5 04 2011

Time to sell by bikes and start to golf?

I’d like to retire…not today, but someday not too far off. I’ve been thinking about what retirement means to me and what I want from being retired.

My vision of retirement:

  • not being stressed about making money
  • not having any major debts to pay
  • being able to travel at least 6 months of the year
  • staying fit
  • being able to do the stuff I love
  • having a comfortable place to live
  • having access to decent medical services

I’ve been playing with retirement calculators trying to figure out how much I need to save to get a modest investment income. The result is a large number as I have no pension or other external source of income aside from the money I’ve saved from my personal income. I could save more each year, but I also believe it’s not smart to assume you’ll ever get to retirement and work exclusively for that. I could die anytime and I want to spend money now to travel, do the things I love which includes futzing with bikes/gear. I think you need to strike a balance between what you save and what you spend so that neither is out of control.

So I gave my retirement assumptions some consideration and realized that I didn’t really want or need to stop working, but I did want to work less and be less stressed about my job. I like interacting with people and I like where I am living – especially in the late spring/summer/early-fall.

So my plan looks something like this:

  • Phase 1: Saving – right now I have a target amount of $$ I want to put away that works with the rest of my plan to give me a modest income down the road.
  • Phase 2: Semi-Retirement – once I’ve saved my goal $$ and those investments are growing I can stop working fulltime, stop saving $$ and switch to a 6 month travel/6 month work cycle where I just need to earn enough to cover my living expenses.
  • Phase 3: Full-Retirement – when I am ready and my investments have grown to another goal value I can stop working completely.

Piggy bank it!

What I like about this plan is that the savings goal to get to semi-retirement isn’t so crazy that it’s not within reach. It also allows me to be flexible if my investments do better or worse than anticipated or something else comes up. Perhaps more importantly it gives me some benefits early so that if I don’t live to retirement age I haven’t been saving all my life for some abstract never to be seen phase of life. I am hoping that the ability to work less and/or work doing stuff that I really like will allow me to keep my physical and mental health at a high level. There is no point getting to retirement with a broken body and a bad attitude!

A few things that have become very apparent to me during this process are:

  • simple needs/wants makes for a much easier life. If your idea of a kick ass vacation is camping for free on a beach in Mexico kitesurfing once you’ve bought your gear your daily expenses are ~$20/person = $600/month.
  • if you want luxury it’s going to cost you! Staying at a fancy beach resort in Mexico can run you $300-$400/day/person = $9000-$12000/month.
  • if your ideas of fun involve a lot moving your body not only is that often a low cost way to spend your time, but you’ll likely stay healthier which is cheaper in the long run and improves the quality of the rest of your life.
  • with a positive attitude you can find a way to be happy in most situations.
  • with a bad attitude you’ll have a miserable time in paradise.
  • save money early even if it’s just a small amount and let it grow for as long as possible.
  • trying to save/invest close to retirement is way harder since you don’t have the time to let investments mature long enough.
  • there is always someone richer than you to compare yourself to and always someone poorer than you.
  • appreciate what you have in terms of loved ones, health and material things.

I do realize that is all just a theory at this point, but without some sort of plan you just end up where the currents of life take you so I like the idea of working towards an achievable goal. If things don’t happen exactly as I had hoped that’s fine. Part of the process is to reevaluate where things are at every year and adjust accordingly.

One thing is for sure you can no longer pretend you are a young guy when you are playing with retirement calculators!!!…=-)~



14 responses

5 04 2011

Sounds great. I have a similar plan, but far more difficult, complicated by the need to get some kids educated and out of the house!

5 04 2011
Steve Park

This sums up my entire outlook too.

The balanced simple living concept is key. Allow yourself to enjoy the present, but do it in a selective way that allows wealth to build for future. With this lifestyle I too hope to semi-retire before long. Though I’m not sure I’d ever stop working completely because there are many jobs that could be rewarding as part time work and there would still be tons of time for family, outdoors, travel.

5 04 2011

I wish you the best of luck, but your plans rely on a stable economy and government. All you need to do is a little research into peak oil and the current unsustainable economic situation in the USA (which will affect Canada regardless of whether Canada is in better shape or not) to see that we are heading for collapse. The only two sensible plans for the future is either to enjoy life now and hope for the best, or to learn how to grow your own food.

5 04 2011

Paranoia doesn’t make the present or the future any better.

I am enjoying my life now. I am investing in the existing system.

And should something occur to change that system I’ve got the skills I developed as a military officer and professional engineer to rely on.

Personally I’ll leave the freaking out to the folks that want to spend their lives afraid. Recall the global nuclear war paranoia? What did that do for the folks in their backyard bomb shelters except give them ulcers?

5 04 2011

I really like the have a heart attack on the golf course at age 65 plan. So much less saving to do. Really, what is that ad on top selling? Is it selling church? I can’t figure it out.

5 04 2011

Yeah for the simple life! My wife and I are on a similar plan and hope to be at that point mid next year. Among the more extreme parts of our plan, we plan to reside in a 130 sf house on wheels that’s paid for 🙂

5 04 2011

Also, in regards to Thor’s comment. I don’t want to give you something else to worry about, but if the economy does collapse and people can’t get food. Guess where they are going? Your garden.

6 04 2011
Early Retirement Extreme

The balance between saving and spending can often be moved by reconsidering the biggest expenses that most people have: housing and cars. Would you rather live a one hour commute away and have 3 extra bedrooms or would you rather have 40 more years to do what you want. The choice is fluid. You should check out the “finance” pages on They have been biking around the world for the past 8 years full-time after saving 75% of their income for five years—they lived in an RV while renting out their house and commuted by bike. I did something similar so I never have to work for a living again. The thing about the “balance” is that “spending” is quickly forgotten, but savings and investments are forever. A friend and I are planning a coast to coast ride next summer (2012). In my opinion it beats two week vacations and extra bedrooms 🙂

6 04 2011

@Jacob – good points. I live in a modest cottage and I could have a less costly vehicle, but 1) I enjoy the one I own and 2) my goal isn’t to retire as fast as possible. I did pay my truck off in under 2yrs so that I didn’t pay a lot of interest and also so I felt the pain of the purchase fully to keep me honest. I’ll keep it for 10-15yrs so I can focus on saving $$$ now until the next time I need a vehicle.

I mostly spend money on travel and gear after housing/vehicle are removed from the equation. Although the travel is ephemeral I have great memories and experiences from that $$. My gear tends to last a long time since it’s quality stuff and I sell what I no longer use.

6 04 2011

A very well thought post, however, here are some thoughts from someone who has already gone down this path.

I first retired at 43 some 13 years ago now. True, up until then I had a well paid job and had amassed a good deal of savings.

Then the economic downturn came and I was forced to go back into part-time work.

I now work 12 hours a week just to keep myself “ticking over” and do not have any money worries.

Your savings/investments are never guaranteed. Savings can be eroded by inflation being higher than the return you receive. Investments are only worth what someone is willing to pay you for them at any point in time. The value of investments can go down as well as up.

To retire/semi-retire, I would advise:
1) Plan to minimise your retirement outgoings. For example, rather than building up your savings whilst still having a mortgage on your home, pay off any debt outstanding on your home. Then if things get bad, you do not have on-going accommodation expenses. Eliminate all other debt before retiring e.g. credit cards etc.
2) Adjust to a lower level of living expenses before you retire. By doing this, it will not come as a shock if and when you are *forced* to reduce you outgoings. I installed solar panels at a large up-front cost knowing that it would reduce my energy bills for decades into the future – it helped even out any unwelcome increase in future energy cost rises. Similarly decisions will help you to eliminate future financial uncertainties.
3) Keep whatever work skills you have up-to-date after you retire. Then, if it comes to the worse, you will still have marketable qualities.
4) Adjust your outlook prior to retirement. Actually, having the latest gadget is not all that important once you accept that, 12 months on down the line, that very same gadget will be old hat.

I have never regretted my decision and enjoy 3 holidays every year. I am firmly of the opinion that travelling is so much more fun if you undertake it before you become old and infirm.

Good luck with your planning and enjoy your retirement!

6 04 2011

@Funchal – you make good points and ultimately nothing is guaranteed your investments might grow just fine, but you could be hit by a taxi when you are 43 and never see a penny from them. I don’t have any debt other than my mortgage. I would pay off my house first, but interest rates on investments is better at the moment than the mortgage rates. Although I still spend money on things that are not absolutely essential having started the process of retirement planning puts expenditures into perspective. Having a savings goal that I can reach in the nearer term makes the choice to spend $2K on a bicycle vs. putting $2K away in savings so I can stop saving faster is a useful comparison that has steered me away from some purchases. I will still buy a couple bikes a year, but OTOH I don’t own a sofa or any furniture beyond my bed and my office desk.

One thing I am not interested in is living off a very minimal amount of $$ as some sort of challenge to myself or so that I can retire earlier. I think a better approach is to spend money and enjoy the time I have right now while saving responsibly towards a short term goal.

I am lucky that without kids or any debt I can already take 3 months+ off a year and most of that is paid since I can work while traveling.

6 04 2011

“I would pay off my house first, but interest rates on investments is better at the moment than the mortgage rates” – Count yourself lucky on this one. Currently, I get a minimal, after tax, interest return on my savings 😦

“One thing I am not interested in is living off a very minimal amount of $$ as some sort of challenge to myself or so that I can retire earlier.” – For me this was not a challenge, I just wanted to retire as early as possible as I was in a very demanding job. True, I enjoyed what I did, but the pressures meant I didn’t want to become “burnt out” before I retired. But, every case is different, whatever works for you is obviously fine.

“I am lucky that without kids or any debt I can already take 3 months+ off a year and most of that is paid since I can work while traveling.” – This sounds like you have got point (3) above sussed then. I have had to make a positive effort to keep in touch with the field I specialise in.

Keep us updated with how your plan unfolds. It’s nice to be able to read opinions from someone who has a similar outlook in life to mine. The people I used to work with just could not understand where I was coming from on this one. They seemed obsessed with their affluent lifestyles and amassing more possessions and a bigger bank balance than they already had. To me, it seemed that they would never be happy, no matter how much they had, they always wanted more.

6 04 2011

“To me, it seemed that they would never be happy, no matter how much they had, they always wanted more.”

@Funchal – good observation. In my experience people are either happy or they are not. You don’t become happy because some external thing happens.

You can improve how happy your are through various techniques [ie. yoga, meditation, etc…], but not by amassing $$ or getting a promotion at work.

8 04 2011
Pamela Murray

If you are used to living on half your income, you will adjust to a simple lifestyle and can accumulate money to invest. As for investing, the key is to not lose money. Don’t go for the homeruns. Go for singles that accumulate into runs in. It’s not rocket science but most people make it far too complicated. If you do the math, you’ll see that anything over than a 20% loss in one year kills your overall performance. Pretend you lose 20% the first year and see how long it takes you to recover then do a modest return over the same time frame. You’ll see it’s the tortoise that wins the race.
Good luck,

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