When my Millennial clients who retired as millionaires in their early 30s started doing the media thing few weeks ago, the reaction ranged from envy to hate, shock to inspiration. So many people hate their jobs, their careers, their workplace bondage and the fact you only get to goof off after you’re old, wrinkly, hormonally-challenged and need lubrication.
This sucks. So can retirement actually be advanced? Can thirtysomething kids pack it in when they reach a million-dollar portfolio? Or is this a mere media, website-promoting stunt?
Hard to tell, since life is l-o-n-g and a million ain’t what it used to be. But one thing is clear – most people aren’t ready. Many will never retire. And (as a society of house-horny people) we’ve all put way too much faith in a single asset. Not so smart with what lies ahead.
But here’s the question burning in a million minds. How much is enough? Whadda you need to depart this vale of tears, climb on a Harley and never look back?
There’s no one answer, so we’ll bring you several. The simplest way to divine the future is to use one of those fancy online retirement calculators (hundreds exist), but because life is messy and ever-changing, and you might croak way too soon (or way too late) having some simple, changeable metrics is not be a bad idea.
Well, if you want really simple, how about this?
This is a formula that US giant Fidelity Investments came up with for determining how much in savings/investments you should have at various stages of your life. So, if you’re 45, and make a hundred grand, you should have liquid assets of $350,000. A decade later, the total should be $500,000, unless you got a raise, in which case bump it up.
The goal, says the company, is to replace 85% of your working income with retirement income. (Some experts question that as being far too high a replacement amount.) Some good news – you should include government pension benefits in your calcs. This does not factor in two incomes, assumes retirement at age 67 and that you will live 25 years after that. Shorter, if you buy the Harley.
Now key to what you save is what you spend after you stop working. So my Millennial protégées with a million, and a hankering to visit every den of iniquity known to man, will have to live on air for a good portion of the time. But they’re young. Semi-poverty is far harder as you age.
So what’s a safe withdrawal rate? Traditionally most advisors said 4%, so if your portfolio is growing by that amount, the principal is preserved. If you opt for 2% GICs, you enhance the odds of running out of money. To determine what you need to save, divide the annual income you want in retirement by the withdrawal rate. For an income of $50,000 with a safe withdrawal rate of 4%, you need to save $1.25 million. If you can average a 6% long-term rate of return, that drops to $830,000.
Another formula often used: the amount you need to retire comfortably and last your lifespan equals 11 times your final salary. Or you can calculate how much you need to save every year based on your age, income and standard of living according to guidelines published by the Journal of Financial Planning.
Here is the formula for somebody who’s 40. If you earn $80,000 a year the plan suggests you should be saving 19.8% of your gross pay. Gasp. The last column adjusts this savings rate to reflect money you have already out aside – so for every $10,000 you’ve stashed in a TFSA or an RRSP, you can reduce the savings rate by .42%, at the income level of $80,000.
The more you make, of course, the more you need to save since replacing your income becomes a more costly exercise. Also remember that government pension pogey is clawed back at an income level of not much more than $70,000, so it you’ve earned $150,000 and want to retire on a hundred thousand, your pool of savings must be larger.
Lying behind all of these little calculations is the assumption that money will continue to grow, perform and multiple during your entire life. Investors in high-interest savings accounts, GICs or an all-bond portfolio better have a lot more accumulated than those with balanced portfolios which include exposure to growth assets like equity-based ETFs. While rates will creep higher in the years to come, almost nobody will be able to live off interest alone. The greatest risk for those most afraid of risk, ironically, is outliving their money.
Finally, a house is not a retirement strategy. But nobody believes me. So good luck.
190 comments ↓
FIRST
Most Government Workers and Teachers retire ‘on the job’.
First! Praise the lord.
Is that Jimmy playing the guitar ?
Thank you so much for this Garth…off to enter data into the calculator.
The question is, is a GIC even safe in Canada? Will CDIC protection even protect you?
first for once
So, if you’re 45, and make a hundred grand, you should have liquid assets of $350,000. A decade later, the total should be $500,000, unless you got a raise, in which case bump it up.
++++++++++++++++++
So does that mean I can quit my job earlier if I have more saved than that, ie $500K at age 50?
Thought provoking numbers.
Thanks Uncle Garth.
“So, if you’re 45, and make a hundred grand, you should have liquid assets of $350,000.” Shouldn’t that read $300,000 ?
Boy a one legged guitar player it’s going to be rough!
Took a walk over the long weekend.
Many would call it a hike.
3 hours in, three hours back out, off of Forbidden Plateau, to Cruikshank Canyon.
The view rivals any other and the company was great.
Cost me maybe $10 in gas to get to the parking at the trail head and some oatmeal raisin cookies.
Retirement doesn’t have to be expensive at all…if you are happy and comfortable in your own skin.
Now, if you have to travel to Africa to kill lions…that is a different story then.
http://www.huffingtonpost.com/lisa-bloom/why-the-new-child-rape-ca_b_10619944.html
Whoops!
please kill the link in my previous post…that isn’t why I’m here, it was to email to a buddy…I’ve been hacked, I didn’t mean to ctrl-v, I slipped on a banana peel, I actually am not really sure how I did that but…just remove it.
Great article in my opinion. I highly doubt the average schmuck can be that disciplined to save $$$ over such a long term for retirement. In our ponzi economy based on mass consumerism, everything on credit & uber low interest rates, the jig is rigged against folks who save cash. Not to say it is impossible. However when polls after polls will indicate that most Canadians are living pay cheque to pay cheque, something gotta give.
Having said that I took the “glass is half full/empty” approach and decided to become semi-retired last year at 52yo, sold the house, paid my debts, drive a paid for 6 year old car and now rent a small home 600 kms from where I used to live (North Bay, On) and now work part time – 24 hours/week – which provides all my wife (she does not need to work) and I need. For now.
One day interest rates will climb, homes will get cheaper and our lifestyle will improve…
I am amazed as I try to tell people to save 10 to 20 percent of their income in an savings plan for retirement. They just stare at you like what?
I just don’t understand the mentality to spend and live like no tomorrow. I think the government should force all Canadians to save 10 to 20% of their income in a mixed RRSP and TFA, and as an incentive the government can match your savings or some form of tax incentive. And then slowly clawback CPP and OAS till it’s no longer needed.
Here’s a good example my wife’s death I at the beach today, and watch two 20 something backup a nice big truck with a boat. We wondered how they could afford it? And this is middle of the day! Simple the borrowed the money.
So what’s the answer?
Spend and enjoy life now or save and hope for the best?
As I witness typical Canadians we will,spend and die poor. Good luck
when polls after polls do indicate, not will…
Thank you.
“If you earn $80,000 a year the plan suggests you should be saving 19.8% of your gross pay. ”
——
Tomorrow you can write a column how to do that in Toronto, for example, when you have kid(s), instead of a dog.
Thanks, Garth! I was just trying to figure this out, but I wanted to be able to deplete the capital as well. So would a 6% withdrawal rate be safe if you did this? No need to leave anybody anything! Not that I’m tight, just kinda alone in the world. Sad sigh…
Friend of mine is in Cowtown this week on family visit.
Was at a party with a bunch of old school friends he hasnt seen in years.
One guy just bought a house in a subdivision thats been stopped….his view from home( and yes I was sent pics)…. is of an abandoned construction site in the front , side and back of his house…… Oh. And he was just laid off. Never saw it coming.
That started a conversation at the party. Out of 30 people…9 have been wacked in the last 3 months…..
This recession could be long , cruel and deep.
Trades people in BC….prepare thy selves.
I am tired.
That’s one way of looking at it, I guess.
I prefer my method though:
1. Own a house with no mortgage. Do not mortgage, or borrow against the house, for any reason, ever
2. Do not deplete your capital. Live off the distributions only. Never encroach on capital.
This is a very possible way to live, even if you are not retired and still want to work a bit (ie, if you get bored).
To draw $40,000 per year, you need to have a million invested at 4% (which is incredibly easy to do – you can do it with blue chip dividend stocks or blue chip ETFs right now).
People say “there’s no way I can live on $40,000 per year!”
Well, consider that some of that is in a tax free savings account (no tax on the distributions), there is a tax credit for the distributions that ARE taxable (meaning $40,000 per year earned off of dividends is more money, after taxes, than $40,000 per year earned working), you can split this with your spouse or partner ($20,000 per year each, just have each person own $500,000 of the dividend paying shares), and YOU HAVE NO MORTGAGE.
No mortgage. That is the big one. There is no $5000 per month payment on your million dollar house. When you take away the mortgage, all of a sudden 40K is a lot of money.
And you can do better than that (I am doing around 6.0% on my distributions right now, but I take more risks than some)
Very straightforward calculator:
https://www.calcxml.com/calculators/how-long-will-my-money-last
Where is the chart for the happily married people.
Couldn’t a couple that share everything including a toothbrush and underwear live on a lot less than a lonely old dude?
Like Freedom First for instance…
M42BC
#2 Randy – what does ‘on the job’ mean? That those gov’t workers/teachers referred are still working but doing nothing? Old school thinking & not true. If kids are not learning, it could be the teacher, but is far more likely that the child in question isn’t trying to learn or has a learning disability. You can lead a horse to water & all that. As for gov’t workers, yeah, yeah, they don’t work as per popular culture. But somehow – infrastructure is built, programs are administered, taxes are collected, gov’t checks for EI, OAS, CPP, GIS etc. are deposited into bank accounts, etc. etc. It’s all done by computers you say? Someone has to confirm that data….. Now imagine you have to explain stuff to a member of the public who is trying to navigate the bureaucratic waters. Of course, you could continue to be both rude & dismissive of the efforts of said workers but the old saying of you catch more flies with honey might be worth applying.
I think the government should force all Canadians to save 10 to 20% of their income in a mixed RRSP and TFA, and as an incentive the government can match your savings or some form of tax incentive.
—
You may have forgotten that Capitalism is based on growth, supported by spending, not saving.
No spend, no growth. Imagine what a no growth quarter does to your stocks in your ETF after the conference call.
Not to mention that who do you think should finance the government tax incentive?
HI long time reader, but new at this
Thanks Garth!!,
I’m just like # 19
inquiry into the project to find out if procurement rules designed to protect taxpayers were violated in one of the largest deals in Brampton’s history.
“development”?
https://www.thestar.com/news/gta/2016/09/06/city-of-brampton-sacks-25-managers-key-staff.html
Most important part of any financial plan is to marry a frugal spouse.
Check out the spooky pinocchio cylon terminator scary clown lurking to the left of guitar dude and right of red headless figure.
Also important:
– buy a house that you can pay off before age fifty. So what if it’s a piece of shit.
– set your 10% automatic withdrawal from bank account to direct investing account, according to your biweekly pay schedule. Do this forever until you stop working.
– buy equity ETFs, dividend growth blue chips (hello Enbridge – good news today)
– buy good used stuff on Kijiji. No tax.
– buy luxury cars that are good and reliable that have depreciated a lot (Lincoln mkz, Toyota Avalon, Hyundai Genesis, etc.)
– look like a bum at work. They might feel sorry for you and throw you a 2% raise.
Cue all the cry babies who say it’s impossible to save 20% with kids and today’s RE market etc. Most people need to find creative ways to save or earn more, or have a shitty retirement eating cat food and not travelling.
#18 IF on 09.06.16 at 7:08 pm
“If you earn $80,000 a year the plan suggests you should be saving 19.8% of your gross pay. ”
——
Tomorrow you can write a column how to do that in Toronto, for example, when you have kid(s), instead of a dog.
—
The harsh answer to that is: on 80K family income in T.O. you have to sacrifice something. The house, the vacations, the cell plan, the car, new clothes. Something.
Or hope your kid gets drafted into the NHL and sets you up. I’m not happy about it either but that’s the reality these days.
Where is the lab?
on 09.06.16 at 7:16 pm
Friend of mine is in Cowtown this week on family visit.
Was at a party with a bunch of old school friends he hasnt seen in years.
One guy just bought a house in a subdivision thats been stopped….his view from home( and yes I was sent pics)…. is of an abandoned construction site in the front , side and back of his house…… Oh. And he was just laid off. Never saw it coming.
That started a conversation at the party. Out of 30 people…9 have been wacked in the last 3 months…..
This recession could be long , cruel and deep.
Trades people in BC….prepare thy selves.
/////////////////////////
I am in a lot of pain at the moment ,hanging on for surgery but I got a call from a contractor today and I know the house has been a gong show but I am taking the job because next year could be a long year.
There are a lot of projects planned in this city,commercial wise, but I do see a slowdown on the cards for residential projects with the cooling off.
It takes so long for the permit and planning part that it gets to a certain point where there is no turning back.
Sure the profits will be trimmed but there is still money to be made.
The thing is I have only worked on three houses this year as custom builds take a long time so as long as there is a pulse I should be o.k.
My rainy day fund is going to get a solid workout though…
M42BC
#22 Ace Goodheart
Wow, seems like you read my mind. My method is pretty much the same, been doing it (retired) for 6 years now. No debt, no stress.
Saving money is an unattainable dream for most citizens of this country. They are scraping by. If they have somehow managed to buy a house and can hold onto it, it probably IS their best investment.
If push comes to shove, rooms can be rented out, suites built in basements. Extended families can live under one roof.
It’s a third world scenario with a third world solution.
Hello from Santorini Gartho!
Busking for the New World Order , 3.5% for Visa/MC , 15 cents per debit transaction for [email protected] , A tap to pay RFID so the CRA, WCB, EI … etc can find out what corner your on.
No need to wonder why bottles of tide are the currency of choice these days.
@ Brazil exPat
Yo!
Dude!
Brazil seems to be working overtime on the corruption scandals!
Waddup wid dat?
http://www.reuters.com/article/us-brazil-corruption-idUSKCN11C2JK?il=0
http://www.reuters.com/article/us-brazil-arms-forjas-taurus-prosecutors-idUSKCN11C2JM?il=0
Those feisty little amazonian jungle scalpers seem to be Hell bent on sending the Real into the toilet before the year is out!
I used to think about retirement savings, but, as they say, ‘life is what happens when you are busy making other plans’. In my 20s and 30s I was piling money away until a series of things beyond my control began to pillage my bank account. Our child was diagnosed with a severe intellectual impairment requiring tons of expensive therapy and time, then a job loss, then my own health issue (with no group insurance). Putting money away is damn hard these days…glad I got a head start in my 20s. Progress isn’t always linear, I tell myself. I’ll get back on my feet. For now, I gotta take care of other things.
For those of you starting out, remember that anything can happen. Think twice before you piss it away on a huge wedding, house, vacations, trucks, boats or hookers in Vegas.
To retire just have at least 25x annual expenses. Good to go.
Premier will not reconsider foreign buyers tax despite dip in sales
http://bc.ctvnews.ca/premier-will-not-reconsider-foreign-buyers-tax-despite-dip-in-sales-1.3060898
I am amazed as I try to tell people to save 10 to 20 percent of their income in an savings plan for retirement. They just stare at you like what?
Maybe they’ve government pensions and don’t care about your babbling
23 Timmy on 09.06.16 at 7:30 pm
Very straightforward calculator:
https://www.calcxml.com/calculators/how-long-will-my-money-last
——————————————————————-
This has a 30 year limit. Anyone find a good calculator that doesn’t have age limits?
I’d like to retire in my early 40s and hope to live more than 30 years after that…..
#35 For those about to flop
All the best to you!
I think that what we are currently going through in AB is just the tip of the iceberg, slowly sinking, the rest of Canada to follow, it is down right scary. The political climate is even more of a concern for the fact that they cannot/do not want to see this or are in denial..
Cake walk! Saving money is like brushing my teeth everyday! Took awhile but was worth every hour! Need a tip let me know!
The harsh answer to that is: on 80K family income in T.O. you have to sacrifice something. The house, the vacations, the cell plan, the car, new clothes. Something.
Or hope your kid gets drafted into the NHL and sets you up. I’m not happy about it either but that’s the reality these days.
—
Funny that nobody ever asks the most obvious question: why does this “have to be the reality these days”?
We produce more than ever of everything – large portion of it goes unsold to the waste, including food.
Yet, “this is the harsh reality”.
Why? Who knows the answer?
How is it going to be changed?
“If you earn $80,000 a year the plan suggests you should be saving 19.8% of your gross pay. ”
——
“Tomorrow you can write a column how to do that in Toronto, for example, when you have kid(s), instead of a dog.”
—–
If you put 18% into your RRSP, that leaves you with $65,600 of taxable income, or $52,570 after-tax in ON. The additional 1.8% of your salary ($1440) in savings reduces that to $51,130, a monthly budget of $4260.
If you can’t figure out how to live on $4260 (plus the child benefit) per month, you need to seriously reconsider the idea of ever retiring.
I live in Calgary at a gross salary of about $72k, I save 40-50% of that every year, and I don’t feel like I’m depriving myself of anything that I really want. Conversely, saving that much and being able to live on a small amount gives me a good shot at early retirement, which I *do* want. Think like a poor person and figure it out.
#14The Nature Boy
That’s why they’re called 1%ers, they’re not average schmucks.
Garth…do you have any stats on the % of homeowners who have less than 20% home equity? There is lots of speculation on this blog about how a housing correction will decimate Canada but not sure what that is based on? My sense is that there would be some tragic stories for sure but not so sure that a lot of people (like myself who bought in 2006) wouldn’t just ride it out without even noticing? My mortgage is such a small percentage of what the home is worth I really couldn’t care less if there is a correction and I suspect other than those that rent on this blog, many are in the same boat.
Here’s a short article on inflation, published today.
I found it interesting.
It discusses among others, Consumer Price Index, and I quote:
…the government only uses the cost you incur, not the fact that you take home both less money and less cheddar.
https://betterdwelling.com/declining-loonie-could-boost-canadian-real-estate-prices-further/
It gets really dicey:
Goldman Bans Partners From Donating To Trump Campaign To “Minimize Potential Reputational Damage”
http://www.zerohedge.com/news/2016-09-06/goldman-bans-partners-donating-trump-campaign-minimize-potential-reputational-damage
Thanks Garth
“Finally, a house is not a retirement strategy. But nobody believes me. So good luck.”
Neither is winning the lottery but apparently lots of folks are counting on that too.
And just in: A house was sold in Burnaby.
What if you die just before or after you retire. Skimped and saved for your entire life only to end up a decomposing slab of meat.
Ah yes my kids will have it… Best part of life is figuring it out how to do it yourself., taken risks, having fun all the time.
Money is so over rated. Well if you punch a clock to make it. Guess you would value it.
Make big bets with it you don’t value it that much..
But that’s the only way to make more of it.
RE: #31 JSS:
“– buy luxury cars that are good and reliable that have depreciated a lot (Lincoln mkz, Toyota Avalon, Hyundai Genesis, etc.)”
Volkswagen Phaeton: Original price over 100k, now available for:
http://www.kijiji.ca/v-cars-trucks/edmonton/2005-volkswagen-phaeton-v8-luxury-pkg-leather-sunroof-navi-awd/1181630710?enableSearchNavigationFlag=true
#24 Flop
Yes. However Flop, make plans. You have a 50% chance of being divorced. High risk lifestyle for men. Every man thinks it won’t happen to them, but divorce is 80% initiated by women. Thank the no-fault divorce laws. And don’t forget, Flop, Garth recently included marriage counselor in his job description. He knows.
Flop, you’re welcome, no charge.
Also, I am living my dream, while you are living my nightmare.
ps. My girlfriends are always the same age as your wife. Or younger. Listen and learn, Grasshopper.
#21 Almost a millionaire on 09.06.16 at 7:22 pm
I am tired.
…..
You must have done it wrong.
With 2 kids and over 100k combined income in Toronto, not able to save whatsoever.
Sad but true
Several mainstream articles published on Tuesday followed the same trend: Hillary is losing ground against Trump and may very well lose the election, which is an unusual admission from pro-Hillary media.
It’s called hedging, the top brass of all MSM have been full on get Trump. It’s not working, now twitter Facebook, Google have been called out for there bias.
It’s starting to sink in, if they go all out to nail Trump like they have been and Trump wins. President Trump will go after them hard. He will have the mandate.
Establishment cuddles to winners. Watch the next month. Hillary deserters MSM wanting to kiss and make up with the Alpha Dog…
Garth for your next Tuesday pod cast. Talk about strategies, best rebalance for a Trump white house.
Dr Smoking Man
PhD in Herdonomics.
#57
Nice car!
With 2 kids and over 100k combined income in Toronto, not able to save whatsoever.
Sad but true
I believe it. YVR bad too
My guess is we have the opposite of pent up demand. Actually it is not a guess. It is fact.
1. Home ownership rates have increased over the past 10 years and are at all time highs. When over 70% have bought that leaves few with money and enough income who can buy.
2. People with money and credit have already bought second and third investment properties. As prices correct they will not get credit to buy more even if they want to.
3. Parents have bought places for their kids before they are even old enough to live on their own. Those are sales brought forward that will not take place in the future.
All of the above is called borrowing demand from the future. That coupled with move up buyers who own condos and will have no equity (many with negative equity) to use as a down payment to move up along with tightened credit means less demand (buyers) not more regardless of price. Then add in the foreign buyer tax which kills that part of the market.
Plus nobody wants to buy something they expect will be cheaper 6 months later. The opposite of FOMO. You are seeing that right now. It works this way in all real estate busts. I guess your realtor didn’t explain this part to you.
What if you die just before or after you retire. Skimped and saved for your entire life only to end up a decomposing slab of meat.
This. This is the problem living like a miser. Living for money. Sad.
any retirement calculator that bases the calculation on salary are not on projected expenses during retirmenment is idiotic
Volkswagen Phaeton: Original price over 100k, now available for
171000 km? You like your sexual partners cheap with a lot of mileage on em too?
“are” => “and”
you really need an edit option for comments waiting moderation
Don’t you get it? I’m trying to discourage you. — Garth
Money is so over rated. Well if you punch a clock to make it. Guess you would value it.
Make big bets with it you don’t value it that much..
But that’s the only way to make more of it.
Totally agree. Treat money like its scarce and it will be. Punch a clock? Feels bad man
We produce more than ever of everything – large portion of it goes unsold to the waste, including food.
Yet, “this is the harsh reality”.
Why? Who knows the answer?
How is it going to be changed?
It will never change. Poor will always be poor. That’s the harsh reality. Society’s output doesn’t go to people who punch a clock. They’ll never see any of that profit. That’s how it will always be.
If Hunter S Thompson where alive today and writing about modern day culture. FEAR AND LOATHING would be capitalized on the book title.
What would he be saying about SJW. Climate Change bull shit, globalism, modern day brain washed teachers. Black lives matter, open boarders with a fanatical elements to it.
I got an idea. I’m no Hunter, but I totally get him.
I’ll do my best to keep his memory alive.
My book title. I think.
Fear and Floating in Las Vegas.
I know Steve french got me onto Bukowski, who got me onto Hunter. I don’t remember, Need to thank you in the book credits.
Gut Check. Read your email please. I need an answer.
#20 Crowdedelevatorfartz
Yes. I am seeing the same thing. Many many Albertans are hurting bad. I am watching them age right before my own eyes. Panic phase is coming.
The tide has been going out. Unfortunately, it is just beginning. I wish no one hard times. And that goes for Flop too.
#58 Freedom First on 09.06.16 at 9:22 pm
#24 Flop
Yes. However Flop, make plans. You have a 50% chance of being divorced. High risk lifestyle for men. Every man thinks it won’t happen to them, but divorce is 80% initiated by women. Thank the no-fault divorce laws. And don’t forget, Flop, Garth recently included marriage counselor in his job description. He knows.
Flop, you’re welcome, no charge.
Also, I am living my dream, while you are living my nightmare.
ps. My girlfriends are always the same age as your wife. Or younger. Listen and learn, Grasshopper.
////////////////////////////
Hey Freedom,I just did my post as a preemptive strike and your answer was a lot more tamer than I thought it would be.
Who knows what is going to happen ,but I feel like I married my best friend and so far it has been a rewarding experience.
I didn’t go for the ” hot thin wife” bimbo thing.
Sure she’s a hell of a lot better looking than me but I went for the more complete package ,which you need to use both heads to get.
My brother has been divorced twice so he is obviously a slow learner,maybe it runs in the family.
I am hoping to be one of the 52% that stay together but just in case I keep some radiator fluid handy…
M42BC
Travel when you are young cause if you retire at 65 having worked your butt off all your life just when you think you can travel something will happen. Very few live till their 80’s without some health issue. Don’t wait. Yes save but enjoy your life now unless you are afraid to spend some money….
I think they come up with these numbers to make the general population feel better and not panic. Its “crowd control”.
Its probably fair to say that most of the ppl interested in your blog outpace these numbers. Hmm lets see:
-% deduction from the required savings rate. I guess I have to spend more based on this to fit in with the rest or the financial illiterates. Should I now? May be I can also buy a house in the great city of van lol
#70 WalMark of Sadkatoon on 09.06.16 at 9:44 pm
We produce more than ever of everything – large portion of it goes unsold to the waste, including food.
Yet, “this is the harsh reality”.
Why? Who knows the answer?
How is it going to be changed?
It will never change. Poor will always be poor. That’s the harsh reality. Society’s output doesn’t go to people who punch a clock. They’ll never see any of that profit. That’s how it will always be.
—-
What are you? A slave?
@#65 WalMark of Sad
“This. This is the problem living like a miser. Living for money. Sad…..
*******************************************
Ok BUT…………
WHAT if you dont save anything for your retirement.
You won be able to “retire”
WHAT if you “live” until you’re 95?
You wont be retired . You wont have money, you wont have a job(who wants to hire a grey toothed , alzheimer wracked babbling idiot?)
You WILL learn the idosyncracies of “cardboard box condo-ing”
WHAT if you live til 95 and spend your “golden years” hanging out behind the “Golden Arches” eating their garbage? Fighting with addicted rats and squalling seagulls on highblood pressure medication (the seagulls…not you) for Salty fries and doublebaconcheeseburgers
Miserly saving? Hardly.
Options dude……..nuthin wrong with having options…..
Good column.
My target is a mortgage free house, plus 1.3M in 2027 dollars. I’ll retire at 55.
Factoring in the house in YYZ, I’m halfway there to overall goal.
I better frikkin live long to spend it!
”
What are you? A slave?”
No. He’s a mentally ill troll who is so caught up with clichés to realize that the unsustainable (ie: the rich getting richer, the poor getting poorer) simply can’t be indefinitely sustained. After all, there’s a lower bound on poorness before revolution or civil unrest breaks out and destroys the wealth of the ‘rich’.
At some point in the economic cycle, most of the ‘rich’ are piled into the same assets, and wham, the economy pulls the rug out beneath them. Usually the ‘rich’ become so ensconced in their own dogma (such as Warren Buffet’s well known hatred of gold, for instance, or Vancouver RE owners’ belief that RE only goes up) that, like lemmings, they all end up invested in the same ‘stuff’ which performs well.
I would suggest the system is always making people rich, but its not always the rich that are getting richer. In fact, most of today’s wealthiest developed their entire fortunes over the past 30-50 years. True long-term inter/multi-generational wealth tends to be a rare occurrence. Severe losses are almost always incurred along the way because of the inherent portfolio imbalance that the wealthy typically have.
I know why Hunter pulled the trigger.
When you can’t fly a flag high, Chuck a plastic o ring into an inverted empty coke bottle. The disappointment. The felling of worthlessness.
Booze and cigarettes probably short changed him by 10 years.
But the years before that. He lived.
Wish I knew about him when he was alive.
Garth for your next Tuesday pod cast. Talk about strategies, best rebalance for a Trump white house.
Dr Smoking Man
PhD in Herdonomics.
+++++++++++++++++++++++++
I’ll save you the wait, buy GOLD and LOTS of it!
@#65Freedom First
“The tide has been going out. Unfortunately, it is just beginning. I wish no one hard times”
********************************************
Total agreement (with the exclusion of Brazil ExPatronising).
I texted my friend in Cowtown and he said the guy with the new house and the even “newer” job loss was ……….”going to sell his car to keep paying the mortgage…….”
I told him to tell the guy to keep the car for job hunting and dump the house in a falling market before he wasted a year’s worth of mortgage payments urinated against the wall and was forced to sell……
Suicides and arsons will be skyrocketing….and not just in Alberta.
Im kidding Brazilian ExWax…..I still like you AND your hot wife.
All you YYZ & YVR folks in your 50s need to give your heads a shake. I did last year. For several reasons I sold everything, paid off my debts, now have good $ aside and rent in a rural area, HOURS from the crazy bustle of it all.
Think I have it all wrong??? I witness regularly YYZ people paying money they probably do not have coming to spend a long summer weekend here then all saying “I could do this for the rest of life”. Then those same 50 year old couples pack up on a Monday morning, then drive their brand new AUDI A7 6 hours back to Toronto to their $700K condo to their crappy jobs.
Because they owe…
You can’t have it all…
#80 Smoking Man:- I saw you with the young lady the other day and had no idea you had an attractive daughter.
#80 Smoking Man on 09.06.16 at 10:11 pm
I know why Hunter pulled the trigger
—
Same reason why Hemingway.
Your characters, stories that used to have the magic eventually stop working.
You think you drank too much or you lost your mojo, you drink even more to bring it back. But there is nothing to bring back, it’s not you. It’s the world. The world has change and it doesn’t resonate with your energy as it used to be.
It’s all about the energy. You are a vessel.
The listings today in Metro Vancouver today appear to be quite strong…
New: 444
Sold: 126
@#80 Smoking Man
I hate to rain on your Hunter S Thompson idolization Smokey.
But Hunter, while brilliant was a self destructive, self absorbed childish moron.
A Baby Boomer with a pen and a rapacious wit
He “peaked” intellectually in his 30’s and the media world had no idea how to deal with him but he was loved by fellow boomers for his savage attacks on the status quo.
But the 60’s drug culture slithered into the 70’s cocaine culture. More drugs, more debauchery, more toxic brain damage.
From his crass , blatant sexual escapades at home all while expecting his wife to cook breakfast for his “conquests”.
To his eventual violent, paranoid (cocaine induced) gun shooting tirades against everyone and everything.
He scared family and friends away with his unstable , violent outbursts…until he was alone.
Another sad relic of the 60’s drug culture with unlimited money..
And then he blew his brains out.
A cowards way to “get back” at all the people that loved and cared for him.
Hunter S Thompson was no legend.
To his
Bit stressed out, one of my kids, confesses he’s got brain aneurysm, could explode at moments notice. 28 years old, has the bracelet to prove it.
He totaly got to wifee poo. She wants me to re onshore some loot. So he can buy a house mortgage free. I’ve only left the fkn CRA about two hundred grand to steal from me.
Thinking I trained him Smoking Man doctorin, is he telling the truth. Or looking for maximum wedding gift.
He’s good, I’m 50 50 on this. Good lier or its true, Wife’s going to win I’m thinking.
Cause if I’m wrong on this… I can’t live anymore.
#84 Context on 09.06.16 at 10:22 pm
#80 Smoking Man:- I saw you with the young lady the other day and had no idea you had an attractive daughter.
..
That was my wife….
#85 Why:- My coded message just came in and Hunter was on the phone to Toronto the day before his staged suicide took place and informed X he was afraid they were going to get him regarding 911.
# 71 Smoking Man writes:
I know Steve french got me onto Bukowski, who got me onto Hunter. I don’t remember, Need to thank you in the book credits.
That may or may nor have been me. However please do not credit me in any form.
Here is something else to occupy you for a bit…
ayahuasca
Google that, see if maybe it might improve your writing.
#60 Same. We left Toronto this past July after 20 years invested in our community. I keep a meticulous budget, and we couldn’t make it on $103K past 2015. If you go back over my budget spreadsheets, it’s pretty telling for inflation. In 2011 we could get by on $70K. Then $85K, then $96K, etc.. Now a middle class lifestyle downtown is over $110K for a family of four. (Rented apartment, no cable, no vacations.) TTC alone for four people over twelve? To heck with that.
#85 Why
Interesting. Appreciate the insight.
As a corollary, is one’s energy informed by the world in one’s younger years, and cannot modify much, afterwards?
#87 crowdedelevatorfartz on 09.06.16 at 10:30 pm
@#80 Smoking Man
I hate to rain on your Hunter S Thompson idolization Smokey.
But Hunter, while brilliant was a self destructive, self absorbed childish moron.
A Baby Boomer with a pen and a rapacious wit
He “peaked” intellectually in his 30’s and the media world had no idea how to deal with him but he was loved by fellow boomers for his savage attacks on the status quo.
But the 60’s drug culture slithered into the 70’s cocaine culture. More drugs, more debauchery, more toxic brain damage.
From his crass , blatant sexual escapades at home all while expecting his wife to cook breakfast for his “conquests”.
To his eventual violent, paranoid (cocaine induced) gun shooting tirades against everyone and everything.
He scared family and friends away with his unstable , violent outbursts…until he was alone.
Another sad relic of the 60’s drug culture with unlimited money..
And then he blew his brains out.
A cowards way to “get back” at all the people that loved and cared for him.
Hunter S Thompson was no legend.
To his
…..
We all read into shit differently, I respect your opinion. But your wrong…
My mirrored naked image of me is a bit longer than yours.
Snap chat dual is what I’m thinking..
The sequence of returns when you begin retirement is critical to how well your money lasts throughout retirement. Hit a sequence of high returns from the stock market and you’re unlikely to ever outlive your money (if you saved nominally the right amount initially). Hit a bad sequence of returns and your capital is likely to be so depleted that even if better returns follow you’ll not recover. Monte Carlo analysis is about the best way to go about looking at these scenarios. Realistically you’ll always have to live with some risk, or the amount you’d need to save would be prohibitively high. At a certain point you have to abandon the math torture test and just save a reasonable amount and hope for the best.
Traditionally most advisors said 4%, so if your portfolio is growing by that amount, the principal is preserved.
Pretty sure that is incorrect. The 4% safe withdrawal rate assumes some draw down of capital can occur. It’s really the rate of withdrawal that ensures you will not run out of money before you die. I also think it’s 4% real, not nominal. That is, 4% in today’s dollars in year 1 thereafter adjusted for inflation. So if that works out to be, say, $70k in year 1 and inflation is 2%, you withdraw $71400 in year 2 to maintain your purchasing power. The critical point here is you are withdrawing a fixed real amount each year in retirement, not a percentage of the portfolio.
#90 Context on 09.06.16 at 10:38 pm
#85 Why:- My coded message just came in and Hunter was on the phone to Toronto the day before his staged suicide took place and informed X he was afraid they were going to get him regarding 911.
…..
They are going to get us one way or a another
Drink, have fun, hope your kids don’t outlive you.
It’s all that matters.
Shit I’m hammered read my last post..
Should gave read.
Hope you dont out live your kids or Wyatt.. My crazy dog
#91 Metaxa
That’s a sacred medicine you idiot.
It’s not for improving writing skills.
You must follow strict dietary restrictions, including alcohol, that Smoking Man would never pass alive.
No shaman would have him on a ceremony, the spirit would chew him up.
91 Metaxa on 09.06.16 at 10:47 pm
# 71 Smoking Man writes:
I know Steve french got me onto Bukowski, who got me onto Hunter. I don’t remember, Need to thank you in the book credits.
That may or may nor have been me. However please do not credit me in any form.
Here is something else to occupy you for a bit…
ayahuasca
Google that, see if maybe it might improve your writing.
….
Don’t worry you weren’t around then.. Beach girl days…
Archives bitch……
Current income has nothing to do with projecting how much money you need saved for retirement.
In the simplest terms… you need to figure out how much money you will spend on average in retirement. You need 25x your annual spending…this is the 4% withdrawal rate.
#46 acdel on 09.06.16 at 8:21 pm
#35 For those about to flop
All the best to you!
I think that what we are currently going through in AB is just the tip of the iceberg, slowly sinking, the rest of Canada to follow, it is down right scary. The political climate is even more of a concern for the fact that they cannot/do not want to see this or are in denial..
////////////////////////////
My apologies acdel,I forgot to thank you for your good wishes.
During Garth’s recent poll there was a lot of heavy hitters who posted some big numbers but haven’t been heard from since.
I think a lot of the regulars have some money but are looking for tips to maximize it and are not so sure they have enough to last.
I was not surprised that some of the people I regularly communicate with did not boast or posted believable numbers,but a couple of my blog buddies had more money than I would have guessed if I had to the way they talk to me.
I ain’t trying to impress anyone around here and if anyone lied during that poll ,you only lied to yourself…
M42BC
#LPstrong
#90 Context on 09.06.16 at 10:38 pm
#85 Why:- My coded message just came in and Hunter was on the phone to Toronto the day before his staged suicide took place and informed X he was afraid they were going to get him regarding 911.
…..
Good thing I only have about 100 fans.
#91 Metaxa on 09.06.16 at 10:47 pm
excellent suggestion! it could scarcely hurt….
perhaps a pinch of salvia as well?
#48 Why on 09.06.16 at 8:34 pm
The harsh answer to that is: on 80K family income in T.O. you have to sacrifice something. The house, the vacations, the cell plan, the car, new clothes. Something.
Or hope your kid gets drafted into the NHL and sets you up. I’m not happy about it either but that’s the reality these days.
—
Funny that nobody ever asks the most obvious question: why does this “have to be the reality these days”?
We produce more than ever of everything – large portion of it goes unsold to the waste, including food.
Yet, “this is the harsh reality”.
Why? Who knows the answer?
How is it going to be changed?
—
People would need to opt out of rabid and blind consumerism for starters. Not only that but opt in to paying a premium for good/services from small to medium sized local businesses. Human nature being what it is, most people want to have their cake and eat it too. So here we are.
Folks get ready for my presidency. That’s right, I’ll soon be President Trump. Why? Hillary is imploding, it’s so sad to watch. She’s going to be the biggest looser. She’s fired. I mean it was bad enough when she was running around calling the leader of Russia “the new Hitler”, which was very un-statesmanlike and dangerous, but it was also reminiscent of “the axis-of-evil” aka bush the junior and fool. But then she went on to accuse the Russian government of hacking the DNC emails that show her conspiracy against Sanders, with no evidence what so ever. You just don’t make claims like that unless you know for sure. Putin says his government didn’t do it, but he could be lying too and that does not remove the idea it could have been a non-government related Russian hacker, they have lots of hackers in Russia same as there are lots of hackers in the US and elsewhere, it could have been anybody including a Russian. What we need here is proof which Hillary is offering none of.
Oh well it’s just another one of Hilary’s lies. My favorite is claiming to be named after Sir Edmond Hillary, the first man to the top of Everest, when in fact she was 6 when he accomplished this feat. Her parents must have lied to her and she never figured it out. I personally know why my name is Donald, and don’t you forget it.
In any case the debates are going to be awesome! I have a full stack of Hillary lies and she is going to answer for every one of them! It will be a little tricky, I have to prepare, because of course she will respond by saying I am a misogynist racist. My job will be to prove that she lies about everything so she is probably lying about that too, which will both destroy her and clear my name at the same time. If I can do that, we will have the hottest first lady of all time, finally rivaling other countries.
There is nothing wrong in having money. My husband plans to retire, and we have saved and saved many years for this, to buy a home to retire in (within our budget). Both of portfolio’s are healthy and growing. Thank goodness the RE is succumbing to lower prices. We have rented for 12 years, and it is time to go to greener pastures. I know homes are over priced by over $100 … check the BC Assessment. Do people ever do their home work before buying a home. It totally flaws me they do not. Before we ever view a home we do a thorough search and investigate the home and property. And, in the end after viewing it is totally a right off. Yet, we continue to find the right home. And as Garth has said a home is NOT an investment, so head his warning. A home is a roof over your fray head and for your enjoyment.
Good times ahead….
potential of sept rate hike : was 20%…now 15%
potential of hike before dec : was 60%…now 50%
the futures market tells no lies?
Boombust
Rob Chipman is actually only showing 117 sales over the long weekend which is more interesting than the number of listings.
There is no other period of 3 consecutive days since 2012 with less sales.
“The more you make, of course, the more you need to save since replacing your income becomes a more costly exercise”
Hmm, there is a large part of the Financial Independence Community out here who would disagree. Believe it or not, there are many $200,000 + families living on $50,000 happily and saving the rest. Just because some people need lifestyle inflation to enjoy the present, doesn’t mean we all do.
Time free from having to work, and time with my family is more important than looking like we earn a certain amount. I’ll stick to saving 50% + thanks.
I don’t get why all these financial planning calculators relate retirement income with pre-retirement income.
If you make $200,000 per year just before retirement but you are happy living on $50,000 per year, then you need $50,000 per year in retirement income. Not 85% of $200,000. It doesn’t make any sense other than to convince people to shove an endless amount of money into mutual funds, forever.
#73 Flop
Don’t blame your Brother. He simply made one mistake twice.
Also, Flop. No radiator fluid. Just because a woman divorces a man it doesn’t mean she deserves to be murdered.
Also, guys tell me that the reason a divorce is so expensive for a man is because it’s worth it.
FF quote:
“Also, I am living my dream, while you are living my nightmare.”
Superb comeback. It amuses me how FF’s outlook on life/marriage irks some – it obviously hits some deep nerve to provoke a “preemptive strike” even while it’s author is in pain. (?!) Sad…
You don’t need the massive legal risk of marriage to find and keep your best friend, attractive or otherwise. I’ve been with my partner longer than most marriages last and e’re both still happy and content.
#29 JSS on 09.06.16 at 7:38 pm
Most important part of any financial plan is to marry a frugal spouse.
This. (Although I modify “spouse” to include non-legally binding relationships.)
Boring and unromantic as it may be, having your ideas about money aligned is far more important to longevity than almost any other factor of compatibility. Feelings come and go, debt is forever.
Trump will win and the banksters will freak, sending gold to $5000+.
DELETED
#56 Smoking Man on 09.06.16 at 9:04 pm
What if you die just before or after you retire. Skimped and saved for your entire life only to end up a decomposing slab of meat.
Ah yes my kids will have it… Best part of life is figuring it out how to do it yourself., taken risks, having fun all the time.
Money is so over rated. Well if you punch a clock to make it. Guess you would value it.
Make big bets with it you don’t value it that much..
But that’s the only way to make more of it.
01010101010101010101010101010
Was in a cemetery to the east of Montreal 2 years ago.
The back hoe had just dug a grave.
I had to walk by and i looked down and saw pieces of tarmac , concrete , plastic etc.
The whole place was built on landfill.
It did a number on my head i can tell you.
#18 IF — “Tomorrow you can write a column how to [save 19.8% of your gross pay] in Toronto, for example, when you have kid(s), instead of a dog.”
#60 IO — “With 2 kids and over 100k combined income in Toronto, not able to save whatsoever.”
You need to figure out how to do it, or accept that you can’t and be willing to live with the consequences. Canada is a reasonably progressive welfare state, so you won’t starve on a street corner unless you want to. Earn more, spend less or move if you want to hit the target. But unless you save the money before retirement, you won’t have it in retirement. Some do it, while others say it can’t be done. It was ever thus. Nobody ever got an income gross-up on their day of retirement by saying “Oh, I lived in [insert expensive city here].”
My household is doing what you say is impossible.
Re #109 Fortune 500:
“Time free from having to work, and time with my family is more important than looking like we earn a certain amount. I’ll stick to saving 50% + thanks.”
Totally agree. Save as much as you can (ideally more than 50%), invest in stuff that pays you dividends or distributions, and get rid of your debt.
It is easy to live on 50K per year, if you are not servicing a huge mortgage, lines of credit, credit cards, for all the stuff you bought that you don’t really need….
RE: Walmark of Sadkatoon
“171000 km? You like your sexual partners cheap with a lot of mileage on em too?”
That’s km, not miles. And it’s a V8. That is barely broken in.
Finally some capitulation to truth. First we had HAM being non existent and a small tax exposed the truth. Now in the last paragraph we read that equities are the reality and bonds/balanced/indexing will not provide sufficient returns. This shows progress IMHO.
I expect chart watching will become the norm and stock picking will be the main topic of this blog in the very near future. I use focused investing to earn $10,000 per week per million invested. I create separate portfolios for each million dollar acct. The balance created in non correlated performance while collecting dividends on 99 percent of holdings. Rebalancing/tax consequence near zero….pure Alpha. Averages have moved up from 35k per week average to $40 as yield became God over the last year.
Re: #22 Ace Goodheart on 09.06.16 at 7:26 pm
You could easily solve the entire world debt problem with that easy 4 percent. If it were so easy maybe you could sell subscriptions showing just how easy it is. The rest of the world is still buying negative yielding bonds.
#109 Fortune 500
“Time free from having to work, and time with my family is more important than looking like we earn a certain amount.”
——————————————————————-
Dude’s got it right.
Value rigidity refers to our tendency to cling to certain preconceived ideas of what’s important and what’s not, even when events or circumstances change. To make matters worse, we sometimes put a high value on things that we shouldn’t and then stubbornly cling to our error.
The types of things that are important to us in the new life stage (i.e., retirement) are likely different from the things that were important to us during the previous life stage. We need to decide what those new things are and elevate them to their proper position. If we don’t, we’ll cling to things that used to be important to us (e.g. work, houses, how we spend our free time, etc.) and our tight grip on those keeps us stuck in the monkey trap, unable to pursue our new plans.
Sometimes clinging to the tangible thing can cause you to lose the intangible. There’s nothing wrong with having nice things, but everything we own takes some of our time and some of our money. If we focus too much on the tangible (houses, cars, etc.), that leaves little time and money left over for the intangible (travel, experiences, hobbies, relationships, pursuits, etc.).
Suffering is rooted in clinging and craving.
Ceasing clinging and craving ceases suffering.
[Ref. “Zen and the Art of Motorcycle Maintenance” by Robert M. Pirsig.]
[Ref. “Zen and the Art of Retirement” by Joe Hearn”]
Or you could have your $ in GIC’s earning 1%, withdraw 0% and only be down 3% / year, on the spending power left in the box.
Live below your means and it pans out.
#79 Mark
the unsustainable (ie: the rich getting richer, the poor getting poorer) simply can’t be indefinitely sustained.
That’s a load of leftist crap. Never in human history more people got out of abject poverty than in the last 50 years, NEVER. And that’s all because of one thing, as imperfect as it is: Free Market Capitalism.
Great discussion topic Garth.
A few ideas for me:
1. Retire with no debt – pay off the house – check!
2. Health is more important than money – excercise eat right- check!
3. Find hobbies and interests that don’t break the bank. Hiking, biking, running, lodge,
4. Live in the down town – walk or bike everywhere- check!
5. One used car for two people- basic transportation- check.
6. Learn to do maintenance on house etc – from YouTube, Google- check!!!!!
Not that hard, just some planning and common sense.
Dave.
Half of working Canadians ‘overwhelmed’ by debt and living paycheque to paycheque: Survey
http://www.bnn.ca/half-of-working-canadians-overwhelmed-by-debt-and-living-paycheque-to-paycheque-survey-1.562284
Toronto real estate industry reports scorching hot August
http://www.macleans.ca/economy/business/toronto-real-estate-industry-reports-scorching-hot-august/
TORONTO — The Toronto area’s real estate industry says it set a new August record for home sales and a 17.2 per cent increase in the average sale price.
The Toronto Real Estate Board says its members had 9,813 sales last month.
That was 23.5 per cent more than in August 2015 — although last month’s volume was assisted by two additional working days.
Even adjusting for an equal number of days, last month’s sales volume in the Greater Toronto Area was up about 13 per cent from August 2015.
The average price for homes sold, regardless of type of property, was $710,400 — with the average price for detached homes in the city of Toronto itself going up 18.3 per cent to $1.2 million.
that guy likely is way ahead of most people. The facade of wealth runs deep and long.
http://www.usatoday.com/story/money/cars/2016/09/06/car-loans-now-top-1-trillion-delinquency-rates-rise/89911210/
@#115 drydock
Donate your body to medical science.
The ultimate in recycling.
And its free.
Haiku over.
“Semi-poverty is far harder as you age.”
Sums up perfectly the whole point of saving and careful investing.
Slipped the bonds of employment at 47 after turbo-saving since my first job at 15. Now work in our family business. Bliss.
The pure pleasure of taking my morning coffee whilst gazing out over rush-hour traffic has never diminished. It’s the closest feeling to having arrived that I know. That, and also traveling for a month or a few at a time.
Around the late 90’s, work, for me and increasingly many others migrated into the realm of “just no damned fun anymore” (too much workload, or worse, too little, office politics and increasingly lousy benefits (DB to DC)). The final straw for me was the limited array of investment options for DC funds – it’s my money, I’ll invest it however I please! The law of diminishing returns in spades.
Having had enough of “the new work order” I found myself squarely ensconced by the law of diminishing returns. Time had arrived for a major life upgrade. Since then, I have had the time of my life, literally, and only look back to admire the preceding effort.
Nearly anyone can do this, anyone, but rarely by buying crap with the goal of garnering the admiration and/or envy of others. That’s not just wasting cash, worse, it’s wasting time and life.
Oh, and you have to WANT to do it. The desire to become free is developed by taking small steps, tiny steps at first and enjoying the ride. This eventually takes on a life of its own and simply becomes a life-changing habit.
I think we should base all out currency on Yap coins.
They’re hard to steal. Hard to counterfeit, and difficult for opportunists to “day trade”.
http://www.google.ca/url?url=http://basementgeographer.com/the-stone-money-of-yap/&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwi-8cTpnv3OAhVU32MKHVOYAnAQFghEMAo&usg=AFQjCNELLrsxD4j35S9WJ62VYVrGjNuEag
Anyone want to second this?
#92 SI2K on 09.06.16 at 10:47 pm
————————-
And hence why debt loads are increasing. People aren’t making much more money than 10 years ago, but costs (food, housing, hydro etc.) have doubled.
Vancouver the first Canadian city of millionaires!
Say what you will, for he last seventy years the best path to wealth has been through real estate, specifically owning you own home.
“Rising real estate values have pushed the average net worth of Metro Vancouver households up over $1 million, making it Canada’s first “city of millionaires,”
http://www.cbc.ca/news/canada/british-columbia/vancouver-millionaires-1.3749581
#107 liquidincalgary on 09.07.16 at 1:12 am
potential of sept rate hike : was 20%…now 15%
potential of hike before dec : was 60%…now 50%
——-
rinse. repeat. rinse. repeat… there are some who still don’t see the cycle, clinging to hope that this time will be different. The ship is sinking but many prefer to pull up a chair while the band plays on.
#110 John
“I don’t get why all these financial planning calculators relate retirement income with pre-retirement income.”
I think the answer is easy.
As I found out in a previous life, spending EASILY tracks income gains. How many people actually keep track of what they live on, AND try and keep it under their net income? 5% ? 2% ??
If one knows what it takes to live on, apply the 4% (or, to be conservative, 3%) rule and see if you can live on the results. Most of the population does not know what the 4% rule is, nor do they know how to budget.
Yes, we keep a “to the penny” list of monthly expenses, and, yes, it is sobering to see where money goes, but at least we know what we require for retirement, and what percentage of our spending is fluff.
#121 Zen Headspace on 09.07.16 at 7:07 am
Bingo bango bongo this guy gets it!
WalMark is a guy who can’t find a job but can comment on wealth preservation? Seems odd
#94 Smoking Man on 09.06.16 at 11:03 pm
#87 crowdedelevatorfartz on 09.06.16 at 10:30 pm
@#80 Smoking Man
I hate to rain on your Hunter S Thompson idolization Smokey.
But Hunter, while brilliant was a self destructive, self absorbed childish moron.
A Baby Boomer with a pen and a rapacious wit
He “peaked” intellectually in his 30’s and the media world had no idea how to deal with him but he was loved by fellow boomers for his savage attacks on the status quo.
But the 60’s drug culture slithered into the 70’s cocaine culture. More drugs, more debauchery, more toxic brain damage.
From his crass , blatant sexual escapades at home all while expecting his wife to cook breakfast for his “conquests”.
To his eventual violent, paranoid (cocaine induced) gun shooting tirades against everyone and everything.
He scared family and friends away with his unstable , violent outbursts…until he was alone.
Another sad relic of the 60’s drug culture with unlimited money..
And then he blew his brains out.
A cowards way to “get back” at all the people that loved and cared for him.
Hunter S Thompson was no legend.
To his
…..
We all read into shit differently, I respect your opinion. But your wrong…
My mirrored naked image of me is a bit longer than yours.
Snap chat dual is what I’m thinking..
…
Good lord…..Smoking wiener man ..
Uh oh…looks like more fodder for this blog to perseverate endlessly about the inevitable crash….some may have been premature to jump to the opinion that it is already occurring?
http://www.theglobeandmail.com/report-on-business/video/video-toronto-home-sales-surge-235-to-record-despite-supply-crunch/article31741240/
The amount of replacement income needed in retirement has ZERO to do with your salary while you were working.
Garth even you have to admit this is true as your clients Firecracker/and the other one are a testament to that.
For anyone who cares here is the best retirement calculator available.
http://financialmentor.com/calculator/best-retirement-calculator
Ashamed of you Garth. Your calculations on what you need above are based on income.
As many above have said, that’s bullshit. It assumes incorrectly that everyone spends the same % of their incomes in retirement as everyone else. What the hell is that based on?
Nevermind that everyone saves and spends a different portion of their take home salary and gross salary; nevermind that some people get masses changes in their salary over their saving life times…nevermind a hundred other things wrong with this method.
You need to determine your estimated expenses in retirement; which a good starting point may be your current spending less things you know won’t be there (such as a mortgage payment or saving for kids education and saving for your own retirement, CPP, EI, etc) and adding things you know will be (a more robust travel budget, higher spending on health care, lubricants ;-).
If I make $300k a year but only spend $40k a year because I choose to live frugally (most Blog Dogs are frugal 1%ers like me) then basing my retirement needs on the $300k is stupid. Any idiot can see that.
Most happy retired people will tell you that’s a myth. Spending barely decreases – which is the point of having money. Monasticism sucks. — Garth
#115 drydock
“Conquer your fear, and I guarantee you, you will conquer death” – Megas Alexandros (paraphrased by Ptolemy)
“All that matters in the end, is what you’ve done… Each land, each boundary I cross, I strip away another illusion. I sense death will be the last. Yet still I push, harder and harder to reach this…”home.” Where has our eagle gone? We must go on Ptolemy, until we find an end.” – Ibid.
“Know your worth” – Drake
I think you’ve got it backwards Garth (along with most financial planners). The problem is (and the reason why most canadians are living paycheck to paycheck) is that you are assuming people spend 100% of their money. Should be looking at expenses, not income. Want a simpler formula? Once you have 25X your annual expenses saved up, you can retire. $40,000/year expenses = $1,000,000 needed nest egg. You can then withdraw 4% inflation adjusted forever based on the trinity study.
In Canada we say “paycheque.” — Garth
#116, You need to figure out how to do it, or accept that you can’t and be willing to live with the consequences.
Absolutely. I couldn’t save a ton of money when I was younger – my salary was pretty bare-bones – so I saved what I could. What worked for me was setting up bi-weekly automatic RRSP contributions. If the money wasn’t in the account on the day after payday, I couldn’t spent it.
Now I’m ok – and barely ok – for retirement. I’m in IT, and when you are in your late forties, a layoff means it’s very hard to obtain another position in IT. So I’m now focusing on financial security.
I’m not the best at recording expenses and budgeting. What saves me are those bi-weekly automatic deductions and getting the bills paid off first.
As expected, no rate hike
http://business.financialpost.com/news/economy/bank-of-canada-holds-interest-rate-read-the-official-statement
US Feds are next.
Nobody expected a Canadian rte hike, with the odds favouring a drop. — Garth
#117 Ace Goodheart
invest in stuff that pays you dividends or distributions
You do realize that dividends and capital appreciation are roughly equivalent, right? There is no mathematical reason to prefer receiving a dividend to selling shares at a higher price for the same amount. Why? Because the share price falls when a dividend is paid out. In other words you could create your own dividend stream through regular sales of the underlying security.
Wife, 18 month old, dog, and myself. We live on $40K a year, and quite comfortably, in Toronto. Save over 50%. It’s easily doable. We don’t buy any toys that provide instant gratification then end up on ebay. And no, we don’t eat Kraft Dinner and Hamburger Helper on a nightly basis.
Weekly? — Garth
In Canada we say “paycheque.” — Garth
You’re an (almost) infinite source of knowledge Garth ;)
Most happy retired people will tell you that’s a myth. Spending barely decreases — Garth
Make sense, except a lot of expenses also disappear, in particular work related expenses (including taxes and contributions) and savings. The big difference is you get to spend on stuff you actually like! No question it’s better to err on the too much side because retirement in poverty would truly suck!
RE: #120 Tony:
“Re: #22 Ace Goodheart on 09.06.16 at 7:26 pm
You could easily solve the entire world debt problem with that easy 4 percent. If it were so easy maybe you could sell subscriptions showing just how easy it is. The rest of the world is still buying negative yielding bonds.”
OK, I’ll tell you how to do it (or how I did it, anyway – but I get 6%):
Weight yourself like this:
20% Canadian REITs (everyone on here will say that’s too much, I like them)
10% Canadian Chartered Banks
10% Oil stocks, 5% Canadian, 5% US
20% Canadian based ETFs that pay above 4% distributions
10% US ETFs that pay above 4%
5% in the golden arches (I love this stock, look at the history)
5% in that wonderful fizzy soft drink that comes in the red can (again, one of my favorite stocks of all time)
5% American REITs (some really good deals here)
10% preferreds (5% Canadian, 5% US paying above 4%)
10% financials and insurance (again look for above 4% dividends).
That is what I did. It is working. Average distribution is 6% and I am up 13% from this time last year in equity (which I don’t really care about, I’m only interested in the distributions).
That, and purchase an outwardly crappy looking house, with good bones, in a “not to prime” neighborhood and pay it off fast (or pay cash).
I don’t know why everyone is going into negative yield instruments. Considering that cash is rapidly losing its value due to excessive government debt and money printing, this seems like a terrible idea. I much prefer owing the means of production.
Happy Birthday Jack!
Love Hunter
https://www.youtube.com/watch?v=gw6ErvziPdM
#111 Freedom First on 09.07.16 at 1:46 am
#73 Flop
Don’t blame your Brother. He simply made one mistake twice.
Also, Flop. No radiator fluid. Just because a woman divorces a man it doesn’t mean she deserves to be murdered.
Also, guys tell me that the reason a divorce is so expensive for a man is because it’s worth it.
//////////////////////////
The radiator fluid is for me…
M42BC
#98 Native American on 09.06.16 at 11:13 pm
#91 Metaxa
That’s a sacred medicine you idiot.
It’s not for improving writing skills.
You must follow strict dietary restrictions, including alcohol, that Smoking Man would never pass alive.
No shaman would have him on a ceremony, the spirit would chew him up.
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Never mess with yaje.
Or what it exposes you to will mess with you.
#132 Sam the Sham on 09.07.16 at 8:27 am
Vancouver the first Canadian city of millionaires!
Say what you will, for he last seventy years the best path to wealth has been through real estate, specifically owning you own home.
===================================
I am trying, and failing, to plumb the depths of the sheer asininity that actually believes that having the title to a house that may (or may not) sell for a million dollars makes one a millionaire…
In Canada we say “paycheque.” — Garth
…
In Kanuckistan, we say…. Will that be cash?………
looks like no interest rate increase until 2018 – maybe longer.
RE is just too protected an asset by banks and government:
http://www.bnn.ca/bank-of-canada-leaves-benchmark-interest-rate-on-hold-at-0-5-1.562346
Groundless comment. The central bakn is not trying to ‘protect’ an over-valued asset class. — Garth
“A new poll suggests that about half of working Canadians would be hard-pressed to meet their financial obligations if their paycheque was delayed for a week.”
“…The most common type of debt cited by respondents was a mortgage (26 per cent), followed by credit-card debt (18 per cent), car loans (17 per cent) and a line of credit (16 per cent).”
https://www.thestar.com/business/2016/09/07/half-of-working-canadians-living-paycheque-to-paycheque-survey-says.html
The Mortgage % I can understand, but look at the consumer debt. How can folks be this stupid? When did we get this dumb?
T2 is ensuring our Federal finances look the same.
I hope you are all preparing for a drought…
#140 Toronto_CA on 09.07.16 at 9:39 am
If I make $300k a year but only spend $40k a year because I choose to live frugally (most Blog Dogs are frugal 1%ers like me) then basing my retirement needs on the $300k is stupid. Any idiot can see that.
Most happy retired people will tell you that’s a myth. Spending barely decreases – which is the point of having money. Monasticism sucks. — Garth
———————
Have to agree with you Toronto_CA. That is the formula for becoming real wealthy. It must really bug some people that others have a large income, yet refuse to spend it on outward show of wealth such as expensive watch, cars, boat, cottage, big house, etc. I think people really hate it when others are wealthy and will not buy ‘stuff’ that they themselves want and think it will make them happy.
Some of us are real content to enjoy their retirement relaxing in their garden watching the butterflies, riding their bike, walking on the beach, reading a good book, listening to nice music, cooking good food at home, keeping fit, etc, etc. We get our enjoyment out of things that don’t cost much to own, do, or operate. Hence you do not need a lot of money.
And Garth, yes most people in our society think monasticism sucks. But to the monk that is what they choose.
“Take heed, and beware of covetousness: for a man’s life consists not in the abundance of the things which he possesses.”
– Jesus Christ (Luke 12:15)
Keep JC out of this. A full life of working should deliver a fulsome retirement. — Garth
Toronto home sales up 23.5 per cent in August, realtors vow to study foreign investors
http://business.financialpost.com/personal-finance/mortgages-real-estate/toronto-home-sales-up-23-5-per-cent-in-august-realtors-vow-to-study-foreign-investors
With the focus in Vancouver on foreign investors and their impact on their market, Toronto realtors say they will study the issue on their own in the coming months. Last month, the British Columbia began taxing foreign investors an extra 15 per cent on property taxes and some have linked that move to a major decline in August sales in the province’s largest city.
“TREB will also be releasing new third-party research, and consumer and realtor survey results throughout the fall and winter, with discussions focusing on foreign buying activity and issues affecting the supply of ownership housing,” said Jason Mercer, director of market analysis, with the board, in a statement.
http://business.financialpost.com/news/economy/bank-of-canada-holds-interest-rate-at-0-5-per-cent
A huge cloud remains over Canada’s housing sector, however, as households continue to pile on debt to purchase record high-prices homes, especially in Vancouver and Toronto.
The bank said “while there are preliminary signs of a possible moderation in the Vancouver housing market, financial vulnerabilities associated with household imbalances remain elevated and continue to rise.”
RE: #145 Capt. Serious:
“You do realize that dividends and capital appreciation are roughly equivalent, right? There is no mathematical reason to prefer receiving a dividend to selling shares at a higher price for the same amount. Why? Because the share price falls when a dividend is paid out. In other words you could create your own dividend stream through regular sales of the underlying security.”
I don’t sell shares. I only buy them.
If I ever foresaw a situation where I might want to sell shares of a company I was considering buying, I would not buy the company.
I’m in the game for the distributions. I understand that is not the way everyone plays it.
I have had one exception to this rule, a funny little spin off company that used to be part of a much larger Netherlands Company, that makes technology that lets you pay for stuff with your smart phone.
But I don’t plan on selling that either. Just interested in how high the share value will actually go once everyone starts doing that (paying with smart phones).
Polo expresses optimism for upcoming quarters. Wildfires taketh and wildfires giveth. First foundation poured in Fort Mac and a couple thousand to follow.
First 7 days in Sept in Cowtown and a boffo 14.29% increase over Sept ’15 in average price. Cannot be a supply issue. I suspect lovely bargains at the higher end. Strapped engineers, geologists and geophysicists perhaps.
#21 Almost a millionaire on 09.06.16 at 7:22 pm
“I am tired.”
Slow down a bit, shut out the unnecessary and keep going.
LOL at this: “Attention Hypocrites: Stop Judging”
http://www.iwillteachyoutoberich.com/blog/judgmental-money-spending/
CREB – Single Family Detached had the 14.29% bump in average price.
#142 Karlhungus
As I recall, the Trinity study you refer to used about a 100 year look-back of equity and fixed-income returns, starting a theoretical 30-year, 4% withdrawal-rate (adjusted for inflation annually) “retirement” during each of those years. Problem is.. at no time in that 100 year period were fixed-income returns as abysmally low as they are in today’s world. (8 years now and counting) Central banks (the U.S. Fed in particular) have rendered the Trinity Study largely irrelevant.
That being said, I don’t think there has ever been a better time to be alive. I marvel daily at what mankind has achieved in my lifetime.
#89 Smoking Man on 09.06.16 at 10:34 pm
#84 Context on 09.06.16 at 10:22 pm
#80 Smoking Man:- I saw you with the young lady the other day and had no idea you had an attractive daughter.
..
That was my wife….
……………………………………………………………………..
Now we all know you are the greatest fiction writer.
My wife “The Psychopath” “The Hag” “Fat ass” sorry I can not recall of them.
Perhaps you were spotted with one of your rentals.
Nice pic of you up top though! I thought you were bald, or is that a rug?
Toronto’s RE market still kicking like a mule:
http://www.theglobeandmail.com/report-on-business/video/video-toronto-home-sales-surge-235-to-record-despite-supply-crunch/article31741240/
Fanny Mae and Freddy Mac cry uncle (oh, wait, did I say Fanny and Freddy, I meant CMHC….cough):
http://www.theglobeandmail.com/news/politics/cmhc-head-warns-of-funds-shortage-to-meet-housing-strategy-demands/article31727190/
Ridiculous really. Why are they insuring all these mortgages? There is no money here folks, this market is made out of thin air and promises.
Toronto home sales up 23.5 per cent in August, realtors vow to study foreign investors
http://business.financialpost.com/personal-finance/mortgages-real-estate/toronto-home-sales-up-23-5-per-cent-in-august-realtors-vow-to-study-foreign-investors
With the focus in Vancouver on foreign investors and their impact on their market, Toronto realtors say they will study the issue on their own in the coming months. Last month, the British Columbia began taxing foreign investors an extra 15 per cent on property taxes and some have linked that move to a major decline in August sales in the province’s largest city.
———
Looks like TO is still on fire. Makes sense as it took many years for it to catch Vancouver’s momentum. Still plenty more years of price increases to catch up to Vancouver debt levels and price to income ratios.
Up and up and up for TO. See you Vancouver!
#145 Capt. Serious «You do realize that dividends and capital appreciation are roughly equivalent, right»
Nicely said, I would add that some companies that pay a big dividend do so because their growth prospect alone is not attractive enough for investors. I suspect when you buy a high dividend ETF you get a lot of those. So it is a compromise, you will sacrifice value appreciation for more immediate returns, if you are going to reinvest most of that money it makes little sense to seek dividend paying stocks. Still, if you need the income and are ok with slower growth many great companies pay dividends, better they increase their dividend every years, sometimes for decades:
http://www.suredividend.com/dividend-kings/
#148 Ace Goodheart
Hey Ace that’s 105% total?
Like those athletes that
give more than 100%?
WTF is “radiator fluid”? You can tell who’s never worked on a car in their life.
Whoops, gotta go put some gas tank fluid in the truck so I can get home!
Bye!
#146 Insurance Guy
Wife, 18 month old, dog, and myself. We live on $40K a year, and quite comfortably, in Toronto. Save over 50%. It’s easily doable. We don’t buy any toys that provide instant gratification then end up on ebay. And no, we don’t eat Kraft Dinner and Hamburger Helper on a nightly basis.
Weekly? — Garth
*****************
Not sure how that works. After tax income of, say $32,000? Save 50% that leaves you about $16,000 a year to live on.
Garth opined: “Most happy retired people will tell you that’s a myth. Spending barely decreases – which is the point of having money. Monasticism sucks. — Garth”
Obviously then, everyone should know what your household spends over a year, and plan for that.
For those who do not keep track of every penny, It is enlightening to see:
1) where money actually goes;
2) if you write down before starting what/where one spends, it is *VERY* interesting to see where one THINKS money is going, but where it ends up, and the amount, is what makes one sit down in a cold sweat.
Surprises for me are A) food and assorted sundries, B) taxes, C) Booze. And, I don’t think we are big drinkers, but that last one was surprising.
#170 radiator fluid: if ingested will help you to quickly depart this vale of tears (much faster than the Harley)
In order to save money get rid of the car. Live in a location to take public transportation with a National car leasing place at hand. There is always a weekend special at National and don’t forget the taxi.
‘Retirement’ – LOL, she lost her job.
#171 Julia
#146 Insurance Guy
Wife, 18 month old, dog, and myself. We live on $40K a year, and quite comfortably, in Toronto. Save over 50%. It’s easily doable. We don’t buy any toys that provide instant gratification then end up on ebay. And no, we don’t eat Kraft Dinner and Hamburger Helper on a nightly basis.
Weekly? — Garth
*****************
Not sure how that works. After tax income of, say $32,000? Save 50% that leaves you about $16,000 a year to live on.
……………………………..
Insurance Guy never said they make $40K, they live on $40K.
Absolutely doable. We have two boys, pay childcare for one of them and manage on about the say amount without sacrifices.
Mind you maybe for some people not buying the latest gadgets or not having cable TV would be considered major sacrifices.
We have an OTA HD antenna giving us more TV that we need for free, cook 99% of what we eat, lots of fresh veggies and fruits, no processed crap at all.
The ONLY thing we spend most then others on is travel, we book whatever comes up as a great deal and take the kids to at least one new country/location every year! We actually live in Vancouver where all the talk is about housing costs but we rent in a safe, well maintained Co-op building that not only keeps costs down but allows us to live in a community where the kids have lots of friends and are happy.
It’s still possible to live well and save on an average household income in Canada if one makes the right choices. Our TFSA accounts are maxed out, RESP contributions each year 2500/child to get max benefits and also able to contribute to RRSPs.
But we never had any debt, drive a great little Civic that we bought 10y ago, never needed any repairs and will likely drive it for another 10 years. Gets me to the same places that some of my friends new BMW or Mercedes SUVs without the need to live paycheque to paycheque like those friends.
Read…
http://www.theatlantic.com/politics/archive/2014/03/heres-how-nasa-thinks-society-will-collapse/441375/
Have you been putting all of your money into your house and you are near retirement? Did you tell yourself long ago that you would be happy to sell at prices that are even lower than today’s market value? What are you waiting for? Now is the time to sell. The market has dropped and it looks like it will continue to do so. Why are you so greedy? Greed is what always kills investors. You want what your neighbor’s got in spring, but you will not get it in the current market and there’s a high chance it will not come back for many years. Price aggressively for a sale and ensure that you will have a good retirement. The market has turned, the first ones out will win in this market.
Name says it all… semi-retired (about 24hrs a week on average) at age 43 and loving it.
No, most people are innumerate and will never get there and they by and large don’t deserve to. They will not educate themselves, grow up or make sacrifices.
And I am glad they don’t and won’t. Keep buying overpriced consumer shit, sheeple, keep paying your taxes and keep working hard. Those of us who don’t have to salute you and thank you for your idiocy.
Just stop voting for the boy king and this will be paradise…
#132 Sam the Sham on 09.07.16 at 8:27 am
Vancouver the first Canadian city of millionaires!
Say what you will, for he last seventy years the best path to wealth has been through real estate, specifically owning you own home.
——————–
Not for everyone. Hurricanes, Earthquakes, Land Slides, Sinkholes, and the Economy all make RE a very volatile asset to own.
You cannot add a house to your net worth, unless you sell it… get it off the books.
#175 Noel ‘Retirement’ – LOL, she lost her job.
No, Noel. She QUIT her job.
150 For those about to flop… on 09.07.16 at 11:04 am
#111 Freedom First on 09.07.16 at 1:46 am
#73 Flop
Don’t blame your Brother. He simply made one mistake twice.
Also, Flop. No radiator fluid. Just because a woman divorces a man it doesn’t mean she deserves to be murdered.
Also, guys tell me that the reason a divorce is so expensive for a man is because it’s worth it.
//////////////////////////
The radiator fluid is for me…
M42BC
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You’d be better off eating a 3 inch 00 12 guage round.
Link to antifreeze poisoning.
https://medlineplus.gov/ency/article/002751.htm
Save money by throwing your service providers a curve ball or kick them under the bus. OTA with a Lava HD 8008 multi-directional will get you free television with lots of stations. Go low format on the internet and kick in a new DNS high speed server on a free public system which I am on now with 8.8.8.8 8.8.4.4. :)
Rent in Vancouver has been skyrocketing, surely buying long enough ago was a good hedge against rent increase. Same reason I own my skis instead of renting them. At what point should I buy a place here?
We have some official numbers out for the taxman in Toronto and this is just one of many. Airbnb website details 8,600 host sites are up for Toronto renting out rooms or units with many more throughout Ontario.
presume this lawyer site is current
could not believe what us attorneys are paid
breakdown is city,state…hourly wage
http://www.lawyeredu.org/lawyer-salary.html
Wife, 18 month old, dog, and myself. We live on $40K a year, and quite comfortably, in Toronto. Save over 50%. It’s easily doable. We don’t buy any toys that provide instant gratification then end up on ebay. And no, we don’t eat Kraft Dinner and Hamburger Helper on a nightly basis.
Weekly? — Garth
Ha, sorry, to clarify, we spend $40K a year, and the rest of our income (>50%) goes in the bank. Very doable in Toronto.
Combined is about $140K, but we’d be fine at a combined $100K.
Saving money, just hoop the grocery stores with their loss leaders and stock up. There are lots of half price sales with no limits, but to make things look good split the buying with your partner and do the same with the next nearest store on short-term sales. T-bone steaks go on sale to bring you in, so have a freezer to move them out all week long at less than half price.
Very glad husband and I had great annual overseas vacations when we were ages 40 through 50.
The world’s a different place now…there’s absolutely nowhere either of us want to go now that retirement is imminent. Far too many nutcases out there!
Easy to save money if you don’t spend any.
Yet we lack for nothing…grown child and grandchild are doing fine, need no help from us.
#164 a Yank in BC
Fair point, however, the 4% is a very safe withdraw rate. It was measured during the start of the worst 30 year retirement. There were other times (during the 90’s) where your nest egg would have survived an 8% withdraw rate.
The nest egg is also based on 50/50 stock bond allocation I believe. You could adjust to 75/25 if you were worried about it. Point being, all the factors have been considered. Play around with firecalc to see your own retirement.