Posted by Dave on January 28, 2014
The last couple of weeks, I have written about my past and present financial plans, today I thought I would write about one possible path that my wife and I have looked at.
My plan in retirement is to continue with my frugal lifestyle, spending as little as possible and living off of the investments I’ve made during my working years. One of the benefits of living on very little money, is that we may be able to live essentially tax-free in our retirement years.
In 2013, according to CRA, the basic personal amount Federally is $11,038, Ontario has an amount of $9,574 – both of which are inflation adjusted. Given our current level of spending, we would be fairly close to these minimum amounts, resulting in very little taxes payable to the government. My preference would be to pay zero taxes, because (like most people), I don’t like to pay these at all.
Most major “capital” expenses will be taken care of going into our retirement years. The two major items (our house and car) will be paid off and hopefully well-maintained, and I can’t foresee much in the way of major expenses (outside of normal emergencies like a furnace breaking down or a car accident) taking place, which can hopefully be taken care of out of an emergency fund.
Right now, we don’t spend a lot of money. Like most people, our spending priorities probably wouldn’t make sense to anyone but ourselves. When I look at variable expenses in my monthly spending, the vast majority of it is on gas for the car to visit family and friends, food, and drinks. Other than this spending, we spend almost nothing on “stuff” – we would kind of look like we were living in poverty (compared to a normal North American family).
Our low expenses in comparison to the income we bring in is the main reason we are even able to contemplate an Early Retirement path. I think the vast percentage of people would balk at our lifestyle, but at least for now are more than enjoying the current way we live. What would maybe look like poverty to an outsider, is comfortable and stress free to us. We have savings, we have more than enough food to eat, we have a car to get around with and we can support our various hobbies and interests that we enjoy doing in our free time. Our goal is to increase the free time portion of our life to have more time to enjoy these hobbies and interests.
Do you feel you’re missing out on anything by taking part in an Early Retirement path?