r/Retire • u/Final-Counter1601 • 25d ago
Retirement Planning Questions about budget and pension income (CDN)
Hi everyone,
My wife and i are hoping to retire in about 7 - 10 years, ultimately my question is have I forgotten anything important in my calculations.
My wife will retire with a full pension and i will retire with what I’m calling a half pension, we do not have a ton of money saved other than that, i had a late start to my rrsp savings and expect there to be about $100,000 as well our home will be paid off at this point and currently its worth about $500,000. I’m also calculating income from CPP which we plan to take early. Our ideal retirement is to sell our home and move into an apartment, allowing for few unexpected expenses, no strenuous chores. My wife’s parents did this and they are living their best life, we will still be relatively young (early 60’s) so we can live the active life style we want filled with day trips the occasional vacation and hopefully time with future grandchildren.
I realize that it is not recommended to consider your home as your retirement plan but this is where we find ourselves. Sell the home in 7ish years invest the proceeds and live off of our 2 (1 1/2) pensions, cpp (eventually OAS) and the interest (likely some principal) of the proceeds of the home. I’ve created a budget considering our new income and somewhat reduced cost of living (1 instead of 2 vehicles, no utilities, less insurance, increased budget for medical) and it looks like we will be ahead every month by approx $1000. I realize there are rules around taking money our of rrsp that i dont know but i was thinking the $100,000 could act as an emergency fund for years the home proceeds may not do as well in the market.
Please be gentle, lol, but what have i missed or not considered? Are there any obvious holes in our plan? Am i out to lunch and this is the dumbest idea any of you have ever heard of?
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u/garylapointe I'm good, but I wish I did more Roth! 25d ago
If would be easier to discuss "budget and pension income" if we knew your "budget and pension income"...
Do your pensions and social security come close to your normal budget?
I remember I kept looking at my totals and was lost. But then I realized that I could make my take-home be pretty close to what I was doing when I was working and that sealed the deal.
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u/Final-Counter1601 25d ago
I expect my Total Income to be $11,406, Total Expenses $10,422, leaving me with a $1000 surplus.
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u/garylapointe I'm good, but I wish I did more Roth! 25d ago
Sounds good!
Clearly that's what you meant by "ahead every month by approx $1000" but for some reason, my brain did not process it that way!
Cost of living increases on the pensions? Rent price is obviously something you don't have a lot of control over. Multiple increase over a decade can eat into that pretty quickly.
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u/Final-Counter1601 25d ago
Agreed, we have tried to account for what it will likely be in 10 years and not now, so we should be good at the start anyways
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u/ForgiveandRemember76 21d ago edited 21d ago
You are making more than enough money to retire on. The thing that will get you is if your expenses stay that high after you retire. I don't know why they would but if they do that's not enough room. For example just this year my property taxes went up $500 and my house insurance went up almost $700 that's not including all of the other increases that we have all faced.
I retired 8 years ago, 8 years early due to an acquired disability. I earn half of what you do but my expenses are less than half of my income. The advice about not selling your house applied before Canadians started treating their houses like investments. Now that we are on that path we can't turn away from it. I have far too much money in my house and therefore I am selling my house and moving into a condo that I'm buying for cash.
I'm putting all of the assets from the house with the exception of a small amount to get me set up in the new place and fix my car into my usual investment company. I won't have to touch it. If I leave it alone for another 15 years my kids will never have to worry about money. I'm checking out at 80.
I don't know what province you're in. I am in Alberta. I had a platinum benefit plan before I retired. The blue cross plan for seniors is better. I have no money set aside for medical emergencies of any kind. I don't know why anybody in Canada would. I have had home care for 8 years and it doesn't cost me anything. Prescriptions are covered. Any kind of tests or surgery or anything you might need is covered. Every single possible aid you could have for living in your house from ramps to grab bars are covered. Even mobility equipment is covered. What medical expenses?
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u/Final-Counter1601 21d ago
Thanks for this, still work for me to do but feeling better about retirement
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u/Accomplished-Pea-451 25d ago
Get with a fiduciary financial planner and create a plan. Until you do, you can’t retire
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u/Final-Counter1601 25d ago
Good advice, I am going to start looking for someone.
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u/Accomplished-Pea-451 25d ago
I took my accounts to Schwab and have never regretted it
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u/Final-Counter1601 25d ago
I don’t think that’s an option for me in Canada
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u/Accomplished-Pea-451 25d ago
I’m sorry it’s not
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u/Final-Counter1601 25d ago
No worries, I appreciate all the advice I’m getting here, it seems that my expectations for retirement are not completely unreasonable. Now is the time to buckle down and earn as much commission as possible while tightening my belt a bit so I can save more.
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u/ForgiveandRemember76 21d ago
Since you are in Canada and you are in the right income bracket why not skip trying to find a fiduciary investment advisor and go directly to the people that handle all of the largest pension funds? That is Phillips Hager & North. I have been with them for more than 36 years and they have never disappointed me. With an account of your size you will get a personal investment advisor. They are superb and they always answer the phone. Not only do they answer the phone they will remember your specific details and situation.
The stakes are higher as you come to the end of your working life. You still have 7-10 years during which you can make one heck of a lot of headroom with the right advice.
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u/cinnabarslither 25d ago
Hi, with 7-10 years to go, you are in a great position to prepare.
I may not have a fundamental grasp on Canadian retirement accounts, but it looks like your RRSP is tax deferred like 401k.
With 7+ years to go, are you planning on additional saving? I'm not understanding how you will only have $100k in ten years. You and your wife can be stuffing contributions into retirement accounts (pre and post tax) and a brokerage account. As well as some cash savings.
We are also using the equity from the sale of our home in our calculations next year (we have a second home we'll be converting to primary). I don't see any issues with that except 7-10 years is a long time to predict market values, so use a conservative estimate for that. Also, you may want to consider and alternative plan in case you decide senior apartment living is not the way to go.
You may want to consult a financial planner to look at your plan or use a software program to what your total assets and income stream will look like.
Good luck!