This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.
I made some terrible bets on the Super Bowl this past weekend. At the time I made the bet, everything seemed to make sense and I thought I was in a position to come out way ahead for the year with football betting. Unfortunately, the game did not go as well for me, either as a fan of the New England Patriots or as (I would term it) a somewhat degenerate gambler. On the plus side, my homebrew beer was delicious, as was all of the food I ate (probably too much) so my Super Bowl was fun, it just didn’t add very much to my retirement fund (which is why I don’t bet very much at all).
As far as gambling goes, the stock market is consistently a gamble – making my retirement plans somewhat risky as this is where I am hoping the majority of my cash will be coming from to fund my retirement. I’m hoping that in the 10 years I will have to invest, and the 40-some years I’m hoping to live off of these investments there is no significant collapse.
In the off-chance that I invest in stocks the same way I bet on this year’s Super Bowl (and capitalism has carried on) I do have a backup plan. In my retirement fund calculations, I have not included some funds that will be coming in. On top of my retirement savings, there are three sources of income which may be added to my retirement.
The first source is my work pension. I work for a crown agency of the Ontario government and have a defined benefit plan, which at this point is fully funded. Right now, I have no plans of leaving this company in the near future. This source should provide a significant increase to my cash flow at age 65.
The second source is Canada Pension Plan income. From everything I have read, this is a relatively safe bet, even over 30 years from now. If for some reason it turns out that the statements Prime Minister Harper made that CPP is “fully funded and actuarially sound” is not, I’ll still be okay. If this pays off, there will be a considerable boost to my retirement account.
Finally, and the one source I am not sure of is Old Age Security. Depending what you believe and what happens over the next 40+ years, this potential source of income may disappear.
Added all up, after age 65 I should (hopefully) have a considerable buffer in monthly income. I will be fine without these, but felt it prudent to not include this income – which I really have no control over.
What do you include in your retirement calculations? Do you have any “extra” sources of income that may be a buffer after age 65? (Or whatever age retirement will be in the future).