This is a guest post from long time reader Gary Daniels.
We retired in 2006; I am 66 and my wife Margaret is 63. We started collecting CPP at 60 and of course OAS at 65.
We’re now in our 7th year of retirement and we are very happy (although it took us three years to get used to not having a regular paycheque!)
We are also debt free.
We’ve made plenty of mistakes; the worst of which is being over budget each and every year due to either an unrealistic budget or too much travelling!
Make A Plan
Preparing for retirement was partially a guessing game. We knew three things:
- We wanted to travel — we love cruising and camping;
- We wanted to escape the snow and cold in the winter months;
- And most important we wanted to be part of our grandchildren’s lives.
All three required savings, as being self-employed we had no pension plan beyond CPP and OAS.
Our only option was RRSP’s.
Today we have TFSA’s, which in my opinion are as or more important than RRSP’s.
If we need a lump sum we’ll either cash in RRSP’s, which have tax ramifications, or use our non-registered savings.
With TFSA’s you can build up a nest egg of tax free savings even when you’re withdrawing from other sources.
My wife always calls it the “better than diet”. Instead of eating two butter tarts, just eat one.
Making The Budget Work
Our first decision was to move closer to our grandchildren; into a retirement community, not a high-priced condo.
Our trips are researched constantly for the best deal, and the purchase of a fifth-wheel is certainly much more frugal than buying a house in Arizona.
When we retired in 2006, we received monthly income from the company that bought our business. That ended in late 2008 so our RRSP’s were left untouched until then.
It was a stroke of luck that 80% of our RRSP’s were in GIC’s and the balance in monthly income funds. The markets tanked and we were basically left unscathed.
We originally planned to keep two to three years ahead in GIC’s, but we need more income from our investments than GIC’s can provide. Remember the years of 10 – 15% savings interest rates? Oh, to have those rates today we would be on easy street!
But interest rates got so low that we decided to put half our portfolio in monthly income funds and half in dividend paying stocks, which we started buying in 2010 after reading Boomer & Echo.
We hope that if the markets go south that not every company would cease paying dividends – which they didn’t in 2008-2009. It’s a bit of a gamble, but life is a gamble.
Thankfully, having no debt affords us the ability to TRY to live within our means.
Travelling In Retirement
We love to travel. Each year we find a trip we would love to take, but of course we’d never budget enough so our savings take a hit.
We certainly won’t be the richest people in the graveyard. Our two kids have done well so an inheritance is not expected; it would just be a bonus.
Travel while you can because you don’t know what’s around the corner. As you get older, health insurance becomes very expensive and if your health deteriorates then look out!
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We are in Myrtle Beach, SC right now in our ‘tin can’ (fifth-wheel) looking at the ocean. It’s economical, and best of all – no snow!