You are too young to retire
Hey folks,
Welcome to a new post for your Weekend Reading – this one about being too young to retire.
Before that, some Weekend Reading last weekend on the subject of fixed income, why I have some along with my existing portfolio of individual stocks and ETFs:
You are too young to retire
Image source/attribution: Jill Wellington, Pexels.
Inspiration for this post arrived from attending a few retirement parties of late with work colleagues, another one as recently as yesterday and a few more to attend this spring.
Is age 50 too young to retire?
What about age 55? Age 60?
After talking to some work colleagues who submitted their retirement letters and who are now moving on, I know their ages. The celebration yesterday was for someone in their early 60s. They talked and yearned about more time at their cottage, doing small home reno projects, and leaving early morning Microsoft Teams calls in the rearview mirror.
They also talked about their desire to retire now since they “had enough” both mentally and financially – support from the latter after working with their financial advisor or planner and doing some retirement math on their own to bridge the gap between spending needs now and when their pension benefits would kick in, at age 65, including their firm intention to take CPP and OAS at that age too.
Although I’m leaping to lots of assumptions here, this makes me believe that the personal retirement savings of some work colleagues (the sum of RRSPs, TFSAs, non-registered investments or other assets) is likely small to modest beyond a workplace pension – in that they needed to work to ensure they were not sacrificing their personal portfolio too much, too soon. I get that. After decades of raising a family, buying a cottage, paying down a mortgage or two along with other expenses I’m sure, it seems my colleague was more than ready to permanently slow down; cut the cord from work and enjoy their time more while they still have decent health. Good on them. 🙂
This individual is however not the first person to mention the following to me:
“Oh, I can’t afford to retire yet but thinking age 63 or so should be fine since that’s when I can get my full OAS and decent CPP income.”
And my work colleague is hardly alone…
In looking at some stats (Source: StatsCan) the average age of retirement is hardly for anyone in their 50s:
These are also not easy times to retire…
Rising general inflation, uncertain tax rates, and higher healthcare costs could very well impact many retirees at any age. Myself included. Certainly, starting to save for retirement early and often and getting out of debt faster than most would be enablers – and I hope they have been for us.
You are too young to retire – is early retirement right for you?
Although many Canadians seem to expect to retire between the ages of 60 and 70 above, there is absolutely no hard and fast rules about when you need or must stop working of course.
Your retirement timeline will depend on many factors, I’ve highlighted some milestone ideas below:
3-5 Years Before Retirement
This is where dreams might start becoming a reality. I was there. I wrote about the emotional side of early retirement back in 2021 as my own evidence.
Somewhere between 3-5 years before retirement, it’s probably wise to get some retirement details in order. Accuracy isn’t overly important IMO but the process of planning is.
I recall focusing on our desired lifestyle and spending habits to go with it: what early retirement or semi-retirement or full retirement might look like:
- We started estimating our retirement spending levels, our income sources, and inflation factors.
- We started evaluating our portfolio returns over the last 5- or 10-years.
- We looked seriously at our sustainable cashflow from our portfolio (passive dividend and distribution income since we’d be too young to accept any workplace pension or any CPP or OAS government benefits).
- We started tracking our spending in more detail to challenge those spending assumptions.
1-2 Years Before Retirement
As recently as early 2024 for us, things got more serious.
You might recall we became mortgage and debt-free almost 18 months ago.
You might also recall we realized our financial independence milestone last summer.
In the year or so leading up to any big decisions, more detailed planning kicked into higher gear:
- We started to explore ways at work to test some semi-retirement assumptions; the desire but also the financial flexibility to work part-time vs. full-time (i.e., could we still make ends meet).
- We started to look into post-retirement healthcare insurance options, where needed.
- We started to talk about our purpose (if not working at all) – what would we do with our time?
- We started to position our portfolio for upcoming withdrawals.
Although we might be in this timeline, not sure, since part-time work is now occurring with our solid employer (this could continue for both of us??) but this is where the real retirement countdown calendar probably begins for most people…as you strike full-time working days off your calendar:
- Look to finalize your portfolio income strategy – what income is coming from where and when.
- Keep a cash buffer and finalize your bucket approach for retirement income to avoid some poor sequence of returns risks.
- Finalize post-retirement healthcare insurance.
- For fun, put a retirement countdown timer somewhere!
- Start planning your time when you are not working – see previous points above!
- With a few months to go, be kind and fair to your employer, pick a firm retirement date and support your co-workers with any transition plan.
- Begin focusing on your life beyond work in preparation for semi-retirement or retirement.
- Make any final “important” purchases and pay those off to remain debt-free (while you still have your workplace income and/or benefits).
Wrap-up
Once again, while many Canadians expect to retire after age 60, there is nothing written in stone to suggest you cannot adjust your life-work balance much sooner than most.
That’s always been our plan and we’re living that now.
Here are some other factors to consider too:
- Your health: Life is short and precious. How do you feel? Taking care of your physical and mental health is just as important as taking care of your financial health.
- Your professional motivation: Does your job still bring lots of personal satisfaction and happiness?
- Your social life: What passions do you have or rather have you put off outside of work? Is it time to make more time for those? Life is more than a paycheque.
I can’t speak for any retiree or aspiring retiree that reads this site but I can say with lots of conviction that I will personally enjoy the next few months as my transition to retirement continues.
Mark
More Weekend Reading and Reminders!
As readers will know, I have used a hybrid investing strategy for about 15-years now that has helped me/us realize financial independence.
I enjoy and have therefore benefitted from owning many Canadian stocks that pay dividends (about 25+ in my current portfolio) that also deliver some price appreciation but I also own thousands of units of low-cost ETFs that focus on total return (distributions and growth) beyond Canada.
I learned some lessons in diversification many years ago.
So: Is total return or income growth the better investing strategy?
Well, you can engage with me and discuss this subject and more – and find out!
Save the Date! Thursday, May 22, 2025 @ 2:30 PM ET
While there is no best way to invest for everyone….we can all agree that earning dividends AND growth are both good. Right?
Well, get ready for my battle: a pure income investor vs. yours truly on this subject.
In one corner, you have my friend Henry Mah from Your Ever Growing Income who argues in favour of dividend growth and more specifically, income investing for a handful of convinction stocks. He’s done very well for sure.
In the other corner, My Own Advisor since I seek and desire a mix of capital appreciation and dividends in my portfolio. Based on our discussion, you can decide what is best for you!
Plus, we’ll both answer questions from the audience – live – about our respective strategies and considerations for building a retirement nest egg in this live Q&A session.
AUDIENCE REGISTRATION FREE LINK:
I’m taking some time off work to engage with you this afternoon so register here for the event for free!
I look forward to seeing you online.
Mark
Want to your own personal low-cost retirement income projection?
Just reach out! I offer discounts when you do as a My Own Advisor reader for services that cost literally thousands of dollars less than the alternatives.
I am happy to offer discounts to DIY investors, by a DIY investor – anytime. 🙂
Check out my work along with my partner Joe at Cashflows & Portfolios.
We will help you answer some burning retirement income planning questions like:
- Do you have enough to retire with your current lifestyle/spending?
- What will be your estate value based on your spending plans?
- Amongst your pension(s) or RRSPs or TFSAs or your taxable accounts, what accounts should you tap first to smooth out taxation impacts over time?
- Should you take CPP or OAS at age 65 or 70?
- And more!
Again, contact us anytime to learn more and get started.
Other popular case studies:
How much do you need to retire on $5,000 per month?
What you need to retire on $6,000 per month?
Have a great weekend!
Mark
Mark
My name is Mark Seed – the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I’ve reached financial independence. Now, I share my lessons learned for free on this site. Find out what I did and how I reached financial independence to tailor your own path. Join the newsletter read by thousands.
