Save. Spend. Splurge.

How much I need to retire

So what I have saved right now is definitely not enough to retire on today and here’s a few reasons why other than the fact that I loooove to spend money.

As a benchmark, as of this post, my current net worth is around $600,000 give or take.


I have a huge chunk of my net worth in fixed assets.

Even though I have a lot of money saved, 50% of it is tied up in fixed assets – meaning my condo.

50% actually is what I had said that my ideal net worth ratio if I were to buy a home, was to have only 50% of it in my home and the other 50% of it “liquid” (relatively speaking, as in investments….)

Basically, I can’t eat my condo, spend it or otherwise unlock its liquidity without selling it.

If I sold my condo (my half anyway), where would I live? I would then need to factor in another $1000 or so for rental costs, etc.

Right now, since I pay about $500 in condo fees and taxes per month, my rent would effectively increase to $1000 or so a month, if I unlocked my $300,000 capital.

Let’s pretend interest and inflation doesn’t exist:

$300,000 (assuming I even get that price) minus realtor fees and other costs gets me $250,000

$250,000 / $1000 = 250 months or 20 years of renting

Obviously it is not correct and would be more like 10-15 years of renting.

The thing is that if I live longer than 10-15 years while in retirement I run out of money if I don’t have a home that in the long run, would have lower fees if I kept the asset and paid half the amount of rent in fees instead.

This is a long and drawn out sort of complicated calculation that I don’t plan on running because selling the condo is the END of the line if I’m strapped for cash.

My plan is to live off my savings and investments and passive (or active!) income and not touch fixed assets.

So what does this mean?


So it is $300,000, really.

And in that $300,000 is about $150,000 that is locked until I’m at least 60 before I can start drawing in it as it is put into retirement accounts that will make me pay huge penalties if I withdraw early.

Then that leaves me with $150,000 to use until I’m 60, which is in about 25 years give or take.

$150,000 divided by 25 years is only $6000 a year.

That is not enough to live on.

Also, the dividends earned each year at around $4000 – $6000 only keeps rolling in if the companies keep giving dividends AND I keep my capital invested in them!


Jointly, my partner and I need about $30,000 net each year each to live a comfortable life together.

I’m talking buying $2000 custom made chairs, kitchen equipment (just got a $400 roasting pan), fixing the apartment, vacations, paying for childcare etc.

Because I don’t do anything half-assed, I personally spend an ADDITIONAL $30,000 on myself.


I need to rein it in, but let’s be honest, I’m going to spend at least $500 a month on myself with is an additional $6000 a year but realistically, it is more like $1000 a month as a “bare minimum” for my life.

(What? Girl’s gotta have her pricey skincare and clothes..)


It means I can’t retire today.

Womp womp.

What else it does mean is I need to save a lot more money to retire.

The retirement calculation I have done for myself this includes the following:

  • Assume I have my home paid for – CHECK
  • Assume I have no major outstanding debts or loans – CHECK
  • Calculate how much I actually want to spend each year until I retire and AFTER I retire – Ouch.. my 2017 was a spend of $30,000 on necessary bills and another $30,000 on MYSELF. I need to drop this personal spending spree big time but it’ll never go below $12,000 extra if I know myself. So I’m going to need to budget for $45,000 in total expenses to be on the safe side. Of course, who knows how much MORE I will spend because of Little Bun…
  • Calculate how much my investments might accumulate and grow (this is guesswork, no one knows the future but I can use average and conservative numbers.
  • Calculate an average salary and savings until I plan on retiring (also up in the air as I am also a freelancer! But I can take my last 10 years of income as an average.)


What I need to retire today:


Without taking into account any inflation, or any other fancy complex calculations, of course.

My yearly expenses are $45,000, I have about 25 years to go before I actually retire, and the calculation is simple:

$45,000 x 25 years = $1.125M

If I dropped my expenses, I would need less money.

If I retired later, I would need less money.

Right now, as I only have $300,000 saved, I need an additional:

$825,000 extra

In 25 years, that means I need to save on a yearly average:

$33,000 net / year

This is very doable, although some years like 2016, I didn’t work at all and ate into my net worth like a Hungry Caterpillar, but some years like 2015, I saved over $250,000 (yes a quarter of a million) into my net worth.

So it’s a crapshoot what the year will be, but on average, my net worth has gone up:

$66,000 net / year

At this rate, I could reach my retirement goals in about 13 years, but again, if I retire earlier (another 13 years earlier), I need more money than what I have projected above to save.

You see? Lots of moving parts.

The other part of my grand plan…

…is to have passive income flow in and cover my expenses for the year.

So if I need about $45,000 a year to live, that means that each month, I need to make $3750.

If I can get dividend or other income sources (PASSIVE INCOME, not ACTIVE.. blogging is very, VERY time consuming and active), up to where it covers up to $45,000 of expenses a year, I’m golden.

If I can assume a rate of return from dividends of 5%, it means that I need about $900,000 invested in capital to live off the money.

If my (safer, more conservative) rate of return from dividends is 3%, it means I need about $1.5M saved and invested in liquid capital, OUTSIDE of my retirement accounts (can’t touch that money until I am 65) to live off the dividend income.

Again, I only have about $150,000 liquid cash outside of retirement accounts saved, so I have about $750,000 to $1.35 million left to save and invest in dividends.

Doable? Yeah. I think so.

And those are my retirement numbers.


  • Paul Sharp

    I think that you should be looking forward to control your spending habits in order to retire early. Even better will be to think about making some active income sources, but you must ensure this in a way that they do not get you involved very much in them. Freelancing online is not a bad option either, but keeping in mind that you own the condo selling it now makes no sense. Even reverse mortgage is not the way to go because you will lose money more quickly then you will be generating it. So, the solution in my opinion is that you keep working a bit longer during the work hours and holidays. It will let you create more money, so you will easily think about retiring early. Controlling your spending habits alongside finding ways to create money will lead you to live prosper during retired life. There is no shortcut way to it, otherwise.

  • Jemma

    Are you planning to reduce costs and live off of the gov pension plan at 60? Why do you only calculate up to age 60? I’m confused.

  • SP

    Early retirement blogs talk a lot about safe withdrawal rates, and a basic starting point is 25x yearly expenses will support retirement “indefinitely”. Obviously there is some probability in there, and people adjust from there based on how conservative they want to be.

    In the US, there are clever ways to access retirement account money before you are in your 60s, without paying penalties. This is something I had to look into, because we have a lot of tax-advantaged space and I was worried that we we were saving too much that could never be touched. Not sure what the situation is for Canadians.

    At any rate, ~1.25M is a good goal! I think we (together) need about $1.5-$2M, plus a paid off home, but we’d probably need to up it if we really wanted to retire due to health care cost uncertainty. I think in the long run we’ll get better socialized health care, but I’m not going to bet my life on it.

  • Financial Orchid

    There’s literature to recommend rrsp be used during years of unemployment rather than at retirement for tax advantage because at 71 u r forced to convert all into a rrif then u get taxes all at once .

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