Posted by Canadian Dream on June 22, 2009
Typically in retirement planning one of the common assumptions is that the kids are out of the house and off the payroll when you retire. Early retirement has no such guarantee. For example, I know if I manage my goal of retiring at 45 I will have a couple of teenagers still around the house for a few more years. So how do you plan for kids in early retirement?
In general I have yet to be too worried about this problem until I get closer to the end of my working life. I haven’t had teenagers before, but after talking to other people I realize they can be a money pit if you let them be one. So I won’t know there total drain on the household spending until I get closer to my target date. In the mean time I’m planning on a few things:
- Control expectations. I fully intend to make sure my kids know I won’t be giving them money for every little thing that want in life. There will be limits and I intend to make it know for many years. So the deal will be I’m prepared to spend $X per year on you via allowance and slush fund for activities. If you burn through it in six months that isn’t my problem. (This isn’t to say I won’t negotiate for unusual items. I’m not so cold that I won’t at least listen to a proposal where they can’t afford something and they really want it. I will be expecting some effort on their part to make it happen.)
- Fund RESP’s. We already have RESP’s for the kids and I intend to ensure they are well funded prior to me going into early retirement. I will only pay for one degree and each class only once. If the kids fail something, they need to find a way to pay to repeat the class.
- Keep a kid slush fund. I will keep a fund of cash to help cover all sorts of requests for help for the first few years when they leave the house. I fully recall I needed a hand once and a while myself. I haven’t decided exactly how much to put in for each kid, but I’m initially thinking $10,000 each.
- Teach them we are not rich. An important item that I will have to teach the kids is just because I don’t work full time doesn’t mean I’m rich. It’s almost insane the ideas people get when they think you have lots of money for some reason or another. So the idea will be to teach them I worked hard in my early life, so I don’t have to work so hard now. All it takes is planning.
So that’s my rough outline of what I’m planning on doing with my kids. What would you do if you retired with kids? Or if you have already been in this situation, what worked for you?
Posted by Canadian Dream on June 19, 2009
Hot, Flat and Crowded by Thomas L. Friedman was a excellent read. I have to admit that some books along these lines are very boring to read since they don’t really explore too much. Yet in this case Thomas has linked up population growth, climate change and geopolitical issues to produce a book that I had a hard time putting down.
In general the book is in two parts. Part one explains the problems of how the world is becoming hot (climate change), flat (increased communications) and crowded (population growth). Then he starts liking up some of the issues like with crowded and hot meet up the problems multiply. He also touches on some geopolitical implications of all this including China-US and US-Middle East and how in reality the US addiction to oil is directly and indirectly funding both sides of the war in Iraq.
The second part of the book is the plan to do something. I like that fact he points out a few very importantly concepts:
- Going green in a big way will not be easy. Frankly it will be lots of hard work and lots of dollars to get there.
- You don’t need a climate change treaty to get moving. If the US started moving towards clean energy in a huge way and then started exporting the technology you would see big changes sooner than later.
- If green takes off in a huge way, it won’t be ‘green’ anymore. It will just be the way we live our lives and do our business.
In some regards Thomas is a bit over optimistic, specifically with a smart grid. It will help out a lot with the utilities going to more wind power, but what is really needed is the ability of electric cars to act a giant battery bank for the country. The ability to shape loads and shift power generation and demand through time will be huge to change the way business is done for power companies.
Overall it was an excellent read that linked up a number of important issues and how to solve one major issue like climate change can have good secondary effect that help other problems like the US addiction to oil and its associated political issues.
So if you read the book what did you think?
Posted by Canadian Dream on June 18, 2009
Well sorry for the suspense on the book give-a-way. I had forgotten to draw the name yesterday. The winner was Valerie. Thanks for all the ideas everyone. I’ll start working on them into posts over the next few weeks.
On to the links:
0.1% Inflation – Wow, we are so close to going negative except for gas prices. *sigh*
We bailed out the auto sector, now pulp, and I’m hearing talk of a farmers seeking some bailout for a poor crop this year. When will this ever end?
More proof that we suck at predicting how happy money makes us and that your income doesn’t limit your happiness. If anything a middle class person stands a better chance of being happy than those making $125,000/year.
ERE has an interesting post on how to spend very little money.
Preet just got even more famous (beyond the book and blogger thing). He’s now on TV.
Modern Gal points out, just unplug it already.
