Posted by Tim Stobbs on February 14, 2007
Q: I’d really like to retire by 45 too What would you say are the main strategies to use to get there? How much money will you need by then? Is your strategy also to live on dividend paying stocks?
A: First off if you want an idea of how much money I think I need to retire at 45 please go back and read my Retirement Calculation posts (Part I, Part II, Part III and Assumptions). I’ll update those calculations after I get my tax return back, but for now you will get a good idea of what I’m planning. From those calculations you might be able to tell that I’m not planning on living off of just dividend paying stocks like Dereck Foster. I plan to have some blue chip dividend income, but also at least one REIT and some fixed income investments within an RRSP. I’m still working out the exact mix of investments as I go along.
My main strategies are fairly typically of most people looking for early retirement. I always live below my means (ie: live off of $30K even if you earn $60K), never pay any attention to trying to keep up with the Jonses and never pay attention to what anyone thinks about me for the most part.
I also avoid debt like it is a plague. I paid off my wife and mine student loans ($60,000) as fast as possible and then got saving for a house down payment and the car buyout on our lease. Now I’m 28 and the only debt I have is my mortgage which I’m going to accelerate paying down to hopefully get rid of it within the next ten years.
Perhaps the most useful strategy that I have is I hate wasting money on things I don’t care about. Reading my saving money posts (Part I, Part II and Part III) you may notice that I don’t like to pay more for my utilities. Also I don’t pay full price retail on anything unless I have too. Most of my books I buy at sales (By the way I just found out my library sells old books they no longer need for $0.50 for a paper back!). I have no problem buying a nice shirt from Walmart if I like it and its on clearance for $5. I always check out the clearance section of any store I go into to see if there is anything I could use/like (For example, my wife got a piece of her china pattern that retails for $30 for $3.)
This isn’t to say that I’m cheap. I also own a 32 inch wide screen LCD TV with surround sound. My wife owns some very nice china and crystal glasses. I also sleep in 400 thread count sheets during the summer. I just know what brings me the most happiness for my dollar. If you can master that, then everything else will fall into place fairly easily.