Posted by Dave on June 10, 2014
Dave 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.
In my post last week, I stated that I hoped to be able to save $500,000 in order to retire. At a 4% withdrawal rate, this level of savings would provide more than enough money to support my wife and I. If I were to adjust the $500,000 for inflation of 2.5%, compounded over the next 10 years, I would be at $640,000 – still much lower than was seen as prudent.
I’m not really sure what the answer, or what the right amount of money to retire would be. Is it $1.5 million? This amount of money would give me more annual spending money than I ever would have spent in any year in my life. I know how much my wife and I spend right now, and if anything, for 10 or 15 years, this amount may decrease.
We are by nature “home-bodies”. We read a lot, have quiet hobbies and other than visiting family and friends, don’t really leave our house all that much. I can’t see our desire to essentially be left alone by everyone much of the time (we are kind of cranky as well) changing. I look forward to days I can spend just walking, either around a golf course or in the city, cooking elaborate meals, and consuming more information.
I realize that I may sound naive, but at age 34, the only reason I can see in upping my amount saved (and therefore my years at work) would be to provide a buffer to disease. If there’s one thing that would significantly alter my wife’s and my plans, it would be a long bout of cancer, a debilitating disease like alzheimer’s or a bad stroke, or any other myriad of issues that could arise as we age (in what we hope is a graceful manner).
The odds are pretty good that at some point either my wife and I will have some sort of issue arise that will incapacitate us either temporarily or permanently. If something hits us during our working life, I am covered by my work for Long Term Disability insurance, and I make enough to cover the vast majority of expenses that we would incur.
After retirement, we could purchase Critical Illness insurance to cover some diseases that we might get, which would provide a lump-sum payment to assist with treatment and healing, or we could assume that something like this would cost say $100,000 and budget for that. Either way, I’m not sure how you budget for these type of unknowns. Do you give up on retiring at 45 in order to have that extra buffer available, or do you retire when you want to, live as healthy as you can and hope it all works out?
I’m fairly risk averse, but I’m also 34, talking about would could happen to me a lifetime from now is kind of silly, but is something that I take into consideration. I’m just not all that sure how much to plan for and to give up for a “what if”scenario that may never materialize.
If you have made it to retirement age, how did you decide on “your number”? Did you take into consideration the risk of critical illness or other health issues?