Author Topic: Unsure how many years are left  (Read 1972 times)

OttawaNeal

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Unsure how many years are left
« on: January 22, 2023, 11:47:32 AM »
Life Situation:
Wife “K”: 42, healthcare professional, part-time (70% of full-time schedule)
Me “N”: 42, engineer/manager in a 100% of the time work-from-home arrangement
DS: 12
DD: 9
We live in Ottawa, Canada. All dollar amounts listed are Canadian.

I have wanted to exit the corporate rat-race for more than a decade now. I was investing before being introduced to MMM, but it was after that introduction that I saw that the path forward lay in ramping up our savings rate considerably higher than the 10% that many authors promote.

“K” on the other hand likes her job and wants to continue growing her DB pension until at least age 50. She works in a 0.7*FTE position, so she accumulates 0.7 years of pension service per year. She doesn’t get workplace benefits as a part-timer, but we have mine which are great. They pay her extra compensation in lieu of benefits – meaning if she were to change to full-time at some point, she would get very little extra money, but we would get her benefits instead. She has mentioned before that she would consider going full-time in a few years for a few years, but I don’t think either of us would prefer that option really. I’d rather work a year longer so that it wouldn’t be necessary if that’s what it took.

K has said she is on board with me leaving the workforce earlier than her. Of course, the implication is that the time for me to do that is “not until we’re financially ready.” I guess I’m trying to figure out at what point we will be financially ready.

My focus on this goal of getting to FI has come in “waves” of motivation. When the wave is rising I set a goal (50% savings rate), track our expenses like a hawk, and maximize putting the savings into investments. My wife tolerates the new regime probably better than she should considering it isn’t her goal to retire early – although really, she isn’t really a “spender” anyways. But she does change her habits (buys less coffees, delivers receipts to me for tracking) which I think chafes a little.

Eventually my motivation starts to wane as it sinks in just how long a road it is to save enough to reach FI. I settle back into just living within our means and not really going beyond filling the registered investment accounts. Currently we’re (I’m) riding the beginning of a large wave of motivation (to finally get to the end!? One can hope).

Gross Salary/Wages:
N: $133K plus 10% bonus (bonus depends primarily on company performance and a little on mine)

K: Around $90K – it varies because she isn’t paid for stat holidays, sick days, etc., but she can also pick up extra work sometimes if she wants to (as casual shifts)

Pre-Tax Deductions:
Each year we maximize our RRSPs. Because of K’s DB pension she never has a whole lot of RRSP room to contribute towards, but I typically end up with a good chunk (nearly $20K/yr).

We have an investment HELOC loan I took out when money was cheap that I use in an unregistered trading account. For 2022 the deduction for the interest will amount to $7150. It will be even more for 2023 with interest rates continuing to rise – but I might kill the whole thing off. We’re under water on the investment currently to the tune of about $6K on a $158K loan. Interest rate is currently 6.95% (but with the tax deduction it’s more like 3.93% interest). I don’t include the interest as an expense below because the HELOC itself is paying its own interest (i.e. interest is rolled into the debt each month).

We’ve pretty much passed through the period of childcare deductions and work from home deductions are minor too.

Current Expenses:
Obviously the most important parameter to this whole case study. I’ve held off on even posting here for a few months because it’s tough to pin down exactly what our expenses would be if we were more focused with our spending/saving, and last year we were not, so what am I even going to base everything below off of?

The best I could do was tally up our spending for last year – I did so on this journal post:
https://forum.mrmoneymustache.com/journals/(can)-condolences-to-gentle-hearts-who-couldn't-bear-to-try-127925/msg3083580/#msg3083580
That was during a period of time though when, like I said, we were not trying very hard. Many of the expenses were hard to figure out exactly what they were for after the fact – e.g. was a trip to Walmart six months ago for groceries? Clothing? Who knows anymore! It was a mess to figure out after the fact.

In December I started tracking very carefully breaking down every expense into proper categories. I used these values, along with knowing where further cuts would come from, to create a 2023 whole year projection spreadsheet which I’m now tracking ourselves against. So far (22 days in!) we’re tracking along nicely to the plan.

All this to say there is a degree of estimation in the expenses below – it’s my best guess.

Numbers below are yearly totals as this mirrors my spreadsheet.

**********************************************************************************
Yearly Expected After-Tax Income: $155K

**********************************************************************************
Yearly Expected Expenses:

** HOME**
$14230 Mortgage
$4900 Property Tax
$1270 Home Insurance
$600 Home Maintenance
$5000 Home Improvement
TOTAL HOME = $26000
We’re planning to get the central air AC unit replaced this year. It’s over 30 years old and could go at any time.

**TRANSPORTATION**
We have two vehicles – 2017 CR-V EX-L and a 2016 Civic LX
$1300 Car Insurance
$1000 Car Maintenance/Parts
$2800 Fuel
Parking – K does have parking charges at her workplace, but they come off her pay (so they’re already accounted for in the above take home pay)
TOTAL TRANSPORTATION = $5100
I know I’ll be changing the CR-V rotors and pads, front and back, in the spring (2-3mm left now). Other than that, just regular maintenance is anticipated.
$2800 for fuel might be too low based on where we’re at in January already ($175 of the $200 I budgeted with probably one more CR-V tank to go). Not to mention gas prices continue to vary wildly.

**Other Financial Charges**
$400 Life Insurance
$1100 Professional Dues
TOTAL OTHER = $1500

**Utilities**
$1600 Electricity
$1500 Natural Gas
$1130 Internet
$1200 Cell Phones (3 lines)
$930 Water
TOTAL UTILITIES = $6360
I’m reimbursed $813.60 for the cell phones and $720 for the internet by my employer. I could get a slower than 940/30 Mbps internet package and probably have essentially free internet - it’s an option. The cell phone though I have to provide a receipt for – so anything less than $60/month (+tax) is just giving up free reimbursement.

**Food/Dining/Vices**
$12000 Groceries
$2400 Restaurants
$1200 Alcohol
$600 Cannabis
TOTAL FOOD/DINING/VICES = $16200

**Entertainment**
$200 Spotify
$2200 Other (probably an over-estimation)
TOTAL ENTERTAINMENT = $2400
I wouldn’t normally subscribe to something like Spotify. Most “content” I get for free one way or another. After a three-month free trial though we decided this was one service worth paying for.

**Shopping**
$800 Clothing
$1200 Other
TOTAL SHOPPING = $ 2000

**Health & Fitness**
$500 Running (Me)
$1000 Rep Baseball (DS)
$1200 Horseback Riding (DD)
$300 Sporting Goods
TOTAL HEALTH & FITNESS = $3000

**Medical/Dental/Pharma**
Most things are covered 100%, but I’ll put in $1200 just in case (our pharma plan is the only benefit not particularly good by our own choice as we wouldn’t get much use from it)
TOTAL MEDICAL/DENTAL/PHARMA = $1200

**GIFTS & DONATIONS**
$2200 Gifts
$600 Donations
TOTAL GIFTS & DONATIONS = $2800

**Childcare**
$3000 Summer Camps
TOTAL CHILDCARE = $3000

**Personal Care**
$1800 Hair/Nails/Shaving/Cosmetics
TOTAL PERSONAL CARE = $1800

**Travel**
$4800 Generic Travel (no exact trips planned for now)
$1200 Backcountry Camping Trip(s)
TOTAL TRAVEL = $6000

**Pets**
$2000 A blanket $2K to cover mostly food, cat litter, vet visits for 1 golden retriever and 2 cats.
TOTAL PETS = $2000
Only the dog visits the vet. All the pets are young (3-4). They won’t be replaced when they pass away (they’re mostly for the kid’s benefit).

*******************************************************************************

TOTAL YEARLY EXPENSES = $79360
AVG MONTHLY EXPENSES = $6613 (which sounds about right)
AMOUNT LEFT TO INVEST = $155K - $79K = around $76K (we’re aiming for 50% this year)


Expected RE Expenses:
If I were to pull the plug, I anticipate I could make the following changes:
- Sell one car resulting in a savings of: -$1500/yr
- Drop the life insurance: -$400/yr
- Lower food expenses: -$2000/yr mostly through better meal planning (probably more really)
- Unsure of what we would do for a supplemental health plan
- Childcare need completely gone: -$3000/yr
- I’m tempted to say consider the mortgage to be gone, as I would probably pay it off before RE (although we may take one out again purely for a deductible investment loan)

In total:
RE Scenario 1 (still have mortgage) sees RE expenses drop to $72460/yr ($6038/mth), and
RE Scenario 2 (no mortgage) sees RE expenses drop to $58230/yr ($4853/mth).


Assets:
$612K Primary Residence (likely higher, but this is the last appraised value from when we got the mortgage)
$170K non-registered investments (primarily in ETFs – VUN and XAW, and some cash in the bank account)
$734K registered investments
- $221K in TFSAs
- $193K in N’s RRSP
- $45K in K’s RRSP
- $44K in K’s Spousal RRSP
- $15K in N’s Ontario regulated LIRA
- $138K in N’s Federally regulated LRRSP
- $71K in the family RESP account
- Small remainder is in N’s workplace RRSP/DC pension accounts
- K has a DB pension – her accumulated service up to now would allow for $28280/year from age 60 onwards.
- As previously mentioned, we have two vehicles. I assume they have no value as we will drive them until they have no value, but if we were to sell one (likely the Civic) we could get $10K-15K.

Liabilities:
- $202K Mortgage (1.74% fixed until March 2026)
- $158K HELOC investment loan (6.95% tax deductible – effective rate around 3.93%)

Specific Questions:

1)  Where the hell am I on this FI journey? I can’t help but think the following:
- Considering K still wants to work, and her take home is already nearly enough to cover our yearly expenses, I feel like I could pull the plug at any time. Our situation would improve in that we would start getting CCB again (we made too much last year to get any).
- On the other hand, we’re a good $600K away from having 25X our “Scenario 1” expenses. But K’s DB pension essentially covers nearly half of our expenses (17-ish years from now).
- Another consideration is that our investments are already generating nearly $22K/year in income, easily making up the shortfall (about $1800/month on average). We could start drawing out some of the dividends instead of reinvesting them.

2) Any of the spending categories seem way out of whack? (I realize what I’m walking into here…)
I realize by MMM standards we spend a lot. At least while the kids are dependent on us, we’d like to give them a semi-stable life and encourage them to pursue passions which interest them (sports, arts/crafts, etc.). We will stay in the same house for 4 more years minimum so the youngest can finish out public school at the same school. Realistically we would probably stay in this house until the last kid moves out, then downsize to a smaller house with a bit more land. Or maybe take some time to "slow travel" the world. K has a lot more travel experience than I do, but I welcome the chance to catch up.

3) When would you pull the plug in my situation?
Curious to hear different opinions. Would your answer change if K pulled the plug at the same time as me, or let’s say at age 50 in 8 years?
Part of me is pretty sure I could pull the plug now, but another part of me also knows that these are some of the best years I’m going to get to pad the investments even further, increasing the opportunities in the future for more travel/adventures. A little more stress today for a lot less stress down the road? We're both of the opinion that we will help the kids through post-secondary education to a point, but not pay their whole way. K would like to make sure the kids get a good start in life without much school related debt before we do anything too drastic. I'm of the opinion that they will learn a lot of responsibility from paying off their own school debt (although I don't want them to be drowning in debt either should they choose to pursue a program with an exceptionally high cost).

One of the possible “work-for-the-man” exit strategies I’m considering is starting my own business – likely an ETSY shop (I have a couple ideas). Alternatively, it could be a service-based business (I am working from home and popping out for an hour or so during the day isn’t out of the question). The plan would be to get the business running and successful before I quit the day job.
« Last Edit: January 24, 2023, 06:15:54 AM by OttawaNeal »

Gronnie

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Re: Unsure how many years are left
« Reply #1 on: January 22, 2023, 12:56:12 PM »
How sure are you that your spouse will want to continue working after they see you no longer working for a bit (and hopefully enjoying it)?

BicycleB

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Re: Unsure how many years are left
« Reply #2 on: January 22, 2023, 01:31:26 PM »
Ptf

daverobev

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Re: Unsure how many years are left
« Reply #3 on: January 22, 2023, 03:12:51 PM »
A'ight so you need ~70k a year, you have about $900k excluding the house.

4% SWR... but that's for a 30 year retirement. You only need 17 years til DB kicks in, and a little bit longer for CPP plus OAS (how much are you expecting from those?).

That 900k can carry *you* on that expenditure now with room to spare for ~23 years, and then your wife only needs to bring in 35k so she could drop to 50% rather than 70% of full time quite easily (and as you say then you'd get some CCB).

You are closer to CCP and OAS than you think - if those are going to give you another 15, 20k a year... yeah I'd say you're there honestly, depending on how much you can cope with 30% market drops, how much you can pull back your spending during lean times.

Lews Therin

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Re: Unsure how many years are left
« Reply #4 on: January 22, 2023, 06:37:46 PM »
I no longer have workday boredom, so I won't give the usual complete a to z.

Excel homework: write down a timeline starting now, to benefits. Your benefits are gonna be significant with the DB + CPP for two high earners/people who have workeda while.

Backtrack from that number, since the guaranteed portion reduces the fire number when you have access.

Note that the amount your wife is paying into the DB is also savings, and should be noted in the 50% savings rate.

When is the mortgage finished if you didn't have the heloc investments? Thats another significant chunk you won't need after a while in fire.

Groceries are your easiest way to save some money.

P.s. you should have a moderator move this to canadian discussian, or place (can) before the title. You'll get more interest and specifica for the hat of our southern friends.
« Last Edit: January 22, 2023, 06:40:48 PM by Lews Therin »

OttawaNeal

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Re: Unsure how many years are left
« Reply #5 on: January 22, 2023, 09:07:43 PM »
How sure are you that your spouse will want to continue working after they see you no longer working for a bit (and hopefully enjoying it)?

At most she thinks she would work 5-7 years after me. She could eventually just go to only casual shifts and basically work as much or as little as she likes.

iluvzbeach

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Re: Unsure how many years are left
« Reply #6 on: January 22, 2023, 09:58:56 PM »
I don’t really have any answers to your questions as I’m from and live in the U.S., but I did want to thank you for including the descriptions of the CAN investments. I always see people on here post about them but I never really had any understanding of how they worked. Now I do. Thank you.

LightTripper

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Re: Unsure how many years are left
« Reply #7 on: January 23, 2023, 03:27:21 AM »
Posting to follow!

I've gone part time (and now very part-time) over the last couple of years while OH continues full time in quite an intense job.  We have separate finances so I hadn't thought as much as I probably should have done about how that would affect him: I think it probably does feel a bit weird for him to still be working very intensely while I have coffee/lunch with friends and pootle around - and particularly that he does now more "visibly" miss out on time with the kids than he did when we were both working full time and both missing out (if that makes sense!). 

On the plus side for him, I how have time to do most of the laundry (which he used to do at least half of), to think more about what we are going to eat (resulting in marginally nicer meals), to keep the house in better order, and just to have a lot fewer "oh crap we forgot X how do we fix that now?" moments.  He also doesn't have to be as rigidly home for a set time as used to be the case when we had a nanny (or would be the case now if we were sharing pick-ups from after-school clubs).

So there are challenges and benefits for a still-working partner of an ER person I think, even leaving aside the financial issues.

OttawaNeal

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Re: Unsure how many years are left
« Reply #8 on: January 23, 2023, 02:51:00 PM »
A'ight so you need ~70k a year, you have about $900k excluding the house.
Yeah, if I don't consider the HELOC loan that was used to buy investments as like negative investment then I have about that.

4% SWR... but that's for a 30 year retirement. You only need 17 years til DB kicks in, and a little bit longer for CPP plus OAS (how much are you expecting from those?).
Good question. I mean I'll game things as best I can to get as much OAS as possible. In terms of CPP I'd say I have around 15 years of full contribution to it by now. I'll look into this further (should be able to get a better idea from Service Canada).

That 900k can carry *you* on that expenditure now with room to spare for ~23 years, and then your wife only needs to bring in 35k so she could drop to 50% rather than 70% of full time quite easily (and as you say then you'd get some CCB).

You are closer to CPP and OAS than you think - if those are going to give you another 15, 20k a year... yeah I'd say you're there honestly, depending on how much you can cope with 30% market drops, how much you can pull back your spending during lean times.
I can cope with market drops fairly well I think. When the time comes I think I'll move most of our investments into blue chip dividend payers of the type that aren't going out of business anytime soon (price might fall but dividend likely won't), and there's always the option to return to working if needed.

This whole process so far has been beneficial in that putting ideas to writing has opened up a more serious discussion with my wife about these plans. I think it was more abstract before to her when it was further off. I'm getting the sense that we'll need a little more margin for error to make her comfortable (which honestly sounds good to me too).

OttawaNeal

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Re: Unsure how many years are left
« Reply #9 on: January 23, 2023, 03:31:53 PM »
Excel homework: write down a timeline starting now, to benefits. Your benefits are gonna be significant with the DB + CPP for two high earners/people who have worked a while.

Backtrack from that number, since the guaranteed portion reduces the fire number when you have access.
Alright, I'll do this.

Note that the amount your wife is paying into the DB is also savings, and should be noted in the 50% savings rate.
Good point. I wasn't counting that or the money my employer and I put into my workplace plan (it's a hybrid of a DC pension, an RRSP, and a DPSP). When I calculated our savings rate a few years ago I also included CPP contributions...but I didn't do that this time either.

When is the mortgage finished if you didn't have the heloc investments? Thats another significant chunk you won't need after a while in fire.
So the mortgage we got is a re-advanceable one (idea was to do the Smith Manoeuvre with it).
5-year fixed with weekly payments at 1.74% (term will be up March 2026).
Allowable pre-payments of 20% per year (which I was doing at first until I realized that was not optimal).
Balance at the end (2026) will be somewhere around $150K to $160K (originally it was going to be around $240K...but we made heavy use of the pre-payments at the start).
Yes, I agree the mortgage has to go before fire.

Groceries are your easiest way to save some money.
Yeah, breaking down our receipts like I've been doing is showing me that we don't spend quite as much on groceries as I had thought (I think a lot of what I categorized in my 2022 expenses as groceries must have been non-grocery items bought at stores which also sell groceries. So far for January we've spent around $740 (I say around because I still have a few receipts to process). I'm sure there's likely some room to improve still though. We tend to consume meat at every dinner (I should find a few more meatless meals to test on the kids).

P.s. you should have a moderator move this to Canadian discussion, or place (can) before the title. You'll get more interest and specifica for the hat of our southern friends.
I didn't flag it as Canadian on purpose so that the Americans wouldn't screen it out (more opinions that way I figured). But I see your point. Maybe Canadians are screening it out. I'll see about getting it moved to the Canadian Discussion section (and remove from it all the stuff I put to help the Americans understand our accounts).

OttawaNeal

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Re: Unsure how many years are left
« Reply #10 on: January 23, 2023, 03:33:54 PM »
I don’t really have any answers to your questions as I’m from and live in the U.S., but I did want to thank you for including the descriptions of the CAN investments. I always see people on here post about them but I never really had any understanding of how they worked. Now I do. Thank you.
Glad to have helped with clearing that up a bit. 😊

OttawaNeal

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Re: Unsure how many years are left
« Reply #11 on: January 23, 2023, 03:42:36 PM »
I've gone part time (and now very part-time) over the last couple of years while OH continues full time in quite an intense job.  We have separate finances so I hadn't thought as much as I probably should have done about how that would affect him: I think it probably does feel a bit weird for him to still be working very intensely while I have coffee/lunch with friends and pootle around - and particularly that he does now more "visibly" miss out on time with the kids than he did when we were both working full time and both missing out (if that makes sense!).
Part of how I sell the idea to my wife is by making it plain that I'll be becoming her "house-husband." 😂 She'll (almost) never have to clean the house again. I like cooking, and probably do a little more than half of that task already, but that will be another job I'll pretty much completely take over too. Of course we'll have to see how it all pans out if I do start a side business and then that becomes time consuming.

We started combining our finances as soon as we got engaged with a joint account for wedding savings. Ever since then we've had joint finances, so we never really think about who's paying what portion of anything. It's a joke between us though that while we were dating I would conveniently forget my wallet when we'd go out for dinner (it happened a few times...it was always legitimate (but hilarious) oversight 😂).

On the plus side for him, I how have time to do most of the laundry (which he used to do at least half of), to think more about what we are going to eat (resulting in marginally nicer meals), to keep the house in better order, and just to have a lot fewer "oh crap we forgot X how do we fix that now?" moments.  He also doesn't have to be as rigidly home for a set time as used to be the case when we had a nanny (or would be the case now if we were sharing pick-ups from after-school clubs).

So there are challenges and benefits for a still-working partner of an ER person I think, even leaving aside the financial issues.
Exactly 😊

Lews Therin

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Re: Unsure how many years are left
« Reply #12 on: January 23, 2023, 03:47:51 PM »
For the mortgage, I wouldn't touch it till 2026 for sure.

Paying it off before FIRE, meh, wait till 2026 and see what the mortgage rates are like.

Don't prepay at 1.74, that's for sure!

Clarifying the timeline comment for excel: multiply your yearly pen sion amount by 25 (DB, CPP, OAS), and act as if you have a stash windfall at that point. It'll make the FIRE number easier to figure out.

Groceries: Somewhere i have a CMTO presentation in my journal that explains how to do it best.

Mostly it's start the weekly meal plan by having the week's specials as the main ingredient, then build outward. (No frills, food basic, freshco)

OttawaNeal

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Re: Unsure how many years are left
« Reply #13 on: January 23, 2023, 06:45:09 PM »
For the mortgage, I wouldn't touch it till 2026 for sure.

Paying it off before FIRE, meh, wait till 2026 and see what the mortgage rates are like.

Don't prepay at 1.74, that's for sure!
For sure! When we refinanced into this mortgage to be able to do the SM we also took the opportunity to take out some additional equity to fully max out our TFSAs/RRSPs. I guess I started aggressively prepaying the mortgage at that time because we had been so close to mortgage free, and I wanted to get back to that point again. But at that interest rate obviously it makes no sense.

Clarifying the timeline comment for excel: multiply your yearly pension amount by 25 (DB, CPP, OAS), and act as if you have a stash windfall at that point. It'll make the FIRE number easier to figure out.
Okay.

Groceries: Somewhere i have a CMTO presentation in my journal that explains how to do it best.

Mostly it's start the weekly meal plan by having the week's specials as the main ingredient, then build outward. (No frills, food basic, freshco)
That's pretty much what I do. I go through the flyers each week and compile a list of the lowest prices for the things we typically buy. I then will go to RCSS and/or No Frills so that I can price match (occasionally FreshCo...but it's farther away, and I find it takes forever to check out there - Bell's Corners location). Our RCSS price matches some stores that No Frills will not (Maxi, Provigo, T&T, Giant Tiger, Shoppers Drug Mart...a few off the top of my head), which is partially why I go there (even though in general it's more expensive for other things). I can also have more luck with price matching meat there sometimes (as they have a larger selection of cuts).

The one catch to the plan though is sometimes I won't be able to find an exact match to something I want to price match, so sometimes my weekly meal plan has to change on the fly.

We have a white board in the kitchen where we try to keep track of the weekly plan, what we have in the fridge as left-overs (and how old), what we've run out of, etc.

OttawaNeal

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Re: Unsure how many years are left
« Reply #14 on: January 24, 2023, 06:17:11 AM »
Had the post moved over from the case studies board to here. 😊

c-kat

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Re: Unsure how many years are left
« Reply #15 on: January 24, 2023, 07:36:44 AM »
We are in Ottawa, also have two kids and our expenses are similar. I'm also part time and will have a DB pension.

How many more years do you think that your wife will work? When she decides to leave her job will her pension be indexed to inflation between then and when she's able to access it at 60?  Are there options to take the pension earlier? or to take leave and then buy back the years to increase the pension?  These are some of the things were are exploring so just thought I'd mention them.


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Re: Unsure how many years are left
« Reply #16 on: January 24, 2023, 08:35:52 AM »
P.s. you should have a moderator move this to canadian discussian, or place (can) before the title. You'll get more interest and specifica for the hat of our southern friends.
+1 to this wise advice.

Captain FIRE

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Re: Unsure how many years are left
« Reply #17 on: January 24, 2023, 08:39:31 AM »
Part of how I sell the idea to my wife is by making it plain that I'll be becoming her "house-husband." 😂 She'll (almost) never have to clean the house again. I like cooking, and probably do a little more than half of that task already, but that will be another job I'll pretty much completely take over too. Of course we'll have to see how it all pans out if I do start a side business and then that becomes time consuming.

Just also consider how the transition will go once you both retire.  I think women in particular often find that when their husbands retire, they don't reevaluate their household division of labor. (I suspect this often happens with a stay at home parent raising kids more than one spouse retiring earlier.) And thus resentment grows, as that stay at home spouse does more than 50% of the chores even though both are now home.

My top tip is to stop the feast and famine cycle and figure out a monitoring/maintenance plan you can do continuously. So perhaps don't require receipts to be turned in, but review bank statements (that's what I do when tracking spending). Don't crack down on every coffee, but do try to limit them, etc. I think a large part of your issue is that your monitoring/tracking is not sustainable on either of your parts (buy in from your wife to time investment for you).

On specifics:
- What heat do you have?  I'm confused as electricity and gas both seem high.
- Personal care seems high
- Gifts seems high.  Can you break down what it's for - your kids, gifts to family, friends etc to see how to get a better handle on it?
- Suggest breaking out alcohol/cannabis into a separate column.  Yes it's consumable but it's 100% vice, so it might make you think twice about whether you can cut back on it if it's not merged into a necessity. (Yes, yes, I understand that you spend more on groceries than necessary, but even so.)
- Suggest better tracking in entertainment catch-all category, so you know what you're spending on and whether you can trim it. Is it weekly move nights that you can maybe change to monthly and watch at home?  A concert habit? Many streaming services you can cut back on? etc.
« Last Edit: January 24, 2023, 08:44:26 AM by Captain FIRE »

OttawaNeal

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Re: Unsure how many years are left
« Reply #18 on: January 24, 2023, 09:33:50 AM »
We are in Ottawa, also have two kids and our expenses are similar. I'm also part time and will have a DB pension.

How many more years do you think that your wife will work? When she decides to leave her job will her pension be indexed to inflation between then and when she's able to access it at 60?  Are there options to take the pension earlier? or to take leave and then buy back the years to increase the pension?  These are some of the things were are exploring so just thought I'd mention them.
I think her thought on this is about 10 more years of work. She wants to make sure the kids are launched with a good start in life before pulling the plug. I think she would decrease her schedule from 0.7FTE sooner than that though. If she switches to casual she could probably work as much or little as she likes.

Her pension plan decides on an annual basis whether to provide a cost of living adjustment. It seems to be well funded (they've done well enough that they've had to revalue the pensions at a higher amount a couple times over the past few years - "Past Service Pension Adjustments").

It seems she can access the pension at age 55 on a reduced basis, and at age 60 it becomes unreduced.

If she were to resign today and never contribute to it again, her pension estimator estimates:
- At age 55 she could get $23110/yr for life and a bridge benefit of $655/yr (not much of a bridge to 65)
- At age 60 she could get $28708/yr for life and a bridge benefit of $813/yr
- At age 65 she could get $28708/yr for life and no bridge benefit

Not that we would take a lump sum, but the lump sum value at the moment is estimated at $234K (non-taxable).

Not sure about the leave question - would be a nice option to just buy the service time though!

OttawaNeal

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Re: Unsure how many years are left
« Reply #19 on: January 24, 2023, 10:39:26 AM »
My top tip is to stop the feast and famine cycle and figure out a monitoring/maintenance plan you can do continuously. So perhaps don't require receipts to be turned in, but review bank statements (that's what I do when tracking spending). Don't crack down on every coffee, but do try to limit them, etc. I think a large part of your issue is that your monitoring/tracking is not sustainable on either of your parts (buy in from your wife to time investment for you).
That's good advice. She's told me she's worried the 50% goal might be too high, and that she doesn't want the whole exercise to lead to disappointment. What I've told her (and it's true too 😂) is that it's just a goal - I'm not going to be disappointed if we don't reach it. The fact that we're tracking again is miles ahead of what we were doing last year. We signed her up for a new credit card in December that is purely for her to use for expenses she doesn't want me to know about - at least not until after it no longer matters. She wanted to be able to use it for when she wants to plan a surprise (like a night away for us, gifts, or something like that).

I have stressed to her that it's not about cracking down on every coffee/etc. but just keeping track so we can choose to do something about it or not. So far this month we had spent so little on restaurants that on the weekend I suggested we should order pizza (we had only spent around $50 of the $200 budget).

On specifics:
- What heat do you have?  I'm confused as electricity and gas both seem high.
Heat is natural gas. Typically in the winter we see gas bills peaking around $250, and in the summer like $30. Maybe I should be getting the attic insulation checked? the furnace is newer and relatively high-efficiency I think (Energuide sticker on the side gives it a 96.0 out of 98.5).
I'll attach a few images.

- Personal care seems high
Haircuts in 2022 amounted to $1352. My wife gets her hair cut about every 3 months by the looks of it for about $230. Seems high to me, but I won't be saying anything about it! 😂
I spent about $120 last year on shaving supplies. I switched to a double-edge safety razor a few years back to save on shaving. Last year I bought a 100 pack of "feather" blades (should last a few years) and some specialty shaving cream (Taylor of Old Bond Street). Likely those expenses won't happen this year.

It might be a bit high.

- Gifts seems high.  Can you break down what it's for - your kids, gifts to family, friends etc to see how to get a better handle on it?
I had Gifts at $2200/yr. I forget exactly how that broke down now, but based on which months I have the expenses in I can guess it was:
- Gifts to a child for BDay (x2) - $300 (might also include some BDay party costs too)
- Gifts to a parent for BDay (x2) - $100
- Gifts to a grandparent for BDay (x2) - $100
- Christmas $1000 (probably way too high 😂)
- Leaving gifts to friends at $200 (seems way too low)

- Suggest breaking out alcohol/cannabis into a separate column.  Yes it's consumable but it's 100% vice, so it might make you think twice about whether you can cut back on it if it's not merged into a necessity. (Yes, yes, I understand that you spend more on groceries than necessary, but even so.)
Yes, agreed, should/will do that.

- Suggest better tracking in entertainment catch-all category, so you know what you're spending on and whether you can trim it. Is it weekly move nights that you can maybe change to monthly and watch at home?  A concert habit? Many streaming services you can cut back on? etc.
We really don't spend a lot on entertainment. In my actual tracking spreadsheet I have 8 subcategories, but odds are the majority of them won't even see use this year. This is the reason I didn't break them out. I mean we might go to a movie theatre this year, but we probably won't. We're usually content to wait until I can download a movie to watch it at home. Likewise with concerts, sports events, escape rooms*, laser tag, etc. We might go, but I'm not planning to at any particular time.

Our Spotify subscription is about the only recurring thing we have, and that's new as of December.

*For January we booked an Escape Room for our daughter's upcoming BDay party which if I'm being consistent with what I said above should fall under gifts (but currently in Mint is classified as entertainment). Spotify and that party were the only expenses in that category for the month.

Actually we're treating DD to a pretty good BDay this year (after a few years of her getting pretty low-key BDay attention). K and her mom are taking her to Toronto for a night to see Joseph and the Amazing Technicolor Dreamcoat.
« Last Edit: January 24, 2023, 11:16:47 AM by OttawaNeal »

Captain FIRE

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Re: Unsure how many years are left
« Reply #20 on: January 24, 2023, 11:34:08 AM »
So if you don't have buy in on a 50% goal, can you set it something lower that is still a stretch but she feels is achievable? It's hard to work towards a goal you don't think you can meet AND you didn't set it.  (My husband is complaining about this right  now for his work goals...).  Maybe it's 45% or 40% or something else, but I would focus on what you BOTH feel you can achieve with some pushing. You NEED her to buy in for this to work.  And once you get into good habits you can always ratchet the savings up later until you hit a pain point.

Yeah, electric still seems high.  How many kwh are you using?  Maybe it's a high Canada delivery fee or something, but if not - see if your library has a electricity meter thing that you plug in to see how much your devices are using. (FWIW I live in a cold climate too, gas heat, same size family, make minimal effort to conserve electricity - we should do better - and spend almost 50% less than you.)

Even with avoiding the third rail of your wife's haircuts, I still wonder if you can cut back as it's well over $1k. We still cut my husband and son's hair at home. (My hair is long, and my mom cuts it when I want it.) Granted I don't rarely buy makeup which can be pricey, but even allotting some budget to that, I'm really hard pressed to see where the personal care money is going.

On gifts:
- If $300 for birthday includes a party I can see that, otherwise $300 for birthday gifts can be pared back. As your kids get older I imagine there are fewer parties. I've heard of people that do one party every other year, or allow the kids to choose splashier present or party but not both, etc. It's not a big area to cut back on if you feel it isn't worth the resistance fight, but food for thought.
- Can you do less for the grandparents - e.g. come up with ways to spend time not money on them for the birthday?  (We've mutually agreed to cut out gifts to adult family members, though I worried about initiating the conversation at first another sibling was thrilled to agree.)
- Are the friends gifts to the kid's friends or your friends? If the kid's friends, at $25/gift, 4 birthday parties per kid, ok I get it. If your friends, you can easily cut that out.
- Christmas, agreed. Maybe if you make a list in advance it can help to cut down on impulse purchases that can add up?

Also, do you water your lawn?  The water bill also seems pretty high. Maybe get some low flow shower heads, put in some drought resistant landscaping, etc.
« Last Edit: January 24, 2023, 11:36:26 AM by Captain FIRE »

OttawaNeal

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Re: Unsure how many years are left
« Reply #21 on: January 24, 2023, 01:05:19 PM »
So if you don't have buy in on a 50% goal, can you set it something lower that is still a stretch but she feels is achievable? It's hard to work towards a goal you don't think you can meet AND you didn't set it.  (My husband is complaining about this right  now for his work goals...).  Maybe it's 45% or 40% or something else, but I would focus on what you BOTH feel you can achieve with some pushing. You NEED her to buy in for this to work.  And once you get into good habits you can always ratchet the savings up later until you hit a pain point.
I mean, I'm not sure I'd say there's no buy in for 50%. I get what you're saying though.

We're coming up on the first month shortly and I'd say it was a success so far without feeling like deprivation. About all we changed was we used restaurants way less, and cut back big time on alcohol. When the month is done and the final numbers are available I'll prepare a little something for her to look at and we'll go over the goal % again. I'm hesitant to say let's aim for 40-45% at this point when the changes so far have been pretty minor, and we're still on track.

Yeah, electric still seems high.  How many kwh are you using?  Maybe it's a high Canada delivery fee or something, but if not - see if your library has a electricity meter thing that you plug in to see how much your devices are using. (FWIW I live in a cold climate too, gas heat, same size family, make minimal effort to conserve electricity - we should do better - and spend almost 50% less than you.)
A typical winter bill for us is like the following (pictured below). I do have a "kill-a-watt" power meter which I could use to try to kill off some wasted power with. The biggest draw is the ancient A/C unit in the summer. Summer bills are closer to $200. We have the option of paying based on how much we consume or based on when we consume (different rate formulas). I swap between the two systems as the seasons change to save a few extra $.

Even with avoiding the third rail of your wife's haircuts, I still wonder if you can cut back as it's well over $1k. We still cut my husband and son's hair at home. (My hair is long, and my mom cuts it when I want it.) Granted I don't rarely buy makeup which can be pricey, but even allotting some budget to that, I'm really hard pressed to see where the personal care money is going.
You might be right that I may have put too much there. My wife doesn't buy much makeup either. I think in general I did try to over-estimate spending rather than under-estimate to be on the safe side. I have cut my own hair in the past at times, and may do so again. My wife prefers when I get it professionally cut though, as when I do it I just shave it all down to a #2 on the clippers. She tried to cut my hair once and forgot to put the #2 attachment on - that was fun. 😂

On gifts:
- If $300 for birthday includes a party I can see that, otherwise $300 for birthday gifts can be pared back. As your kids get older I imagine there are fewer parties. I've heard of people that do one party every other year, or allow the kids to choose splashier present or party but not both, etc. It's not a big area to cut back on if you feel it isn't worth the resistance fight, but food for thought.
- Can you do less for the grandparents - e.g. come up with ways to spend time not money on them for the birthday?  (We've mutually agreed to cut out gifts to adult family members, though I worried about initiating the conversation at first another sibling was thrilled to agree.)
- Are the friends gifts to the kid's friends or your friends? If the kid's friends, at $25/gift, 4 birthday parties per kid, ok I get it. If your friends, you can easily cut that out.
- Christmas, agreed. Maybe if you make a list in advance it can help to cut down on impulse purchases that can add up?

Also, do you water your lawn?  The water bill also seems pretty high. Maybe get some low flow shower heads, put in some drought resistant landscaping, etc.
I also expect there will be fewer parties as the kids get a little older. We're probably getting to pretty near the end of them really. In reality, we probably spend about $100 per child on gifts for their birthdays.

In reality I've been pretty bad about getting my own mother gifts recently. If I was going to get her a gift this year it would be to fly her to Ottawa for a visit (we have some airline points to use, so maybe...). My wife typically spends $50 maximum for a birthday gift for her mom. We did stop exchanging Christmas gifts between the adults a few years ago (a welcome change since it tended to just be a big gift card swap anyways).

The gifts to friends is both our friends and the kids'. For our friends it not things like birthdays. It's more like for example when we went away for a week on vacation some friends watched our dog at their house during that time. When we got back we gave them a $50 gift card to their favourite pizza place and a 12-pack of beer. It wasn't necessary of course, but I think we'll keep doing things like that. That would be one of those cases where I think I'd rather work an extra month and invest that money so that it's always possible to have this flexibility, rather than worry about the expense.

We don't water the lawn - in fact we pretty much neglect it. 😂 Looks like we're using about 15 cubic meters a month (15000L or 3963ga). How does that stack up compared to your usage? Keep in mind all these dollar figures would be divided by 1.34 if converted to USD -> $930CAD = $696USD.

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Re: Unsure how many years are left
« Reply #22 on: January 24, 2023, 06:58:48 PM »
Just a thought - when looking at electricity and natural gas consumption on here, it's helpful to put units in as well.  Because prices vary so widely, comparing money spent isn't really that useful.

OttawaNeal

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Re: Unsure how many years are left
« Reply #23 on: January 24, 2023, 07:40:43 PM »
Just a thought - when looking at electricity and natural gas consumption on here, it's helpful to put units in as well.  Because prices vary so widely, comparing money spent isn't really that useful.

Fair enough. Consumption depends to a large extent on the weather unfortunately…our largest electricity usage definitely comes from the AC unit (summer usage is easily double winter), and likewise we really only use the natural gas for heat in the winter (the hot water tank doesn’t use all that much).

I do have Nat Gas consumption amounts in the one picture above. But my picture for electricity usage is a little older.

c-kat

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Re: Unsure how many years are left
« Reply #24 on: January 30, 2023, 06:48:31 AM »

4% SWR... but that's for a 30 year retirement. You only need 17 years til DB kicks in, and a little bit longer for CPP plus OAS (how much are you expecting from those?).
Good question. I mean I'll game things as best I can to get as much OAS as possible. In terms of CPP I'd say I have around 15 years of full contribution to it by now. I'll look into this further (should be able to get a better idea from Service Canada).

I was looking on service Canada and It isn't clear to me whether the estimate they give you is based on work to date, or assuming you keep working at the same salary until 60?

OttawaNeal

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Re: Unsure how many years are left
« Reply #25 on: January 30, 2023, 07:12:51 AM »

4% SWR... but that's for a 30 year retirement. You only need 17 years til DB kicks in, and a little bit longer for CPP plus OAS (how much are you expecting from those?).
Good question. I mean I'll game things as best I can to get as much OAS as possible. In terms of CPP I'd say I have around 15 years of full contribution to it by now. I'll look into this further (should be able to get a better idea from Service Canada).

I was looking on service Canada and It isn't clear to me whether the estimate they give you is based on work to date, or assuming you keep working at the same salary until 60?

I think it has to be with the assumption that you continue working until 60/65 (or somehow have the ability to drop the remaining years out of the calculation - raising kids, full-time student?, etc.)

When I checked it was saying my estimated monthly pension for age 60/65/70 was $691/$1079/$1532. My wife's values were similar (within $10). Those values are close enough to the maximum values that it must be assuming continued work.

Lews Therin

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Re: Unsure how many years are left
« Reply #26 on: January 30, 2023, 07:48:54 AM »
My cpp hasn't lowered, and I haven't worked for 4 years.

OttawaNeal

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Re: Unsure how many years are left
« Reply #27 on: January 30, 2023, 02:32:52 PM »
My cpp hasn't lowered, and I haven't worked for 4 years.

Hmmm...interesting. I'll give them a call at some point to clarify.

c-kat

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Re: Unsure how many years are left
« Reply #28 on: January 31, 2023, 03:57:33 PM »

4% SWR... but that's for a 30 year retirement. You only need 17 years til DB kicks in, and a little bit longer for CPP plus OAS (how much are you expecting from those?).
Good question. I mean I'll game things as best I can to get as much OAS as possible. In terms of CPP I'd say I have around 15 years of full contribution to it by now. I'll look into this further (should be able to get a better idea from Service Canada).

I was looking on service Canada and It isn't clear to me whether the estimate they give you is based on work to date, or assuming you keep working at the same salary until 60?

I think it has to be with the assumption that you continue working until 60/65 (or somehow have the ability to drop the remaining years out of the calculation - raising kids, full-time student?, etc.)

When I checked it was saying my estimated monthly pension for age 60/65/70 was $691/$1079/$1532. My wife's values were similar (within $10). Those values are close enough to the maximum values that it must be assuming continued work.

And these amounts would go up with inflation as well.

OttawaNeal

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Re: Unsure how many years are left
« Reply #29 on: February 01, 2023, 06:04:20 AM »
And these amounts would go up with inflation as well.
They would, yes. It just seems though that if I were to pull the plug right now at 42 that would leave so many years of no contribution in the equation that I couldn't expect that much? But I'm not sure.

Lews Therin

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Re: Unsure how many years are left
« Reply #30 on: February 01, 2023, 06:09:43 AM »
Quote: https://www.drpensions.ca/resources-fin-plan.html

The estimates for CPP retirement pensions starting at age 60, 65 and 70 are calculated as though your client has reached each of those ages on the date that the Statement of Contributions (SOC) was created. In effect, the estimates assume that the "average lifetime earnings" that your client has had from age 18 until the last year shown on the SOC will continue until ages 60, 65, or 70. In fact, your client's future earnings may be quite different.

If your client is still working and earning at or above the amount of the Year's Maximum Pensionable Earnings (YMPE), their calculated CPP retirement pension could increase from the amount shown on the SOC by as much as approximately $28 per month for each year of additional earnings. (It may also not change at all.)

If your client is still working but earning less than the YMPE, their calculated CPP retirement pension could actually decrease from the amount shown on the SOC with each year of additional earnings and contributions.

If your client is no longer working, their calculated CPP retirement pension could decrease from the amount shown on the SOC by as much as approximately $28 per month for each year of additional zero earnings. (It also may not change at all.)

If your client is currently over the age of 60 and has enough years of earnings at or above the YMPE, additional CPP contributions may not increase their regular CPP retirement pension. However, the contributions could create eligibility for post-retirement benefits if your client applies for their CPP retirement pension early.

If your client was ever the primary caregiver for a child under the age of seven, they may be able to claim the CPP child-rearing provision, and their actual CPP retirement pension may be significantly higher than the amount shown on the SOC.




 

Wow, a phone plan for fifteen bucks!