Category Archives: Retirement

Financially Independent

Financially Independent (FI) is the twin brother (or sister) to early retirement. Different package, but the same toy inside. You have enough money to not work if you so choose.

During my lunch break yesterday I can across a series of three posts on the attitude to achieve financial independence over at Violent Acres. They were vulgar, in your face, but true. Here are the three posts Part I, Part II and Part III.

What really got my attention, beyond the writing style, was in Part III there was one phrase that said “I guess the real question is: How bad do you want it?”

And that is the real test of wanting FI or early retirement. You have to understand how badly you want this dream of yours compared to everything else in your life and commit yourself to making that dream come true. Otherwise your plans will always seem to fall apart on you regardless of anything else. You have to find your motivation and commit yourself.

Do you withdrawl your RRSP’s early?

I was reading an interesting story early this week about 40% of Canadians withdrawl from the RRSP before retirement. The top reasons for those who use the funds were to pay for a house downpayment (37%) or cover living expenses (20%).

The article presented this as something bad rather than putting it in a good light. Out of the 1026 people surveyed most (60%) never pulled out anything from their RRSP’s. Out of those who did about 152 people used it to buy a home, which is good thing for retirement planning in my mind. Then that leaves about a mere 82 people (out of 1026 or 8%) who used the RRSP’s to cover living expenses, which is not a great idea. So 92% of us are doing the right thing with our RRSP’s overall.

So why was this even a news story? You might want to notice who did the survey, the Bank of Nova Scotia. Perhaps they like to sell you some more RRSP’s this season. Keep your eyes open everyone we are going to be drowning in “stories” about retirement savings over the next few months.

Retirement Savings Burnout

Every once in a while I just feel depressed about trying to save for retirement. For example during the income trust disaster last Oct, I got hammered in my taxable account and I still had some expenses related to my move in the summer draining the last of my savings. I felt broke and was wondering what is the point of trying to save when something just happens to mess it all up.

At times like this there is no one size fits all solution. Some people get a good night sleep and feel better. Others play with the kids or visit some family or watch a movie. In my case, I find I often have to take a break from the retirement planning books and stop playing with savings calculators. Once I have some distance from it all I tend to feel a bit better.

There is only two truly bad ideas on how to feel better: spending your way out it or stop saving. Both are doomed to create more problems in the long run. After all getting to early retirement is a bit of a marathon. You save for years to reach your goal and sometimes that finish line might as well be at the other side of the globe. For some people, short term goals can help avoid burnout. First save $100, then $1000 and then $10,000. Small steps that keep you heading in the right direction. I’ve read from numerous people that the first $100,000 is the worst to save and after that you really start to see compounding work its magic.

So don’t worry if you feel a bit of burnout while saving once in a while. It’s hard work some days, but the payback will be worth it.