Welcome to my net worth posts where I try to prove to myself and you that I wasn’t crazy for leaving work in the fall of 2017 to start my early retirement. A few important notes: we are mortgage free and our goal is have our income/investment gains exceed our spending by 102% on a 12 month rolling average (the extra 2% is a buffer for inflation).
Wife’s RRSP $91,390
Wife’s TFSA $85,380
Wife’s Taxable $42,800
High Interest Savings Account $29,290
Investment Net Worth $596,220 ($6100 increase over last month from investments)
To keep things simple I’m only going to track what income comes into our main ‘house’ chequing account. I won’t be tracking my wife’s or my businesses income as those don’t really matter until the money moves over to the ‘house’ account. Also I won’t track investment gains since that is covered above.
- Wife’s Monthly Payment to House: $550
- Child Tax: $340
- Interest $28
- Total Income: $918
Last Month $2942
This included $1024 for dental work (mostly cleanings) and we started our Christmas shopping ($610). So other than those two item not a bad month.
Net Worth ~$991,220
This Month Investment Gains & Income/Spending Ratio = (6100+918)/2942 = 2.39 (Target 1.02 or higher)
Dec 2017 to Nov 2018 Invest Gain & Income/Spending Ratio = (-27588+16507)/33428 =-0.33 (Target 1.02 or higher)
This month was slightly better after the disaster of Oct 2018 but I am still down overall for the last year with a negative ratio result which sort of sucks since I have to take out some cash right away for next year.
The other factor that kicks into play here is my ratio is based on a 12 month average so I just stripped out the results of Sept, Oct, Nov 2017 which were really good so that made the results look even worse. If you put those back in the overall decrease in investments since I retired is only $3641.
I’m still not in needed to use a backup plan mode here so while it sucks it isn’t terminal to my retirement plan.
(click to make bigger)
Well with the Christmas over you might be focused on cleaning up the cardboard and packing up the tree before getting ready for the New Year’s fireworks. Yet this is also a good time of year to get some financial items in order before the New Year hits. The good news is many of these items only take a few minutes to take care of.
For retirees like myself you should consider pulling money from your RRSP and/or your TFSA for living expenses for next year. Why now? Well with the TFSA if you pull the money out now you regenerate the contribution room on January 1. Which may come in handy if you want to shift money around and maximize your TFSA to reduce your long term tax burden. After all, why keep money in a taxable account when you have contribution room in an TFSA? I would rather pay a small capital gain now and reduce the long term tax liability.
As to the RRSP, the fun part of those funds is if you have no other income for the year you can pull money out of it up to your basic income tax deduction and pay zero tax (the exact number can vary by province but generally you are safe around the federal deduction limit of $11,809 for 2018). The key point here is you eventually get your money back. You still have to pay the withholding “tax” when the money comes out but you get it back when you file your taxes next spring (it really isn’t a tax but rather an bulk estimate of income tax that is automatically deducted when you take the money out).
I already did both of those items. I pulled the cash sitting in our TFSA accounts out last month and then this month I pulled just under $7000 out of my RRSP. Which honestly felt more scary than it was…why? Because I pulled the money from the bond portion of my RRSP. That way I can ignore the noise of the stock markets which seem to acting closer to a yo-yo than anything else lately.
Finally, you might also plan to sell some of your investments, which I know sounds nuts given my last statement but there are situations where that is a good idea. For example, you might purposely sell off that dead end individual stock you own and that is worth a faction of its worth to create a tax loss which can be used to offset some capital gains from those investments that did turn out and you are getting out of. I’m personally not in this situation but it can be useful at times.
Finally, you likely want to gather any copies of tax documents you might need to get a jump on your taxes. So that might mean updating your accounting records for your small business or/and downloading digital copies of bills if you use your home for your business. Often this can be done fairly quickly and make the tax season a bit easier.
So what do you for a year end financial clean up?
So the other day I actually went to a workplace and did manual work for almost 8 hours. Did I fall on my head? Nope. Did I run out of money? Nope. I actually did it because I wanted to and I didn’t even bother asking how much I would be paid.
The job in question was actually a casual position with a local brewery. They occasionally need help with canning the beer depending on what they are doing and they put out the word a while back to the beer club I belong to. So I put my name on the list and then as they need help they just work their way down the list to find someone who can come in that day.
So I got the call at shortly after 8am and I was ‘working’ around 8:30am. The job was totally easy to learn as it was basically just manual labour for the day. My primary job was collecting beer cans off the end of the line and snapping plastic six pack holders onto them and then loading them on to pallets. I also would pull unlabelled cans off the line in the event the label marker was down but they didn’t want to stop the entire beer canning production line. During this I learned that the canning equipment occasionally has issues so dented cans or under filled ones are put aside as rejects.
Overall it was dead easy work but I sort of enjoyed it for two reasons. First off, it was nice to actually try to do something new and learn a bit more about the brewery. For example, I didn’t know they did contract brewing where they will brew and can other brewery’s beer. The second reason was a bit more obvious I was told to go through the rejects and take some home at the end of the day. The beer is fine they just can’t sell it since it is under filled. So I got 16 cans of craft beer for a day of work which at the retails price makes a bloody good bonus for the day.
Now I wouldn’t want to do this as a full time job. It’s just too much physical work for my taste but as an occasional thing I don’t mind it in the slightest. Heck, I would even be willing to do it up to once a week. Which leads me to believe that most work would actually be okay for just about anyone on a shorter term basis. The issue is far too much work is full time positions which can drive people nuts. Some people don’t want to do boring repetitive work such as data entry, or manual packing of goods for eight hours a day for five days a week. But once in while, it can be just fine.
I think the trick for work in retirement is to find things you don’t mind doing where the benefits make it worthwhile for you personally. For example, I won’t want to do manual work for most things but I love beer so if I get some as a bonus for a job I’m okay with the work. The pay is really secondary to getting to learn a bit more about breweries and the free beer. Which by the way I was $13/hour at the brewery so I got just under $100 for the day. The benefits out weigh the pay for me. Or for another example, my volunteer time at the local school library. I do it because I enjoy the work and the fact it helps the students and yes the occasional thank you gift of a book or bookstore gift card also helps. Again the benefits out weigh any pay issues for me personally. And as a added bonus I now have gotten to try two of my ‘dream’ jobs in retirement which I’m grateful for.
Now obviously everyone will have different ideas of what they are okay doing for work and what benefits matter most for you. Yet the reality is I think work can be a useful thing to a retiree as long as it doesn’t take up too much of your time. I don’t think I would be okay doing either of those jobs more than half time.
So do you see doing some work in retirement? If so, do you have any ‘dream’ jobs you want try out?