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Sunday, May 29, 2016

The Last Stroll

Posted by Tim Stobbs on April 8, 2016

I feel like I should almost be walking around my office with a sign on my back that says “The End is Near,” so I can stop talking around the issue of how much longer I plan on working.  While I don’t plan to formally commit to a given date I am thinking of something in the range of late 2017 to spring 2018 which of course even talking about to people gets them a bit nervous.  It’s like they suddenly all realize that when I talked about taking an early retirement for the last decade I was actually serious about doing it.

I don’t provide an exact date because it depends on several variables like how much renovation work we do before I quit on the house or do we do that afterwards, how the stock and bond market does in the next few years and what other opportunities come up in the mean time.  So for now I’m keeping things vague and plan to give more formal notice when I get closer.

What has been interesting as I start to close in on my last two years or so of my engineering career if that fact I’m actually already starting to shift gears in my head to my post full time day job life.  I’ve signed up for a online writing class and I’m working on a series of novels right now.  Then I have to get back to editing the novel I finished last year and wondering when I should start putting out the submission letters to publishers. I’m also thinking about when I should start up a new writing blog and when I should finally shut down this one.  I do want to provide some post-retirement updates to those that are wondering how it all turns out but at the same time I can’t see keeping this blog going indefinitely.  Then I’m also working on plans on how exactly to pull the money out which accounts and when.  Then also deciding what exactly I’m going to tell people at parties when they ask what I do for a living: do you go with ‘private wealth management’ or ‘writer’?

Yet oddly enough the one pain point I realized during this last stroll was: I will no longer be an engineer at some point.  I will likely cease membership in my professional association after a few years post work and no longer even bother wearing that iron ring and the thought of this actually scared me.  Why? Because that title as been a particular part of my identity for twenty years now.  I’m so used to thinking of myself as an engineer and introducing myself this way that breaking that habit will be particularly painful for me to do.  After all saying it was an excellent short hand for how to describe me to others, so I could say “I’m an engineer” which would translate to: smart guy, good with numbers, geeky, and may have issues with social situations.

On the other hand, dropping that title from my identity will provide an opportunity to define myself without the usual baggage.  This of course is rather good since I in fact do well in most social situations and aren’t so geeky that I can’t talk to regular people.  In fact, one of my highlights to employers has been you get the geeky engineer who can actually explain stuff to the non-technical crowd.  So when I free from that title I can be just who I am rather than my old stereotype.

In the end, I can to really ask myself: who do you want to be?  I don’t need to conform to a stereotype so I’m free to just be myself with all the complexity that implies.  It’s a bit of an exciting time to have that opportunity to reinvent yourself, but of course also a bit confusing to reshape an identity that has been core to my life for 20 years.

Books, Reviews and Reading Lists

Posted by Tim Stobbs on March 15, 2016

I love books, like A LOT.  Like to the point the librarians at our local library branch know me by first and last name, which isn’t surprising when we go there almost every week of the year.  As some of you may recall I even used to post the odd book review here on relevant titles, but I’ve more or less stopped that as I read too much and couldn’t keep up with what I finished reading. (For reference my reading goal for the year is 100 books, which isn’t really that much of stretch for me. I did say I read A LOT.)

Yet now I found the crack for book lovers website: aka Goodreads.  While I’m rather new to the site I’m slowly building up a listing of books I’ve read and like and will even put in the odd review for those that might be interested in following my reading tastes this is my profile.  Please be patient with me as building up what I’ve read over the years is a work in progress.   I do hope to offer you all an idea of what retirement books I found useful over the years plus a heavy dose of other business books, fantasy and science fiction and even some young adult books (yes I like Harry Potter and Percy Jackson).

So if somehow you are curious about what I’m reading in a given week I now am giving you all collective permission to stalk my reading habits.  Hopefully this will be more effect means for keeping you up to date on books that may help you out on your own journey to early retirement.

When the Government Thinks Your Poor

Posted by Tim Stobbs on March 4, 2016

I have a confession to make to you all.  I generally ignore our Child Tax Benefit statement that comes in from the federal government each year.  Why? Well with our combined income we don’t really get a whole lot of money from it and second all of the money I do get, plus some of our own, goes immediately into the kid’s RESP.  So from my point of view the money doesn’t really exist since it only passes through my bank account on the way to the RESP account.  I think of it as my kid’s money and not mine.

So when I did all my retirement planning I generally ignored any potential tax perks I may get when I leave full time work and our income sinks like a stone.  I knew we would be paying less tax but I didn’t really consider that we may qualify for any other benefits programs like an increase to our Child Tax Benefit.

Yet the other day it did occur to me finally that we would get a bit more Child Tax Benefit, so I finally sat down and plug our projected numbers into the government calculator.  Then my jaw hit the table when I saw the result.  See the screen shot below.

Child Tax Estimate

In my head I was expecting perhaps $100/kid per month, so $2400/year.  I certainly was not expecting $8,873 a year.  So how the hell did that happen?  Well it appears that there was a high degree of dumb luck on the numbers when I looked into it.  I figured we would end up between my wife we would have a taxable income of about $26,000/year between RRSP withdrawals and some work (recall my wife will keep running her daycare after I leave work which is her choice).  The rest would come from TFSA accounts so won’t impact our qualification for government programs.  That $26,000/year number is just under the threshold to tie into the National Child Benefit Supplement which for two kids under 18 is fairly generous (over $350/month), then we would also qualify for a few other programs like the GST credit which would give us a bit extra money.

Of course all of this is set to change with the next federal budget as they have previously promised to overhaul these particular benefits during the election campaign.  So I can’t depend on these numbers but it does provide me with some useful input towards my retirement planning.

First off it tells me that I will likely get enough government benefits that I shouldn’t need to save any additional money to finish funding the kid’s RESP account.  I had previously estimated I would need around $20,000 stashed away for that prior to leaving my day job (I had assumed five years of contributions at $4000/year).  But now it entirely reasonable that we should get enough government funds to cover that amount.

The second particular useful fallout of likely getting more benefits than I thought would be the fact this provides a minor cushion to my plan.  As you may be aware one of the particular risks of retiring early and living off of investment income is if you get a series of bad returns on your investments in your first five years, you may end up running out of money in the long run.  So to combat this issue I have a series of backup plans on the ready to help cushion the blow should anything go wrong during those critical five years including: being able to cut back on some spending, having a year’s worth of spending money put aside, being willing to pick up some part time or consulting work in those first five years…you get the idea.  This unexpected money just provides an additional cushion, if we ended up needing it.  On the other hand, if things go well, I would continue to not depend on the government benefits and just put the money aside for the kids.

Ah the joys of having a government think I’m poor based on income, just because I don’t tend to spend a lot regardless of our income.  So this was news to me, did anyone else out there with kids look at this when planning their early retirement?