The Second Opinion – Part I

Well I’m been trying so very hard not to be jumping the gun on this, but I can’t help but discuss part of what I’ve been up to lately. You see a while back I got idea a second opinion on my retirement plan might be a useful. After all I am aware I’m just doing my best estimation of my plan, but I could be missing something big.

Now I just needed to find an adviser that I could trust. That led me to contact Preet Banerjee a fellow blogger and author of the RRSP’s book. I’ve always admired his insights and his ease of explaining a complex issue easily on his blog. Not to mention the man has a certain style of writing that makes it feel like a conversation as you read his blog.  Preet has the option of paying him by the hour so I asked about getting an estimate to review my plan. I won’t sugar coat it and say Preet is cheap on an hourly basis of $400/hour, but so far I would have to say he is worth ever damn penny of it!

I’m not completely done the process yet, but we are winding down. What we did was basically input my plan I outlined in my How Much Do I Need to Retire series in his software and gave it a run, plus I also gave Preet a few of my backup plans to model as well in a couple of scenario cases.

The results were fairly eye opening. First off on to be fair we used all the same parameters I had in my series, but with a bit more detail. We didn’t model the use of TFSA (namely because Preet’s software hasn’t been updated for that yet) and we used 1.5% inflation and 8% return on my investments (assuming 4% from dividends and 4% from growth).

The good news is my base plan is good to go. Keeping a low cost lifestyle and assuming all my guesses about my personal investment return and inflation rate are right. I will retire at 45. Wow! Nice to hear my theory has been validated by someone else as possible.

Actually once we included a few of my backup plans like downsizing my house when I retire by 20% and me making $2500/year from odd jobs and writing for the first 15 years of retirement. The picture got damn right rosy. So much so that Preet suggested I could consider changing the retirement date to my 44th birthday.

On the other side I had Preet run a doom and gloom scenario where I didn’t downsize the house, I didn’t make any income in retirement, my investments only returned 6% and inflation was at 2.5%. That resulted in me having to delay retirement till age 53.

So I will retire early. The only thing up for debate is exactly when I leave work which will depend on my personal inflation rate and my rate of return on my investments. That’s extremely comforting to know that.

The other thing that was very comforting in this exercise was I wasn’t putting every bit of our savings towards retirement. We had assumed any extra that I make beyond my current saving is being spent. We even managed to plan in RESP accounts for the kids to provide $40,000 each in today’s dollars for their education. So it is not like I’m not going to live a bit today as well as plan for the future.

Well that wraps up Part I of my review of Preet’s second opinion. I’ll write up the remaining bit of the review next week.  Yet so far I have to say Preet is excellent to work with.  He provides lots of useful information and is very willing to explain anything you have questions with.  So if you think you need a hand with some planning I would suggest you contact him.

5 thoughts on “The Second Opinion – Part I”

  1. Jordan,

    I’m not done yet so I can’t say the total amount. I will say if your going this route consider the amount a long term investment. Yes you are going to pay a lot up front, but I’m walking away with a long term plan to follow for my investments and a series of simulations that confirm my own work that I can retire early.

    The service would more easily pay for itself if you had a larger amount to invest since Preet’s plan would likely reduce your fees (by switching you over to ETF’s if you were still in mutual funds).


  2. Tim

    I have been tracking my plan for a few years and as I approach the decision point I am increasingly looking for a second opinion. Every time I begin a dialogue with someone about vetting my assumptions and caculations they end up talking about investment “advice”.

    Plan separate. Implementation separate.

    Your post began with a second opinion about your plan. Your comment to Jordan ended up in ETFs.

    Does anyone focus on giving a second opinion on the plan?


  3. ARW,

    I imagine Preet could just give you a second opinion is that is what you wanted.

    I didn’t want to give too many details of what I’m doing with Preet since we are not done yet. Also I don’t want people to assume that my experience will be the same as theirs. Afterall the more detail plan you have the less time Preet will need to get the information he needs out of you.

    I’m currently at about 4 billable hours with Preet.

    Hope that helps,

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