income via x2 Canada Pension Plan and x2 Old Age Security).
- Selling our home for old age needs in our 90s, if we get there, is the nuclear-plan to die somewhat broke.
- Tax Planning – We already know our drawdown strategy and other approaches to help optimize taxation.
- Life Insurance – We won’t have any debt/much debt in semi-retirement so we’re not planning on much if any life insurance needs. We’ll have a cash wedge/large emergency fund to cover major expenses.
- Estate Planning – We have a will and we’ll update ours again in the coming year or so. Any premature death would likely create stress and problems for my wife – so I want to ensure things are up to date as much as possible.
Where I’m going with all of this is that it takes a lot of thought for any retirement or semi-retirement planning. This process is much more about who you are, where you want to be, than financial. Yes, math and portfolio assets are important but they are only part of the equation.
I feel it’s never too soon to start that process.
At the end of the day – life is a series of small moments. My goal in life is to have nice things, in moderation, not to acquire things but to enjoy things and just as importantly, enjoy the process.
As I get older and reach some of my long-standing goals, I anticipate I’ll set new ones – financial, personal or other. I expect to. I want to.
As I get older, I try not to measure any progress against others. Our journey and our process is unique to us. I’m learning to enjoy the process more over time…
I hope the same enjoyment can apply to your personal finance process can as a passionate reader as well…
Weekend Reading – What does your retirement look like and more!
Thanks for the inspiration to write this Weekend Reading theme from Tawcan and Dale recently. Read on about the retirement landscape in Canada here.
Be mindful about what your retirement might look like – since retirement can trigger unhappiness for some:
“What can follow is a lack of structure and sense of belonging — or, in some cases, a reason to get out of bed in the morning. Many people also don’t realize how much of their social connectivity is tied to their workplace.”
Nice to see another juicy dividend increase to my portfolio this week: Suncor increased their dividend by 11%.
Curious about dividend income stocks beyond Suncor, where instead you own ETFs to help fight inflation for any Canadian retiree? Check out this list of ETFs to consider:
Lots of insider buying with Algonquin Power of late. Does the CEO know something we don’t? Quite the purchase!
This MoneySense article argued TINA (There Is No Alterative i.e., to stocks) still applies but less so these days with interest rates rising. You may want to consider GICs or bonds again as part of your portfolio but with some caution on inflation:
At the time of writing this article, GIC rates were at their highest levels in years. Tangerine was offering a one-year GIC at 4.7%. Inflation was sitting at 7%. The real rate of return is -2.3%. With these numbers, investors are not growing their wealth.
GICs and bonds are options for Canadian investors who are nervous about market performance, are not concerned about growth and can afford to earn less than 5%. If you are looking for financial growth, being invested in the markets over the long term is still a good strategy.
Interesting to see this asset class quilt so far for 2022 for hints to buy this yeat what may be in favour next year:
More interesting analysis on AQN with Dan Kent and the guys at Stocktrades.ca
Check out my Deals page for major discounts with Dan Kent and the Stocktrades.ca team along with other ongoing partnerships and offers to save, invest, and propser!
Have a great weekend,
“FIRE is great, and fine for a few but don’t kid yourself when it comes to the marketing madness done by many 30-somethings on this subject. They work hard for income even though they are retired. Go figure.“
Who are the ones working hard for income after retiring?
I’ll flip the question around. Please share any name of any blogger, author, podcaster, or other doing their work for free 🙂
I don’t know of any but if you know of folks who are working, for no income, and retired in their 30s can you let me know?
Thanks for reading!
Trip of a Lifestyle (all proceeds go to charity), Building Wealth Now, Risk Parity Radio (proceeds go to charity), Earn & Invest, Retire by 45 (donates kids books to schools), RV on FIRE, Modern Fimily, Explorer Genes, A Purple Life, Eat Sleep Breathe FI, Financial Mechanic, ScrunchyFI, Prescriptions and Paychecks – all are accounts I follow and either don’t have ads on their platforms, any income earned gets donated, openly blog about how they don’t make much money (maybe a few hundred but nothing to sustain their retirement).
Then of course, there are the hundreds – if not thousands – who simply do not blog about retiring early and are living contently in early retirement with no one knowing about them (myself included).
Please be more mindful of putting a group of people down when in reality it’s likely flipped the other way around. You may know of the select few who are using their voices on platforms and making money with it. But I can guarantee they are the minority in the community.
Thanks very much for your comment.
I appreciate knowing who these folks are, that do not work, that do not hustle for income or don’t need to. I respect those folks I’ve met like Chrissy (ESB FI), Financial Mechanic (met in person), Purple (also met in person) from your list and more. Very much so.
I’m sorry if you misunderstood my comments.
FIRE is great. I’m all for FIRE. I’m very happy for folks that have achieved FIRE and are honest about it. I just think many others could be selling a dream via courses, books, podcasts and more.
By the time you are 40 or 50, I feel it’s much more realistic to have realized financial independence. I don’t think I am wrong with that perspective but maybe more folks are FIRE in their 30s vs. 40s vs. 50s.
Again, I’ve met Purple and Financial Mechanic in person. Lovely, talented, smart women. I’m just saying they are both very much in the honest minority when it comes to their approach.
Thanks for reading,
Thanks Mark. I don’t think I misunderstood your comment. I understand you understand the concept of FIRE and are all for it. But it also still seems like you think the majority of people who have FIREd are still aggressively hustling after the fact. And that’s simply not true. Ask any FIRE blogger out there what their hourly rate is – I can guarantee the average comes out to under minimum wage.
I don’t think they – the minority of people who have retired early who do have monetized platforms in the community – are selling a dream if they reached said dream – it’s then a reality, not a dream, right? Sure the extra extra padding they earn is allowing them to spend more / withdraw less but it’s not what allowed them to quit their 9-5 in the first place.
They hustled hard to begin with and now can do whatever they want – be it paid or unpaid. And that’s the beauty of it all.
That’s fair Asian Outlaw and I appreciate the update and your perspective. I guess I see FIRE by some a bit misleading, others are far more geniune – which is great of course.
Have you read this article? Interesting.
If I can call myself FIRE and still work part-time, I will do that, just seems a bit odd to me that’s all but happy to call myself FIRE’ed pretty much now.
All my best,
“Trip of a Lifestyle (all proceeds go to charity)”
Is that *really* true?
I mean I’m not them so I don’t know 100% but they openly talk about it
Fair enough. One has to be careful to read *all* the information. Affiliate profits is a fairly specific item.
I looked at their disclosure page to get a fuller understanding of the issue. Worthwhile reading IMO.
I still hope to buy AQN at lower prices and I project the stock price will take another haircut if they cut the dividend. Given the insider purchases there’s a good chance my bid won’t get filled. How the company turns this around will be as much about interest rates as it will be about selling assets, becoming more cost lean and seeing if they can do better than only relying on making ratepayers pay more for continued viability of their model.
That’s a good thesis – they (AQN) need to become more lean/less debt-ridden with higher rates now. Rates going higher was very easily to predict since money was so cheap for such a long time – it had to revert.
Hi Mark: My pension plan started 53 1/2 years ago when I first entered the work force and received a regular check. I started to buy stocks and with the power of compounding it has grown over the years. When I got laid off in ’92 I didn’t bother looking for a new job, but I still bought stocks. I said to my dad what will I do, and he said that you have enough to worry about just looking after your portfolio and he was right. It is between 7-8 figures now so I should have enough to live on. Every year the max goes into the TFSA and the RRIF is small compared to the rest of my portfolio. I took my pension, small that it is, at 60 because a lot of people don’t live that long. A couple of friends of mine passed away in their 60’s. When my brother and I were born dad took out term insurance on us. My brother cashed his out years ago, but I didn’t see the need and over the years it has built up and the premium is paid up and the interest and dividend interest are now over $7400.00. That may help in burial. I have made a will but like you it has to be revised. I don’t intend to die broke as investing is too much fun.
Very true, right Ronald? Life is short.
Congrats on moving assets to TFSA every year. We see a lot of clients considering that at Cashflows & Portfolios, it tends to make a lot of tax sense for many.
Ya, I will update my Will in 2023 likely. Need to.
I’m a 60+ hours guy, to a zero hours guy; and that works for me!
There’s lots to do in my life without work, like reading your blog, Mark.
Each to their own.
Ha, well, I think you’re smart to go from 60+ to zero.
When in your countdown happening? 🙂
I’m already there and feeling great about it. All the effort we put into reducing our spending, increasing our savings, and managing our investments was well worth it. Learning from your blog and many others was key to achieving our goal. Thank you!
Outstanding. It is my hope we have 18-24 months and then part-time work can begin. I hope my employer is OK with that? 🙂
Yes, exactly Bob – I’ve/we’ve been focused on sound spending practices, maintaining a healthy savings rate and as you know, also managing our investments – a great triple-threat as you know for DIY wealth-building!
Excited to hear about your personal plans for the future. I recall you’re stopping full-time work, when/how soon?
Hi Mark , I was wondering if you can answer a few questions . I have a small active corporation but am in the process of semi retirement ( currently in Arizona ) . I invest my own tfsa at TD which I’m in dividend stocks . My question is my portfolio is at Td private wealth and I pay approximately 1.15% . My wife has a Lira and we have rrsp and also a corporate account. If I was to take over my investments hoe do you open up a Lira and does the broker send all required paperwork for taxes at end of year . I have moved all my investments at Td wealth to there canadian dividend in the spring for a steady income when I start . Thanks and please advise .
Not advice 🙂 – but you can open a self-directed LIRA.
Same as a self-directed RRSP or TFSA for that matter, however, you would make all the stock, bond, GIC, ETF, etc. selections. Any assets should be able to be transferred into a self-directed account “in-kind” in that there is not sale of funds, etc that you own. You can then decide how to sell any mutuals or assets as you build a more personal portfolio from there.
Not advice of course but just an idea based on your comment 🙂
Wow…reading the Six Retirement Mistakes comments sure takes me back. 🙂
LOL. In a bad or good way, Lloyd?
In a good way (smiley face). It was interesting to read what my intentions were back then and compare them to the evolution to today.
Thank you Mark for this great article! I think AQN took the spotlight in the investment news and it’s very reasonable, my share prices dropped about 40% from my purcahse point but I’m holding and here I’ve read comments from all sides sellers buyers and holders 🙂 and all have their own reason and believes but like everyone is saying next quarter will hold their plan to correct the messiness in the balance sheet and if they cut the dividend even by 50% and slowly recover that’s fine for me. Many advises I learned on your site and I thank you for it but in AQN case was the point that you always make on how important is to keep every company that you hold under a ~5% .
I think they will cut their dividend by 50% – that’s my guess. Then the stock price will rebound.
Yes, I feel it’s very (very!) important to keep any one stock <5% of the portfolio value, just in case such things like this happen to seemingly the best of companies. You never know.
My AQN was all in my non reg.
I sold some BEPC shares in my TFSA . They were at about par.
I sold equivalent $ value AQN in my non reg. Then rebought AQN in my TFSA at the lower price.
I used AQN sales to buy shares of BEPC in my non reg.
I now own BEPC shares in my non reg (as well as TFSA). The non reg shares are about equivalent to what I anticipate the 2023 TFSA contribution limit will be. (A little less actually.)
So if BEPC share price goes up I can pay the capital gains and have them transferred in kind to TFSA.
If price goes down I sell in non reg and rebuy in TFSA at the new lower price.
If AQN in my non reg stays down I will sell it for tax loss harvesting and probably rebuy in 30 days. Hopefully at the still low price.
Note. I am no expert on this but since I will still hold shares of AQN in my TFSA I need to wait 30 days after my last purchase of AQN in order to sell in non reg for tax loss.
Also, one needs to not be dripping shares or this can affect the tax loss claim/30 days/superficial loss rule.
Hope it works!
Gotcha, re: AQN.
I know a few investors now that have purchased BEPC instead.
Smart to be mindful of the superfiscial loss rule.
I guess we’ll all see in time how this plays out!
Just to clarify
I already held BEPC in my TFSA
I already held AQN in non reg
So, I sold some shares of BEPC in my TFSA so that I could buy AQN, in my TFSA at the low price/high yield.
I then sold equivalent shares of AQN in my non reg and bought back the shares of BEPC in my non reg that I had sold in my TFSA
The shares cost I bought and sold are about the equivalent of what I expect that the 2023 TFSA contribution limit will be.
So, in 2023 I can move the shares of BEPC (that I used to have in my TFSA) back into my TFSA.
And if AQN goes back up, it goes up in my TFSA.
Thanks for all you do.
Have helped me a lot.
May have to rethink cashflows with housing prices on decline.
Gotcha: BEPC in your TFSA; you held AQN in non reg.
Thanks very much for the kind words. I might put some BEPC or other into my TFSA as well 🙂
Congratulations Mark on the readership! AQN …never imagined it would be this price…have decided to hold my shares and not buy additional. If I were younger, and had more time for market recovery, I may have decided differently. Our retirement plans have always included simplifying that within our power. Can’t do too much about the rest.
Same. Going to continue to hold AQN and not add, wait things out a bit.
We’ll see in time if that decision is the right one!