Looking for feedback on a "no retirement" retirement strategy

[Valens]

I'm 38, I live in Toronto and I make $130,000/year. It's more than I ever imagined I'd make but buying a house here is still impossible. I rent a 1000 sq. ft. apartment with all utilities included for $1700/month. Because of this I find condos unappealing since I'd be paying significantly more to not materially improve my living conditions. I must admit I'm a bit frustrated with the situation. But then I thought maybe my approach is wrong. So I had an idea and wondered if anybody had heard of anyone else doing something like this since it seems unconventional.

Basically, don't save for retirement, don't save for a down payment. Instead, keep a six month salary cushion in an easily accessible no-risk account for emergencies and then buy whatever you want within the constraints of not incurring debt. This way you have absolute liquidity and no risk that when you retire the money won't be there because the market tanked (I'm thinking of what happened to a lot of people in 2008). This does mean no retirement, but I'm ok with that. I also have no dependents so I don't need to leave an inheritance for anyone.

This way I can travel more, buy whatever fits my budget and have more fun in general (again with the caveat of not carrying any balances). I also don't have to expend any time or energy on investment strategies.

I know this is kinda out there in terms of conventional wisdom but the more I think about it the more appealing it seems.

[RWD]

That sounds like a terrible way to live.

[Valens]

That sounds like a terrible way to live.

Care to elaborate?

[dandarc]

So you're planning on dying within 6 months of retiring? Or at least having to adjust your lifestyle to fit within whatever state or public pension you might receive when the small sum of money runs out.

Considering the central thesis of this site is to disconnect "spending money" from "living a happy life", doubt you'll find many takers of the "$65K in checking = spend every other penny that comes in" philosophy.

Plus, you're getting used to a lifestyle that will be very difficult to maintain if you lose this cushy job in a few years. Again, hope you can find a new one before the savings runs out.

[TheAnonOne]

I know this is kinda out there in terms of conventional wisdom but the more I think about it the more appealing it seems.

This is actually exactly how normal broke people live. So you'll have company.

[dandarc]

I know this is kinda out there in terms of conventional wisdom but the more I think about it the more appealing it seems.

This is actually exactly how normal broke people live. So you'll have company.

Normal broke people don't have 5 figure savings account balances. Living 3-6 months (less if a real emergency hits) from being a normal broke person is REVOLUTIONARY!

[bacchi]

It's pretty likely that someone making $130k/year will take longer than 6 months to find a job. That's especially true during a depression.

If you're in tech, you'll find it harder and harder to keep/get a good job past around 50.

Your boss or company could change and you could find yourself hating your job. Having 5-30 years in investments makes quitting so much easier.

Etc., etc., etc.

[neo von retorch]

Basically, don't save for retirement, don't save for a down payment. Instead, keep a six month salary cushion in an easily accessible no-risk account for emergencies and then buy whatever you want within the constraints of not incurring debt. This way you have absolute liquidity and no risk that when you retire the money won't be there because the market tanked (I'm thinking of what happened to a lot of people in 2008). This does mean no retirement, but I'm ok with that. I also have no dependents so I don't need to leave an inheritance for anyone.

This way I can travel more, buy whatever fits my budget and have more fun in general (again with the caveat of not carrying any balances). I also don't have to expend any time or energy on investment strategies.

You may have some misconceptions.

• You have to choose between having a liquid emergency fund and having retirement and investments
• Investing takes a lot of "strategies" and it could just go up in smoke
• Spending more will make me happier

Now travel and some other forms of fun might be things worth pursuing, but before we get to that, let's break down the three items above.

1. Liquidity No one here will disagree that it's a good idea to have some form of savings / emergency fund in a liquid vehicle so that you can access it. While money that you invest can still be considered liquid, we don't recommend investing with a short-term mindset, so interest-bearing savings accounts should work for this purpose. Given all that, you can still put money above and beyond this account into long-term investments.
2. Investing You don't need to expend time or energy, because it's really simple, and the work has already been done for you. Yes, you'll have to spend ten minutes opening an account if you haven't already, and it helps to connect your primary bank account to make it easy to transfer money, but even that is optional. (It just saves time later.) Beyond that, you can choose a total market index fund or life strategy/target retirement fund. This might take "time" but it's a one-time cost and you likely cannot go wrong with either. Investment Order - at least read through this. If you stick to this simple "strategy", and you simply stick to long-term investing - that is, leave it alone - it won't go up in smoke. What happened in 2008 was that the market lost a lot of value, and people sold their investments after they lost value, reducing how much they had. If they had simply left it alone the value would have recovered and then a lot more. That's how long-term investing works. You leave it alone.
3. Spending You kind of have to figure this out for yourself. And we all have different ideas about what makes us happy. But the general idea if you're here is that you start to learn more about yourself. You learn what makes you happy, what gives you long-term satisfaction in life. Not just what's fun for a moment or two. You don't have to spend nothing on fun (or travel) to retire, but you can't spend everything. So you figure out which of those moments where your spending was actually worth it, and when it actually feels like a waste, or where a lower cost alternative might actually be more satisfying. Do this a little and before long it adds up and you not only save a lot of money that you could use for retirement, but you also find you're living a better life than before. That's the real idea here.

[Boofinator]

This is clearly trolling. But entertaining at the same time.

[DadJokes]

This is clearly trolling. But entertaining at the same time.

I surely hope so. Otherwise, it has to be the single dumbest post I've seen in the forum.

[Valens]

So you're planning on dying within 6 months of retiring? Or at least having to adjust your lifestyle to fit within whatever state or public pension you might receive when the small sum of money runs out.

Considering the central thesis of this site is to disconnect "spending money" from "living a happy life", doubt you'll find many takers of the "$65K in checking = spend every other penny that comes in" philosophy.

Plus, you're getting used to a lifestyle that will be very difficult to maintain if you lose this cushy job in a few years. Again, hope you can find a new one before the savings runs out.

The idea is to not retire. I won't receive any kind of public pension (I don't pay into one). I wasn't aware of this site's philosophy, I asked this question elsewhere and it was recommended I seek advice here. While it's true that losing my job is a risk, that risk would be there regardless, so the issue is really is $65k enough of a cushion. Perhaps not, I'm not sure. I figured if I can't find another job before I burn through $65k I'm probably pretty boned anyway.

The central thrust of my thinking is that I want to maximize enjoyment of my income. I have no dependents and no family besides my father, who is financially secure, therefore any value in my estate when I die is worthless. Also, I can enjoy things more while I'm healthy than when I'm old and potentially infirmed. I've seen co-workers pass away shortly before or after retirement and it seems like such a waste.

[Valens]

This is clearly trolling. But entertaining at the same time.

I surely hope so. Otherwise, it has to be the single dumbest post I've seen in the forum.

I'm not trolling. Whenever I run investment calculators and put in how much I could save per month I come away unimpressed, even when assuming a 10% annual return. I guess I just need to see a bigger number at the end to make the deferred gratification feel worthwhile.

[RWD]

This is clearly trolling. But entertaining at the same time.

I surely hope so. Otherwise, it has to be the single dumbest post I've seen in the forum.

I'm not trolling. Whenever I run investment calculators and put in how much I could save per month I come away unimpressed, even when assuming a 10% annual return. I guess I just need to see a bigger number at the end to make the deferred gratification feel worthwhile.

How much do you think you could save? On a $130k salary I would expect quite a lot. Have you seen this blog post:
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

[Valens]

Basically, don't save for retirement, don't save for a down payment. Instead, keep a six month salary cushion in an easily accessible no-risk account for emergencies and then buy whatever you want within the constraints of not incurring debt. This way you have absolute liquidity and no risk that when you retire the money won't be there because the market tanked (I'm thinking of what happened to a lot of people in 2008). This does mean no retirement, but I'm ok with that. I also have no dependents so I don't need to leave an inheritance for anyone.

This way I can travel more, buy whatever fits my budget and have more fun in general (again with the caveat of not carrying any balances). I also don't have to expend any time or energy on investment strategies.

You may have some misconceptions.

• You have to choose between having a liquid emergency fund and having retirement and investments
• Investing takes a lot of "strategies" and it could just go up in smoke
• Spending more will make me happier

Now travel and some other forms of fun might be things worth pursuing, but before we get to that, let's break down the three items above.

1. Liquidity No one here will disagree that it's a good idea to have some form of savings / emergency fund in a liquid vehicle so that you can access it. While money that you invest can still be considered liquid, we don't recommend investing with a short-term mindset, so interest-bearing savings accounts should work for this purpose. Given all that, you can still put money above and beyond this account into long-term investments.
2. Investing You don't need to expend time or energy, because it's really simple, and the work has already been done for you. Yes, you'll have to spend ten minutes opening an account if you haven't already, and it helps to connect your primary bank account to make it easy to transfer money, but even that is optional. (It just saves time later.) Beyond that, you can choose a total market index fund or life strategy/target retirement fund. This might take "time" but it's a one-time cost and you likely cannot go wrong with either. Investment Order - at least read through this. If you stick to this simple "strategy", and you simply stick to long-term investing - that is, leave it alone - it won't go up in smoke. What happened in 2008 was that the market lost a lot of value, and people sold their investments after they lost value, reducing how much they had. If they had simply left it alone the value would have recovered and then a lot more. That's how long-term investing works. You leave it alone.
3. Spending You kind of have to figure this out for yourself. And we all have different ideas about what makes us happy. But the general idea if you're here is that you start to learn more about yourself. You learn what makes you happy, what gives you long-term satisfaction in life. Not just what's fun for a moment or two. You don't have to spend nothing on fun (or travel) to retire, but you can't spend everything. So you figure out which of those moments where your spending was actually worth it, and when it actually feels like a waste, or where a lower cost alternative might actually be more satisfying. Do this a little and before long it adds up and you not only save a lot of money that you could use for retirement, but you also find you're living a better life than before. That's the real idea here.

Thanks for the feedback. I'll take a look at the Investment Order link. If I were to invest, I'd be inclined towards passive funds, which sounds like what you're referring to. However, and my math might be off here so please correct me if I'm wrong, when I assume a 10% annual return and saving $2000 per month for 20 years I come back with $1.45 million. That would buy you a small house in Toronto today, and maybe nothing in 20 years.

[neo von retorch]

Ah yes - well it does sound like buying houses in Toronto is ridiculous and no one should do it.

Is there any other way to live your life, given your income, than to save up to buy a house in Toronto? Perhaps if you save some of your income and invest it, but then buy a house for a lot less in a different location where it makes sense? And if you save up enough, you don't need the same kind of job and income in the new location?

[RWD]

Thanks for the feedback. I'll take a look at the Investment Order link. If I were to invest, I'd be inclined towards passive funds, which sounds like what you're referring to. However, and my math might be off here so please correct me if I'm wrong, when I assume a 10% annual return and saving $2000 per month for 20 years I come back with $1.45 million. That would buy you a small house in Toronto today, and maybe nothing in 20 years.

You are correct. $2k/month for 20 years at 10% is about $1.5 million. If you wanted a house then presumably some of the money you are not saving/investing would be going towards a mortgage which would be a separate investment towards home equity. Not many people wait until they have the full purchase price to buy a house.

$2k/month is very low for savings around here (especially in Canadian dollars). We're saving more than four times that amount (when converting for currency differences) though we do make about 70% more than you. $2k/month is only 18.5% of your gross income. You should be able to save at least double that.

[Valens]

Ah yes - well it does sound like buying houses in Toronto is ridiculous and no one should do it.

Is there any other way to live your life, given your income, than to save up to buy a house in Toronto? Perhaps if you save some of your income and invest it, but then buy a house for a lot less in a different location where it makes sense? And if you save up enough, you don't need the same kind of job and income in the new location?

That is true, I don't have to buy a house in Toronto. Although, for myself, I think that rules out buying a house altogether as any places I'd like to live are comparable in cost to Toronto. But maybe no house at all is better.

[maginvizIZ]

... I  can't tell whether you're just trolling or not.  The overall goal here is for maximum happiness.  Turns out maximum happiness is not as expensive as everyone thinks it is.

You sound like you don't believe in the stock market. You sound stuck on the idea that you need to buy a house/condo in Toronto, which would be a bad investment (nearly impossible to buy too due to ultra inflated prices).

Write down a list of 25 things that make you happy.  Sort it from cheapest to most expensive.  Focus on the top 10 cheapest things that make you happy and you should be fine.  You'll "accidentally" save 20-50% of your income, in which I hope you invest in cash flow producing assets (stocks), to which one day you produce so much passive cash that you could retire one day.

Even if you die with a bunch of money, which you make it sound like a "waste", what if you donated that money to something you believe in?  Is it still a waste?

Don't complicate things.

[MTBmustachian]

I also don't have to expend any time or energy on investment strategies.

Right, because it's so complicated *rolls eyes*

Spend a couple days reading these forums, then go 90/10 or 80/20 stocks/bonds with total stock market ETFs and call it good.

[Zikoris]

Why do you hate the earth so much that you feel the desire to consume/burn your way through $130,000 worth of resources every year? Did a tree fall on your house in childhood, and now you want to decimate the rainforests in revenge? You know MMM is an environmentalism/reduced consumption blog, right?

Yeah, your plan is dogshit.

[Freedomin5]

MMM wrote a post specifically on how renting saves you money in HCOL cities such as Toronto. In fact, he used Toronto as his example and ran through the numbers using a $2000/month condo in downtown TO.

Another way to afford Toronto if you MUST buy is to househack. The market is softening and you may be able to get a 1 or 3 bedroom townhouse for around the same price as a downtown condo. Live in one bedroom and rent out the other(s) to help you cover the mortgage.

Finally, you have to remember that you don’t really need to spent $1.5 million to buy a $1.5M house. We have a $500k condo in Toronto that we put $70k of our own money towards. The renter paid it off for us. Also, with Toronto real estate appreciation, the $1M house you buy today will likely be worth a lot more in twenty years.

Also, how are you not contributing to a public pension? Do you (or your employer) not contribute to CPP? Is that even legal?

Finally, the biggest concern I would have if I were using your retirement strategy is the potential for job loss. I’d like to know that I have income coming in regardless of whether I’m employed.

In any case, saving $2k is pretty respectable for Canada. I’m guessing your tax rate is around 50% Since you’re probably not contributing to RRSP to reduce your taxable income. So your take home is what? ~65k per year or $5k per month? You could probably increase your savings rate by a bit.

[Gremlin]

I'll bite and assume you are genuinely looking for advice...

It feels like the premise of this question is that spending your full salary (less whatever is in your emergency stash) will maximise your happiness.

That may be so in your situation.  But those of us here have reached a different conclusion.

Many of us have realised that you can maximise happiness without spending every last dollar.  Have a cable subscription, but rarely watch it?  There's money I'm spending without maximising happiness.  Have a set of golf clubs sitting in storage?  There's money I'm spending without maximising happiness.  Buying overpriced lunch in the city every day?  There's money I'm spending without maximising happiness.  Paying over the odds on an expensive phone plan?  There's money I'm spending without maximising happiness.  Paying more than the cost of the best possible deal on my car insurance?  There's money I'm spending without maximising happiness.

The corollary to your theory is that working forever will also maximise your happiness.

That may be so in your situation, but those of us here have reached a different conclusion.

Many of us have realised that work can provide unbridled happiness and fulfilment.  But it's not always the case - especially when you are working on someone else's terms.  Finding yourself being laid off in a downturn?  The more you have invested, the more options you have.  Stuck in a toxic environment with a micro-managing boss?  The more you have invested, the more options you have.  Finding that the work you've done for the last 20 years is no longer thrilling you and you're looking for something completely different?  The more you have invested, the more options you have.  Wanting to go out on your own and start your own business?  The more you have invested, the more options you have.  Deciding that you'd rather be at the beach than in the office because, even though it's a Wednesday, it's a beautiful summer's day?  The more you have invested, the more options you have.

Each decision you make is a trade-off.

[mozar]

Eventually you're not going to be able to work anymore. My parents think they're going to be able to work until 70 even that I think is unrealistic. A lot of people barely make it to 62. How about you stache 100k in the stock market in addition to the 65k e-fund and I'll give you a free pass to spend however you want after that. Then come back and tell us how you're blowing 130k each year so we can make fun of you.

[Valens]

Why do you hate the earth so much that you feel the desire to consume/burn your way through $130,000 worth of resources every year? Did a tree fall on your house in childhood, and now you want to decimate the rainforests in revenge? You know MMM is an environmentalism/reduced consumption blog, right?

Yeah, your plan is dogshit.

No, I did not know it was an environmentalism/reduced consumption blog. I just thought it was a financial advice blog.

[Valens]

... I  can't tell whether you're just trolling or not.  The overall goal here is for maximum happiness.  Turns out maximum happiness is not as expensive as everyone thinks it is.

You sound like you don't believe in the stock market. You sound stuck on the idea that you need to buy a house/condo in Toronto, which would be a bad investment (nearly impossible to buy too due to ultra inflated prices).

Write down a list of 25 things that make you happy.  Sort it from cheapest to most expensive.  Focus on the top 10 cheapest things that make you happy and you should be fine.  You'll "accidentally" save 20-50% of your income, in which I hope you invest in cash flow producing assets (stocks), to which one day you produce so much passive cash that you could retire one day.

Even if you die with a bunch of money, which you make it sound like a "waste", what if you donated that money to something you believe in?  Is it still a waste?

Don't complicate things.

I assure you I'm not trolling. I think the emphasis on buying a house is a bit misleading in my post. It's just what got me thinking about financial matters today. I believe in the stock market as much as anyone does, I guess. I think, fundamentally, my hang up is on the fact that even if I saved 50% of my income I wouldn't reach retirement age with a life changing amount of money. Especially if the plan is to leave the principal alone and live off the interest.

[Valens]

MMM wrote a post specifically on how renting saves you money in HCOL cities such as Toronto. In fact, he used Toronto as his example and ran through the numbers using a $2000/month condo in downtown TO.

Another way to afford Toronto if you MUST buy is to househack. The market is softening and you may be able to get a 1 or 3 bedroom townhouse for around the same price as a downtown condo. Live in one bedroom and rent out the other(s) to help you cover the mortgage.

Finally, you have to remember that you don’t really need to spent $1.5 million to buy a $1.5M house. We have a $500k condo in Toronto that we put $70k of our own money towards. The renter paid it off for us. Also, with Toronto real estate appreciation, the $1M house you buy today will likely be worth a lot more in twenty years.

Also, how are you not contributing to a public pension? Do you (or your employer) not contribute to CPP? Is that even legal?

Finally, the biggest concern I would have if I were using your retirement strategy is the potential for job loss. I’d like to know that I have income coming in regardless of whether I’m employed.

In any case, saving $2k is pretty respectable for Canada. I’m guessing your tax rate is around 50% Since you’re probably not contributing to RRSP to reduce your taxable income. So your take home is what? ~65k per year or $5k per month? You could probably increase your savings rate by a bit.

I'll look for that post. In regards to CPP, I'm self-employed/incorporated and I take my income as dividends so as not to contribute to CPP.

[neo von retorch]

https://www.google.com/url?q=https://www.vanguard.com/retirementincomecalculator

[neo von retorch]

https://www.calculator.net/investment-calculator.html?ctype=endamount&ctargetamountv=1000000&cstartingprinciplev=000&cyearsv=24&cinterestratev=7&ccontributeamountv=5000&ciadditionat1=monthly&printit=0&x=69&y=17

If you save and invest half of your income, you'll have... a lot of money available to you by 62.

You don't live off the interest. That's not how this works.

[Valens]

Eventually you're not going to be able to work anymore. My parents think they're going to be able to work until 70 even that I think is unrealistic. A lot of people barely make it to 62. How about you stache 100k in the stock market in addition to the 65k e-fund and I'll give you a free pass to spend however you want after that. Then come back and tell us how you're blowing 130k each year so we can make fun of you.

Not a bad plan, really, except for that last part. If there was a reasonably clear path to retiring with something like $20M then I'd understand the drive to save every penny. In a case like that I could convince myself to find a way to save even 70% of my income. The incentive just isn't strong enough with the numbers I have. The fear of being destitute when I'm old isn't enough motivation. I've been broke and I've been homeless, and while I'd never wish for those things to return, I need something more. I need more carrot, the stick isn't enough.

[Valens]

https://www.calculator.net/investment-calculator.html?ctype=endamount&ctargetamountv=1000000&cstartingprinciplev=000&cyearsv=24&cinterestratev=7&ccontributeamountv=5000&ciadditionat1=monthly&printit=0&x=69&y=17

If you save and invest half of your income, you'll have... a lot of money available to you by 62.

You don't live off the interest. That's not how this works.

Better than I thought. When you say "You don't live off the interest" do you mean even once you retire you don't keep what you've accumulated in the bank and live off the annual return?

[mistymoney]

let us know how you feel about this at 58.....or 68.....78?

[RWD]

https://www.calculator.net/investment-calculator.html?ctype=endamount&ctargetamountv=1000000&cstartingprinciplev=000&cyearsv=24&cinterestratev=7&ccontributeamountv=5000&ciadditionat1=monthly&printit=0&x=69&y=17

If you save and invest half of your income, you'll have... a lot of money available to you by 62.

You don't live off the interest. That's not how this works.

Better than I thought. When you say "You don't live off the interest" do you mean even once you retire you don't keep what you've accumulated in the bank and live off the annual return?

No, you keep it invested and spend an inflation adjust amount (roughly) each year while your balance fluctuates up and down with the stock market (but more up than down). Time has shown that generally (95% of the time) you won't run out of money if you withdraw 4% per year, adjusted for inflation. See the Trinity study.

More reading material:
https://jlcollinsnh.com/2012/12/07/stocks-part-xiii-withdrawal-rates-how-much-can-i-spend-anyway/
https://forum.mrmoneymustache.com/investor-alley/stop-worrying-about-the-4-rule/
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

[Valens]

https://www.calculator.net/investment-calculator.html?ctype=endamount&ctargetamountv=1000000&cstartingprinciplev=000&cyearsv=24&cinterestratev=7&ccontributeamountv=5000&ciadditionat1=monthly&printit=0&x=69&y=17

If you save and invest half of your income, you'll have... a lot of money available to you by 62.

You don't live off the interest. That's not how this works.

Better than I thought. When you say "You don't live off the interest" do you mean even once you retire you don't keep what you've accumulated in the bank and live off the annual return?

No, you keep it invested and spend an inflation adjust amount (roughly) each year while your balance fluctuates up and down with the stock market (but more up than down). Time has shown that generally (95% of the time) you won't run out of money if you withdraw 4% per year, adjusted for inflation. See the Trinity study.

More reading material:
https://jlcollinsnh.com/2012/12/07/stocks-part-xiii-withdrawal-rates-how-much-can-i-spend-anyway/
https://forum.mrmoneymustache.com/investor-alley/stop-worrying-about-the-4-rule/
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

I'll take a look. I remember someone telling me you should shift away from riskier assets like stocks as you approach retirement. Not so?

[Metalcat]

This thread must be a fucking joke, no?

OP, if you aren't a blatant and ridiculous troll, then maybe spend some time actually reading the MMM forum, as you clearly haven't and I think it would really help you condense some of your thinking.

I will answer in earnest though that I intend to never retire, and it does give me a lot more financial flexibility long term. However, I would never, ever, ever depend on working in my senior years.

Also, if you are totally cool with completely and utterly fucking over your senior, tired, possibly very ill, future senior self...then...you're kind of an asshole and your future self deserves better.

Just imagine how brutal it will be for future you to adjust to poverty after a lifetime of rampant luxury consumption?

I feel bad for that poor beleaguered old soul who has to suffer the consequences of the indulgent, impatient, borderline insane decisions of a young high earner in Toronto who doesn't like the way compounding calculators make them feel at this point in time.

There's nothing wrong with never retiring, but there's something very very wrong with robbing yourself of the option. It's also anathema to the very MMM ethos.

[MaybeBabyMustache]

What you've described (spending all of my money each year, saving nothing for the future) is at the top of my list of most uncomfortable thought exercises & worst nightmares. Money gives me freedom & flexibility. It also gives me a helluva lo of security. While I can't predict the future, I do want to be prepared for it, and part of preparing for the future, IMO, is to understand the likelihood & desire of not wanting to work until you die huddled over your desk.

[mozar]

Not a bad plan, really, except for that last part. If there was a reasonably clear path to retiring with something like $20M then I'd understand the drive to save every penny. In a case like that I could convince myself to find a way to save even 70% of my income. The incentive just isn't strong enough with the numbers I have. The fear of being destitute when I'm old isn't enough motivation. I've been broke and I've been homeless, and while I'd never wish for those things to return, I need something more. I need more carrot, the stick isn't enough.

What do you want 20 million dollars for? You need 10 million dollars to be in the top 1% of the usa.
https://dqydj.com/net-worth-brackets-wealth-brackets-one-percent/
20 million dollars is an obscene amount of money. Try posting in the bogleheads forum. In this forum retiring with 1.5 million would be enough. Bogleheads is for people with much higher net worth.

To me it sounds like you are bored and like the game of making money. Why not go for it? Have the goal of having 20 million saved in 20 years. You'll likely have to change careers to something that scales better.

[Freedomin5]

MMM wrote a post specifically on how renting saves you money in HCOL cities such as Toronto. In fact, he used Toronto as his example and ran through the numbers using a $2000/month condo in downtown TO.

Another way to afford Toronto if you MUST buy is to househack. The market is softening and you may be able to get a 1 or 3 bedroom townhouse for around the same price as a downtown condo. Live in one bedroom and rent out the other(s) to help you cover the mortgage.

Finally, you have to remember that you don’t really need to spent $1.5 million to buy a $1.5M house. We have a $500k condo in Toronto that we put $70k of our own money towards. The renter paid it off for us. Also, with Toronto real estate appreciation, the $1M house you buy today will likely be worth a lot more in twenty years.

Also, how are you not contributing to a public pension? Do you (or your employer) not contribute to CPP? Is that even legal?

Finally, the biggest concern I would have if I were using your retirement strategy is the potential for job loss. I’d like to know that I have income coming in regardless of whether I’m employed.

In any case, saving $2k is pretty respectable for Canada. I’m guessing your tax rate is around 50% Since you’re probably not contributing to RRSP to reduce your taxable income. So your take home is what? ~65k per year or $5k per month? You could probably increase your savings rate by a bit.

I'll look for that post. In regards to CPP, I'm self-employed/incorporated and I take my income as dividends so as not to contribute to CPP.

Found the post for you: https://www.mrmoneymustache.com/2015/07/27/rent-vs-buy/

And I was wrong. The case he used was a $2300/month apartment.

[EscapeVelocity2020]

Pre-MMM, there was this guy Robert Kiyosaki (Rich Dad, Poor Dad).  He was debunked for fabricating the lore of the books, but some of the points he made were pretty useful. 

One thing that stuck with me when I read one book back in the day was (paraphrasing), 'I could work really hard to buy a Porsche, or I could work really hard, buy investment properties, and then get a new Porsche every three years for the rest of my life'.

The FI game hasn't changed over the years, even that there are flawed people that make money selling it;  Buy investments and delay gratification until you reach FI.

[Moonwaves]

It kind of sounds like someone told you this is a good place to find information on retirement finances without actually having an in-depth discussion with you or understanding of what that is.
OP, I hope you've read some of the stuff people have already linked to. I think you'd be well served by reading the blog before diving into the forums too much. You can do this by starting at the first post and going through them all in order, or by checking out the complete list of posts and clicking on the ones you think sound most interesting first. Both options are linked to on the main page.

I'll take a look. I remember someone telling me you should shift away from riskier assets like stocks as you approach retirement. Not so?

I've heard this as well. It's the kind of thing you hear at conventional retirement advice seminars, the type that employers sometimes offer to their employees.
You should definitely read the JL Collins stock series and/or get the book. Decide what level of risk you're comfortable with, and write down what you decide. I really liked this post from LivingAFI on investment policy statements - it clarified a lot of things I hadn't really put together in my head and somehow made the whole thing feel more real to me somehow. I remember when I finally "got" the 4% rule, instead of just accepting that it was true but not really understanding how it would actually work when it came time to actually use the money - that was only this year, I'm not as quick as many on here. :)

[Valens]

MMM wrote a post specifically on how renting saves you money in HCOL cities such as Toronto. In fact, he used Toronto as his example and ran through the numbers using a $2000/month condo in downtown TO.

Another way to afford Toronto if you MUST buy is to househack. The market is softening and you may be able to get a 1 or 3 bedroom townhouse for around the same price as a downtown condo. Live in one bedroom and rent out the other(s) to help you cover the mortgage.

Finally, you have to remember that you don’t really need to spent $1.5 million to buy a $1.5M house. We have a $500k condo in Toronto that we put $70k of our own money towards. The renter paid it off for us. Also, with Toronto real estate appreciation, the $1M house you buy today will likely be worth a lot more in twenty years.

Also, how are you not contributing to a public pension? Do you (or your employer) not contribute to CPP? Is that even legal?

Finally, the biggest concern I would have if I were using your retirement strategy is the potential for job loss. I’d like to know that I have income coming in regardless of whether I’m employed.

In any case, saving $2k is pretty respectable for Canada. I’m guessing your tax rate is around 50% Since you’re probably not contributing to RRSP to reduce your taxable income. So your take home is what? ~65k per year or $5k per month? You could probably increase your savings rate by a bit.

I'll look for that post. In regards to CPP, I'm self-employed/incorporated and I take my income as dividends so as not to contribute to CPP.

Found the post for you: https://www.mrmoneymustache.com/2015/07/27/rent-vs-buy/

And I was wrong. The case he used was a $2300/month apartment.

Thanks! I read the article, the principles make sense but the situation in Toronto has changed a bit since 2015. A couple of years ago they expanded rent control to include properties built after ~1991. This caused a lot of people who were renting out their condos to cease doing so creating a rental shortage. Since then rents have shot up significantly which is why I'm kinda stuck in the apartment I'm in. That same 2 bed, 2 bath apartment would cost you about $3500 - $4000/month now. Not sure how the rent vs buy argument looks with the current situation of high rents and high prices but looking at padmapper definitely makes me feel better about my 2 bed, 2 bath apartment for $1700.

[Metalcat]

MMM wrote a post specifically on how renting saves you money in HCOL cities such as Toronto. In fact, he used Toronto as his example and ran through the numbers using a $2000/month condo in downtown TO.

Another way to afford Toronto if you MUST buy is to househack. The market is softening and you may be able to get a 1 or 3 bedroom townhouse for around the same price as a downtown condo. Live in one bedroom and rent out the other(s) to help you cover the mortgage.

Finally, you have to remember that you don’t really need to spent $1.5 million to buy a $1.5M house. We have a $500k condo in Toronto that we put $70k of our own money towards. The renter paid it off for us. Also, with Toronto real estate appreciation, the $1M house you buy today will likely be worth a lot more in twenty years.

Also, how are you not contributing to a public pension? Do you (or your employer) not contribute to CPP? Is that even legal?

Finally, the biggest concern I would have if I were using your retirement strategy is the potential for job loss. I’d like to know that I have income coming in regardless of whether I’m employed.

In any case, saving $2k is pretty respectable for Canada. I’m guessing your tax rate is around 50% Since you’re probably not contributing to RRSP to reduce your taxable income. So your take home is what? ~65k per year or $5k per month? You could probably increase your savings rate by a bit.

I'll look for that post. In regards to CPP, I'm self-employed/incorporated and I take my income as dividends so as not to contribute to CPP.

Found the post for you: https://www.mrmoneymustache.com/2015/07/27/rent-vs-buy/

And I was wrong. The case he used was a $2300/month apartment.

Thanks! I read the article, the principles make sense but the situation in Toronto has changed a bit since 2015. A couple of years ago they expanded rent control to include properties built after ~1991. This caused a lot of people who were renting out their condos to cease doing so creating a rental shortage. Since then rents have shot up significantly which is why I'm kinda stuck in the apartment I'm in. That same 2 bed, 2 bath apartment would cost you about $3500 - $4000/month now. Not sure how the rent vs buy argument looks with the current situation of high rents and high prices but looking at padmapper definitely makes me feel better about my 2 bed, 2 bath apartment for $1700.

Just curious why you would want to leave a 2 bed 2 bath apartment for $1700. If I were you, I would pretty much hunker down indefinitely.

Speaking as someone who pays not much less for a 1 bed 1 bath apartment, not in nearly as expensive a market.

[norajean]

If you like earning and spending, then working to maintain that income is not a bad strategy.  But what job can you continue doing at age 70? 80? 90?

[Valens]

MMM wrote a post specifically on how renting saves you money in HCOL cities such as Toronto. In fact, he used Toronto as his example and ran through the numbers using a $2000/month condo in downtown TO.

Another way to afford Toronto if you MUST buy is to househack. The market is softening and you may be able to get a 1 or 3 bedroom townhouse for around the same price as a downtown condo. Live in one bedroom and rent out the other(s) to help you cover the mortgage.

Finally, you have to remember that you don’t really need to spent $1.5 million to buy a $1.5M house. We have a $500k condo in Toronto that we put $70k of our own money towards. The renter paid it off for us. Also, with Toronto real estate appreciation, the $1M house you buy today will likely be worth a lot more in twenty years.

Also, how are you not contributing to a public pension? Do you (or your employer) not contribute to CPP? Is that even legal?

Finally, the biggest concern I would have if I were using your retirement strategy is the potential for job loss. I’d like to know that I have income coming in regardless of whether I’m employed.

In any case, saving $2k is pretty respectable for Canada. I’m guessing your tax rate is around 50% Since you’re probably not contributing to RRSP to reduce your taxable income. So your take home is what? ~65k per year or $5k per month? You could probably increase your savings rate by a bit.

I'll look for that post. In regards to CPP, I'm self-employed/incorporated and I take my income as dividends so as not to contribute to CPP.

Found the post for you: https://www.mrmoneymustache.com/2015/07/27/rent-vs-buy/

And I was wrong. The case he used was a $2300/month apartment.

Thanks! I read the article, the principles make sense but the situation in Toronto has changed a bit since 2015. A couple of years ago they expanded rent control to include properties built after ~1991. This caused a lot of people who were renting out their condos to cease doing so creating a rental shortage. Since then rents have shot up significantly which is why I'm kinda stuck in the apartment I'm in. That same 2 bed, 2 bath apartment would cost you about $3500 - $4000/month now. Not sure how the rent vs buy argument looks with the current situation of high rents and high prices but looking at padmapper definitely makes me feel better about my 2 bed, 2 bath apartment for $1700.

Just curious why you would want to leave a 2 bed 2 bath apartment for $1700. If I were you, I would pretty much hunker down indefinitely.

Speaking as someone who pays not much less for a 1 bed 1 bath apartment, not in nearly as expensive a market.

Financially I don't. I don't want to rent a condo for double the price just for nicer floors and hardware. Especially since that $1700 includes utilities and parking. But I've been here for 10 years and I'm bored of the apartment and the neighborhood. And since I'm renting, there a limits to what I can do with the place. None of these are good enough reasons to move and pay double, which is why I looked into buying a house, leading to my frustration with the Toronto housing market and the original post in this thread.

[Valens]

It kind of sounds like someone told you this is a good place to find information on retirement finances without actually having an in-depth discussion with you or understanding of what that is.
OP, I hope you've read some of the stuff people have already linked to. I think you'd be well served by reading the blog before diving into the forums too much. You can do this by starting at the first post and going through them all in order, or by checking out the complete list of posts and clicking on the ones you think sound most interesting first. Both options are linked to on the main page.

I'll take a look. I remember someone telling me you should shift away from riskier assets like stocks as you approach retirement. Not so?

I've heard this as well. It's the kind of thing you hear at conventional retirement advice seminars, the type that employers sometimes offer to their employees.
You should definitely read the JL Collins stock series and/or get the book. Decide what level of risk you're comfortable with, and write down what you decide. I really liked this post from LivingAFI on investment policy statements - it clarified a lot of things I hadn't really put together in my head and somehow made the whole thing feel more real to me somehow. I remember when I finally "got" the 4% rule, instead of just accepting that it was true but not really understanding how it would actually work when it came time to actually use the money - that was only this year, I'm not as quick as many on here. :)

I posted this elsewhere and someone just replied with a link to this place, no real discussion. I've read a couple of the linked articles and I'll read some more of them today. I appreciate the advice that the people here are providing and I really did mean it when I said "Looking for feedback". I'll take a look at the LivingAFI investment policy statement and the JL Collins stock series.

[Metalcat]

Financially I don't. I don't want to rent a condo for double the price just for nicer floors and hardware. Especially since that $1700 includes utilities and parking. But I've been here for 10 years and I'm bored of the apartment and the neighborhood. And since I'm renting, there a limits to what I can do with the place. None of these are good enough reasons to move and pay double, which is why I looked into buying a house, leading to my frustration with the Toronto housing market and the original post in this thread.

And if you were to buy, you would also get stuck somewhere and probably get bored. Buying and selling is extremely costly.

Regardless, I really, really don't understand what housing costs have to do with saving for retirement?
I get that the cost of housing has you not wanting to save for a house, but how does that lead to the logical conclusion of not saving at all?

If you aren't a troll, then my intuition from what you've posted is that you aren't very happy, and so the appeal of spending tons of money feels like it might make your life happier.
Kind of a "Fuck it! YOLO!" kind of sentiment.

It is frustrating to work really hard, make a lot of money, and still feel so limited or even trapped. I completely understand that.

However, if your angst is driving you towards thinking that not saving at all and leaving your future self with nothing is somehow a sane option...it's time to start looking at bigger pictures and more creative solutions.

Happy, mentally healthy people don't seriously contemplate not saving anything and leaving themselves with no options when they're older. That's a fundamentally self-destructive concept. There's a reason we all assumed you were a troll.

Perhaps I'll approach this from another direction. What are you hoping that spending all of your income will give you?

[Moonwaves]

In that case, welcome to MMM, dive on in and let us know what you think of it when you've done some reading. Enjoy!

[Boofinator]

OP: You've asked a pretty heady question for your very first post, and then proceeded to hypothetically "answer" that question using logic that is anathema to this whole group.

Which is fine. (And somewhat comical.)

However, since your future happiness hinges on the actions you will take in answering your question, I highly recommend that you have a firm grasp of the options and their associated consequences. If you think the right answer might be "financial independence" (the ethos of most of us here), then I suggest you take your time and begin reading through the MMM blog. If you think financial independence is for losers, that's fine too, but I don't think you'll find the answers you are looking for on this site.

[Valens]

Financially I don't. I don't want to rent a condo for double the price just for nicer floors and hardware. Especially since that $1700 includes utilities and parking. But I've been here for 10 years and I'm bored of the apartment and the neighborhood. And since I'm renting, there a limits to what I can do with the place. None of these are good enough reasons to move and pay double, which is why I looked into buying a house, leading to my frustration with the Toronto housing market and the original post in this thread.

And if you were to buy, you would also get stuck somewhere and probably get bored. Buying and selling is extremely costly.

Regardless, I really, really don't understand what housing costs have to do with saving for retirement?
I get that the cost of housing has you not wanting to save for a house, but how does that lead to the logical conclusion of not saving at all?

If you aren't a troll, then my intuition from what you've posted is that you aren't very happy, and so the appeal of spending tons of money feels like it might make your life happier.
Kind of a "Fuck it! YOLO!" kind of sentiment.

It is frustrating to work really hard, make a lot of money, and still feel so limited or even trapped. I completely understand that.

However, if your angst is driving you towards thinking that not saving at all and leaving your future self with nothing is somehow a sane option...it's time to start looking at bigger pictures and more creative solutions.

Happy, mentally healthy people don't seriously contemplate not saving anything and leaving themselves with no options when they're older. That's a fundamentally self-destructive concept. There's a reason we all assumed you were a troll.

Perhaps I'll approach this from another direction. What are you hoping that spending all of your income will give you?

Regarding housing costs and retirement it was more that I can't afford a house now on my income and when I looked at the result of saving $2000/month at 10% per year and only reaching ~$1.5M it was frustrating. Frustrating that even after 20 years of saving at that rate I couldn't buy a decent house (without a mortgage). That doesn't mean that saving for retirement is pointless, but at that point I just thought I'd explore turning the whole thing on it's head.

In regards to your intuition you're pretty close to the mark. I feel trapped and bored. My job is easy and comfortable but there's nowhere to go from here. I could try something else in regards to career, although I don't know what that would be, and maybe that would lead to significantly more money, but it could just as easily result in the same or less and almost certainly require significant effort.

[neo von retorch]

Going back to your original post:

• Buying a house in Toronto is nearly impossible
• You want to enjoy what life has to offer, and maintain flexibility
• You have a healthy income

Given these things... what are your goals? I would suggest, for example, that travel is something that you value and want to do a lot of. What are some of the best options to do a lot of travel?

• Forget buying a house in Toronto, since it's a waste of money for what you get, and greatly reduces your flexibility
• Minimize spending on things that you value less than travel
• Save a healthy chunk of your high income and invest it so that it adds to your available resources
• Learn how to travel inexpensively so you can get a lot of traveling for your money
• With enough savings and investment, you can work less in time and have even more freedom to travel

How does approaching things with the end goal in mind help your mindset in looking for the best tactics to use to accomplish that goal?

[Valens]

OP: You've asked a pretty heady question for your very first post, and then proceeded to hypothetically "answer" that question using logic that is anathema to this whole group.

Which is fine. (And somewhat comical.)

However, since your future happiness hinges on the actions you will take in answering your question, I highly recommend that you have a firm grasp of the options and their associated consequences. If you think the right answer might be "financial independence" (the ethos of most of us here), then I suggest you take your time and begin reading through the MMM blog. If you think financial independence is for losers, that's fine too, but I don't think you'll find the answers you are looking for on this site.

It is funny, but also a testament to the people here that they've been genuine and helpful. In regards to financial independence, I certainly don't think it's for losers, but I struggle with being excited to save a significant portion of my income just to maintain my lifestyle in the future. So I think we agree that financial independence is good, but maybe differ on what that means or how to get there.