Featured Personal Finance

Retire Early Plan Has High Risk of Failure

Ming and Li are exceptional savers. They have already paid for their $300,000 home in southwestern Ontario and saved nearly $330,000, without any help from parents since they graduated. They have built a solid financial base for themselves and their two young children.

Now the 37-year-old software developer and 34-year-old consumer research analyst wonder whether socking away a further $50,000 a year from their $163,000 income would put them in a position to retire — or scale back substantially — in just 18 years.  Read More…

Replies to this Post

  1. Tobias Bunch says:

    Bravo to both of them for doing what most Canadians dread…”saving”. Most people think that day will never come (growing old) and so they just spend, spend, spend and when they get old they have nothing save.

    But as the article points out trying to plan TOO early is a potential dangerous thing too. There is a fine line one must be careful.

    But one certainty is that leaving $80,000 in your bank account @ 0% interest (as Ming is doing) is plain foolish. Someone needs to wake him up on the matter. Sheesh!

  2. Jeremie H. says:

    I am 45 years old and i feel sick to my stomach because i haven’t even thought about my retirement plan.

    I actually blame my parents and how I grew up. We aren’t taught to save for retirement and so we are left with our CPP that we pay into at our jobs.

    Will I change my bad habits? I don’t know. It’s tough but i must. I am getting long in the tooth and its a bit frustrating but at the same time you get use to it. 🙁

  3. Jevon says:

    Uhh there are countless ways to avoid high risk. But if you dont take risk you wont get much nor retire early. You need to take some risk but it needs to be well thought out.

  4. Landon Huggins says:

    So why aren’t they considering the Smith Manuvre. It would help cut down on their mortgage much faster and shift their available assets towards more liquidable stocks. It’s also tax deductible.

    Considering this Monte Cristo approach isn’t the only solution to everyone’s case.

  5. Joan H says:

    My couch potato approach to reducing risk of failure is to max out your RRSP while at your highest tax bracket (usually while you are working) and then once maxed out look to max out your TFSA.

    In both cases I’d put them in discount broker registered accounts. And diversify in less risky, low cost investments (ETFs).

    Problem solved!

  6. Kurtis D says:

    @Mike you raise an great point. My mother is the same. Although she is retired and her houses are fully paid for (no mortgage) she gets a bit intimidated by all the options she can do with her savings.

    Most of her money is still in unregistered accounts not earning much interest. She is too scared to invest in stocks out of fear she will be out on the streets.

  7. Mike says:

    Excellent read! The main problem is that there are a myriad of choices for Canadians that people get overwhelmed and paralyzed on what they should do next.

  8. Vinse K. says:

    Why not live more frugally? Most people live so excessively that they actually end up broke when they retire.

    Live in a cheap apartment or very low cost condo and eat macaroni and cheese every night.

    Millionaire by 40. 😛

  9. Finley D says:

    When is the best time to start saving? I am only 17 and not working but i have a nice savings based on savings my parents have been doing since i was a baby (to be used for university)?

  10. Shutter Girl says:

    Yea well imagine someone making only $30K/yr there is no chance to retire early. In every case i only see myself at 100% risk and no chance 🙁 What’s a girl to do???

    I am not married either and the men i have been with tend to be slackers and not into saving (blue colour types). Ah well! I think fate plays cruel jokes at times.

  11. Raekwon Dwiggins says:

    One alternative is to move to another country where the retirements are much more favorable. For example in England they have more programs to helps savers.

    But if you must stay here then one just has to roll up their sleeves and get dirty with the details.

    No way around it. I’ve spent hours studying and although it seems a bit dull it is very rewarding learning new paths for retirement i never considered.

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