Monday, December 14, 2009

Retiring at 45?

I've stumbled across a very interesting blog that I've been following. Tim has decided he's going to retire at 45. That really intrigued me and got me thinking about my retirement plans again.

At first the idea of retiring at 45 seemed just crazy to me. So I was intrigued and had to read on. I thought maybe he was just a little bit crazy and/or naive. I decided to read his blog starting from the beginning and I've only just now gotten to 2007, but already I can tell that Tim has given it some thought and has a viable plan.

The "conventional wisdom" or the notorious "they", recommend 70% of your last years income. The Wealthy Barber recommends 100% and I thought he had some good reasons for it. Tim figures all he needs is 40% and again he has some good reasons for it.

I was already planning on writing about retirement and advocating for the 100%. However, I was falling into that same old trap again. There are no magic numbers and no one should give you a number without knowing what it is you want and plan to accomplish. That number is going to vary for everyone based on the answers to a number of questions.

  • Why do you want to retire?
  • What does retirement mean to you?
  • What do you plan to do in your retirement?
  • When do you plan to retire?
  • How much money do I need realistically to make that happen?

I know its hard to plan for something so far in advance, but I also think it's necessary. Especially if you have high hopes for your retirement. The younger you are the more options you have. Compound interest is amazing and the younger you start investing the more impressive the results will be. However, deciding you want to retire at 55 when you're 53, might be a tad too late.

I have a hard time forcing myself to go in to work, so retiring at 45 does sound kind of appealing. Tim wants to write full-time and by having enough to pay his expenses through his retirement savings. Allowing him to focus on his writing career without worrying about having to make a living from doing so.

For me, that's the key issue. Why do you want to retire? If you're happy doing what you love to do, why would you want to stop? 45 is still 13 years away for me and I don't think I could handle the software industry for that much longer. Heck 6 more months, is feeling quite painful. That's why I'm studying to be a CGA and at least right now I can see myself working as an accountant that long past the age of 65. Doing what you love has to be the most important thing and I don't think you'd want to put that off any longer than you have to.

I'm not sure how the retiring at 45 plan would work here in the lower mainland though. Tim's home and mine have about the same value. However, he plans to retire in that home. I figure I have at least 2 upgrades to go before I'll have a home to retire in. He's in Saskatchewan by the way.

I think 70% is probably a safe number to throw out to the masses. Especially if you don't take time to determine what you want to do when you retire. I still recommend sitting down and figuring that out. Hmmmm... I suppose I should do that myself too. Maybe something else to blog about. :)

I'm still leaning towards supplying 100% for a few reasons, but I'll get to that on a future post. The point here is to think about what you want to do in your retirement and when you want it to start. Also, I really encourage you find your passion and find a way to make a living at it.

If you want to share your retirement plans, I'd love to hear them!


  1. I don't have any retirement plans. I like doing what I'm doing...which is a stay-at-home-mom! It's 'hard' but not too has it's won't last forever...eventually the kids will grow up and the rewards will be wonderful! I'm hoping my at-home business will grow so I won't need to go back into the workforce then. I wonder what my husband's plans for retirement are???

  2. the idea of him being home all day sounds nice...and scary! LOL :)

  3. Just keep working at it and I'm sure the business will succeed! I think it's a good idea to discuss your retirement as a couple. After all you'll be with each other for many years after you stop working. Also, think about what you're going to do when your husband is home all day.