Alright, so now I have all these pools of investments, so how exactly do I spend them is the real question. So after playing around with a few different methods I put the numbers together in the following spreadsheet. See the BASE tab to see the calculations. Now note the data used in this sheet doesn’t match the last few days of numbers. Why? I didn’t want to do the hassle of calculating monthly compounding and by doing annual compounding only I’ve added an extra layer of being conservative (so hence the lower numbers).
Then I also dropped my rate of return after 45 down to 4%. So on the CHART tab you will see my income versus spending chart. The line goes up till 45 and drops down at 46, the reason is the change in the rate of return.
In the end if I could keep up the 5% rate of return I can pull the plug at 43, but given the number of conservative factors I’ve used it could be earlier than that. Also if I assume everything goes to hell for a long while here and I have crap returns for the next five years I would still likely retire by 49. So I’m retiring in my 40’s at some point, when that happens will depend on how life goes. Overall I find that a comforting thought.
Perhaps another comforting piece of information I took out of my sheet was the fact at 65 with no other income than CPP, OAS and my pension I could bring in $31,899. So now I have some parameters to plan within for some sensitivity tests that I want to run on these numbers.
I’m planning on working on several different scenarios like: being semi-retirement at 40, what happens if OAS gets cut in half, and what happens to my target date as rates of return move up and down. I’m curious what other ones you would run on your numbers? Please suggest them in the comments. I’ll try to get to these scenarios over the next few weeks and roll out the results from each one when it becomes available.
Note: No post on Monday (it’s Family Day here in SK).