Why Saving Too Much for Retirement Can Be a Mistake

Why Saving Too Much for Retirement Can Be a Mistake

As one reader recently put it to me: “some people work too long and save too much”. Certainly, saving too much can for retirement can be a mistake. 

For most of us aspiring to retire, we all know the recipe by now: 

  • Live within your means.
  • Maximize savings to registered accounts like the RRSP and TFSA, then consider taxable investing.
  • When you do invest inside these registered accounts, keep your investing costs low and diversify your investments.
  • Rinse and repeat for 30 years.
  • Retire with money in the bank.

These elements, and more, should be part of your financial plan.

Millionaire

At some point though, even with your grand plan, you must figure out how much is enough.

I answered a reader question with some of those ideas back here.

When it comes to you, only you know what you need or want from retirement.

This doesn’t mean this recipe is simple to figure out. In fact, it’s like putting together a 10,000-piece jigsaw puzzle.

Your retirement answers may not be intuitive:

  • Should you take your pension early, if you’re lucky enough to have one?
  • What about drawing down your RRSP assets? When?
  • Should you keep your RRSP assets intact until you convert that account to a RRIF?
  • When should you spend any non-registered assets, if you have those?
  • What about the TFSAs, invest and keep those assets “near the end”?
  • When should you take Canada Pension Plan (CPP)?
  • When should you take your Old Age Security (OAS)?
  • Should you consider an annuity?
  • Dozens more questions abound…

Maybe this is why “some people work too long and save too much” for their retirement…they just don’t know any of these answers and err on the very conservative side.

That said, there is much more ground to cover and as always, I like to learn from folks that have been there and done that (or are doing that) for their retirement. My dedicated Retirement page is full of those people that you can learn from too. 

Rob is a fan of My Own Advisor in Germany, and has been following my site for years.

Previously, he wrote about his early retirement litmus test.

Rob caught up with me recently over email and I bundled some questions for him to answer on that subject (some people work too long and save too much) and asked him to offer his own thoughts.

Rob, nice to hear from you!

Mark to Rob: How are things in Germany?  Are you still working?

Good thanks! Yes, for a bit until I retire in a few years.

Some background for your readers…

My wife and I got married in 1984 and bought out first place in 89 just as the late 80s housing bubble burst. This left us in the unenviable position of being in negative equity. About a decade later we had managed to crawl out of that hole and were reasonably well positioned. My wife’s career had taken off and I was (ironically) finishing my CFP studies with the hope of becoming a Financial Planner one day when an off handed comment to an intern at my wife’s (Chris’) place of employment opened the door for us to make a temporary move to Germany. We rented our place out with the intention of returning.  A year or so in we decided to make the move permanent and we severed our ties to Canada. We toyed with the idea of keeping the property but the hassle of long distance landlording simply wasn’t worth the effort. In the end we sold the property for a small profit.

Tell me about your investments Rob. 

I guess like most people I started off investing in expensive mutual funds in the early years. I too, I guess, succumbed to the heavy advertising during the “RRSP seasons”. Over time, thanks to blogs like yours Mark, I eventually got out of big bank mutual funds and owned some stocks directly, I started DRIPping stocks too.

We left Canada when I was 39 (celebrated my 40th on the Eiffel Tower) and Chris was 37. Enough time to build some assets but not a lot. Most of our investments (beyond the house) came via my wife’s DCP (defined contribution pension). Sadly, my company offered an “opt-in” pension which I never got around to joining. Once my wife left her job her company pension, we rolled that over to a Locked-In RRSP. Unsure what to do with it then, I decided to park the whole thing in a 30-year government strip bond. In this case my timing couldn’t have been better – I got lucky. I bought the bond just as interest rates began the long run down to zero. I sold it 2/3 of the way to maturity.  I moved everything into Canadian dividend paying stocks like banks etc.  

What are your projected modest income streams in retirement?  How are you figuring out your retirement income puzzle?

A BIG FYI for readers – I keep some FREE tools on my Helpful Sites page to help others on that front.

Great resources Mark!

It’s interesting because when I first contacted you I was still very unsure of how everything would work out. My wife was looking at taking a buyout (retire early but at a reduced income). Now many spreadsheets and a lot of research later I’ve learned some interesting facts about retirement.

The biggest one: you don’t need as much as you think. Your cost of living drops substantially once you stop working. There are several factors involved, with the first being taxes. They drop substantially in retirement. In fact here in Europe, one scenario I ran showed us owing a mere $7 in taxes! 

Another thing:  your cost of living steadily decreases as time wears on. Mortgages get paid, tuition support ends, kids launch – and grocery, gasoline, auto insurance, and hydro bills all tend to drop alongside that when you’re not running around as much. The experts say you need ~70% of your working income to maintain your lifestyle, but I figure we’ll need around 25% to live the same.

It’s probably worth telling your readers Mark, our income streams in Germany can be broken into 4 areas:

  • Government pensions
  • Locked-In Retirement Account / Locked-In RRSP
  • CPP/OAS
  • Real estate investments.

Some tidbits for your readers, since we’re no longer residents of Canada both our SINs were considered non-active so before either my wife or I could access our Service Canada accounts we needed to get them re-activated. Of course with the pandemic this is a total nightmare but now resolved.

Thanks to social security agreements signed by the Canadian government CPP and OAS (not GIS, that’s residents only) we can receive those benefits here Germany. The money will be converted into Euros and paid into a local bank account.  There are some forms to be filled out but the income will be subject to 15% withholding tax and paid into our local bank account. Like all Canadians we have the option to take it early or delay. Because the amounts aren’t that large and due to withholding tax I’m inclined towards delaying both till age 70. 

I know you wrote a great post on that, you believe there is great merit in delaying CPP to age 70.

Just another note for immigrants to Canada, the chances are very high Canada has signed a social security agreement with your country and you will receive a pension at retirement age.

I won’t discuss the Locked-In RRSP because I suspect most of your readers understand how that account works. We’ll have some income from that.

Mark: What is a LIRA and how you should invest in that? A Case Study. 

When it comes to rental income, property is one of the better tax advantaged investments here so with my inheritance we bought 2 rental properties. When we cash out my wife’s LIRA, we’ll use those funds to pay off the remaining mortgages. That will generate some extra income for us being debt-free.

Great stuff Rob. In closing, why do you believe some people work too long and save too much?

Remember Mark, working is expensive! See my points above. Every senior I’ve spoken with reminds me they are living on substantially reduced incomes but with no difference in their standard of living. 

Another thing to consider, although the pandemic has pushed this back: travel while you have your health.

Early Retirement

What I’m constantly surprised at here is how little people actually travel in retirement. A few go to Florida for the winter (’till illness makes the health insurance too expensive) but you just don’t travel as you get older. People are worried about running out of money so travel gets put off. Don’t delay is my advice!

Finally, on the subject of health – that is true wealth.

That post on your site Mark is so true – health is wealth and it needs to be factored into retirement planning.

I remember when my father-in-law turned 60 and retired. That seemed SOOOO old! Now that 60 for me is in the rear view mirror it seems so young. I read somewhere that the average man lives only 13 and the average lady only 17 years after retirement. After a lifetime of working that is not a lot of time and that’s assuming all those years are healthy ones. 

Life is more than money.

And it’s not just your health, but your spouse’s health. I know many retirees who gave up travel and activities to care for chronically sick spouses. My brother is in this exact boat. He’d love to travel more but his wife can’t. My uncle mentioned that his best years were 60-70, because after that it’s all downhill.

Sadly, the pandemic is forcing many of us to stay at home much more but at the end of the day, please remember there is more to life than work and saving any money from work. There is a legitimate fear of not having “enough” but if you have your health best to start planning for retirement when you can. Don’t take anything for granted.

Great last point Rob.

Mark:

Finding the balance between financial security and enjoying life is not easy and I really haven’t met anyone that has mastered it. For many, the fear of running out of money is real and it’s likely framed by childhood circumstances and lived experiences. 

Boomers might have had parents who lived through the Depression and needed to watch every penny. More current, Millennials are likely to follow Boomer paths in some fearful footsteps: they watched their parents struggle through The Great Recession and some have probably had student loans for years.

Having more money than you need for retirement can help you with your sleep-at-night factor. Not having enough will likely cause significant stress. 

Retirement – how to avoid working too long or saving too much

When it comes to our plan, I’m trying my best to right-size it. We certainly want to work long enough whereby we have enough but putting off ambitions and plans for too long could deliver some financial regrets. 

Like most things in personal finance, I believe the answer to avoid working too long or saving too much for retirement lies with: “it depends”.

  1. It depends if your retirement spending plan makes sense – what can you afford in a sustained way.
  2. It depends if you have considered the unexpected in your plans (hint: you should!)
  3. It depends if you have included some buffer or discretionary money beyond #1 and #2.

If you have confidence in all three of these areas above, you probably have enough. 

While I believe you should always consider what will make you happy and joyful today, you also need to account for the money needed to keep those good days rollin’ into your senior years. 

Too little money could make you miserable. Too much money could be filled with regrets.

A BIG part of our financial independence plan is making some assumptions about our future. You should do the same. We’ve included some of the following in our plan:

  • Will inflation be higher or lower than today? (hint: we’re going for higher). 
  • What will our portfolio rate of return be? (hint: we’re assuming lower equity returns in the future).
  • What will our portfolio draw down rate be? 4%? (hint: we’re targeting 3-4% in our early years of our retirement; the first 5 years we will “live off dividends” only). 
  • Could we require long term care? (hint: we are planning for that).
  • What unexpected expenses might occur? (hint: some could come up and we’re planning for that!)

We can’t predict the future however we can make some assumptions about it.

The irony is though, good savers typically need less money in retirement. They’re used to living below their means. Something to consider when it comes to your financial planning and personal projections. 

Thoughts? Did you know folks that have worked too long or saved too much? Are you one of those people? What advice do you have for folks saving and investing for their retirement (like me)?

Further Reading:

Why the 4% rule remains a decent rule of thumb.

This is the proven path to early retirement ignoring the 4% rule.

Determining your financial independence number.

They have $1.2 M saved – can they retire???

Check out my Helpful Sites page to find some great, FREE retirement calculators and retirement draw down tools. There are also some services you can take advantage of too. 

My name is Mark Seed and I'm the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've surpassed my goal and I'm now investing beyond the 7-figure portfolio to start semi-retirement with. Find out how, what I did, and what you can learn to tailor your own financial independence path. Subscribe and join the newsletter! Follow me on Twitter @myownadvisor.

63 Responses to "Why Saving Too Much for Retirement Can Be a Mistake"

  1. If only I could really know · Edit

    The thing that worries me is I can never account for future taxes and future inflation, especially since I don’t have a house. So I continue to work when, I probably could retire. Its only after tax dollars that have any value to you.

    Reply
    1. Inflation concerns me the most. I’m counting on taxes going higher for sure. Inflation is a wild card. I suspect it will go higher over time. Thoughts?

      Reply
  2. The experts, Rob in Germany said “say you need ~70% of your working income to maintain your lifestyle”, are usually the same ones selling the high-fee mutual funds. The real experts, those commenting on this blog, know the truth.

    Reply
    1. Ha, quite true. There is a bias by some advisors (not all mind you, I believe there are some excellent fee-only advisors out there) where they want you to stay invested and contribute more. You can’t blame them, the higher their book value, the more money they make!

      Ultimately, I feel, the best thing you can you for your financial plan is figure out what you might or might not spend with some buffer added. That’s your starting point. Everything hinges on that.
      https://www.myownadvisor.ca/what-is-a-financial-plan/

      Good stuff Bob.

      Reply
  3. Excellent post.
    For overseas retirees, it’s worth noting an alternative to paying the 15% withholding tax on CPP deposits to a foreign bank.
    There’s no withholding tax when I have my CPP deposited into my Canadian bank account and wait till I see an attractive foreign exchange rate, then transfer the accumulated amount to my foreign bank account.

    Reply
  4. The article and reading the comments made me think about 1) how we each perceive money/finance/life goals based on our upbringing and experiences, 2) the transference of wealth from “boomers” to the next generation.

    Point 1 – I think in general, the generation of my parents was more secretive about talking about money/finances. This prompted me to become more inquisitive about educating myself in this area.

    Point 2 – My wife and I are in our 60″s and at that stage where we have and will be inheriting money. For us, we could have used that money much earlier in our life journey when it would have had a significant impact. Given that, we have committed to helping out our kids financially during the challenging time of work, young families, mortgages, loans, etc. We value education as well, and have maxed out RESP contributions for each of our grandkids – another way of supporting our kids.

    Reply
    1. That’s very wise Bruce, re: if you want to help your kids out now, this is the time vs. when they are in their 50s and 60s and probably don’t need the help.

      I’ve told my parents to “spend it all as they please”. They’ve worked hard and they deserve to enjoy anything and everything for the coming 20 years or so. I think they are doing that 🙂

      Reply
  5. Hello Mark,

    It’s Kim here. Another week with a few new posts. There is so much to learn from you and your fans in this site. I’m now following a step by step in Henry’s book. He refereed to a few worksheets but I can’t find it. Do you have any tools, worksheets, excel package? Can you post them on the website or post me the links (maybe already posted but I couldn’t find). Thanks a lot for your work and sharing. Kim

    Reply
  6. As is so often the case, many comments in financial blogs are from middle and upper middle class followers. My comments are given so that someone who does not have much — is not earning a lot, has a lot of necessary expenses, etc. — will take hope. It is unlikely we will ever save or have too much for retirement. That doesn’t mean we should give up on using the helpful advice found here. I am now retired on a modest pension (DCP started in my early 50s) and, after reading a couple of good books on personal finance and investing and following Mark’s blog, I continue to live modestly but without fear of cat food for dinner in my future. I didn’t have the opportunity to save too much but I did get to save enough. And that’s important.

    Reply
    1. What a great comment Pat. There is no doubt a bias to people reading personal finance blogs. Folks are generally educated and/or they have a desire to be educated in personal finance. That’s part one. Part two, these folks (not just my blogs, there are a gazillion…) are more than likely to have a modest income – they have the means to save or invest. Three, these folks have access to internet, time, and the means to grow their knowledge over time. Time is a big factor. If you don’t or can’t make time to read, internalize, gain knowledge, you are largely going to fall behind.

      I could go on….I see so many emails from readers who have an arrange of circumstances. Some people have $3M saved by age 60 and are not sure if they “have enough”. I see other emails from readers who just have CPP + OAS to rely on, and are not sure if they can afford to keep their home. The range of reader emails, questions, circumstances is really staggering actually.

      I certainly don’t think folks should give up on any advice and personal perspectives on here or other (good) sites. 🙂 I have my opinions of course, they may differ quite a bit from others’ naturally, but at the end of the day I do want everyone reading this site to be either inspired or empowered in their own financial decisions and convictions. If this blog can do that, then, well, I’ve certainly succeeded in any messages.

      A nice closing: “I didn’t have the opportunity to save too much but I did get to save enough. And that’s important.”
      Mark

      Reply
    2. Well done. Congrats on your good retirement.

      I think the important thing is living within your means and save as much as one can, no matter what is the income. We are doing better than average Canadians now for sure. But when we first came to this country, we have very little money and still managed not to spend all of it. Of course our living standard is different now. We used to eat lots of chicken as it’s cheap. I still pay attention to the price of food, but focus more on nutrition and taste. If circumstance changes and I have to live on lots of chicken again, I have no problem at all.

      Reply
  7. A lot of interesting stuff here. Life is for living and you shouldn’t wait until you retire if possible to enjoy it. We took vacations, I played golf every week a couple of times, and in the last 10 years of work also took every Wednesday afternoon off to golf. This thing that your expenses go down in retirement is something I have not found. When you have a good life and work balance your expenses remain the same and even go up as your FI increases. Of course this isn’t the same for everyone. If your paying of a mortgage or other debt till retirement your expenses go way down. We payed our house debt off over 20 years ago and invested for retirement. We are grateful that we were always able to keep a good balance. Now were waiting like the rest of you for the world to open up again. Do your part and stay safe.

    Reply
    1. If there’s a Will there’s a Way. If you are short of time, you might have to make some concessions, but if you’re not dead yet, you can still make it.

      Reply
    2. More great comments, re: “this thing that your expenses go down in retirement is something I have not found.”

      I suspect if/when you’ve been accustomed to a certain standard of living then that sticks.

      It is our hope once the mortgage and actually saving for retirement are gone, we can slightly increase our standard of living. That would be ideal. We’ll see!

      Reply
  8. This is a great topic and fantastic advice in this blog. We spend about 55 percent of our prior income in retirement. This includes our RV travel and many hobbies such as modest DIY home renovations usually on the go. Be good savers, constantly pay off debt so you will have more options to align what it is you want to do in retirement. But keep looking at what you are saving, and what your costs will be. The more you work on that and considering your goals which likely will evolve a bit, it will come more clear on what you need. I suggest as well it is less than you hear from marketers.

    Years ago I read age 60-70, are usually your best (go go) years to enjoy what you want to do. Retired at age 58, we are there now enjoying every day and are pleased that good habits and the hard work of has paid off.

    Reply
    1. I’ve also seen that with my parents Brad. The go-go years are in the 60s. By the 70s, things simply slow down. The will is there but the energy and other factors are not. We hope to enjoy our 50s and 60s thoroughly with some travel and simple pleasures around the city; festivals, parks, etc. It doesn’t always have to be expensive right?

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  9. Thanks Mark, this has been a very relevant topic for me, and never more so than right now. Like many who come to MyOwnAdvisor, but unlike most other Canadians, for years we lived lean and focused on maxing our RRSPs, TFSAs and then started having non-sheltered savings. Using the various retirement/cashflow calculators we rationally know that we don’t need to worry but it is very hard to break a savings mentality developed and reinforced over a lifetime.

    It’s made me regret the fun that we didn’t have along the way. Life should be balance but because we grew up in environments where finances were more precarious, we were so focused on achieving financial independence, long before FIRE was a thing. Now that we are conscious we don’t need to continue stressful jobs, finding something to do for our early retirement years that provides meaning and purpose in life is our next challenge to figure out. Brian Portnoy’s Geometry of Wealth touches on many of these themes.

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  10. We saved way more than we need in retirement but I don’t regret it at all. We simply spent everything we wanted to our entire lives and invested and saved the rest. Because I enjoyed my career I only retired slightly early and that meant we ended up with more than we’ll ever spend. That’s not a problem, we never sacrificed on the quality of our lives, we just made too much money, inherited a lot and our kids all got free college from academic scholarships meaning we didn’t have to fund their educations. I don’t mind handing a few million down to our kids. We could also spend much more in retirement than we do, but whats the point, we have very full lives now, spending more is not a priority as long as we are enjoying the way we live.

    Reply
    1. A great message for others Steve.

      “We could also spend much more in retirement than we do…we have very full lives now, spending more is not a priority as long as we are enjoying the way we live.”

      At the end of the day that’s all that matters.

      Reply
      1. That’s interesting not many people enjoy work that much. I was thinking of my brother is law, now partically retired. He worked an insane 45 years at his job! He will on average expect 13 years of retirement!!

        Reply
        1. The reality is though, some folks don’t have any choice but to work. Maybe your brother in law did have a choice though?

          I receive countless emails about the inability to save through not fault of their own / circumstances just happen.

          I hope to post more case studies and articles on my site in the future just about that.

          Reply
          1. Yeah that’s the downside to using anecdotes. I have spoken with a lot of retirees and asked on Reddit what peoples experiences were. But again still a very limited non representative sample. But the main point I wanted to make is that the personal finance industry is biased towards oversaving. Also I had in mind the average baby boomer who now pushing 65 needs to decide when to retire. Most of the people I know retired 63-35, a few before a few after.
            I would guess that the reason why some need to continue working would be either late life divoice or death of the primary wage earner.

            “I hope to post more case studies and articles on my site in the future just about that.”

            That would be really interesting, there is very little written about this aspect of retirement

            Reply
            1. I believe you are correct Rob – no doubt – over-saving. I suspect most Canadians are not on personal finance Reddit or other and don’t really care 🙂

              Yes, I know I have some readers who aspire to save more, invest more, but absolutely can’t for various reasons. I hope to explore that more in the coming months and years since I feel they are an under-served audience and maybe there is something they can glean more from my experiences and expertise. Maybe?! At least they can read my site and ideas and still delete at their command. ha.

              Mark

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  11. This is a constant discussion in our household. We are pursuing FI not to retire early but to have the freedom to not have to work for money. I think we could pull the chute at the same time in a few years but hubby is more conservative and thinks he will have to work a few years longer.

    At the end of the day there is no “right” answer. Whatever we end up deciding to do will be the right choice for us.

    Reply
    1. Yes, it comes up quite a bit in this house too Maria! The only right answer is the one that you can sleep with at night!

      Thanks for your comment. Stay safe!
      Mark

      Reply
  12. IMHO, too much is better than not enough, as long as you didn’t sacrifice your health. There won’t too many fixes if you are old and no money.

    While retirement will reduce some expenses, but there is also other extra expenses, e.g. dental and vision care, drugs, etc.

    I do agree though 70% replacement is nonsense. 25% for Rob is amazing. For us, it might be 40-50%, depends on the market and some other factors. I think retirement budget needs to be flexible.

    Reply
    1. Oh for sure, too much is the best problem to have but I also meet many folks that save and save and simply have way too much or they put off too much in the process of saving too much.

      I know my wife and I won’t have as much money as we would if we worked until age 65 full-time but that’s not our goal and never been our goal.

      25% for Rob is amazing isn’t it? I suspect we’ll be around 50% or so ourselves for income replacement. Of course, spending is quite dynamic.

      Reply
      1. Yeah, I guess the key point, as others pointed out, are you enjoy your life as you should while you are pursuing financial independence. People need to keep a balance between wasting money and being too frugal. After all, FI itself should never be one’s goal in life.

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        1. Definitely trying to May…we are not that frugal but we also save as you know from this site and my journey so I feel we’re taking a decent balance of things. I’m far from a master know. I struggle with saving more and spending more at times. FI is not the end goal but it is an important milestone for us!

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    2. The 25% is also based on the fact we earn an above average income, so probably closer to 40% of an average income. Also as mentioned people spend less in retirement

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    3. Agree with what you’re saying.

      We could have had much more by working longer but that’s not a priority here. Wife stopped @ 53, me semi@ 52, stopped @55.

      People that save a lot while working will likely need significantly less income when retiring because so much of their outlay went to savings (and taxes) then.

      Our income varied. Peak was 2003 -11 years before my full retirement and our taxable income since retiring is around 60% of that, and about 85% of the last year we both worked FT 2011. Actual (not inflation adjusted). We have a fair bit of latitude to raise retirement income, but like has been said above – life is good and we currently have no real need for that. Maybe that will change especially with some pent up COVID cabin fever.

      We feel so far we had a great balance. Saved some while working, but also spent a lot on homes, travel, cars etc. daily life. Not overly frugal at all. Same thing has happened in retirement but more on travel, then home, cars.

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      1. I think you did very well on your work, your life and your retirement, I hope I could follow in your footsteps.

        You definitely spent lots on your wants, not your needs as I remember. You have way more cars than you actually need, LOL.

        I like what my friend saying: a retirement plan should be of three parts: needs, wants and legacy. I think our daily life also should have both needs and wants. With only needs, it will be a very frugal life style, but I doubt I will be happy. We should be able to differentiate between needs and wants, and we also need to satisfy some of our wants, although definitely not all of them.

        Reply
        1. Thanks May. I don’t think you need any lessons from me. You’ve done extremely well and will have a great retirement.

          Ha on the vehicles. Just traded one in for a newer one.

          Agree on that part with daily life, and for us its the same in retirement. With no children legacy isn’t a concern here but some charities might benefit at some point. That’s good.

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      2. I have observed with lots of retirees that they have more than they need in retirement now as they plan in a very conservative way years ago when they retire. The market has been very well and far exceeded the conservative projection, and they end up with much more money than they expected. Nobody knows the future, and I think we still need to plan in a conservative way, maybe even more so with the long bull market has to end sooner or later. Retirement plan is about surviving in worst times. If time is good, great, easy to spend more or leave a legacy, only the sky is the limit. But there are expenses we cannot cut even with a flexible budget. There are bills we have to pay no matter what. I don’t want to end up eating cat food under a bridge in my old days.

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        1. Good points again May.

          For sure the real retirement test is when markets dump or stagnate for some time, and having a good plan to still cover your needs and ideally some or even all of your wants.

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  13. This is a challenging topic for everyone who makes the effort to address it seriously.
    Life is for living. If you enjoy what you are doing, why stop? If your work life is a grind, of course, retirement looks appealing. The trick throughout life is to do what you enjoy. If you don’t at least get satisfaction from what you do, do something else that enriches your life (lives). Part of a good living plan should incorporate building in enough flexibility to do some good things in your life even before you retire. Don’t wait until it’s too late to travel to your dream destinations.

    Join the Ski Patrol, go wilderness canoeing, visit Europe and New Zealand, learn to scuba dive, sail in the Caribbean and whatever appeals to you. There are a lot of activities you may not be able nor wish to do in your senior years. Don’t put it all off.
    We did all the above and more and have now reached our 80’s when health and the cost of health insurance restrict our travels.

    WRT to retirement savings, we have built up a 7 figure portfolio that exceeds our needs. We own our home mortgage free and live comfortably on two CPPs and two OASs plus a little compulsory drawdown of our RRIFs. The rest sits and grows for our heirs and charity.

    Don’t sweat it, save and invest smartly, have fun and enjoy life. You only get to live once!

    Reply
    1. Your response is my whole view. Enjoy what you do.

      My Dad retired at age 55….did his thing for 20 years….then at age 75 went back to work. He only stopped working at age 85 due to covid. He enjoyed what he was doing. It wasnt so much a job but his way of living. It wasnt done for the money. It was done to be engaged and enjoy his time.

      My view has followed his. I am turning 61…hope to work another 9 years and then see what I want to do. I am actively involved in what I do. I take Fridays off for half the year. My staff get Fridays off in the summer. I ensure everyone in the office takes a break and doesnt just work constantly and ends up burnt out. i enjoy travel…and normally trip off to a different country or two each year and see something new. Life is meant to be lived. Retirement isnt my goal. Living is.

      Reply
      1. That’s a strong life lesson right there Brent – obviously it has stuck with you…

        You strike me as someone that aspires to have balance. re: Friday’s off and your staff as well. That’s awesome.

        Life is absolutely for the living. “Life is meant to be lived. Retirement isn’t my goal. Living is.”

        Well put.

        Any big plans once vaccinations are completed? Sure, the world will be different but folks will travel again. You?

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        1. Hoping for travel….but I suspect that is longer then a lot of us wish it to be. Given the delays for the whole world to get vaccinated I expect travel to be different for the next few years. Canada may have vaccines and be dealing with covid well in a year from now but you need the rest of the world to get there as well. Last trip was to Morocco which was fascinating but a country like Morocco will take a lot longer to deal with covid then Canada. Destination is definitely going to be impacted by where covid is under control.

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          1. That’s interesting about your Dad returning to work. There’s another aspect of retirement that absolutely no one talks about. How to fill your day. Talk to any wife and they’ll tell you the first 2 years of retirement are the hardest. My Dad drove my mum nuts at first. Both my sister in laws complained about having thier husbands at home all day.

            My wife took a retirement planning course and that was one of the points brought up. For many of her male (she was the only lady there) co-workers their social life is based around work. The lady running it ask what will they do when work is gone, where will they get their social interaction from?

            The pandemic has been helpful in that regard, being forced to stay at home has allowed us to think how we’ll approach all that free time

            Reply
    2. Very good words Peter and thanks for sharing. re: “Don’t sweat it, save and invest smartly, have fun and enjoy life. You only get to live once!”

      Indeed we do.

      With your mortgage-free home, x2 CPPs and x2 OAS, I have no doubt you are more than fine and kudos to that.

      Stay well!

      Reply
  14. Christopher T Howes · Edit

    ” Everyone wants to live on top of the Mountain, but all the happiness and growth occurs while you’re climbing it.” (Andy Rooney)

    Reply
  15. Thanks Rob and Mark for the great article. When we retired our spending went up considerably since we enjoy travelling and we went on 4 or 5 international trips per year. We had savings that covered this cost. Covid has grounded that now and I hope to get back travelling again when restrictions are lifted. We are probably in the category of “should have retired earlier” since our net worth has continued to go up almost every year since I retired 10 years ago. I do not regret saving so much and know that our income will increase significantly when our RRSP’s (both in the 7 digits) are turned into RRIF’s when we turn 71. We are withdrawing some funds from my wife’s RRSP now since she is in a lower tax bracket and her income will jump when she turns 71. We have delayed taking our CPP until 70 since we don’t need the money and have significant dividend income from our non-registered investments to live on.

    I believe in investing our pre-tax money (RRSP’s) in equities for as long as you can (our RRSP are over 40 years old) since you are using the governments share to increase your net worth. Yes we will have to pay the piper (CRA) in the future but investment of tax deferred income has served us well. We plan to continue to donate non-registered account shares in kind with large embedded capital gains to charity now and even more when our RRIF’s require minimum withdrawals. We don’t worry about our financial future since we know we have saved sufficiently to enjoy our retirement in the manner that we wish.

    Staying healthy is our primary goal now so we do yoga, Pilates, cycling and walking.

    Reply
    1. Great stuff Roger.

      Certainly, although this bull market has helped, anyone that is making MORE $$ in retirement has clearly saved enough…income > expenses even with drawdown. I think anyone with 7-digit RRSPs is proof of that. A nice problem to have 🙂

      I too, am likely to take CPP at age 70. I prefer to transfer that portfolio risk to the government vs. me although we’ll still have TFSAs and RRSPs/RRIFs (potentially) then.

      “Staying healthy is our primary goal now so we do yoga, Pilates, cycling and walking.” Me too. Really trying to walk, bike and do yoga more. COVID-19 was sadly a big wake-up call for me.

      Reply
  16. It is certainly true that you should travel while you have your health.

    Over the past five years, my wife and I have had medical issues, all fixed now but getting health insurance within a year of surgery or even a change in medication becomes a challenge. We did find one company that for a price will sell limited cover, but most companies have very strict rules.

    This year was supposed to be a big trip back to NZ, ah well that didn’t happen and next year is suspect.

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  17. Thanks Gruff, as I mentioned to Mark when we were discussing this life has a tenancy to get ahead of you. I remember being 40 and retirement seemed soooo far away and now it’s like where did the years go to.All of us worry about if we’ll have enough and I’m no exception. Long complicated story but we have a 4 year gap between the end of work and when our pensions kick in and I worry if we’ll have enough but talking with other retirees (both here in Germany and family back in Canada) I was shocked at just how little people needed to live on. And being in lockdown has also shown us that we don’t need to be crazy busy. All our holiday plans got cancelled and to be honest we both really enjoyed just being home and not being a rush to get places!

    Of and it’s, as of next month, 1 year 8 months, not that I’m counting or anything LOL

    Reply
  18. Lloyd (60, retired) · Edit

    We fall into the category of *having* too much for retirement. (intentionally using having versus saving, they are not the same) Given the same set of circumstances, we’d go down the same path.

    Reply
    1. Absolutely the thing is about being a good saver is that if you’re forced into early retirement (say laid off at 55 or something) you have much less a worry of a financial crisis.

      Reply
  19. Thanks Rob for this fantastic article and congratulations on upcoming early retirement. It just takes a little bit of planning to make a huge difference. Some real gems here:
    Work is expensive – absolutely. People might be surprised to see how much of their income they can replace when they stop working.
    Health before wealth – life is a participation sport, don’t spend it all chasing the dollar. My spouse is older than I. That plays a significant factor for my plan. We regret the risks we don’t take.
    You don’t need as much as you think – spot on. It’s all about being financially independent and making enough to cover expenses.
    Thanks for sharing your journey and all the best.

    Reply
    1. Thanks Gruff. It is our hope once mortgage is dead, and actually saving for retirement is gone, we’ll be able to work part-time, try out some expenses and see what works and what doesn’t for us.

      Health is the ultimate form of wealth. Getting into my later 40s now I appreciate that so much.

      Reply

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