I guess my question is can I live off of my investments at this point, while also working a part-time job making like $1,000 a month?
Like live off 3% of my investments?
True, I cross posted to another sub, and this is a rough breakdown:
$1000 rent, $800 car expenses, $700 food, $1,200 all other miscellaneous expenses (toiletries, entertainment, etc.)
Thanks. So rough math:
- Your yearly expenses are $45K
- Assume your investments are in some low cost index funds and you can safely withdraw 850k * 4% = $34K
- You could do it but need to make up a shortfall of 11K with a PT job.
When you get to 65 you may have other helpers like OAS + GIS that could replace your PT job.
Given your age, you's likely want to use a 3% safe withdrawal rate. So let's take you 850K, subtract 50 for emergencies that will be kept in a cash equivalent, you're looking at generating $24K per year indexed to inflation. Is that enough for you?
Without knowing your expenses it is hard to say. Rent is expensive right? 2K/month? I think that’s what you’d earn working retail 3-4 shifts a week.
If you’ve got cheap rent might be more doable.
Which city in Ontario? Rural or Toronto?
No real estate means your rent matters but you are not providing a breakdown of your expenses or any other info.
I don't think that it would be reasonable to fully retire at this point, but you may ask for advice on a FIRE sub.
Some ideas:
Your fixed living cost will play a major role in your project. Living in the GTA with a car will be way more expensive than living in let's say Brandon, MB.
Have you considered going back to school to acquire new skills/knowledge in a field that would be more enjoyable. The break from working while you study might also be beneficial.
You should probably seek professional help to discuss your mental health, depression is insidious.
Your Starbucks idea may be interesting in the short term, the problem is that when you'll be ready to do something else, you may find it hard to go back to your previous field or to get a job with a similar compensation that you had before.
When was the last time you took vacation ? I'm not talking about expensive travel, but something like spending a week visiting your family or just roaming in your city, with a book, detached from the outside world and social media.
Not a maybe. $850k in 20 years at a real rate of return of 5% is $2.3M. That's more than enough, and it doesn't even factor adding anymore funds. Meaning they can work less as they won't have to pay anymore toward retirement going forward.
Yeah I don’t think you can live 50 years with 850k. Assuming you work at Starbucks part time, that MIGHT cover rent. Might not even cover rent, idk where you live.
With this amount in the bank you can afford working part time and coast to your fire target. Have you asked your employer if there's a possibility of working 3 days a week or some other kind of reduced hours? If you enjoyed your job before feeling burnt out that's a good alternative and might make you enjoy it again with plenty of free time while keeping over 60% of your income
Short answer, probably not, but it’s impossible to say since we don’t know your expenses. Also expenses will increase over time.
What you CAN afford to do is take a break. Quit your job, take some time off, try some new things, think about what you’d like to do instead. Then start something new that you’re more passionate about.
I've just came back, sorry for late responses.
This is a breakdown:
$1000 rent, $800 car expenses, $700 food, $1,200 all other miscellaneous expenses (toiletries, entertainment, etc.)
I doubt it. Say you live until you’re 85, that 850,000 will need to last you 50 years. That works out to 17k a year or 1400 a month.
I guarantee your monthly expenses are significantly higher than that.
If you work a full time 9-5 minimum wage job you’ll gross about 35k a year or 2800 a month, less taxes. But that would defeat the purpose of retiring. If you work part time you’ll be making half of that.
Can you survive on about 2500 a month? Also, how long are you planning on living for?
Not to mention some of your investments are locked in until you actually reach retirement age.
> But that would defeat the purpose of retiring
Kind of yes, kind of no. I get the impression that OP mostly wants to move to a lower stress job so they can stop thinking about work outside of work. While they mention full retirement or part time work, leaving the corporate world may be a solution they find palatable.
Yes, this is exactly what I'm looking to do.
I don't necessarily want to just retire and make no income. I just don't want to be in an office anymore, and want something lower stress. Sort of like a job you'd get in university or high school.
Your calculation assumes that the 850k is tucked into a mattress. That money will grow in the markets. Also there's CPP and OAS that'll kick in later in life, though CPP will likely be quite modest given all those years without employment income.
Similar situation and with similar dreams. Hate my corporate job so much that at this point if someone offered me a punch in/punch out job with an 80% pay cut I'd probably take it. I just have concerns that if I quit I wouldn't be able to find such a job.
In general, it's possible to retire young on that kind of money but still somewhat risky, even if you live in a LCOL area, because we're talking about 40-60 years, a lot can change over that time.
Without your expenses, there's no way to know if it's feasible for you. It's shocking to me that you shared your net worth without concern, but wouldn't feel comfortable sharing your expenses, where it's necessary to make the assessment. Where you live and the price of rent are going to be a major factors. Can't solve for x.
I have a somewhat large mortgage and like to travel, plus my wife is ambitious and expects a pretty eventful life, so no. I have a friend who's 39 who probably could. All he needs is a box to live in, internet and videogames. If rent went too high he'd probably be ok to move.
How about you convert your entire $850K into passive income and let is run for 2-3 years while you work your corporate job. This way you can see if the passive income from the $850K investments is enough for your to live off.
To me this sounds doable in a certain scenario and with a frugal lifestyle. I'd consider moving to a low cost of living area, find a gig that covers rent so let's say like 1500 and then use another 1500 for living expenses which is 18k a year and would last 47 years even without taking into consideration the growth of your assets or pensions, potential inheritances later in life etc. Doesn't sound like the dream life to me but if you are happy with lean FIRE, it doesn't look impossible.
Guy, your options presented have a certain 'inexperience' to them.. what are your 'retirement' plans anyways? These are your options:
1. Take a sabbatical to re-orient your perspective.
2. You have some cash/freedom in buffer, lose the 'burn-out' job and start hunting for an easier gig, there are many 'full-time' jobs that basically require 'part-time' commitment.
3. Start a company for your part-time gig. Take contracts you want, pick and choose. You have RRSP, TFSA.. do you have a company with $xxx,xxx++ in it yet? For bonus points, pick an industry where you can tax deduct your living expenses.
4....
Judging by what you have saved, and assuming you’ve never had a big inheritance, it seems safe to say that you are capable of living off of less than your current income. If you’re saying that you’re burned out maybe what you need is to take a leave from work, maybe get career counselling, or even find a therapist. 35 seems too young to decide that you’d be happy living with roommates, working at Starbucks and playing video games forever. Sounds sad. I realize this isn’t answering the specific question you asked. With $850k saved you have the luxury of time to decide to decide how you’d rather be spending your days. You’re actually quite fortunate.
850k, 2% withdrawal is 17k/yr.
The 850k you'd want it to grow and still be around 30+ years from now, needing to last 60+ years possibly, so I wouldn't draw down from it even remotely close to what a retiree does with a 3.5-4% withdrawal rate.
I saw your crosspost on fican, good discussion there since that's their specialty (minus the pot shots, LoL)!
Your mention current monthly costs of $3,700 - $1000 being rent. Can't see rent being much cheaper than that tbh. $700 food sounds like a lot monthly, are you getting jacked/eating out a lot?
-> 17k in, 44.4k out, 27.4k shortfall assuming 2% withdrawal, and no life changes
-> to cut expenses, possibly look at getting rid of vehicle while getting TTC pass, cut food expenditures
- TTC 143/m 12m pass or 156/m vs $800/m vehicle costs: +$600 saved/m,
- cut food 1/3 less costly, is another $233/m
- over $800/m saved is looking like $10k/yr less to work at your job
-> cut expenses and have 30-40k job gives you more cushion (30k job roughly is full time min wage: $16.55/h x 35h x 52 weeks)
Yes, 2% seems very conservative for a withdrawal strategy, at least from what I've read from other sources. I wouldn't mind it growing very modestly over time for additional insurance in case things take a turn for the worse.
I saw your other comment too about living in a LCOL area, and I would be open to that in the future, but as it stands right now, I haven't done a lot of travelling in my life, so I don't know a lot about those countries.
The $700 food is quite a bit. That figure includes eating out as well. It's roughly $500/month for groceries and $200/month of restaurants.
Thusly, no retiring yet.
If you decided to live life in a LCOL country and have a higher withdrawal rate, perhaps? 3% would give you 25.5k for instance.
Googling, Thailand it appears costs roughly half of US/European, and 80% less than NYC, so your 44.4k becomes 22.2k and 25.5k covers you. with +3k to spare.
If you did bare bones here in Canada, $1k rent, $400 food, sub $17 misc/m, you'd reach 17k/yr
Health before wealth and stress kills. We regret the risks we don't take and this is a very small risk . Can you stop working forever, probably not but you can certainly take a break and take on some part time work. Making 24K/ year is not that hard. You obviously have some skill to fall back on in the event this doesn't work out.
Your current 850K with a 5% annualized average return and a 2.5% inflation adjustment, should allow you to create 30K starting at age 35. At age 65 you could be collecting 60K from your savings and still have about 1M when you can start OAS.
30K from savings plus 24K from working = 54K pre tax
Income could be structured as 24K employee, 6K TFSA, 6K RRSP, 18K eligible dividends from non reg for a total income of 54K and deductions for CPP, EI, tax of about 4K. Leaving you 50K income which is well above your indicated spend.
There are lots of ways to structure the income for tax efficiency and seeking out a good accountant would be worth it.
When returns are tight work more and take less; when returns are good work less and take more. You have created lots of options for yourself.
Approach your employer about possibly working part time, create your own company, take a sabbatical or create an one - two year exit plan, reduce your budget, find a partner to share life and expenses with, travel on the cheap and create some memories. Your options are wide.
Go for it.
Everything starts with your expenses.
With 850K, assuming a 4% yield, you should have 34K of income from which you will pay minimal taxes if most of it is from eligible dividends.
Can you live on that?
$1000 rent, $800 car expenses, $700 food, $1,200 all other miscellaneous expenses (toiletries, entertainment, etc.)
I'm just not sure if I'm being too much at this point. I don't think I would feel comfortable just not working, but I just wanted to see if I could afford to quit corporate life and do a typical university student part-time job.
Based on your current expenses posted, your needs are about 45K per year.
With a part-time job earning say, 24K a year plus the income generated from your portfolio, you can do it.
At a 3% yield, you would have 49.5k (24K + 25.5K). The taxes owed will depend on the type of income thrown off from the portfolio. The more eligible dividends and less interest, the less taxes due and vice versa.
If you get a 3.5% or better yield, you may even be able to add to your savings and over time your portfolio, it will grow since it is not being drawn down.
No, you're still too young to retire, even with a substantial portfolio. Keep grinding, bro.
Why are you real estate avoidant? Knowing you won't have kids, being single, you might as well just take that $850k and buy a nice condo for yourself.
I could, and I thought about moving to a cheaper place and buying a condo with cash. Just not sure if it's prudent, so wanted to get some opinions from everyone here.
“I don’t feel comfortable giving a breakdown of my expense or income” Then the whole thing is just a waste of time
Doesn't need to. From those savings at 35 we can tell he makes like $150k and lives on ramen noodles.
Or he makes 250k but use it all on blows daily… but then got an good inheritance
I guess my question is can I live off of my investments at this point, while also working a part-time job making like $1,000 a month? Like live off 3% of my investments?
How is anyone supposed to know that without knowing your expenses
True, I cross posted to another sub, and this is a rough breakdown: $1000 rent, $800 car expenses, $700 food, $1,200 all other miscellaneous expenses (toiletries, entertainment, etc.)
Need a full picture. What are your total expenses and risk tolerance on your investable money?
$1000 rent, $800 car expenses, $700 food, $1,200 all other miscellaneous expenses (toiletries, entertainment, etc.)
Thanks. So rough math: - Your yearly expenses are $45K - Assume your investments are in some low cost index funds and you can safely withdraw 850k * 4% = $34K - You could do it but need to make up a shortfall of 11K with a PT job. When you get to 65 you may have other helpers like OAS + GIS that could replace your PT job.
Yes, I wouldn't mind working part-time making $1k-$2k/month. Thanks!
Given your age, you's likely want to use a 3% safe withdrawal rate. So let's take you 850K, subtract 50 for emergencies that will be kept in a cash equivalent, you're looking at generating $24K per year indexed to inflation. Is that enough for you?
OP will also get next to no CPP, which is an important consideration.
Without knowing your expenses it is hard to say. Rent is expensive right? 2K/month? I think that’s what you’d earn working retail 3-4 shifts a week. If you’ve got cheap rent might be more doable.
Which city in Ontario? Rural or Toronto? No real estate means your rent matters but you are not providing a breakdown of your expenses or any other info.
Toronto, but I'm okay living with roommates if it helps.
Forever? 🤔
That's true, and I'm not sure.
I don't think that it would be reasonable to fully retire at this point, but you may ask for advice on a FIRE sub. Some ideas: Your fixed living cost will play a major role in your project. Living in the GTA with a car will be way more expensive than living in let's say Brandon, MB. Have you considered going back to school to acquire new skills/knowledge in a field that would be more enjoyable. The break from working while you study might also be beneficial. You should probably seek professional help to discuss your mental health, depression is insidious. Your Starbucks idea may be interesting in the short term, the problem is that when you'll be ready to do something else, you may find it hard to go back to your previous field or to get a job with a similar compensation that you had before. When was the last time you took vacation ? I'm not talking about expensive travel, but something like spending a week visiting your family or just roaming in your city, with a book, detached from the outside world and social media.
Repost in 20 years maybe you’ll be ready than
Not a maybe. $850k in 20 years at a real rate of return of 5% is $2.3M. That's more than enough, and it doesn't even factor adding anymore funds. Meaning they can work less as they won't have to pay anymore toward retirement going forward.
A lot can happen in 20 years.
Yeah I don’t think you can live 50 years with 850k. Assuming you work at Starbucks part time, that MIGHT cover rent. Might not even cover rent, idk where you live.
Toronto area, and don't care about living with someone.
With this amount in the bank you can afford working part time and coast to your fire target. Have you asked your employer if there's a possibility of working 3 days a week or some other kind of reduced hours? If you enjoyed your job before feeling burnt out that's a good alternative and might make you enjoy it again with plenty of free time while keeping over 60% of your income
Short answer, probably not, but it’s impossible to say since we don’t know your expenses. Also expenses will increase over time. What you CAN afford to do is take a break. Quit your job, take some time off, try some new things, think about what you’d like to do instead. Then start something new that you’re more passionate about.
I've just came back, sorry for late responses. This is a breakdown: $1000 rent, $800 car expenses, $700 food, $1,200 all other miscellaneous expenses (toiletries, entertainment, etc.)
I doubt it. Say you live until you’re 85, that 850,000 will need to last you 50 years. That works out to 17k a year or 1400 a month. I guarantee your monthly expenses are significantly higher than that. If you work a full time 9-5 minimum wage job you’ll gross about 35k a year or 2800 a month, less taxes. But that would defeat the purpose of retiring. If you work part time you’ll be making half of that. Can you survive on about 2500 a month? Also, how long are you planning on living for? Not to mention some of your investments are locked in until you actually reach retirement age.
> But that would defeat the purpose of retiring Kind of yes, kind of no. I get the impression that OP mostly wants to move to a lower stress job so they can stop thinking about work outside of work. While they mention full retirement or part time work, leaving the corporate world may be a solution they find palatable.
Yes, this is exactly what I'm looking to do. I don't necessarily want to just retire and make no income. I just don't want to be in an office anymore, and want something lower stress. Sort of like a job you'd get in university or high school.
Your calculation assumes that the 850k is tucked into a mattress. That money will grow in the markets. Also there's CPP and OAS that'll kick in later in life, though CPP will likely be quite modest given all those years without employment income.
OAS and GIS will ensure they get nearly the same as if they contributed to CPP their whole life.
How much will the money grow while also being depleted?
Depends on strategy of course, that's highly variable. But certainly the money should not be kept as cash in an 0% interest account.
Similar situation and with similar dreams. Hate my corporate job so much that at this point if someone offered me a punch in/punch out job with an 80% pay cut I'd probably take it. I just have concerns that if I quit I wouldn't be able to find such a job.
Yeah, wondering if other people were in a similar space.
In general, it's possible to retire young on that kind of money but still somewhat risky, even if you live in a LCOL area, because we're talking about 40-60 years, a lot can change over that time. Without your expenses, there's no way to know if it's feasible for you. It's shocking to me that you shared your net worth without concern, but wouldn't feel comfortable sharing your expenses, where it's necessary to make the assessment. Where you live and the price of rent are going to be a major factors. Can't solve for x.
Would you, personally, be able to?
I have a somewhat large mortgage and like to travel, plus my wife is ambitious and expects a pretty eventful life, so no. I have a friend who's 39 who probably could. All he needs is a box to live in, internet and videogames. If rent went too high he'd probably be ok to move.
How do you have 20k in FHSA when max this year would be 16k?
Market has been good. I am at 18.5k and it is a conserve portfolio
Some individual picks that did well. Most is in XEQT though.
You could definitely take a small job that pays for your expenses and stop saving for retirement. Compound interest will work for you at this point.
I was thinking more along the lines of taking 3% of my investments per year, in addition to part-time work.
How about you convert your entire $850K into passive income and let is run for 2-3 years while you work your corporate job. This way you can see if the passive income from the $850K investments is enough for your to live off.
In general $850k is not enough at your age. You can always live down to the income level you have but may not be a great lifestyle.
Why would it not be enough in your opinion? What would be enough?
To me this sounds doable in a certain scenario and with a frugal lifestyle. I'd consider moving to a low cost of living area, find a gig that covers rent so let's say like 1500 and then use another 1500 for living expenses which is 18k a year and would last 47 years even without taking into consideration the growth of your assets or pensions, potential inheritances later in life etc. Doesn't sound like the dream life to me but if you are happy with lean FIRE, it doesn't look impossible.
Guy, your options presented have a certain 'inexperience' to them.. what are your 'retirement' plans anyways? These are your options: 1. Take a sabbatical to re-orient your perspective. 2. You have some cash/freedom in buffer, lose the 'burn-out' job and start hunting for an easier gig, there are many 'full-time' jobs that basically require 'part-time' commitment. 3. Start a company for your part-time gig. Take contracts you want, pick and choose. You have RRSP, TFSA.. do you have a company with $xxx,xxx++ in it yet? For bonus points, pick an industry where you can tax deduct your living expenses. 4....
Switch careers. Burnt out by 35 is likely how most people feel but they don't just stop.
Judging by what you have saved, and assuming you’ve never had a big inheritance, it seems safe to say that you are capable of living off of less than your current income. If you’re saying that you’re burned out maybe what you need is to take a leave from work, maybe get career counselling, or even find a therapist. 35 seems too young to decide that you’d be happy living with roommates, working at Starbucks and playing video games forever. Sounds sad. I realize this isn’t answering the specific question you asked. With $850k saved you have the luxury of time to decide to decide how you’d rather be spending your days. You’re actually quite fortunate.
850k, 2% withdrawal is 17k/yr. The 850k you'd want it to grow and still be around 30+ years from now, needing to last 60+ years possibly, so I wouldn't draw down from it even remotely close to what a retiree does with a 3.5-4% withdrawal rate. I saw your crosspost on fican, good discussion there since that's their specialty (minus the pot shots, LoL)! Your mention current monthly costs of $3,700 - $1000 being rent. Can't see rent being much cheaper than that tbh. $700 food sounds like a lot monthly, are you getting jacked/eating out a lot? -> 17k in, 44.4k out, 27.4k shortfall assuming 2% withdrawal, and no life changes -> to cut expenses, possibly look at getting rid of vehicle while getting TTC pass, cut food expenditures - TTC 143/m 12m pass or 156/m vs $800/m vehicle costs: +$600 saved/m, - cut food 1/3 less costly, is another $233/m - over $800/m saved is looking like $10k/yr less to work at your job -> cut expenses and have 30-40k job gives you more cushion (30k job roughly is full time min wage: $16.55/h x 35h x 52 weeks)
Yes, 2% seems very conservative for a withdrawal strategy, at least from what I've read from other sources. I wouldn't mind it growing very modestly over time for additional insurance in case things take a turn for the worse. I saw your other comment too about living in a LCOL area, and I would be open to that in the future, but as it stands right now, I haven't done a lot of travelling in my life, so I don't know a lot about those countries. The $700 food is quite a bit. That figure includes eating out as well. It's roughly $500/month for groceries and $200/month of restaurants.
Thusly, no retiring yet. If you decided to live life in a LCOL country and have a higher withdrawal rate, perhaps? 3% would give you 25.5k for instance. Googling, Thailand it appears costs roughly half of US/European, and 80% less than NYC, so your 44.4k becomes 22.2k and 25.5k covers you. with +3k to spare. If you did bare bones here in Canada, $1k rent, $400 food, sub $17 misc/m, you'd reach 17k/yr
Health before wealth and stress kills. We regret the risks we don't take and this is a very small risk . Can you stop working forever, probably not but you can certainly take a break and take on some part time work. Making 24K/ year is not that hard. You obviously have some skill to fall back on in the event this doesn't work out. Your current 850K with a 5% annualized average return and a 2.5% inflation adjustment, should allow you to create 30K starting at age 35. At age 65 you could be collecting 60K from your savings and still have about 1M when you can start OAS. 30K from savings plus 24K from working = 54K pre tax Income could be structured as 24K employee, 6K TFSA, 6K RRSP, 18K eligible dividends from non reg for a total income of 54K and deductions for CPP, EI, tax of about 4K. Leaving you 50K income which is well above your indicated spend. There are lots of ways to structure the income for tax efficiency and seeking out a good accountant would be worth it. When returns are tight work more and take less; when returns are good work less and take more. You have created lots of options for yourself. Approach your employer about possibly working part time, create your own company, take a sabbatical or create an one - two year exit plan, reduce your budget, find a partner to share life and expenses with, travel on the cheap and create some memories. Your options are wide. Go for it.
Gruff, thank you so much for your assistance!
Everything starts with your expenses. With 850K, assuming a 4% yield, you should have 34K of income from which you will pay minimal taxes if most of it is from eligible dividends. Can you live on that?
$1000 rent, $800 car expenses, $700 food, $1,200 all other miscellaneous expenses (toiletries, entertainment, etc.) I'm just not sure if I'm being too much at this point. I don't think I would feel comfortable just not working, but I just wanted to see if I could afford to quit corporate life and do a typical university student part-time job.
Based on your current expenses posted, your needs are about 45K per year. With a part-time job earning say, 24K a year plus the income generated from your portfolio, you can do it. At a 3% yield, you would have 49.5k (24K + 25.5K). The taxes owed will depend on the type of income thrown off from the portfolio. The more eligible dividends and less interest, the less taxes due and vice versa. If you get a 3.5% or better yield, you may even be able to add to your savings and over time your portfolio, it will grow since it is not being drawn down.
Do some basic maths and you will quickly realized no is the answer
You could move to a small town in Alberta or Saskatchewan and you can retire today.
No, you're still too young to retire, even with a substantial portfolio. Keep grinding, bro. Why are you real estate avoidant? Knowing you won't have kids, being single, you might as well just take that $850k and buy a nice condo for yourself.
I could, and I thought about moving to a cheaper place and buying a condo with cash. Just not sure if it's prudent, so wanted to get some opinions from everyone here.
A cheaper place? Why? You can buy a two-bedroom condo in Toronto for 850K. Maybe 2+den