Wednesday, 28 August 2013

Retirement Goal

I've been hemming and hawing over putting a new financial goal in place now that I have my car savings and my emergency fund fully funded. So I've decided to bite the bullet and go ahead and make a retirement goal. It's not set in stone by any means but it does give me something to shoot for.

If you take a read through my other retirement posts you'll see I'm not sure what my life circumstances will be when I am ready to retire (or even when I'll be ready to retire!) So I'm assuming that I'll want to retire when ever I am financially able and that I will just need to support myself.

I currently spend about $1,400 per month on average, I'll plan for a slight increase in that amount since I may want a car and some travel money. In retirement I will shoot for $1,700 per month net, which is $20,400 per year net. With current tax rates in my province that would mean I need to gross $24,480 per year in investment income. I also need to have my house (worth $191,000) paid off.

If my withdrawal rate is 4%, then I'll need $612,000 in savings to generate my desired monthly income. In other words between my house and my savings I will need a net worth of $803,000 to retire. My current net worth stands at $143,975.97.

It's hard to get time lines because I'm not sure what to expect in terms of raises but my investment calculator makes 40 seem like a reasonable age to be ready to retire. In order to make it a SMART goal I'd have to say:

I will be able to retire when I am 40 because I will have my house paid off ($191,000) and I will have $612,000 in savings.

Goal:  $803,000 by November 2029
Current:  $143,975.97


  1. Sounds like a great goal, and very Mustachian of you (or any of the other early-retirement/financial independent bloggers).

    It seems steep - I am assuming you're around 25-30, so 10-15 years to get up to $600k would be 40 - 60k per year, not including investment growth. And then you have to think about where you put your investments if you intend to retire early because you don't want tax penalties.

    I'm looking forward to seeing how this goal progresses.

    1. Yes, I am a Mustachian and proud of it : - ).

      Age is 23 so about 17 years to go until the big 40. My current RRSP/LIRRSP amount is about $23,000, with $359 a month being added. Once my house is paid off (4 years and 3 months) I'll be able to boost my savings to at least $2,000 a month. At an interest rate of 7% given my current portfolio distribution.

      Most of my savings will be in RRSP/TFSA but will inevitable spill over into non-sheltered funds.