Personal Finance

Locked: Is my plan for retirement at 45 sound? (the Rolen Plan)

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rolenEDM wrote: We will contribute to RESPs, but I will also advise my children that university is a waste of time unless they're going into a small range of professions. Most everything else they can better learn from their parents (who will have ample time for them), the internet, text books, or real world experience.
Having a piece of paper that says you're qualified to do something holds a lot more merit and guarantees a job over someone who is suggests they are self-learned. Just saying.
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rolenEDM wrote: Thanks for sharing your story. You sound very frugal and I agree it's totally ridiculous what people give their kids. I have a sister who grew up in a million dollar home, was spoiled rotten, and turned out so terribly she ended up disowned. I grew up in very modest conditions and turned out OK. I firmly believe that growing up with little builds character and makes people better.
Lol, are you kidding me?

You and your wife are in your 30's and still leeching off your parents. You are giving a very good example for your kids to stay with you until they are 50 years old.

Why does your wife plan on no working in the next decade? Discrepancy in family income is a recipe for disaster. Over 50% marriages end in divorce. Much better chance of you shelling out 50% of your salary until the rest of your life than your little "retirement plan"

You gonna teach your kids university is useless and decide for them?

Counting on family inheritance to get you through?

Man....this post looks like it's written by a millennial....oh wait.
Last edited by BiegeToyota on Feb 17th, 2019 7:20 pm, edited 1 time in total.
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rolenEDM wrote: We are currently in our early 30s, we don't have extraordinarily high income but we live very frugally. I make a salary around $90,000. Wife works part time and only makes $20,000 (likely less or maybe no income at all over the next decade). Our TFSAs are at about $200,000 and our RRSPs are at about $100,000, both are maxed out. We are still living with my parents, but planning to purchase a small house soon. We just had our first child and want 2-3 more.
Unrealistic when you have 2 expensive items you haven't budgeted for: house and kids.

You don't state where you live in Canada, but using the average cost of a house of $500,000, where are your funds to buy the house when your RRSP and TFSA only have $300,000.
Raising a child until they are 18 years old costs on average: $14,000 a year. You plan on having 3 or 4 in total, that is about $40,000-$56,000 a year for 18 years, so that will eat up whatever disposal income you have and not even yet accounting for normal household expenses and your own living expenses.
No amount has been budgeted for children attending college or university: $7,000 a year per student.

So the above 2 items will eat up all your savings and budget for the next 20 years when you expect to retire and basically have no savings to live on until you are 65.
Last edited by WetCoastGuy on Feb 17th, 2019 9:05 pm, edited 1 time in total.
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@HghSsociety We have a lot in common but the funniest one is my wife and daughter also calling me cheap Face With Tears Of Joy, btw, I don't care.
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rolenEDM wrote: We are currently in our early 30s, we don't have extraordinarily high income but we live very frugally. I make a salary around $90,000. Wife works part time and only makes $20,000 (likely less or maybe no income at all over the next decade). Our TFSAs are at about $200,000 and our RRSPs are at about $100,000, both are maxed out. We are still living with my parents, but planning to purchase a small house soon. We just had our first child and want 2-3 more.

My plan is:
- Continue to contribute to TFSAs until the bitter end. Perhaps even borrow money from our children in our old age instead of ever withdrawing them, so as to obtain the maximum benefit from them.
- Continue to contribute the max to RRSPs until around age 45.
- Our remaining income outside of RRSPs and TFSAs contributions will pay off our mortgage, max out RESPs, and cover our living expenses.
- At age 45, we will both stop working and start drawing the maximum we can from our RRSPs without incurring any taxes (approx $30,000/year).
- We will have our RRSPs fully withdrawn around age 65.
- At that time, we will receive the maximum benefits of OAS, GIS, etc as we'll have no income. We can draw as much as we want from our TFSAs to supplement it.
- We aren't too worried about CPP, it will be low due to our early retirement but who cares as we'll receive the other benefits instead.

Thoughts?

I realize there is little margin for error here, but we could also work past 45 if needed. And this also doesn't factor in any inheritance that we're likely to receive.

One thing that could really botch this plan is if OAS, GIS were done away with due to the prominence of TFSAs. TFSAs could also be done away with or changed in a way to botch this plan.
TBH I don't think it's doable, you are assuming too many positives such as nothing happening between now and 45, your ability to teach your kids not to take university (wait and see until you get there).
I have 2 kids, a significantly higher family income, rental properties and in my early 50s, I still don't feel ready to retire. I live a frugal live relative to my income.

I wish you luck.
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Feb 13, 2019
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Altera wrote: Having a piece of paper that says you're qualified to do something holds a lot more merit and guarantees a job over someone who is suggests they are self-learned. Just saying.
Not necessarily. I don't have that piece of paper and I did fine, because I had real world experience to prove myself. Lots of people with the piece of paper lack that. (I do have a piece of paper, but in a different field than I work.)
Older generations literally have no biological purpose to exist other than to help the younger generation.
I am the proud inventor of the Rolen Plan for early retirement.
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BiegeToyota wrote: You and your wife are in your 30's and still leeching off your parents. You are giving a very good example for your kids to stay with you until they are 50 years old.
Only thing we are "leeching" is basement space. We pay all our own expenses and we assist with maintenance, etc so it's a win-win situation. It's not like our parents would be renting out the basement if we weren't here, they'd probably be filling it with junk.
BiegeToyota wrote: Why does your wife plan on no working in the next decade? Discrepancy in family income is a recipe for disaster. Over 50% marriages end in divorce. Much better chance of you shelling out 50% of your salary until the rest of your life than your little "retirement plan"
She will be staying at home with young kids. Perhaps she'll work 1-2 days a week.

That high divorce rate is among selfish boomers, I suspect millennials are going to do much better.

Like several others in this thread, my wife also calls me "cheap" and she knows very well that if she ever divorces me she would live in poverty and I wouldn't pay her a cent. You can't get blood from a stone.
Last edited by rolenEDM on Feb 17th, 2019 9:50 pm, edited 3 times in total.
Older generations literally have no biological purpose to exist other than to help the younger generation.
I am the proud inventor of the Rolen Plan for early retirement.
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WetCoastGuy wrote: Unrealistic when you have 2 expensive items you haven't budgeted for: house and kids.

You don't state where you live in Canada, but using the average cost of a house of $500,000, where are your funds to buy the house when your RRSP and TFSA only have $300,000.
Raising a child until they are 18 years old costs on average: $14,000 a year. You plan on having 3 or 4 in total, that is about $40,000-$56,000 a year for 18 years, so that will eat up whatever disposal income you have and not even yet accounting for normal household expenses and your own living expenses.
No amount has been budgeted for children attending college or university: $7,000 a year per student.

So the above 2 items will eat up all your savings and budget for the next 20 years when you expect to retire and basically have no savings to live on until you are 65.
We're in Alberta and looking at a house in the $300,000-400,000 range. We have a 35-50% downpayment saved already. It won't be fancy and we will be living cheaply. We are handy enough to take care of most things ourselves.

There's no way my kids will be costing $14,000/year per kid. That figure must include full-time child care. I'm budgeting around $3,000/year per kid, or less. No external child care, they'll be involved in one sport each, my wife can teach them a musical instrument, and I can provide any additional tutoring they might need.
raymondly wrote: To add to Sanyo above. You don't want to live before your retire?
How about spending some time traveling with the children? Not that it is everything but I love Disney World with the kids.
Seeing other parts of the world. It is not only entertaining but also educational.
I am cheap, but not that cheap...
Aha! I was waiting for someone to bring that up. Indeed, there would be no point living as frugally as possible at the expense of having a quality life and doing the things you enjoy in life. In my case, I've always been a person who likes to travel as frugally as possible. That usually means camping on public land and cooking our own meals. We really enjoy the outdoors (free) and something like Disney World has no appeal for us, luckily. Hopefully watching a movie about Disney World (free) will teach the kids all they need to know about such places, without having to go there in person.
Older generations literally have no biological purpose to exist other than to help the younger generation.
I am the proud inventor of the Rolen Plan for early retirement.
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rolenEDM wrote: There's no way my kids will be costing $14,000/year per kid. That figure must include full-time child care. I'm budgeting around $3,000/year per kid, or less. No external child care, they'll be involved in one sport each, my wife can teach them a musical instrument, and I can provide any additional tutoring they might need.
I see the expenses for the children to be even less than the $3K on average when they all run away...:rolleyes:
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I have really high respect for those humans that can live like that.

Personnaly, i just can't...i love brand new sport car, i love going restaurant, cinema, humour show, auto show, etc... All these thing cost money.

I understand ur objective to retired young, but i thing that's not the right way to reach it. For me, life is meant to be live.

Your way, it's more survive to me.

Good luck with ur plan, btw i leave my parents home at my early 17yo. But my younger brother and sister still live in the family triplex.
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rolenEDM wrote:
That high divorce rate is among selfish boomers, I suspect millennials are going to do much better.

Like several others in this thread, my wife also calls me "cheap" and she knows very well that if she ever divorces me she would live in poverty and I wouldn't pay her a cent. You can't get blood from a stone.
I'm Gen X, not a boomer.

Come on man, read what you write. You calling boomers selfish and then you write the balded part. How on earth are you going to enforce this in Canada, I'm curious.

Anyway, you're 30 and you both live with your parents, no matter what the arrangement is. You plan on teaching your children that University degree is useless. I am the one who hasn't done anything useful with my degree, but you can't just make sweeping generalisations while the world is always changing. In just 10 years the world has changed so much that a lot of Westerners have made a career outside Canada. What are they going to do? Get a trade and stay in no nothing province of Alberta (with apologies to Conquistador). 5 years ago Alberta was at the top of the game in Canada and now? Things change all the time and the only thing certain is that your plan is not going to work as you imagined.
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rolenEDM wrote: We're in Alberta and looking at a house in the $300,000-400,000 range. We have a 35-50% downpayment saved already. It won't be fancy and we will be living cheaply. We are handy enough to take care of most things ourselves.

There's no way my kids will be costing $14,000/year per kid. That figure must include full-time child care. I'm budgeting around $3,000/year per kid, or less. No external child care, they'll be involved in one sport each, my wife can teach them a musical instrument, and I can provide any additional tutoring they might need.


Aha! I was waiting for someone to bring that up. Indeed, there would be no point living as frugally as possible at the expense of having a quality life and doing the things you enjoy in life. In my case, I've always been a person who likes to travel as frugally as possible. That usually means camping on public land and cooking our own meals. We really enjoy the outdoors (free) and something like Disney World has no appeal for us, luckily. Hopefully watching a movie about Disney World (free) will teach the kids all they need to know about such places, without having to go there in person.
Good luck with $3000/kid/year, that's $250 a month. You budgeted 23K/year between you and your wife, but only 3K for the kid? They need new clothes more often than adults do, they eat more expensive things than adults do, etc. In the first few years, cost of diapers alone will be $6-700/kid/year.
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OP, may I add that your trigger to retirement is reasonable ($1M saved up, 5% will net you 50K/year between you and your wife, which is quite comfortable assuming fully paid off house), but you won't reasonably get there by age 45 based on your current income and expected spending.
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Your numbers are not adding up for 4 kids and one income at $90,000.

RRSP 16200
4 children 12000 (your figure of $3000 per kid)
TFSA 12000
mortgage 20000
resp 5000
additional expenses 20000 (your living expenses before children)
Total: $85,200

Doesn’t leave much room for taxes even when you take into account RRSP and RESP deductions. I’m assuming your mortgage budget includes insurances, taxes, and utilities? What happens when you have an emergency expense (e.g. roof needs replacing)?
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I have to thank everyone for your contributions in this thread. I think the novel part of my plan is to retire at the point where we can withdraw approximately $30,000 from our RRSPs every year until age 65 and then rely on benefits and TFSA after that. We are aware of the political risk. If nobody has thought of this plan before, then I humbly suggest that we on RFD refer to it as the Rolen Plan.

There has been some dispute on whether we can save the necessary funds by age 45 given our expenses. It's hard to predict that. Personally I'm not going to worry about it or to hold myself to a tight budget, I don't mind working an extra year or two if necessary. I will keep you guys updated on our progress. :-)
Jon Lai wrote: OP, may I add that your trigger to retirement is reasonable ($1M saved up, 5% will net you 50K/year between you and your wife, which is quite comfortable assuming fully paid off house), but you won't reasonably get there by age 45 based on your current income and expected spending.
Thanks for the feedback. I hadn't thought of it that way, but that is correct, we would have near $1M in RRSP and TFSA by 45 as per my assumptions.

As for kids, well, we will see. I think some people on here might underestimate how frugal I can be. We already have a pile of cloth diapers that we got for free so we should never have to buy a diaper. I would ideally like to get all kids clothes for free too or very cheap.
TylerK wrote: Your numbers are not adding up for 4 kids and one income at $90,000.

RRSP 16200
4 children 12000 (your figure of $3000 per kid)
TFSA 12000
mortgage 20000
resp 5000
additional expenses 20000 (your living expenses before children)
Total: $85,200

Doesn’t leave much room for taxes. Even when you take into account RRSP and RESP deductions. I’m assuming your mortgage budget includes insurances, taxes, and utilities? What happens when you have an emergency expense (e.g. roof needs replacing)?
$90,000 income - $16,000 RRSP contribution = $74,000 taxable income.
Canada child benefit for 4 children on that is $13,000 to 15,000, according to the online calculator I used.
Subtracting my wife's personal exemption of $12,000 = $62,000 of income I have to pay income tax on.
Income tax on $62,000 = $15,000.

If those calculations are correct, I believe the CCB will cancel out our income tax. We'd still have $5,000 surplus per year. That should cover property taxes and insurance. Utilities are included in our $20,000 of bulk expenses.

You're right that we would additionally need some money for home repairs, unless we wanted to live in squalor. We'll also need a new vehicle in the next few years. Hopefully my wage will also increase (expecting to be closer to $100,000 this year), but since I am in a volatile position it's also likely I could be laid off and have to take a salary cut at some point over the next 15 years. Life events will come and we'll have to deal with them for better or for worse, as best we can.
Older generations literally have no biological purpose to exist other than to help the younger generation.
I am the proud inventor of the Rolen Plan for early retirement.
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Jon Lai wrote: Good luck with $3000/kid/year, that's $250 a month. You budgeted 23K/year between you and your wife, but only 3K for the kid? They need new clothes more often than adults do, they eat more expensive things than adults do, etc. In the first few years, cost of diapers alone will be $6-700/kid/year.
they will use hand me down cloth diapers? lol
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op, good luck with your plan even though i don't think it's realistic ..

i don't want to pinpoint every aspect of life that will affect your plan...

however, good luck with 3k a kid

kids are spoiled with things in life but you're going to raise your kid on the other end of the spectrum...

are you shopping at goodwill every week

no exposure to tv or internet? they are going to see alot of things in society and you are going to deprive them of it

eating healthy costs money.

doing 1 sport? kids change their minds

are you going to stop your kids from going out with friends cuz it's going to cost you $$?

so just cuz you don't need cell data means your kids will be deprived of it too

so you will raise your kids having little in life cuz you choose to stop working at 45...hmmmm
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Not sure if OP is trolling, or just foolish.
rolenEDM wrote: Like several others in this thread, my wife also calls me "cheap" and she knows very well that if she ever divorces me she would live in poverty and I wouldn't pay her a cent. You can't get blood from a stone.
Well, perhaps if you went to university you would know that isn't true.

Courts take a dim view of people they regard as slackers who are refusing to work. You are capable of working in a $90k job, and you choose not to. Courts will calculate child/spousal support as if you are working at that level. If you don't pay up, the courts will make your life miserable.
rolenEDM wrote: We will contribute to RESPs, but I will also advise my children that university is a waste of time unless they're going into a small range of professions. Most everything else they can better learn from their parents (who will have ample time for them), the internet, text books, or real world experience.
Well, you are wrong. Even though there are many people with useless degrees working as baristas, and many people are successful without going to university ( http://content.time.com/time/specials/p ... 82,00.html ), the average income for university graduates remains much higher than for non-university graduates.


Anyone else find this statement odd?
rolenEDM wrote: Personally I don't think I could have a fulfilling life without kids, which is why I decided I had to do it. Plus, I felt an obligation to my people and my race.
This one too:
rolenEDM wrote: I suspect that's exaggerated by the media and that a war along racial lines is more likely. At any rate, I'm stockpiling ammo so I'll be prepared if the shit hits the fan.

Since OP's plan depends on government largesse (OAS, GIS, etc.), it surprises me that the welfare state makes him bitter:
rolenEDM wrote: The reason I think we dislike this is that the older generations created a system of wealth redistribution where 30% of our income is taken and much of it is given indiscriminately to poor and lazy people. This system makes us bitter as we know that indiscriminately giving people money does not help them and is not in our interest.

Look OP, you are planning to stop working during your prime years of maximum income. Your earning potential won't be that high ever again.

When many people retire, they discover that they actually liked getting up in the morning and going to work (unless your job is miserable, looking at your other posts, it doesn't sound like it).

Waitaminute - OP seems to think so too:
rolenEDM wrote: I'm not a person who is lazy or trying to avoid work. On the contrary, work is my life.
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You guys are being trolled!
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Your situation sounds pretty similar to ours, except for the weird statements you have made about certain things.

We left full time work permanently 2 years ago, at ages 41. Spent most of 2018 travelling with our kids, homeschooling them. They are now back in school (straight A's now!), we've bought a new house (paid cash for it), and settled into part time work in our fields, about 15 hours a week each. People thought we were crazy when we quit our high paying jobs, sold our GTA house, and pulled kids from school. But it all worked out perfectly, we have never been as satisfied in life as we are now. We have loads of time for our kids, for fitness, for each other, and for cooking healthy meals. No commuting, no stress at all, really. I highly recommend it for anyone who has the means to do so.

A couple points on your plan;

Look into the spousal tax credit, might not be worth it for your wife to work at all. You'll still be net ahead, but your effective marginal tax rate n her earnings could be incredibly high.

Play with the CCB calculator on government site. Note that RRSP contributions will boost your CCB, especially with multiple children. We actually keep our taxable income very low, to get the max benefit, which is over $1k/month for CCB/HST/Trillium (Trillium is Ontario only). That is tax free money, too. RRSP withdrawals with kids under 18 till reduce benefits.

Changes to OAS and GIS by the time you get there are indeed a huge risk to your plan. We are not counting on these at all, just CPP, and a DB pension, plus dividend income.

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