Early
retirement, who wouldn't want that! Here's an article I just read from the
Financial Post:
This
family of five wants to retire by age 35, quite an aggressive goal. It's highly
improbable given the sacrifices they have to make on their quality of life, but
I guess if you're disciplined enough it could be possible. Moral of the story
is, cut back on unnecessary expenses and save every penny! Oh and of course,
start early...as early as you can and let the power of compounding work for
you. Now I am not suggesting you forgo your beers folks, woah woah woah let's
not go overboard here but instead of kicking back a few pints at a pub, why not
drink at home instead? Bottled beer may not taste as good as tap but it sure
isn't watered down like in most pubs nowadays, and it's cheaper than going out
for drinks.
For fun,
I have quickly put together a rough estimate of what you can expect to save up
between you and your partner living under the same roof for 21 years. Yes
yes...I know, it's the year 2013 and relationships might not last that long...but I assume you will find another partner at some point. Note that because
these are rough figures, I didn't take into account the fact that you may need
to buy replacement vehicles within the 21 years. Instead of breaking out the
major maintenance items for the cars, I just lumped those costs into the row
called "discretionary/misc". Also, be advised that I have made an
assumption that both you and your partner would've saved enough to afford the
down payment on the mortgage by age 24. Based on what I have saved up so far
and it's just me alone, it is definitely possible!
Looking
at this chart, it certainly seems possible you can retire between age 40 to age
50. It would probably be closer to age 50 if you factor in the cost of having
children, and the cost of replacement vehicles during those years. The mortgage
would've been mostly paid off at that point and with half a $million
per person, combined with post-retirement investments on that $500k, your CPP,
and company pension plans (if applicable) it is definitely doable. If you choose to have children and they
turn out to be somewhat successful in their lives, you might not even need to
put away that much for retirement!
Bottom line is, for an early retirement to be possible it is necessary to be disciplined when it comes to saving. Keep track of your expenses and make a plan to save, don't just save whatever is leftover, make saving a priority as oppose to a "catch-all category". Tell yourself you need to save $ X each month and use calculations to forecast your retirement savings. It's never too early to start retirement saving!
-TT
