Seems to make sense in the window between retired/no longer working and when RMDs begin where you can shove some income through a lower tax bracket.
2 Likes
Exactly this, but I changed your post to reflect the biggest savings window.
1 Like
Spreadsheets continue to be useful even after you retire! An added complication for Canadian retirees is factoring in 100% confiscation of certain social security income after a certain level of income is reached. Not just fully taxed but at an effective rate of 100%.
yup. you left it all in the spreadsheets already. someone else will find a way to handle it.
keep in mind that they might call you if they realize they NEED your hourly consulting. I suspect your rate should have gone up by then since youāll be enjoying all your time so much.
1 Like
Not a good look for your company if anyone on here was thinking of applying.
What did you learn that you didnāt know about? Is this Canada or US law
Canada. Deferring capital gains on death.
a
1 Like
My impression is that Americans have a lot more income tax deferral options than Canadians do on death. At least we donāt have estate tax in Canada (although the US thresholds are pretty high anyway.)
Must be nice to have a uniform scheme (Canada-only) for this sort of thing.
Just started the process for our estate planning and its just insane when you have multiple countries, jurisdictions, and regulations involved.
I have like a 6 month list of things āI need to inform myselfā about.
Just converted $50,528 of Traditional IRA money into a Roth IRA so I can take advantage of the Roth backdoor. Big tax bill incoming.
I think this year wonāt be a full dual 401k/IRA max, but it should be around 1.8 max 401ks and one IRA. Next year, targeting all 4 accounts to be filled.
1 Like
As of today with the last mortgage payment, our non-retirement, unallocated brokerage fund exceeds the balance of our mortgage after 6 years in the house.
Started with $213,600 on the mortgage which is now down to $139,981. Brokerage started at around $20k and is now $140,970. This ignores taxes of course, but I enjoyed the milestone. The brokerage isnāt earmarked to pay off the home, though when the mortgage hits around $50k while my 1.875% ARM interest adjusts up to market rate I may do so. Itās more of a āmega emergency fundā to buy a car, etc. while looking to use it to retire before 59.5.
2 Likes
Nice. Scott Galloway would say that is the path to economic security. I like to call it financial freedom. I should be there a year from now, a little less than 8 years out since I started building this up.
1 Like
I think of it like being free of our last debt. Similar to what you said.
With the brokerage being unallocated, if one of us totals a car tomorrow then we might dip into $25k of it and drop back under the mortgage, but overall I now consider myself debt-free with the details just running their course. Now itās just accumulating retirement and 529 funds.
2 Likes
Eliminating mortgage debt generally is a nice milestone, but not all that interesting. It is even less interesting when you can put the balance in TBIL@5% with todayās rates and earn a spread. The mortgage helps align spending and consumption.
As you noted, having both balances gives you a lot of flexibility wrt large purchases or expenses. Keep it going and maybe one day you think about the new house and if your current one might become an income generating property.
1 Like
Right, right now at 1.875% Iām just overpaying $1,000/month with the knowledge that in 2027 it will go up to as much as 6.875%. Iām also investing $900/month in the brokerage and have my actual short-term emergency fund in a HYSA.
If my mortgage was 30-years 1.875% I wouldnāt touch it beyond the minimum, but at 6.875%, paying off the mortgage is worth ignoring a 5.12% HYSA or an 8% pre-tax return in the stock market.
A future house is possible, too. With this brokerage on track to be around $200k in a few years, we could sell this house and buy a nicer one cashā¦ Depending on prevailing interest rates. But this house could be forever. $280k was a nice enough home in the Po in 2018.
1 Like
3 months into retirement my net worth (excluding house) is virtually unchanged.
On the side I deliver groceries and tutor people (because I enjoy it). That brought in $6,750 in the last three months but also put 2,147++ (prob more like 3,000) miles on my car (and $300+ in gas).
During that time I also took a trip to Europe, a road trip, two trips within 260 miles to play in bridge tournaments. Later this month Iāll be in Toronto for five days for the same reason, then weāll also hit Omaha and then a shot at jury duty.
I asked a younger guy at the club who he was playing with this week and he named two people. I didnāt understand why he was playing two games, and he said he got July 4th off. That really made me feel retired, I get every day off. Itās a real change in mentality. When Iām away on a trip or a tournament I can easily forget what day of the week it is. When you have a job to go back to, even something you enjoy, you know only get away for so long and you have to go back. After 28 years it is very freeing to not have that restriction.
I would like to consider part-time actuarial work, but what little that exists doesnāt pay that great. Nevertheless Iām going to look into the possibility as it canāt pay any less than food delivery. I would like to regularly work 10-20 hours a week with the ability to disappear for a week whenever I want to. Need to decide if there is any point in renewing my actuarial credentials, something tell me I should at least hang on to them for another year but I donāt know yet.
Mortgage is 2.625% but with TBIL or SGOV yielding nearly double, I canāt be bothered to pay it off. If the short term rate gets down closer to 3% I might.
I have a meager pension which I have the opportunity to roll into my retirement accounts, so I agreed to do that, which should bump the assets up another $16K or so.
6 Likes
I was wondering why you hadnāt posted much in the last few months - too busy enjoying yourself! Keep us posted.
1 Like
At work the forums are good for killing the time or quick breaks. Since Iām no longer chained to the desk, I find myself on the forum less, but still check it out regularly.
4 Likes
Iām grappling with the idea of doing something like this post-retirement. Doing something I enjoy and/or thatās low stress. Just making up numbers, if you spend $60k/yr but youāre making $20k after taxes doing odd jobs, you are pulling your withdrawal rate from your nest egg down by a third.
I know this is commonly known as ābarista FIREā and itās a whole thing, but I havenāt really thought through it since Iām not close enough yet. You could use this idea and basically work until you can fully retire, or maybe just use it for a few years to help avoid sequence of returns risk. And then if your portfolio does well after however many years then you can pull the plug, or not.
1 Like