Retiring Early Should Never Be Expected : April Net Worth Update (+0.97%)




Retirement Saving is not easy for many Canadians especially if they are living pay to pay and have a high debt load. Retiring early is a nice dream of flowers and freedom for many of us but the truth is that it should never be expected.

How can you save for retirement if you’re living pay to pay, week after week, month after month, year after year. Well, there are ways but you must be willing to spank your finances back into action. This means taking control of the way you spend, save and view the way you should be living in comparison to what you can afford. A budget is what got us started.


Some of the best retirement plans just look good on paper


I remember when our financial advisor told us that we had average retirement savings for our age the wife and I just looked at each other stunned. He said he has clients our age with much more and others with hardly anything at all but that we had a good head-start in the race to retiring early if we wanted too.

Although that sounded dandy we never rely on just words of the future because no one can predict them. What stunned us the most was knowing that we weren’t as far ahead as we thought we were even though we’ve bust our butt saving as much as we could. The important part to remember is that everyone has different income levels and retirement dreams so no average retirement savings plan will be alike.


Be Your Own Financial Advisor


How much do we need to retire? Don’t ask me because I don’t know. What I do know is that we WILL need a plus sign next to our net worth. I may come back in 25 years to update this post to let you know whether we hit the mark or not. It’s a guessing game for everyone. No one retirement calculator can tell you exactly what you will need. It’s all assumptions based on stats, income and potential future growth or decline in other-words, forecast models.

We’ve had people cut to bits our choice of paying our mortgage off early especially when we have about 25 years left before our so-called retirement age of 65. They felt we could have invested 100% of the money in our retirement investments and lived happily ever after. If only.

Our son is very young still and although we had a child in our late 30’s our financial plan captures all avenues of a balanced basket. We didn’t want to put too much into one investment and not the other and wake up one morning to bad news on the television.

It is my belief that owning a home free from a mortgage becomes more of a stress reliever than hoping that our investments soar. Just recently with the wild fires in Fort McMurray taking down family homes and businesses it made me realize just how important it is to have emergency savings in the bank and lots of insurance. It will take time to rebuild homes and get people back to work so they can earn money. Who would have expected that to happen?

This is exactly why we must never believe we are free from all financial road-blocks especially if we have money in the bank. A million dollars sounds nice but won’t go as far as you think in the future. We must think beyond the million.

We’ve lost money in the investment game and gained it but what we do know is that no one can take our house away from us. If we need to downsize the option will always be there with 100% equity in our pockets even if we choose to rent away our golden years.


Every bit helps


My parents recently sold their static caravan (non-mobile home) to move back into one of their rental homes which was fully paid off. They were worried about living their retirement years in the caravan so they banked as much as they could by renting out their fully paid home and living debt-free in the caravan for 7 years.

They are confident they can continue to travel and enjoy their retirement years comfortably because they saved, planned and expected the worst could happen. They still work part-time casually to earn extra cash because they can even though they both have a nice pension plan. I would do the same if it were easy money and posh living in mansions and castles as house-sitters. I hope to follow in their footsteps and beyond in our journey as a family.


When something goes wrong


I’ve had countless conversations with colleagues and friends about retiring early and I’m always amazed at how many of them are adamant that it’s going to happen for them. Just recently a couple we know had to downsize to add dollar signs to their already depleting bank account.

It was tough for them to keep up with savings, debt repayment and retirement even though the wife has a defined benefits package. Since retirement years aren’t far off they felt it was better for them to sell their house to move into something a bit smaller and further away in town which means less expensive.


But our house is how we will fund our retirement…


I read an article from 2014 that stated that 24% of Canadians are relying on their home to fund their retirement and many expect to be working past the age of 65. I’m almost certain that even though 2 years have passed since the stats were released that nothing much has changed. Income isn’t going up, minimum wage is still low compared to living expenses and jobs aren’t readily available to all graduates and those seeking employment.

Life is tough… it always will be unless you do something about it now and always expect that anything can happen at any time.

On average, Canadians expect 10 per cent of their retirement income to come from home equity. They expect the rest of their retirement income will come from the following sources:

  • 30 per cent from government plans.
  • 27 per cent from personal savings.
  • 23 per cent from employer plans.
  • 5 per cent from inheritance.
  • 6 per cent from other sources.


Retiring early is never a secure dream


Another friend of ours who works for the government recently just found out that her position along with many of her colleagues roles will be ending. All those years of believing that retirement would be golden and that she had nothing to worry about has quickly turned to fear.

That pretty retirement pension doesn’t look that fruitful after all. Just because you work for the government doesn’t mean you are on the easy road to retiring early. Anything can happen and you should be prepared for that pink slip just like everyone else. Oddly enough she would boast about how good she had it but now it’s all going to disappear unless she finds another job internally or at another office out-of-town.

The good news is that even though she will get a decent severance package from her employer she can sell her almost paid off house and move wherever she can afford housing as her kids have gone off to University and graduated. If you are lucky to have the ability to move for work in a city that is cost-effective for your budget this may be an opportunity to get back in the retiring early game.

Trying to find employment of any sorts these days is tough let alone when you are in your 50’s and 60’s. Retiring early is really a thing of the past for many who expect to work past the age of 65 because they simply won’t have the money to fund their retirement let alone retiring early.

We have friends who have never owned a house, have no savings, no retirement investments while working for just over minimum wage. The wife told my wife that she is scared about the future. Although she is educated she continues struggling to find a job in her field. Even when she does it always seems to get axed which puts her back in the unemployment line where she currently stands.

On her resume she has three college diplomas plus one University degree and may find herself back in the retail and fast food industry just to make ends meet. She doesn’t know what she will do if she gets ill and how she will be able to afford the future so she takes it day by day which is frightening.

She knows retiring early is never going to happen unless she wins the lottery or someone generously funds her retirement. There won’t be any inheritance coming her way as her parents have passed on even though that should never be expected. This is just another reason relying on our own pressures to budget, live frugally and save for the future is imperative.

Related: Download our family budget FREE

I’ve learned you rely on nobody for money, expect the worst while living happily in the present and be prepared for as much as you can before it hits you financially. If someone in your family was to fall ill or even a child and you have to take time off from your job who will help you pay the bills? An emergency fund is imperative for everyone and it shouldn’t be part of your mortgage, requirement savings or any other financial plan.

This is cold hard cash in the bank or possibly money stashed away in a Tax Free Savings Account which can easily be with-drawn. Cashing in your Registered Retirement Savings Plan to pay for debt or bills is a big no-no but for many people who have no other resources they have tapped into their future to fund the present. Their outlook on retiring early is grim at best even if they have to work on rebuilding that money, if time prevails.

In the meantime we will continue to budget and live frugally because we don’t know what the road ahead will hold for our family. This is our way of protecting our kingdom.

Is retiring early on your radar of have you even thought about what you might do in the future?


Our net worth 2016


April 2016 Net Worth Losses and Gains

RESP Contribution 2016: $208.33 a month.

Changes to our Net Worth in April

I made a mistake in last months Net Worth and calculated the UK funds at approximately $5,000 more than what it actually was. Don’t ask me how I managed to mix up the figures and make the mistake in the first place, but I do want to rectify the situation.

We actually had a better month than what it actually looks like but due to me correcting the mistake I found, we are approximately $5,000 less than the actual gain in Net Worth this month.

The Net Worth figure is true, just the monthly gain had to be adjusted.

Other than the income coming in, we didn’t fare that well. Our investments didn’t really perform this last month, although they didn’t lose, they didn’t make any money for us either.


Understanding net worth


What Does Individual Net Worth Mean?

Net Worth is a snap shot of your financial health sort of like a picture or debt to net assets. In simple terms it’s a total of the value of your assets minus your liabilities.

We credit the growth of our net worth due to patience, perseverance, using a monthly budget and not giving up. Your numbers may go up and down but don’t let the numbers scare you rather understand why and move on.


Canadian Budget Binder Budget Spreadsheet

If you would like to use our budget I offer a FREE downloadable budget which I created and that you can use at home just like we do. I don’t charge for it because I want you to save money not spend more!

2014 Free Money Saving ToolsEnjoy and let me know what you think.

There are tonnes of other free printable lists offered at Canadian Budget Binder to help you achieve some of those financial goals and build your net worth.

Now… what you need to do is determine just how much net worth you actually have and go from there….


Determining net worth


Figuring out net worth is fairly easy as long as you know your personal numbers or monthly finances which means you need to do your homework. Net Worth is simply adding up all your assets (what you own) then taking away your liabilities (what you owe) which will give you a net worth number.

Understanding your net worth will help you determine if you are on track to meeting or beating your personal financial goals. It doesn’t get any easier than that.

How to Determine Net Worth?

Net Worth = Assets – Liabilities


Calculate net worth


Do you know how to calculate your own Net Worth?

Now you can stop asking yourself the question, how do you find out your net worth? Why? It’s easy to determine. We like to calculate our net worth every month so we know if we are still on track. Some people calculate it yearly or quarterly. It’s really up to you and how informed you want to stay when it comes to your financial health.

Net Worth is essentially an estimate and not everyone uses the same type of figures. Some people don’t include vehicles like we do or they may leave out the assets inside the home like we have. It depends on what you want to calculate or what you can sell today and make money on.

Why not go ahead and calculate your own using our Free Money saving Tool Net worth Calculator (Canadian Budget Binder 2012)


Why you should set goals


Setting goals are the only way we work towards achieving what we want to get done as a couple around the house and in our financial life. I know that without them we would be flying by the seat of our pants which wouldn’t work for us.

I find it’s much easier to be held accountable when I share what we need to do with all of you. Yes, my wife refers to the list when she asks what I plan to do next. I’m not sure if that’s a good thing for me or not.

In the graphical representation below, I have used excel to provide a prediction based on the past years monthly net worth figures.

Using figures from our actual net worth gains over the past 12 months (the solid blue line) it has suggested that by the end of this year (2016) we should be just shy of $900,000.00. This can change over the course of the year and is only a prediction based on known historical figures from our finances.

According to the chart, we should hit the million mark in June 2017.

This is nice to know but anything can happen over the next year. Hopefully with some careful planning we can achieve this goal and go beyond it.

Do you set goals for the year?

Forecasted Net Worth as @ end of December 2015


Our financial numbers


April 2016 Preceding 12 Months Net Worth

When budgeting anything is possible, we are proof of that although we still have a long way to go in our journey. These are our numbers and our goals, not a means of comparison towards your own goals to others target goals.

We don’t care how much money others make or if they have a high net worth or if it is lower than ours as it’s not a competition. I hope our experiences perhaps will help guide you along your financial path working towards debt freedom.


Different financial paths


Not everyone has the same path in life. Some of you may have had to start over like I did or go to school a second time and now have OSAP loans to pay back.

Others may have divorced, lost money in the stock market or other investments, suffered job loss, fell ill or was injured on the job etc. but you can’t let that stop you from achieving your financial goals.

Some of you may have been given trust funds, paid-for homes, paid educations or perks in life that give you a financial kick-start and that’s OK too. Remember what I said, “It’s not about how much money you make, it’s how you save it”.

Focus on you and don’t let the evil eye of money jealousy or keeping up with the Kardashians cloud your vision. No one cares about your money as much as you do so don’t waste your energy trying.

The only reason people accumulate wealth is because they know how to save or invest it wisely even if they did inherit money or win the lottery. The smallest improvements should mean big strides in working towards reaching your goals.

Sometimes we have to fail in order to learn and we’ve all been there. Money can be an evil force for some people especially those who have a negative attitude towards their own financial situation.

I urge you to be optimistic and little by little with determination you too should see improvements, if you want that to happen.


Net worth updates 2016


Below you can click the links to read past 2016 net worth updates to see if we were on target or if we struggled with some of our numbers.

In the last year since April 2015 our net worth according to our figures has grown $128,044.61

March 2016 $802,854.38 – March 2015 $674,809.77 = +$128,044.61

That’s all for this months net worth update but please check in at the beginning of April 2016 to see how we made out in March 2016 and what has happened to our finances since.


Remember: “It’s Not About How Much Money You Make It’s How You Save It

Check out our past actual Monthly Budget Updates to see how much money we earned and where the money went for the month.

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  1. I don’t see retirement as an end goal. I see it as a deadline so that by the time it comes, I should be ready. This strategy helps me to prepare for it and hopefully I’d be completely ready before I enter retirement age.

  2. It does help though if you are making a lot of money, in that you can save more, if you have that mindset. But in general, there is more emphasis on how much you save.

    As a former federal government employee, I thought I would be on the traditional road to retirement, put in my 30 years and then be done with it all. I’ll most likely keep on working on passion projects, but it would be nice to retire early from the daily grind.

    1. That’s true. When we started budgeting I was only making $15 an hour and still managing to save however we didn’t have any debt apart from daily bills and rent. Sometimes more isn’t always necessary for everyone because we all live different lifestyles. Have you seen anyone in your organization get the pink slip after they thought they were in a safe job for life?

  3. I’m not sure if we’ll ever really retire. At this point, we are both enjoying life and what we do, so at least we won’t have to deal with counting down the days to retirement with misery.

  4. We have thought about retiring/semi-retiring early. We have always saved money in RRSP’s and I have a defined benefit pension plan. It is hard to know how much is enough. We will just continue to live below our means so we can keep putting money away and have the freedom to retire when we are ready.
    As for your friend, who is being laid-off from her government job, the money in her retirement fund is not going to disappear. She will have to choose what to do with it (like convert it to a LIRA or RRSP). But she will have to set up some sort of savings plan to make up the difference in savings (especially if she is many years away from retirement).

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