Koogie wrote: ↑
08 Oct 2017 10:14
A lot of the members of this board retired before the traditional age of 65. Should they have kept working for "pride" and because work is the only thing that can "define" their lives ?
I have expressed nothing against that. What I said is that retiring "extremely early" to end up under the line of poverty all life long is nothing to aspire to, and it's quite frankly depressing.
Let me put some numbers behind my claims.
I'll build a realistic scenario using the spreadsheet presented in The After-Tax Spending Plan
. As it is currently limited to QC calculations, I'll pick an average young person living in Montreal, for which Statistics canada provides the average employment income - Montreal region
All calculations will be in 2017 dollars.
So, this person is lucky enough to leave his parent's house at age 25 with no debt whatsoever (net worth $0) and an annual salary $39,000 from age 25 to age 35.
Based on the spreadsheet, this person can't even save enough money to fill the gap in QPP and OAS payments from age 35 to age 70. So, let's pick, instead, the earliest age at which he'll accumulate enough money to fill the gap in CPP and OAS from retirement to age 70. Through trial and error, we discover that it's age 42. But, this would require our young worker to have a 47% savings rate, letting him try to survive on $1,060 per month:
It's equivalent to live on a gross annual income of less than $15,000. Can we agree that this is nothing to aspire to?
Now, is it possible to retire super early with dignity
, let say at age 35 starting from $0 (e.g. without a windfall)? Yes, but here's the type of scenario this requires:
Our young worker has to find employment with a $130,000 salary from age 20 to age 35. He'll have to save and invest 48% of his gross salary. At age 35, he can retire on an annual gross income of $40,000.
It's a nice objective, but it's an unlikely scenario for most people of age 20 living in Montreal.
Extreme early retirement is a pipe dream. The only way to make it work for young people with an average
salary is to live way below the poverty line during work years and probably live on welfare during their so-called retirement
As it happens, Derek Foster seems to be quite dependent on welfare (Canada child benefit)...