In the realm of Personal Finance, at what point in our quest for Early Retirement and FIRE ( Financial Independence Retire Early) do we say that enough is enough? At what point do we have enough to retire? Or if not interested in a “traditional” retirement of drinking Pina Coladas while sitting on a beach, “waiting for death to arrive”, then when can we start anew doing what you truly want to do with your time?
Here at Marco Polo Money, after many years of dedicated work and applying myself, 4 years ago I finally got the job I was always trying to get. Is it what I hoped for? Absolutely. However, it also is a massive time drain, where my work week is always 50 hours, often 60 hours, and sometimes 70+ hours. It is a high stress job that often consists of shift-work away from family, and requires that important holidays and family events be missed. The bosses do their best to try and help out to minimize this, but it is often very difficult with an understaffed workforce.
This is the reason why Early Retirement is something that we are seriously considering (that combined with this nasty and brutal Prairie winter we are experiencing!). I can retire at 50, with a pension, but one that is penalized. If I wait until 55, then there is no penalty. In both cases my pension is based on years of service worked, and it is a Defined Benefit pension, which is a rarity in this time of cutbacks in pensions, or even the elimination of pensions outright.
The Defined Benefit pension is a good thing. It is a BIG cut of my cheque every 2 weeks, but it is worth it. However, the 2 options of retiring at 50 versus 55 are very different in where we would stand financially, and the decision will be largely based on how well our investments do in the next few years.
And this year they DID AWESOME!!! Now, this being said, we took some very big risks in the Cannabis sector and China as well. But they have paid off with around 100% return this year, putting us very near a $100K net worth, which is huge considering that we had just finished paying off all of our debt (minus the mortgage) just over 2 years ago. Was there a big portion of luck in this? Absolutely. We are generally fans of the Couch Potato Portfolios based on Index investing for the majority of our portfolio ( well at least now …. after harvesting some of our profits). However, in that my Defined Benefit pension acts largely like a Fixed Income fund (but even more stable in my mind), we are willing to take on a lot more risk with some of our investments. And ultimately, if for some reason our investments don’t work out, I could just work longer and rely more on my pension.
The biggest factor in this decision does come down to health, family, and quality of life. The demanding nature of my job, no matter how much I enjoy it, means that health, family, and quality of life suffer. There is no way around it. So the high risk investments end up being a hail Mary of a sort to try and get out earlier if at all possible.
The nice part of all this, is even at 50, my pension would likely be around $30,000. This would still allow 15 years for our investments to continue to grow. At 65 things change, my pension goes down, but the CPP would come into play, as well as OAS. The plan would be to access our investments at that point as well, which would likely bring our income to well above $30,000.
This all assumes that at 50 neither of us would work. I think that is ridiculous. personally. I have no issues working a job that I find interesting for up to 20 hours a week (for a resident/work visa or just for some extra money). The remainder of my time could be for music, exercise, etc.. It would be time to get my music career back on track!
AND, very importantly, this would most likely NOT be in Canada. We discussed some possible top choices in the Early retirement world here, but we have some specific favorite countries and cities on our list. Without going into exact details or specifics of why (that will come later), here they are:
All of the above locations look like they are very possible to live on $30,000/year, not including school and vacation costs. There are some other countries that we are considering, mostly in Europe, but it looks they they would be dependent on a work visa, in that a retirement visa would likely be impossible in Europe based on how little I would be making with my pension (the requirements are quite high in most European countries).
We are planning “Research Trips” to all of the above places over the next few years. Soo ……. this year we are starting our research trips with a trip to Puerto Vallarta (yay!!). We are planning to have some general fun in the sun, but we will also be looking at all the sorts of things that people who want information for moving there need to know. Look forward to some future posts about how things in Puerto Vallarta work, and our general perceptions of what it is like overall. Upon our return, we will definitely have some posts to give you a “boots on the ground” idea of what to expect if you are considering Puerto Vallarta as a possibility in your quest for Early Retirement.
Stay tuned for future updates.
Marco Polo Money – Be safe and travel far!