I think everyone out there knows at least a few people who have had to for one reason or another part ways with their spouse. Other than the emotional costs of divorce there is a huge financial burden as well. Let’s just do a little exercise, take all of your networth (including pension) and divide it in half. Before you divide your networth in half don’t forget to subtract the thousands of dollars usually required to legally file for divorce and all of the associated real estate fees that go along with selling the cottage, house etc...Next you’ll want to take all of your shared living expenses, mortgage, heat, hydro, gas, cable, internet, house taxes etc... and double them (because you’ll each need your own place now).
Get the point? Divorce is expensive...so if money is tight it just might be worth working a little bit less (not more) and spend that time with your spouse instead....(especially if you live in Quebec)
PROVINCIAL DIVORCE RATES
Newfoundland and Labrador - 17.1%
Prince Edward Island - 27.3%
New Brunswick - 27.6%
Nova Scotia - 28.9%
Saskatchewan - 29.0%
Manitoba - 30.2%
Ontario - 37.0%
British Columbia - 39.8%
Alberta - 40.0%
Quebec - 49.7%
Source: Statistics Canada, 2003
Showing posts with label early retirement. Show all posts
Showing posts with label early retirement. Show all posts
Tuesday, July 8, 2008
Monday, October 15, 2007
Steps to Early Retirement
There is certainly no shortage of opinions on the steps to early retirement. In this post I’m going to outline the steps that I will be following and feel are necessary to successfully retire early.
Step 1
Realizing that you Actually Need a Retirement Plan – this sounds simple but it’s amazing how many people don’t have a real retirement strategy. Many people save for retirement but have no idea how they are doing or how close they are to retirement. I’ve talked to people who’s “retirement strategy” is to work until 60 and then retire…but they have no idea of how much money they’ll need at 60, how much they’ll be receiving or how much they should be saving or investing. I think “Realizing that you Actually Need a Retirement Plan” is the most important but often overlooked step in many people's retirement journey.
Step 2
Now that you know you need a real retirement plan you need to determine exactly how much money you’ll need each month and then add 10% to that number as a safety cushion. Probably the easiest way to do this is to keep track of your current monthly expenditures and then add and subtract any expenses/expenditures that you think you’d have in retirement ie- increased travel costs, decreased commuting cost etc...
Step 3
Determine how you’re going to generate the required income you calculated in step 2. This isn’t an easy task and if you have no interest in investing or finance may require the help of a retirement planner or investment advisor. I’m not going to go over all of the available strategies as your retirement strategy should be tailored to your specific needs and risk tolerance. Personally, I am pursuing a dividend growth strategy, the rational for my decision can be found here.
Step 4
ELIMINATE ALL DEBT – I personally believe that it’s crucial to ensure that when your retirement date arrives you have no debt of any kind (this certainly includes your mortgage). After you retire your employment income will be 0 so to protect yourself from unforeseen events (ie- rapid rise in interest rates) I am going to make sure that I am debt free when I retire. Some people will argue that it’s OK to retire with a small amount of manageable debt…but I disagree.
Here is a link to my personal retirement philosophy. It will probably be different than yours but it works for me. As always comments are welcome.
Step 1
Realizing that you Actually Need a Retirement Plan – this sounds simple but it’s amazing how many people don’t have a real retirement strategy. Many people save for retirement but have no idea how they are doing or how close they are to retirement. I’ve talked to people who’s “retirement strategy” is to work until 60 and then retire…but they have no idea of how much money they’ll need at 60, how much they’ll be receiving or how much they should be saving or investing. I think “Realizing that you Actually Need a Retirement Plan” is the most important but often overlooked step in many people's retirement journey.
Step 2
Now that you know you need a real retirement plan you need to determine exactly how much money you’ll need each month and then add 10% to that number as a safety cushion. Probably the easiest way to do this is to keep track of your current monthly expenditures and then add and subtract any expenses/expenditures that you think you’d have in retirement ie- increased travel costs, decreased commuting cost etc...
Step 3
Determine how you’re going to generate the required income you calculated in step 2. This isn’t an easy task and if you have no interest in investing or finance may require the help of a retirement planner or investment advisor. I’m not going to go over all of the available strategies as your retirement strategy should be tailored to your specific needs and risk tolerance. Personally, I am pursuing a dividend growth strategy, the rational for my decision can be found here.
Step 4
ELIMINATE ALL DEBT – I personally believe that it’s crucial to ensure that when your retirement date arrives you have no debt of any kind (this certainly includes your mortgage). After you retire your employment income will be 0 so to protect yourself from unforeseen events (ie- rapid rise in interest rates) I am going to make sure that I am debt free when I retire. Some people will argue that it’s OK to retire with a small amount of manageable debt…but I disagree.
Here is a link to my personal retirement philosophy. It will probably be different than yours but it works for me. As always comments are welcome.
Thursday, May 17, 2007
Don’t Retire Early? – My View on the Subject
Before I begin I have to admit I’m envious of anyone who “loves” their job so much they’d do for free. Now don’t get me wrong I do like my job, but I don’t love it. However, even if I did love it I still wouldn’t want to do it for 40hrs a week, every week for the next 30 years. Actually, I don’t think there is a single thing that I’d “love” to do every day for the next 30 years. I love doing lot’s of things, fishing, reading, investing, watching movies etc... but like working I wouldn’t want to “have” to do them for 40 hours a week for the next 30 years.
Early retirement is a risk to your future earnings - what if you retire at 45 then decide 5 years into your retirement hiatus that you want to work? Will you be happy with that Wal-Mart greeter job? ;) You greatly risk your future earnings potential.
I disagree that the only jobs available to young early retirees out of the work force for 5 years is Wal-Mart greeter type jobs. Using the same logic the only jobs available to professional working women who take 5 years off to raise their children are Wal-Mart greeter type jobs. With the exception of some high-tech jobs most people could re-enter the work force in their previous profession after a five year hiatus.
Early retirement likely means a decrease in your disposible income both in retirement and today
I agree. That’s why it’s important to determine how much you’re going to need before retiring early. Of course you’re going to have less disposable income but the trade off is you’re going to have lots of time…what's your time worth?
Think about yourself today! What does it mean to work at something that you don't enjoy?
I’m like many people I talk to, I like my job however I don’t want to have to do it for 8 hours a day everyday. In fact there’s probably nothing (hobby or job) that I’d like to do for 8 hours a day, every day, for the next 30 years. If anyone out there has anything they would “love” to do rain or shine for 8 hours a day, everyday for the next 30 years please post it in the comments section.
Why sacrifice a possibly a lower quality of life / enriching life today for the purpose of a possibly lower quality of life / enriching early retirement life?
I think “quality of life” is a term that is very subjective. For many the quality of their life would be elevated by having more time instead of more money. The only thing you can’t buy in this world is time and for most the freedom of retirement will allow them to spend more time pursuing their hobbies and visiting with friends and family.
Early retirement is a risk to your future earnings - what if you retire at 45 then decide 5 years into your retirement hiatus that you want to work? Will you be happy with that Wal-Mart greeter job? ;) You greatly risk your future earnings potential.
I disagree that the only jobs available to young early retirees out of the work force for 5 years is Wal-Mart greeter type jobs. Using the same logic the only jobs available to professional working women who take 5 years off to raise their children are Wal-Mart greeter type jobs. With the exception of some high-tech jobs most people could re-enter the work force in their previous profession after a five year hiatus.
Early retirement likely means a decrease in your disposible income both in retirement and today
I agree. That’s why it’s important to determine how much you’re going to need before retiring early. Of course you’re going to have less disposable income but the trade off is you’re going to have lots of time…what's your time worth?
Think about yourself today! What does it mean to work at something that you don't enjoy?
I’m like many people I talk to, I like my job however I don’t want to have to do it for 8 hours a day everyday. In fact there’s probably nothing (hobby or job) that I’d like to do for 8 hours a day, every day, for the next 30 years. If anyone out there has anything they would “love” to do rain or shine for 8 hours a day, everyday for the next 30 years please post it in the comments section.
Why sacrifice a possibly a lower quality of life / enriching life today for the purpose of a possibly lower quality of life / enriching early retirement life?
I think “quality of life” is a term that is very subjective. For many the quality of their life would be elevated by having more time instead of more money. The only thing you can’t buy in this world is time and for most the freedom of retirement will allow them to spend more time pursuing their hobbies and visiting with friends and family.
Wednesday, May 16, 2007
Don’t Retire Early?
I was recently reading a post on Savings Journey’s website entitled “Don’t Retire Early”. I was going to leave a comment on his blog but instead I’m going to dedicate today’s and tomorrows entire posts to respond to the questions posed by Savings Journey in his post. Before I do I just wanted to let you know that I have contacted Savings Journey and he welcomes my responses and has given me permission to post his original entry.
ORIGINAL POST BY SAVINGS JOURNEY
Tomorrow I’ll provide my take on the subject and answer the questions he poses in his post.
ORIGINAL POST BY SAVINGS JOURNEY
“A lot of people aspire to retire early - age 40, 45, 50, whatever it may be. In the blogosphere, the phenomenon is pervasive - the dream of so many people! Everyone has their own justifications for their obsession with wanting to retire early - "write a book", "do things that I want to do that I can't now", yada yada.
Personally, I find that my work is enthralling and rewarding. I am very passionate about what I do and I keep very abreast in my industry. I participate in conferences, and I basically look forward to the work that I do nearly each and every day. I've always enjoyed my work for the 10 or so years that I've been doing it. So why the heck would I want to retire early? Consider this:
•Early retirement is a risk to your future earnings - what if you retire at 45 then decide 5 years into your retirement hiatus that you want to work? Will you be happy with that Wal-Mart greeter job? ;) You greatly risk your future earnings potential
•Early retirement likely means a decrease in your disposible income both in retirement and today
This is just one side of the coin obviously. Some people don't like their jobs, and some people don't make a million bucks a year. But if you're already planning for early retirement because you don't enjoy what you do today, and look forward to all that free time you'll have when you retire, you better think long and hard about things. Think about yourself today! What does it mean to work at something that you don't enjoy? Well for starters, you're not necessarily getting paid a lot because you're not passionate about it. You're also preparing yourself for a more mediocre future. I LOVE WHAT I DO TODAY! Do you? If you don't, then why don't you find something that you love doing?
Why sacrifice a possibly a lower quality of life / enriching life today for the purpose of a possibly lower quality of life / enriching early retirement life? Find out what your are passionate about today and pursue that today! If you're finding that your job is not something that you're passionate about, find a job that you will be!
Maybe then your life perspective will be different, and you won't want to retire so young, and as a result the overall quality of life that you will have today until you die may be higher.”
Tomorrow I’ll provide my take on the subject and answer the questions he poses in his post.
Tuesday, April 17, 2007
CPI
This is my post for the Canadian Tour of Personal Finance Blogs.
For those of you unfamiliar with CPI (Consumer Price Index) you might want to check out the following link for a definition before reading the remainder of the post.
http://www.bls.gov/cpi/cpifaq.htm
There has been some debate amongst both professional and amateur investors/advisors about the validity and accuracy of CPI (consumer price index). Some people argue it’s too low, while others argue it’s too high. There are many highly educated, respected and experienced economists on both sides of the fence, and quite frankly I’m happy to leave the academic arguing to them. The purpose of this post isn’t to further the argument one way or the other but simply to point out that regardless of which side of the argument you’re on inflation pressures should be a factor in your retirement planning. Inflation is an important consideration by anyone considering retirement, but especially those considering early retirement as they have a longer time horizon to consider. Do you remember what a dollar bought you 20 years ago compared to today? What do you think a dollar is going to buy you in another 20?
Those who argue that the published CPI number is higher than it should be usually base their argument on the fact that the basket of goods used to calculate the CPI either aren’t used by everyone or that the basket does not account for substitutions ie- if bananas go up you buy apples, chicken instead of steak etc...I believe there is some validity to this argue (depending on your consumption habits), but I would not base my retirement on it. Although you might not feel the full percentage effect that CPI indicates I believe that as an investor aspiring for early retirement it would be prudent to use the CPI figures as a minimum guide or benchmark when making predictions of future cash flow requirements. Nobody can predict the inflation rates of the future but for those of us who plan to be retired for 40+ years no amount of substituting or cutting back is going to insulate us from some percentage of real daily inflation in our lives. I don’t think that I’ll feel the full percent effect of CPI but I’m going to use the published CPI figures in my planning as a safety cushion...just in case.
Canadian CPI Figures
American CPI Figures
For those of you unfamiliar with CPI (Consumer Price Index) you might want to check out the following link for a definition before reading the remainder of the post.
http://www.bls.gov/cpi/cpifaq.htm
There has been some debate amongst both professional and amateur investors/advisors about the validity and accuracy of CPI (consumer price index). Some people argue it’s too low, while others argue it’s too high. There are many highly educated, respected and experienced economists on both sides of the fence, and quite frankly I’m happy to leave the academic arguing to them. The purpose of this post isn’t to further the argument one way or the other but simply to point out that regardless of which side of the argument you’re on inflation pressures should be a factor in your retirement planning. Inflation is an important consideration by anyone considering retirement, but especially those considering early retirement as they have a longer time horizon to consider. Do you remember what a dollar bought you 20 years ago compared to today? What do you think a dollar is going to buy you in another 20?
Those who argue that the published CPI number is higher than it should be usually base their argument on the fact that the basket of goods used to calculate the CPI either aren’t used by everyone or that the basket does not account for substitutions ie- if bananas go up you buy apples, chicken instead of steak etc...I believe there is some validity to this argue (depending on your consumption habits), but I would not base my retirement on it. Although you might not feel the full percentage effect that CPI indicates I believe that as an investor aspiring for early retirement it would be prudent to use the CPI figures as a minimum guide or benchmark when making predictions of future cash flow requirements. Nobody can predict the inflation rates of the future but for those of us who plan to be retired for 40+ years no amount of substituting or cutting back is going to insulate us from some percentage of real daily inflation in our lives. I don’t think that I’ll feel the full percent effect of CPI but I’m going to use the published CPI figures in my planning as a safety cushion...just in case.
Canadian CPI Figures
American CPI Figures
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