Posted by Robert on August 30, 2010
A few weeks ago, a journalist contacted me through this blog, requesting an interview about early retirement. I shared my story and some of my ideas and experiences regarding starting early and enjoying success at a relatively young age. I enjoyed my conversation with Jacqueline Nelson from Canadian Business magazine and looked forward to seeing the article in print. As many people who have been interviewed for an article before can probably guess, the article ended up being very different from what I expected.
The current issue of the magazine contains an article called: Top 10 Retirement Mistakes and How to Avoid Them. The link opens in a new window, so feel free to click on it and read it at your leisure. I contributed to ideas number 8 and 9: plan for a long life and don’t plan to inherit your retirement fund. Those ideas could both be related to early retirement planning, but I know it’s a bit of a stretch.
First, if I were planning to retire at age 45, how would I inherit money? My parents will be in their late 60s, not likely to be leaving an inheritance. And I have many brothers and sisters and cousins. I don’t expect to receive anything from my grandparents, but even if they leave money, it’ll be split many ways.
Second, how many years will I need my investments to provide income for me? As I mentioned to Jacqueline, there’s not much difference between planning to spend down the capital over 35 years (age 65 to age 100) and planning to never touch the capital. Retiring at age 45 leaves 55 years during which investment income will be required. This can only safely be accomplished by never spending capital. As the authors pointed out in the article, a 4% withdrawal rate is likely to achieve this. Coincidentally, 4% income can be produced by dividend paying common and preferred shares, as a way of producing income and protecting capital.
I was lucky to get to share some of my expertise with a wider audience, pointing out two dangerous assumptions people might make when approaching their retirement. Many of us readers of Canadian Dream are already aware of many of the others. We understand the costs associated with our children, if we decided to have kids. We don’t plan to work into old age, but are young and able enough to work if we need to. We are careful with our spending and likely won’t need a million bucks.
What did you think of the article? Is the financial press helpful, or merely distracting? Where have you found the information that has been most helpful to you?
http://www.canadianbusiness.com/managing/strategy/article.jsp?content=20100816_10031_10031A fre
Posted by Canadian Dream on August 27, 2010
Lack of sleep from crying kid? Check. Out of coffee except for decaf? Check. Dentist appointment this morning? Check. I hope your morning is going better than mine. Happy Friday! Now onto the links.
Larry McDonald provides a interesting read and story on the history of Employee Stock Ownership Plans.
Get Rich Slowly shares why he buys local. I personally like the debate towards the end of the positive and negative points of buying local.
Early Retirement Extreme talks about slaying the ‘enough’ dragon. I battle my ‘more is better’ dragon at least a few times a week. Also I can’t resist this post about what is happening to the middle class and why to teach your kids to avoid debt.
Million Dollar Journey points out the downsides of owning REITs, which made a few good points. I personally like them because I’m lazy and don’t want to be stuck in a single real estate market.
If you ever had to track the adjusted cost base (ACB) for a stock you know how much of a pain in the ass that can be. Well to your rescue came the Canadian Capitalist with his spreadsheet. Go get a copy if you need it.
For those truly geeky people that love following every little change in legislation the official notice of changes to the CPP that will take affect in 2012 and 2014.
An interesting article that looks at the stats behind how much do you need to retire.
Tim Ferriss, author of the Four Hour Workweek, takes about the publishing industry and how authors make money (or lack there of). This came about after Seth Godin recently announced that he will no longer use traditional publishing. It’s all rather interesting to see an industry in transition.
Posted by Canadian Dream on August 26, 2010
The kids start back to school next week around here and that means buying ’stuff’. Some it makes sense like new shoes since my oldest is entering Kindergarten this fall and he out grew his last pair. I would like to take the credit for keeping our over all school related bill low, but that actually was my wife.
First off she did not buy any new clothes for the start of school, instead she knows our son tends to our grow this clothes by about October. So when on vacation she picked up some pants and shirts in the next size up on clearance. So that was taken care of over a month ago. The added advantage here is this is my son’s first time at this school so having ‘new’ clothes is rather pointless as he has no friends there to impress.
Then when the school supply list arrived she went shopping for the few items we didn’t have around the house such as:
Shoes – $18.92 (splurge item to get the Transformer pair)
Plastic school box for markers, etc -$2.26
Two Sets of Markers – $5.00
Large Scrapbook – $3.29
School Fees – $13 classroom, $4.50 agenda, $4.50 bus fees for class trips
Total $51.47
So after the splurge item of ‘cool shoes’ the next biggest cost item on the list was school fees. Overall I’m not complaining about the agenda since I know that is done at cost. I’m even ok with fee for class trips but I don’t understand what is included in the classroom fees. So my wife sent a note to the teacher asking so what is up with that, but I haven’t heard what the answer is yet.
Since we are new to this ‘back to school’ shopping I’m not sure how that total ranks compared to other people or what ideas people have on saving money on back to school shopping. So all you experienced parents out there, how much did you spend this year and do you keep you ‘back to school’ shopping bill down?
