Welcome to our new Living in Retirement blog, where a couple will regularly write about their real-life retirement journey.
Last month we climbed the stairs to the hawk tower at Holiday Beach in Amherstburg, an Ontario town near the Windsor-Detroit border. We spent the afternoon watching different birds migrate south and learning about them from the volunteers that count the various species that fly by.
Two and a half years ago we had never heard of a hawk tower. Two and a half years ago our ongoing adventure of living in retirement started. How did we get here?
In early 2010 we were visiting retired friends in Bracebridge, Ont. At that time our retirement was something still far out on our radar. But we appreciated their lifestyle and over a glass of Niagara red, we began to discuss our own post-work plans. Astrid suggested that we consider retiring in three years, which might give us enough time to plan how and where we wanted to do so.
Once we realized that retirement was not some ephemeral concept on TV commercials but could be imminent, we decided to assess our various investments to see if we could in fact achieve this goal within a three year time frame. Over the years we had been investing small amounts into our Registered Retirement Savings Plans (RRSP) but we also had to collapse some for personal reasons. Peter, the accountant in the family, put together a spreadsheet to map our retirement model.
Once we had an idea of how much we had saved, the question we asked was: Would we need more and if so, how much?
To figure that out, we looked at our sources of income. Having worked for 19 years as a teacher, Astrid would be eligible for a reduced pension. We estimated what that pension amount might be by using the retirement planning tools on the Ontario Teachers’ Pension Plan website.
Both of us would be eligible for the Canada Pension Plan (CPP) retirement pension, which we had both contributed to for the past 35 years. We went online and downloaded a form from the Canada Revenue Agency (CRA) for each of us. We signed and mailed the form back to them and a few weeks later they sent us our CPP statements. The CRA will let you take your pension early when you turn 60 but there is a penalty. Nevertheless, we both decided to take the CPP when we turned 60 to increase our monthly income. We then factored this revenue into our retirement planning.
Our retirement model included a budget based upon Toronto costs for gas, hydro, cable, Internet, water and other fixed costs. We looked at how much we typically spent on groceries, clothing, entertainment, car expenses, hobbies and other variable costs that were within our control. Because we thought we would retire in Toronto we used these costs in our retirement spreadsheet.
After we added it up we came to a few conclusions. The first was that Toronto was an expensive place to retire. The second was that we did not want to retire with a mortgage or a car loan.
In order to be able to retire in three years, we would have to get rid of the car – which was unlikely; fully pay down our mortgage – which was seriously unlikely; or move out of Toronto – which was a concept we were willing to explore.
The initial process of mapping out our retirement options was the start of the journey that eventually led us to the hawk tower. Once we started crunching the numbers and examining our options, we found we were forging an exciting new direction for our future.
In our next blog post, we will look at how we decided where to retire.
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