Archive for Early Retirement

Debt A Four Letter Word

 

This is a re-post From September 18. It is still current and I feel since Santa Clause is arriving soon and there is so many advertisement to buy and consume, I thought this re-post on debt was justified. Also a new report came out last week Canadian Households lead the world in term of debt

 

“Debt” A four letter word

My first Word of the week was Debt. I choose that word because it has the most direct impact on financial independents. There is good debt and bad debt, unfortunately most households have a lot of the bad consumer debt.
Canadians have never owed as much as they do now. Debt continues to grow at 3 times inflation and is rising at four percent year over year. The latest numbers from Statistic Canada indicate that household debt now stands at 167.8 per cent of disposable income, a record high. This suggests that, on average, Canadians owe $1.68 for every $1 of disposable income. Statistics Canada.

Another new survey by the Canadian payroll association suggests almost half of workers are living pay cheque to pay cheque due to soaring spending and debt levels. The poll found that 47 per cent of respondents said it would be difficult to meet their financial obligations if their pay cheque was delayed by even a single week. The survey, which polled 4,766 Canadian employees, also found that 35 per cent said they feel overwhelmed by their level of debt. For the first time, more respondents found mortgages the most difficult debt to pay down, with 32 per cent of respondents selecting this option compared to 23 per cent who cited credit card debt.

Some economist feel that household debt is okay as net worth has risen with the debt level. Other economist see a bigger problem as the very wealthy and investors have added to their net worth, where lower and middle income earners have fallen behind. It’s not just Canadian households debt that is high, there is the federal and provincial debt. When we do get a recession both provincial and national debt will explode higher. Check out the national and provincial debt clock.

The Canadian national debt clock shows, as a country what we owe, your share, debt per day, and per hour. It changes so fast I will give you the link here National Debt Clock 

The provincial debt clock shows what your province owes as well as your share Provincial Debt Clock

When we combine household, provincial, and federal debt, Canadians have a lot of a four letter word. “DEBT”

“Savings are a gift to the future, Debt is a burden on it”.

Ernest Hemingway Quote  “How did you go bankrupt?
Two ways. Gradually, then suddenly.”

Just For Fun !! World Debt Clock US Debt Clock

How much is enough, why I am not working till 65

How much is enough

The toughest part of early retirement is knowing when you have enough saved to retire comfortably without running out of money. Working longer prevents this problem. The big question is how much is enough? Early retirement opens up a lot of opportunities, but obviously the longer you work and save the higher your net worth is.

I think the “living to work” mindset plays into people wanting to retire later even past the standard 65. I have known several people who believe if they’re not working they have nothing else to fulfill themselves.

If you live in Canada the average life expectancy for a male is 79 years and a female 83 years. For a couple one out of the couple can be expected to live well into his/her 90s or longer. Statistic  Canada

Back in the early 1900’s when a lot of Social Security started life expectancy was 50 years, so not many lived long enough to collect. In 1927, the Federal government introduced the first old age pension.

In 1965, the Federal government further reformed the public pension regime when it introduced the Canada Pension Plan (CPP). That’s how we have the standard 65 years of age for retirement. Canada Income System

Why I don’t want to work until I am 65

I am sure you have heard the saying 60 is the new 40, but is it really ? Maybe 60 is, but I have noticed that once you get into your 70’s you don’t want to travel as much and health can be an issue. Travel insurance is expensive and most retirees want to slow down and stay closer to home. There are exceptions, for most retirees by the time they are in there 70/80s they start having mobility/health issues.

Some experts discourage people from retiring at 65 and suggest working a few more years to fund their retirement. That would help some people financially, but that’s not for me. I would rather save more now and have a longer more enjoyable retirement. I want to travel and RV. Once I am in my 70’s I will probably prefer to stay home or easier traveling like cruises or all-inclusive packages.

“I would say the greatest gift is time. Money, real estate, stuff, can be bought or stolen, but you’ll never get an extra hour back,”(sorry I don’t know who the quote came from).

Final Thoughts

Only 5-10 good years of retirement after 45+ years of working sounds like a poor trade-off, that’s why I will not wait until I am 65 to retire. I will be a little more frugal and delay gratification now, save as much as I can so I can retire early.

 

Don’t wait for retirement to enjoy life !!