It should be evident by now that I think in terms of numbers, tables and spreadsheets.
I have been this way for as long as I can remember.
I believe in income floors for guarantee and to use my CCPC for our discretionary expenses.
My usual expenses can be approximately 60K per year.
|For me and hubs||65 years old||70 years old|
|CPP x 2||85% Max||1916/ mo||2721/ mo|
|OAS x 2||1202/ mo||1634/ mo|
|RRIF||35K/ year||40K/ year|
|Income Floor||72K/ year||92K/ year|
The above is invested and planned for safety and guarantees. That is why I use 5 year laddered GICs in our RRSP.
I have projected what we could receive at 65 years old versus waiting to start our CPP and OAS at 70 years old.
Waiting to start our CPP and OAS would be cheaper and simpler than buying an annuity.
There are many ways to get where you need to in life. You can go where you need to go by slogging through a dirty swamp. Or you could take a boat. It is all up to you and what you consider fair trade offs.
And don’t forget, just because YOU think it’s so darn macho to wade through the swamp. Your dear wife may really really want to take the boat!
I prefer an element of guarantee for the amount of money needed to support our basic lifestyle. There can be no market risk, inflation risk or longevity risk with that amount. Thankfully my husband is in 100% agreement.
If our discretionary portfolio performs well, we can always increase our lifestyle if we want. But either way, I need to know that we will have a safe floor to support our basic lifestyle.
I realize that building the income floor is expensive. Especially in today’s low interest rate environment. Therefore, I do not need a large income floor.
I do not use our cash flow real estate in this calculation. I do not consider this risk free. Unfortunately, the risk is usually me but I digress.
I certainly do not use the equity market in this calculation. Stocks need to reside mainly in my discretionary portfolio.
If one has a defined benefit pension plan which covers their living expenses, then one could simply use that. Most self employed physicians do not have these.
Do not worry guys, you also do not need it.
I will review my retirement plan yearly. That is the point, this is a plan. It is meant to be reviewed.
The only certain thing in life is change. Learn to embrace it. It is not going away.
We could be so lucky as to get to these senior years. Thus I will do my best to make certain that we will not be worried about finances at that time.
So gentlemen, make sure to ask your wife if they want an income floor. You might enjoy retirement based on a safe withdrawal rate. But your wife may secretly be freaked out.
It takes time to build these structures into your financial plan. It starts with laying the foundation now.