ll eG et A T h w w w co m STOP WORKING l.c om START w w w T he Ge tA l LIVING Copyright © Diann e Nahirny , 2001 All right s reserved No par t o f thi s publicatio n ma y b e reproduced , store d i n a retrieval system, o r transmitte d i n an y for m b y an y proces s — electronic , mechanical , photocopying , recording, o r otherwis e — withou t th e prio r written permissio n o f the copyrigh t owners an d EC W PRESS NATIONAL LIBRAR Y O F CANAD A CATALOGUIN G I N PUBLICATIO N DAT A ISBN 1-55022-484- co m Nahirny, Diann e Stop workin g star t livin g : how I retire d a t 36 tA ll I Retiremen t income Early retirement Retirement — Planning , I Title NGI79.N34 200 332.o24'o I C2ooI-9Oo8io4 Cover an d tex t desig n b y Tania Craa n Cover phot o b y Ro b Allen Layout b y Mar y Bownes s Ge Printed b y Webcom he Distributed i n Canad a b y General Distributio n Services , 325 Humbe r Colleg e Blvd , Toronto, ON , M9W 7C3 w T Published b y EC W PRESS 2120 Quee n Stree t East , Suit e 20 Toronto, ON , M4 E IE2 ecwpress.com PRINTED AN D BOUN D I N CANAD A w w This boo k i s set i n Futur a an d Garamond The publicatio n o f Stop Working Start Living has bee n generousl y supporte d b y the Canad a Council , th e Ontari o Art s Council , an d th e Governmen t o f Canad a through th e Boo k Publishin g Industr y Developmen t Program Canada* Disclaimer This publicatio n i s designed t o provid e accurat e an d authoritativ e information I t i s sold wit h the understandin g tha t th e publisher s ar e no t engage d i n renderin g legal, accountin g o r othe r professional advice I f lega l advice r othe r exper t assistanc e is required , th e service s of a competent professiona l shoul d b e sought The analysi s contained herei n represent s the experiences and opinion s o f th e author , bu t th e autho r an d publishe r ar e no t responsibl e for th e result s of any action s take n o n th e basi s of information i n thi s wor k no r fo r an y error s or omissions STOP WORKING et Al l.c om START T he G LIVING w w w HOW I RETIRED AT THE AGE OF 36 , WITHOUT WINNING THE LOTTERY DIANNE NAHIRNY ECW PRESS m w w w T he Ge tA ll co This page intentionally left blank om l.c w w w T he G et Al For Peter and Tatianna, Fred and Anna, and Mary m w w w T he Ge tA ll co This page intentionally left blank om l.c et Al This book wouldn't hav e been written i f it hadn't been for the following: T he G John and Julie Without them, my life, m y lifestyle, and my book would neve r have come into being They are my inspiration Mark an d Jane , fo r thei r exper t advice , generou s assistance , an d encouragement w w Sandie Many time s I might hav e given up if it hadn't been for her unwavering belief in me, and al l her help w Jack, for recognizing my potential an d patiently guiding m e along m w w w T he Ge tA ll co This page intentionally left blank GET RICH QUICK et Al CHAPTER l.c om STOP WORKING START LIVING PART ONE T he G THE PART CHILDREN'S PROGRAMS: THE FORMATIVE E YEARS 11 CHAPTERS THE STUDENT YEARS 25 CHAPTER FIRST THINGS FIRST 39 CHAPTERS ONWARD AND UPWARD 71 CHAPTER PLUNGE INTO FREEDOM w w CHAPTER w PART TWO THE 97 PROCEDURE CHAPTER A NEW ATTITUDE 107 CHAPTER FINDING YOURSELF 125 CHAPTER KEEPING TRACK MEANS KEEPING MONEY 139 CHAPTER 10 GET RICH NOW CHAPTER 11 THE CHALLENGE: BASICS CHAPTER 12 THE CHALLENGE: NECESSITIES CHAPTER 13 THE CHALLENGE: VARIABLES 219 CHAPTER 14 THE CHALLENGE: UNUSUAL 241 161 CHAPTER 15 247 183 197 THE CHALLENGE: UNUSUAL w w w T he Ge tA ll co m called previou s customers t o se e if they wer e satisfie d wit h th e service The jo b too k a few days, bu t i t turne d ou t t o b e mor e difficult tha n th e workers had expected , s o they wouldn't finis h it M y backyar d wa s mud, logs , stump , an d sawdust The tre e company owne r promise d a coupl e o f time s t o hav e th e cre w return, bu t the y d move d o n t o othe r job s an d didn' t com e back t o m y house Then th e owne r wouldn't retur n m y phon e calls Bu t th e consume r complain t columnis t fro m m y loca l newspaper did H e printe d a scathin g articl e o n m y plight , and righ t afte r tha t I cam e hom e fro m wor k t o fin d tha t th e job d bee n miraculousl y finishe d an d th e yar d perfectl y cleaned up It' s amazin g wha t a littl e ba d publicit y ca n I includ e vacation s unde r Unusua l expense s becaus e the y aren't necessar y fo r basi c survival , unles s yo u hat e you r job , but the n retiremen t i s an eve n bette r choice Surprisingly , the longer I' m retired , th e les s desir e I hav e t o g o afar I don' t need th e escape Thin k abou t wha t yo u d o o n vacation Probably whatever you fee l like Gues s what? That's retirement And sinc e I enjo y ove r three month s a year of summer, I have my fil l o f lazin g i n th e su n an d actuall y loo k forwar d t o th e change t o coole r weathe r i n th e fall I wa s to o bus y writin g this sprin g t o conside r a getawa y t o a warme r climate , bu t when I wa s still working an d payin g of f m y mortgag e I too k a tri p a t leas t ever y othe r year One vacatio n t o Jamaica was free I' d travelled with a group to a hors e ranc h i n Florida , bu t whe n w e arrive d th e resor t was in receivership A couple of days later, half the grou p trans ferred t o a coasta l resort , bu t I wa s ther e fo r th e heat , pool , and horsebac k riding , s o I stayed Ther e wasn' t muc h choic e M3 2-44 w w w T he Ge tA ll co m in meals , an d th e tenni s cour t d see n bette r days , bu t ther e was evenin g entertainment , a beautifu l pool , riding , an d bes t of al l very fe w tourists W e d th e ranc h t o ourselves ! Afte r we al l returne d home , th e mor e disgruntle d vacationer s file d a complain t wit h th e tou r company , an d I di d to o becaus e I didn't ge t what I' d pai d for As compensation, w e were offere d an all-expenses-pai d tri p t o a Jamaican beac h resort , whic h I naturally accepted Alway s ge t valu e fo r you r money Holiday cost s a t Christma s ar e anothe r expens e I includ e under Unusua l becaus e it's a n eas y way to trac k th e cost s an d compare the m yea r t o year Beside s the spendin g o n presents , which I'v e already covered, pa y careful attentio n t o al l the hol iday-related item s you buy The multitud e o f little expenditures can ad d u p quickly ! Conside r mailin g card s onl y to thos e you won't b e abl e t o exten d greeting s t o i n person Yo u could e mail a messag e o r creat e you r ow n car d o r downloa d on e t o send On e o f rn y relative s save s postag e b y gettin g togethe r with m y mothe r an d givin g he r th e card s t o han d delive r t o the res t o f us Gift wra p i s anothe r are a wher e it' s eas y t o sav e money Every year , I g o t o a Christma s churc h bazaa r wher e th e women mak e unique gif t tags , 10 cents for a dozen Remember, items sol d a t thes e bazaars are tax-fre e too Sometime s I mak e my ow n tag s fro m th e gold , silver , red , an d gree n envelope s that I receiv e with Christma s cards I ten d t o reus e gif t bag s because the y las t longer , an d the y ar e faste r an d easie r t o us e than pape r wrapping I'v e foun d tha t fanc y roll s of Christma s paper ar e more expensive, even at half price, than th e coloure d tissue pape r I bu y a t discoun t store s fo r stuffin g i n th e to p THE CHALLENGE: UNUSUAL w w w T he Ge tA ll co m of eac h gif t bag I als o reus e bow s an d ribbons Visit you r loca l librar y in Novembe r fo r book s o n holida y decorating an d entertaining Chec k ou t fre e holida y program s for childre n too An d borro w fro m th e library' s selectio n o f Christmas videos , CDS , an d fiction , fre e o f charge Th e staf f will als o b e abl e t o direc t yo u t o you r area' s communit y offic e or web site for low-cost idea s on local holiday events and enter tainment Now tha t we'r e a t th e en d o f th e regula r cost s o f living , you hav e t o realiz e that, i f you reall y want financia l indepen dence, you hav e to brin g your expense s down, whic h probabl y means adjusting your curren t consume r behaviour If you nee d to eliminat e deb t a s your firs t step , the n yo u mus t tak e you r emotions i n hand , questio n you r spending , an d mak e som e tough decisions A t first , i t migh t see m lik e a battle , bu t i t will be one worth fighting , becaus e your financial freedom wil l depend o n it The example s i n thi s boo k ar e extreme , an d m y opinion s are strong , bu t I'v e give n the m fo r a reason M y spendin g illustrations ar e meant no t onl y t o mak e a memorable impres sion bu t als o t o provid e motivation The y relat e t o ho w yo u feel whe n you'r e face d wit h seemingl y insurmountabl e prob lems Yo u think you r problem s ar e terribl e unti l yo u hea r o f others' troubles , whic h ar e muc h worse , an d the n you'r e relieved becaus e you r ow n problem s don' t loo k s o ba d any more Likewise , afte r seein g th e example s i n thi s book , yo u shouldn't fin d i t to o difficul t makin g you r ow n economies You don' t hav e t o sav e money i n th e extrem e ways I an d m y family have Som e o f th e example s ar e a bi t off-the-wall , an d 245 246 w w T he Ge tA ll co m my intentio n wa s t o mak e financia l readin g mor e fun Still , if you ca n adapt m y advic e an d tr y t o sav e where you choose , you'll ge t into th e routin e o f saving instead o f spending That's an importan t lesson You r focu s o n savin g mone y wil l alle viate th e natura l consume r tendenc y t o overspend Whateve r ways yo u decid e t o cu t expenses , your ne w awarenes s of your costs o f living, combine d wit h you r attempt s t o reduc e them , will chang e you r focu s fro m spendin g t o saving That simpl e act wil l b e s o beneficial Yo u know yo u nee d t o sto p uncon scious spending , loo k a t you r priorities , an d tak e contro l o f your money You r finance s wil l improve , an d you r ne w sumer behaviour will become the norm Your more economica l habits wil l kee p u p th e momentum , resultin g i n mone y fo r luxuries an d furthe r wealt h building Now yo u kno w no t onl y wha t t o d o bu t als o ho w t o d o it You're almost there Puttin g it al l together i s covered i n th e next an d fina l chapter w PREPARE FOR THE UNUSUAL Delay th e purchase ; allo w tim e t o sav e fo r it Use consciou s buyin g behaviour Get i t free Look a t alternatives Consider th e long-ter m effect s an d own , don't rent Get valu e fo r you r mone y and complai n if you don't Avoid taxe s an d sav e o n purchases m FULL SPEED Ge tA ll co AHEAD ^B w w T he an yo u se e the ligh t a t th e en d o f th e tunnel ? It' s there To reac h it , yo u jus t nee d t o tak e action Becoming financiall y independen t ma y see m lik e a n abstract concept , bu t yo u lear n ho w t o achiev e thi s goa l th e same wa y yo u lear n anything (1) You see, hear, read, ©r reason how something is w done (2) You grasp the concept (3) You learn more by doing and practising (4) You use the knowledge and take action repeatedly until if produces results I've give n yo u numbe r i I t shoul d b e eas y t o accomplis h number But you'r e o n you r ow n fo r th e las t two Onl y you can decid e i f your effort s wil l b e worth th e fina l achievement Think, though , o f ho w man y thing s yo u fin d eas y no w tha t 247 248 tA ll co m seemed to o difficul t befor e yo u trie d them Imagin e this: a 31year-old woman o n he r own , with a crummy salary, who owns a ramshackl e house in desperat e need o f major repairs Yet five years later , withou t doin g anythin g terribl y spectacular , she' s retired I f I coul d d o i t i n m y meagr e circumstances , surel y you'll b e abl e to d o a s well, i f no t better , tha n I did Al l you have t o d o i s try These ar e the steps : asses s your curren t financia l standing , create a cas h flo w strategy , and wor k you r mone y plan w w w T he Ge SEE WHERE YOU STAND If you haven't already done it, prepare a personal Balance Sheet, Income an d Expens e Statement , Cas h Flo w Statement , an d Monthly Expense s chart You'l l probably nee d t o d o th e firs t two just onc e a year Cash flo w shoul d b e calculated quarterl y at th e ver y leas t an d preferabl y monthly Obviously , cost-of living expenses are recorded throughou t the month and totalled at th e end Mak e a not e o f an y shortfal l i n incom e versu s expenses a s wel l a s individua l debt s outstandin g an d regula r debt payments Those debt s wil l hav e t o go Freedo m i s paid for b y living within you r mean s and b y using assets, not debt , to d o it CASH FLOW STRATEGY Control your money It' s onl y a medium o f exchange It' s ho w you decid e t o spen d you r tim e an d effor t (life ) t o pa y fo r th e things yo u nee d an d wan t (good s an d services) Without scious control, you'll en d u p paying for previous purchases with past, current , an d futur e dollar s whe n yo u bu y usin g credit FULL SPEED AHEAD w w w T he Ge tA ll co m Does enslavemen t t o you r employe r com e t o mind ? It' s you r life, bu t d o yo u wan t t o b e chaine d t o a jo b t o pa y fo r poo r money-handling skills ? Yo u don't hav e t o d o withou t th e pur chase — jus t don't us e credit Us e delayed gratification It'll b e gratifying whe n yo u hav e wha t yo u wan t an d whe n yo u ca n buy mor e thing s wit h th e interes t you' d hav e pai d t o a financ e company An d i f you'r e makin g deb t payments , ho w ar e yo u ever goin g t o mak e saving s deposits an d investmen t purchases ? Get ou t o f deb t an d sto p buyin g consume r good s o n credit The purpos e o f trackin g cas h flo w i s to encourag e inflow s and discourag e outflow s o f money Loo k fo r way s t o increas e your incom e wit h a highe r salary , ta x credit s an d deductions , job perks , o r multipl e stream s o f income Lowe r you r expen ditures b y eliminatin g debts , avoidin g al l level s o f taxation , applying m y buyin g behaviou r process , rethinkin g lifestyl e choices, an d reducin g cost-of-livin g expenses Your goa l i s t o hav e a health y cas h flo w position , wher e inflows fa r outweigh outflows , preferabl y at 30—40 % i f you ar e paying a mortgag e an d eventuall y a t 70 % a s yo u accelerat e toward you r earl y retiremen t date Don' t thin k fo r a minut e that it's not possible Loo k a t your curren t income Ho w muc h is eaten awa y by taxes, debt an d mortgag e payments , an d auto matic o r uneconomica l spending ? How muc h ar e you actuall y spending o n current cost s of living alone ? Check your Monthly Expenses char t an d recogniz e that Variable s are easy to reduce Add u p you r estimate d tota l an d expres s i t a s a percentage o f net income Doe s 30 % stil l see m impossible ? You nee d th e other 70 % fo r deb t elimination , asse t accumulation , an d a mortgage, i f you don' t alread y ow n a home Own , don' t rent M9 250 w w w T he Ge tA ll co m Just befor e m y parent s were married, the y bough t a house together Eve n thoug h the y wouldn' t b e movin g i n befor e th e wedding, m y mother didn' t tel l her parent s until th e offe r wa s accepted I aske d he r why Sh e said, "M y parents though t we should liv e with your fathe r s family until we could sav e money for a more substantia l dow n payment The y wer e afrai d w e would tak e o n to o muc h deb t otherwise " Whe n sh e finally told them , the y sai d i t wa s a terribl e mistake Bu t afte r th e deal closed , the y wer e invite d t o lunc h a t m y parents ' empt y little four-roo m house Whil e m y mothe r serve d lunc h fro m a picni c baske t an d cooler , m y fathe r gav e the m th e gran d tour Afte r seein g th e home , the y change d thei r tun e an d tol d my fathe r tha t i t wa s a good house , a nice lot, wit h tree s an d a drivewa y too ! Bes t o f all , m y parent s d a hom e waitin g for the m afte r thei r honeymoon A s soo n a s yo u ca n affor d it, bu y a home Simplify you r bankin g s o tha t you'r e no t payin g fee s an d not focusin g o n incom e o r ho w muc h yo u hav e t o spend Focus o n expenses Don't us e consume r credi t fo r them Th e faster yo u eliminat e ol d debts , th e faste r you'l l fin d freedom Concentrate o n you r priorities , no t o n fleetin g amusements Be war y o f advertisin g — bu y th e bricks , no t th e fluff WORK THE PLAN There ar e onl y tw o way s t o generat e savings : earn mor e an d spend less O f course , doin g bot h i s best Revie w Chapte r for idea s on creatin g multiple stream s of income Afte r you'v e exhausted th e opportunitie s fo r raisin g your earnings , a t leas t you'll kno w exactl y what you r mean s are FULL SPEED AHEAD You'll nee d t o liv e well belo w thi s disposabl e incom e leve l and us e you r firs t surplu s t o establis h a positiv e ne t worth That mean s reducin g expenses Conside r ho w psychologica l w w w T he Ge tA ll co m barriers an d externa l conditionin g dete r yo u fro m handlin g money wisely It' s i n man y others ' bes t interest s t o kee p yo u spending and consuming You must judge the validity of media messages i n relation t o you r ow n needs , hopes , dreams , an d desires Yo u benefit b y cuttin g costs , an d remembe r tha t yo u may nee d t o b e fruga l temporaril y unti l you'r e fre e o f credi t payments The n yo u ca n rewar d yoursel f wit h a luxur y pur chase, pai d fo r wit h th e money tha t previousl y wen t t o you r creditors a s interest payments Yo u ca n adjus t you r thrif t t o a more comfortabl e leve l a t tha t poin t too , dependin g o n ho w fast yo u wan t t o retire Bu t yo u nee d t o bas e you r decisio n on th e idea s i n thi s book Th e mor e suggestion s yo u follow , the faste r you'l l creat e wealth , an d th e faste r you'l l retire When yo u star t handlin g you r money profitably , th e sur plus, o r you r savings , wil l automaticall y begi n t o accumulate These saving s shoul d b e applie d a s follows : (1) against consumer debts until they're eliminated; (2) as a contribution t© your RRSP; (3) t© buy adequate housing; (4) to eliminate your mortgage; and (5) t© buy wealth-building assets I thin k I'v e discusse d consume r deb t t o death , bu t I reall y hope yo u tak e m y suggestion s t o heart I' m goin g t o assum e you'll mak e deb t eliminatio n th e firs t goa l fo r you r savings 251 252 w w w T he Ge tA ll co m Then yo u shoul d contribut e t o a n RRS P fo r thre e reasons : (i) you'l l ge t a refun d o r sav e o n th e taxe s yo u owe , (2 ) you'l l establish you r nes t eg g for your conventiona l retiremen t years , and (3 ) you ca n trea t you r initia l contribution s a s a n emer gency fund I recommen d depositin g a n amoun t equa l t o si x months' expense s fo r emergencies , a n amoun t tha t shouldn' t be exorbitan t onc e you overhau l your spending behaviou r and get ri d o f you r debts O f course , th e amoun t tha t yo u ca n contribute wil l b e restricte d b y ho w muc h you'r e allowe d t o put int o you r RRS P an d b y th e amoun t o f surplu s yo u hav e to wor k with Regardless , i t shoul d b e place d i n a cashable , conservative, registere d investment Hopefully , by holding i t i n your RRSP , you'l l b e les s tempte d t o us e i t fo r nonemergen cies You'll als o be abl e to enjo y th e cas h refun d o n tha t year's tax filin g an d th e futur e tax-fre e growt h whil e th e mone y remains i n th e plan B e sure to mak e th e ful l contributio n a s soon as possible, and then ge t the form s fro m Canad a Custom s and Revenu e Agency t o appl y fo r a reduction i n your incom e tax take n of f a t source Once yo u have your emergency fund, you'l l nee d to decid e how t o spli t th e surplu s fo r additiona l RRS P contribution s an d mortgage payments I t reall y depend s o n you r situation Ho w much yo u alread y hav e i n you r RRSP , ho w muc h you'l l need , how man y year s unti l you r conventiona l retiremen t — thes e issues wil l nee d t o b e addressed A s well, yo u nee d t o loo k a t the othe r investmen t option s fo r you r RRS P onc e yo u hav e enough conservativ e holdings Ask, ask, ask Consult with advisors, naturally , bu t d o you r ow n researc h a s well Take anothe r look a t Chapte r FULL SPEED AHEAD co m As fa r a s I' m concerned , th e soone r yo u discharg e you r mortgage th e better Eve n i f yo u hav e a lo w interes t rate , i f you kee p makin g payment s ove r th e nex t years, you coul d easily pa y mor e i n tota l interes t b y th e en d tha n i f you hav e a higher rate of interest but pa y off the mortgag e ove r a shorter w w w T he Ge tA ll term D o th e math You'l l als o b e restricte d b y th e term s o f your mortgag e i n payin g i t dow n faster Tal k t o you r mort gage lender , discus s alternatives , rea d som e books , d o som e research a t othe r lenders , an d the n decid e fo r yourself Paying down you r mortgage , though , wil l stil l depen d o n ho w muc h you ca n regularl y expec t t o hav e i n saving s an d ho w muc h you're allowe d t o o r nee d t o pu t int o you r RRSP Then, afte r you'v e indulge d i n a priorit y luxur y an d stil l have som e savings , it' s tim e t o researc h nonregistere d invest ment opportunities Ther e ar e s o man y books , medi a shows , and advisor s in th e are a of investing that yo u ca n spend a great deal o f tim e an d effor t gatherin g th e knowledg e necessar y t o make th e bes t decisions I f investin g isn' t a n interes t o r hobb y of yours , rea d a fe w article s o n ho w t o choos e a financia l planner, payin g particula r attentio n t o an y bia s th e autho r o r organization ma y have Yo u could visi t th e Financia l Planner s Standards Counci l we b sit e a t www.cfp-ca.org or th e Canadia n Association o f Financia l Planner s sit e a t www.cafp.org ; bot h sites offer advic e on finding a planner Eve n so, you must under stand th e variou s financia l product s availabl e t o mak e a n informed decision Yo u shoul d fee l comfortabl e wit h you r investments an d thin k tha t yo u hav e th e bes t combinatio n o f products t o sui t you r ow n need s an d ris k tolerance I sugges t tha t yo u intervie w a number o f advisors an d as k 253 254 w w w T he Ge tA ll co m every questio n yo u ca n thin k of , bu t don' t mak e a commit ment t o on e o n th e spot Ran k thos e wh o mad e yo u fee l th e most confident , an d afte r a wee k o r s o visi t th e contender s again, still avoidin g a final decision The reaso n for the secon d meeting i s t o confir m you r initia l impressions Then , i f yo u decide o n a coupl e o f commissione d salespeople , divid e you r investment mone y equall y betwee n the m an d monito r th e progress o f their product s quarterly When a year has gone by, judge th e result s o f eac h asse t clas s i n you r portfoli o agains t competitors' simila r investment s an d compar e overal l marke t sector results Financia l newspaper s publis h summarize d chart s for tha t purpose Before I bega n activel y investin g i n th e stoc k market , I went t o a n investmen t hous e an d tol d th e planne r tha t he' d receive onl y half o f my mone y sinc e I wanted t o compar e th e return I' d mak e o n m y ow n wit h th e result s fro m hi s choic e of experts H e didn' t like the idea , s o he didn't get my money At anothe r firm , th e broke r sai d he' d rathe r handl e al l of m y money bu t wa s happy t o loo k afte r hal f o f it B y the en d o f the year , I' d mad e a bette r profi t fro m m y ow n investmen t decisions, s o I transferre d m y mone y fro m th e broke r t o m y existing accoun t wit h a discoun t brokerage , an d I'v e kep t i t there eve r since I spen d a lo t o f tim e o n investmen t research , bu t i f tha t doesn't appea l t o you , mak e th e effor t t o fin d goo d financia l advisors, an d periodicall y chec k you r portfolio' s performance thereafter As you practise living below your means, your assets should grow steadil y fro m th e regula r infusio n o f saving s and invest - FULL SPEED AHEAD w w w T he Ge tA ll co m ment profits Yo u should als o have a good ide a of your average costs o f living an d therefor e b e abl e t o predic t th e amoun t o f income require d t o cove r futur e costs Th e projectio n won' t be precise , bu t i n m y experienc e it' s bee n close When you're making your projections, consider i f you wan t to leav e mone y fo r you r heirs , becaus e an y inheritanc e wil l affect ho w muc h you'l l nee d fo r your retiremen t afte r 65 From the dat e yo u want t o retir e earl y until ag e 65, you'll nee d onl y enough t o cove r you r estimate d futur e cost s fro m you r nes t egg's origina l capita l an d return Coun t o n bot h th e origina l investment an d it s retur n bein g use d u p b y th e tim e you'r e 65 It mean s you'll likely use a different formul a for eac h retirement perio d t o calculat e th e correc t nes t eg g amount Thi s is where a goo d financia l adviso r ca n help Fin d on e wh o wil l perform th e calculation s base d o n wha t yo u sugges t th e vari ables shoul d be As yo u approac h you r targe t date , th e economi c condi tions at that time will provide a good indicatio n o f the variables you'll hav e t o assum e i n figurin g ou t ho w muc h you'l l nee d in eac h portfolio You'll have a better approximatio n o f interest rates, investmen t performance , an d inflatio n rates The n al l you'll hav e t o d o i s provid e you r adviso r wit h th e followin g variables: th e leve l of income require d fo r earl y retirement an d regular retirement , th e tim e spa n o f each , i f th e capita l i s t o be use d up , an d th e estimate d rate s fo r inflatio n an d invest ment return s base d o n governmen t economi c dat a an d you r personal economi c data Yo u could als o us e on e o f th e man y financial softwar e program s tha t offe r retiremen t planning , either bough t a t retai l o r foun d o n th e Internet B e careful , 255 256 w w w T he Ge tA ll co m though, tha t th e progra m ask s fo r al l o f th e variable s an d doesn't assume fixed numbers tha t might not accuratel y reflect your circumstances Fo r example , you shoul d b e able to inser t your desire d leve l o f ne t incom e i n retiremen t (expresse d i n current dollars), and you should agre e with o r be able to change any figure s th e equatio n use s fo r inflatio n rat e o r investmen t return Yo u also nee d t o conside r i f you'l l hav e pensio n ben efits, a RRIF , and/o r annuity , fo r you r conventiona l retiremen t period Thi s i s a comple x are a involving man y persona l deci sions, s o you reall y need t o spea k t o a knowledgeable advisor Don't forget , i f you miscalculat e o r somethin g unforeseen happens durin g you r earl y retirement , you'l l probably onl y need t o mak e a temporar y adjustmen t o r tak e a temporar y job Bu t befor e you reac h earl y retirement , a s you're tryin g t o cut costs , kno w tha t th e temporar y pai n wil l affor d a n excep tional gain Then , n o matte r wha t happen s later , you'l l hav e learned soun d money-handlin g skills , whic h i s a n accom plishment i n itself More than likely, though, you'll work at something in retirement tha t you'v e alway s wante d t o , an d i t ma y generat e some income Eve n though I believe I have enough in my RRSP, I still make contributions to it to lower my income t o the non taxable level when needed , an d th e extr a funds i n my registered plan ar e lik e havin g insurance I ca n als o carr y forwar d th e RRSP deductions t o b e use d against income in futur e years , and in the meantime m y portfolio continue s t o grow with th e tributions earnin g a tax-fre e retur n insid e th e plan When you r Balanc e Shee t reflect s a health y ne t worth , you'll alread y know freedom You'll have options Wealth doe s FULL SPEED AHEAD w w w T he Ge tA ll co m that fo r you Then , whe n yo u n o longe r hav e t o work , yo u might thin k tha t you r jo b isn' t s o ba d afte r all Th e stres s o f needing a jo b wil l b e gone , an d yo u ca n decid e wha t for m early retiremen t wil l take Withou t th e pressur e o f worryin g about "th e job, " it'l l b e easie r t o gai n perspectiv e o n th e reall y important thing s i n you r life From beginnin g t o end , though , yo u hav e t o b e thre e things: a dreamer , driven , an d determined Yo u need t o b e a dreamer t o pictur e wha t yo u wan t an d se e yourself achievin g it Yo u have t o b e driven , whic h mean s makin g a promis e t o yourself an d followin g throug h wit h th e actio n t o ge t wha t you want Yo u must b e determine d t o overcom e adversit y and persevere unti l yo u reac h your goal That's why I think almos t anyone ca n what I'v e done Bu t not withou t dreams , drive , and determination Many peopl e hav e aske d m e i f I eve r though t I' d becom e an author Honestly , no I hadn' t planne d o n it Bu t whe n I decided t o jus t g o ahea d an d begi n writing , i t go t done I t reminds m e o f m y favourit e landmar k o n th e wa y to m y par ents' summe r house There's a lovely farm wit h rollin g hills an d a centur y hom e wit h gingerbrea d tri m se t acros s fro m a bi g red barn Painte d o n th e sid e o f th e bar n i n tal l whit e letter s are th e word s "Neverthough t Farm " It' s amazin g ho w man y wonderful thing s ca n happe n tha t ordinaril y yo u wouldn' t expect Yo u don't kno w wha t yo u ca n d o unti l yo u try Sure ! Why not ? Don' t le t anyon e els e tel l yo u otherwise Yo u ca n find financia l freedo m i f yo u wan t it D o th e math Mak e a plan The n tak e action Persevere , an d realiz e you r dreams 257 ... PRESS NATIONAL LIBRAR Y O F CANAD A CATALOGUIN G I N PUBLICATIO N DAT A ISBN 1-55022-484- co m Nahirny, Diann e Stop workin g star t livin g : how I retire d a t 36 tA ll I Retiremen t income... e i n life Simply put , yo u ge t ric h quic k b y acceleratin g th e accu mulation of assets and th e elimination of liabilities To continue indulging i n you r dreams , yo u kee p buildin... et Al l.c om START T he G LIVING w w w HOW I RETIRED AT THE AGE OF 36 , WITHOUT WINNING THE LOTTERY DIANNE NAHIRNY ECW PRESS m w w w T he Ge tA ll co This page intentionally left blank om l.c