This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.
I had a lengthy discussion with a family member this weekend that I think personifies the difference between my retirement plans and those of a conventional member of society. This family member was basically counting down the months they had until retirement (they are less than 3 years away) and I questioned them out loud why they just wouldn’t quit now (I was pretty sure they could afford it). They basically stated that their pension plan was “handcuffing” them to continue working and there were penalties to retiring early from the pension.
The discussion continued for a little while, but I could tell that we were not necessarily going to see eye to eye on this issue. I explained that my goal was to quit working as soon as I was able to afford it, whereas they were arguing that I would change my mind when I got older and money became more important. It wasn’t that I couldn’t see their side of the discussion, it was more that they couldn’t see mine – that I think I can find better, more interesting things to do with my time than work the rest of my life. I would rather give up a significant percentage of my income now and then later, live on less and do the things that I want to do (most of which do not cost very much money).
The bottom line of this discussion and with many people going into retirement is that they don’t know what their expenses will be. This family member believes that they need 60% of their current income, plus personal investments, plus CPP to live on when I’m almost positive that they don’t require much more than their personal investments. I know that my spending patterns may change over the next decade or so as I approach retirement age, but I don’t think these expenses will increase significantly (double or more for example).
Looking at the discussion I had in a different (and perhaps more morbid) perspective, this person is in their mid to late 50’s right now, planning on working for another 3 years. Current life expectancy is 81 years – I’m not sure I would trade around 10-15% of my remaining days working at a job I didn’t really want to do for money that I probably don’t even need. Time to me is significantly more important than money. I could find tons of stuff to do during the day instead of spinning my tires at a desk.
Right now, I’m happy with my job, but to a certain extent I still “need” it (or some money coming in). When I get to the point where I no longer need this or any job I don’t think I would be so willing to trade my time for money as there is only so much time out there to do the things I want to do.
How do you decide where your spending cut-off is? If you want to retire early there are probably some things that you’d have to give up that you could have had if you would have worked for another 15-30 years full-time.