I was directed to a magazine article recently by a family member in a which a woman wrote in asking if they had enough to retire in a year at age 60. I don’t want to include too much information because I don’t want to get sued, but the couple still owed over $250,000 on their house and had $320,000 in RRSPs. They figured they would need an income of $5,000 per month to live on and seemed to be relying heavily on CPP and OAS, although OAS wouldn’t kick in until they were 67 now. Whoever wrote the article was incredibly patient and nice but according to her calculations, she said the couple would run out of RRSP money by age 70 with the amount they claimed they needed every month.
I had to put the magazine down and shake my head a few times in disbelief as I was reading it. I hope it was a wake-up call to whoever wrote in since they are so out to lunch with their retirement plan. It doesn’t take a financial genius to figure out that they probably should work until they pay off that monster of a mortgage and squirrel away some extra money in the process.
Royal Retirements
How much money is enough to retire? There really is no right answer because everyone has a different idea of what their retirement will look like. Most people plan on working to 65 just so they can actually afford to retire. Others have huge, elaborate plans and they require huge retirement nest eggs. Heading down to your Winter home in Arizona is going to take some major money to make that dream a reality. Whether you plan to play now and pay later or save now and play later, I think it’s important to at least have some idea of a retirement plan. It can be laid out in a spread sheet or written on a napkin for all I care, just please give it some thought.Personally, I don’t want a flashy retirement when I’m older. I want to enjoy exotic locations while I’m young and able bodied. I don’t want to lay on the beaches in Jamaica near the bathrooms and be in bed by 8:30! That’s why it’s important to find a balance of saving and enjoying life at the same time. Start by saving 10% of your net income each month and adjust it depending on what life throws your way. Need a new radiator for your car? Just save 5%. Got a bonus from work? Save 15% of it. If you can’t save 10% every month, then you are probably living above your means and you need to stop.
Look at my giant pile of nothing….
Consumer debt is the number one killer of retirement savings. If you need credit to live your life month after month then congratulations, you are doing it wrong! If you can’t generate positive cash flow, then there is no way you’ll be able to save properly for retirement. Heck, if you can’t live within your means when you are young, you sure as won’t be able to live on a fixed income when you are older.If you can’t stop spending money, it’s OK. We need people like you to stimulate the economy and keep our share prices increasing. I’m not going to preach from my soap box because frankly, it just doesn’t help anyone. If you want to buy crap to fill your garage and basement, then that’s your prerogative and I hope you find happiness in it. If you want to invest your money and increase your wealth over time then you need to be more smart with your money; it’s just that simple.
All I know is that I won’t be writing into magazines, praying that they give me the answer I want to hear about my retirement. I KNOW my nest egg will be large enough to support me through my retirement. With every dividend increase my retirement is actually moving closer to ME in a strategic fashion, which means I’ll be able to retire a lot sooner than the majority and it sure feels good!
This article was written by The Loonie Bin. If you enjoyed this article, please consider subscribing to his feed.
