The Last $100K

So while I know I owe you all a net worth update with all the details I will provide the following little tidbit of net worth news: we just broke $450K in investments at the end of May.  This number may seem a bit odd to be excited over, but I should provide some context to help you understand it.

First off my floor number for leaving work is to have investments of at least $550,000 (plus the already paid off house), so now I’m officially are on saving the last $100,000 to reach my goal.  Being this close to the end of my goal is interesting as I can now actually make a fairly realistic guess of when I will hit that floor value (late 2017 if you must know).  I do intend to actually keep saving (and working) past that number a bit to add some cushion in for a few items like some renovation savings and a pool of cash to use to pay our expenses in the event the stock market falls right after I leave my job.  So rather than fixing the dollar value when I will leave work I’m leaning instead to merely fixing a date in my head in early 2018 and worry less about the exact number of investments when I leave my day job as long as it is past my floor amount.

The second reason that $450,000 in investments is important is that is actually enough money that I am now financially independent on our basics expenses. So when I talk about basic expenses I mean merely bills paid, food on table and nothing else.  No fun money, no vacation, no luxuries, no wine or beer (gasp and sob)! Obviously I have little to no interest in actually leaving paid employment at this particular level, but it does add to the comfort of knowing that if things went really bad suddenly and I was laid off we would be fine for an indefinite period of time.

Of course, some of you may be doing the math on that $550k value above and think I’m bloody well off my rocker for considering leaving work with only that much saved, but I should point out a few important facts:

  • Our plan is based on a spending up to a max of 4.5% of our principle each year (not the usual 4%).  I’ve investigate the risks of pulling out slightly more money I am comfortable accepting them.
  • My wife fully intends to keep working at her daycare, which provides about $6000/year income to the house for the next five years.
  • I fully intend to earn some money myself by working part time at a fun job earning on average $6000/year for the next five years (after an initial 6 month detox period of no work right after I quit).
  • We will be getting an increase in our child tax benefits which will finish funding our boys RESP accounts for us.
  • We are comfortable downsizing in the medium term (5 to 10 years out) and shifting up to $75,000 from the house equity to investments in the event our investments do worse than planned.

Overall I’m happy with plan and the potential risks.  I’m working out the exact details in a spreadsheet model the is broken down by the month from now until 2023. I’ve also setup myself a list of homework assignments to complete before I leave work to determine any issues I have misjudged like reviewing our spending data from the last four years, checking out extended health insurance options, planning my potential weekly schedule ( answering that question of what do I want to do all day) and more.  I’ll provide a post on that in the future.

So I expect there will be questions on all this, so please leave them in the comments I will attempt to address the in a series of posts coming up.

8 thoughts on “The Last $100K”

  1. What would your “number” be if you and your wife were to fully retire and generate zero income (instead of the combined annual $12k) for the next ~5 years? And what would your “number” be if you planned to reduce your WR to 3%, with versus without the added $12k income?

  2. I must be missing something. I am in my late 60’s, retired, house paid off, $100,000 cash, $200,000 RRSP that is not yet drawn on, $200,000 in various investments(non-registered & TFSA) and a company,CPP and OAS pension yearly income of $50,000. However I don’t feel financially comfortable. Yet you think you will be comfortable and content when the time comes.

  3. what are you spending your money on? Retired and you still don’t feel comfortable? or are you just a worry wart?

    I must be missing something. I am in my late 60’s, retired, house paid off, $100,000 cash, $200,000 RRSP that is not yet drawn on, $200,000 in various investments(non-registered & TFSA) and a company,CPP and OAS pension yearly income of $50,000. However I don’t feel financially comfortable. Yet you think you will be comfortable and content when the time comes.

  4. @SimpleJack:
    Perhaps you are right. I am worried about the economy taking another dive and ruining my finances.

  5. That’s exciting that you are coming up on a real date, about 1.5 years away. Do you think writing will be your source of part-time income or something else? How old will your kids be when you retire? I remember my mom retired for my last year of high school and I had to get myself up and to school while she slept in. She did let me use her car to get there, though, so that part was nice. Do your kids anticipate any particular feelings about your retirement?

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