After my problems sorting out our new company’s pension plan, I’ve finally got my head around the various plans. The other component to this problem is how does this impact my grand retirement goal to get out of the workforce by 45.
Strangely enough on the pension side, there isn’t a huge amount of difference. The main piece of it all is I now contribute a bit more than I previously did and my new employer contributes a bit less, but I got a small raise to cover that difference. So on an overall basis the total amount is similar enough that I’m not going to recalculate that value.
Perhaps the bigger change was going to a bi-weekly paycheque instead of a bi-monthly. That itself would have not been really a change at all except for the fact I did change my mortgage payment to bi-weekly as well. So I’ve cut off around $1000/year in savings in exchange my mortgage will be around $10,000 when I hit 45 without a single extra payment from now on. The fall out from this decision is my house is now part of my retirement plan regardless of how I would like it otherwise. In order to retire at 45, I have to down size my home at the end to extract some of my equity.
To be honest that doesn’t scare me as an idea. After all I was likely going to downsize at some point anyway. My current house is great for a family, but far too much room for a retired couple. The other point I should make too is I’m not required to sell it the day I turn 45. Rather at some point I will have to get rid of the current house. I should have enough other money around I can choose my selling point to ensure I get good price when I do sell.
Another consideration I’m going to have to allow for now is our next baby will be just over 15 if I proceed with my plan to retire at 45. This will mean some increased living expenses for the first few years until I can get the kid out the front door. Then there is the potential for some support while baby and older brother are in post secondary training. So I’ll likely have to create a new slush fund to cover those amounts.
In the end, I’m still going to work at my dream. I’m also aware that things can change a lot in 15 years, so I’m not married to my plan. My retirement plan is rather a general guideline on how things should work out, but it must be reviewed periodically and revised to reflect changes in our lives. Life moves on, why shouldn’t your retirement plan?
This post is now part of the Carnival of Personal Finance.