Retirement plan to support my "habit"

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Retirement planning is both pretty straightforward and complex at the same time. My wife and I have backgrounds in finance, so I guess it is something we thought about for years before we both retired a few years ago (she several years before me). The simple part is that your cash inflow (income and whatever principle you can afford to spend) has to equal your outflow (expenses) - and you can come at it from either side.

So you might determine what you think you would need to spend each year for everything, including diving trips - and then compute how much savings/investment you would need to generate that cash. You, of course, probably want to minimize the cash needed, and there are lots of ways to do this (the complex part). If diving is really a big deal for you, then you really might want to look into moving to somewhere where the living is easy, cheap, and dive-friendly. My sister retired to "old" Florida, where the cost of living is pretty low (at least relative to New England, where I'm from). She and her husband do lots of shore diving in the Florida springs (just the cost of air) and the occasional boat dive off the east coast, where they occasionally get a reduced rate deal for locals with the dive op where they got certified.

The other approach is to estimate how much financial resources you think you will have on retirement, plus any payouts from a retirement plan or social security (or whatever the equivalent is). That's what you have to work with, and you need to make your budget fit that. Also remember that you can eat into your savings a little if you have to. The ideal is to have enough funds that you can live off the interest/dividends plus what you get from social security, and never have to use any principal. But then you will never get the pleasure of spending that principal. The rule of thumb is you can spend 3-4% of your total savings plus income each year. Better than rule of thumb is to create a spreadsheet that has for each month (each row) a column for current savings balance, expected misc income, total available (the sum of the first two), expected interest earned on that money,if invested (expected interest rate times the total available ), other income, then add all the income (interest, soc security, other misc) to the beginning balance and subtract expected expenses to get an ending balance. This becomes the beginning balance for the next month (row). create enough rows to cover you from now to when you reach, say, 100 years old. Now you can play around and see how long your funds will last based on various estimates of income, expense, and interest rates. Oh, and if you want to get fancy, estimate a monthly inflation rate and multiply each monthly expense by that to get the expected inflated rate of spending over time. (I said it could get complex).

Depending on the gap between what you think you will need and what you think you will have, and how many years before you retire, you can come up with a maximal savings/earnings plan for the next few years.

I know some people say spend and enjoy now while you can, but I'm of the balanced school which says enjoy life now but life does not stop when you retire, so you will want some financial ability to keep active and alive, at least for a while.

As I posted in another thread on purchasing island property, we were able to find a property on a nice Caribbean Island that we use for several (winter) month per year plus a few additional 2-week trips, and this is where I do all of my diving. We rent the place when we are not there, and so far the rent has covered 100% of our costs each year, and the appreciation has matched what we would have realized by investing the money in the financial markets instead. So essentially a free property. And I get a local resident rate at a few of the dive ops here (only $30 to $60 per 2-tank boat dive), which is something I have seen at other locals as well. And by being here long term I have met several folks to go shore diving with. So those are benefits as far as keeping diving costs down.

Good luck @Dogbowl !!

I was hoping it would not come to this. Financial planning has never been my strength. Spending money has, unfortunately. But it is what it is. I’m gonna have to sit down, think hard about it, and create a spreadsheet.

Referring to that other thread about buying property in Cozumel, my thinking has switched instead to Grand Cayman for several reasons: British commonwealth island, familiar laws, job opportunities in finance/legal/banking, no income/capital gains tax, fairly easy to import pets, etc. This is despite Cozumel being less expensive in day-to-day living. It’s a thought.

As a Canadian, I’m going to have to maintain ties to Canada to maintain my healthcare. So I cannot be away for the whole year.
 
I believe you must reside in Canada 180 days per year or so to keep healthcare coverage, so my idea of completely moving to a "cheap" country is out (unless you have other insurance plans).
The idea mentioned a while back of becoming debt free is generally a good one. Unless you have a loan for investment purposes with interest deductible against Cap. gains from the investments. I've had one loan for 33 years and another for 13 years where I have ONLY paid interest, so have rarely owed taxes. My ideal goal is to die with none of the principal ever being paid. It is also the way we wind up using our paid off house as collateral for an investment loan--as a way of having a "mortgage" that is deductible. You may have heard it called the "Smith Maneuver". Mortgage payments are deductible in the US but not here of course.
 
Never too late to see a CFA! And why fret over retirement? If you don't have ties to NA, move to Indonesia, become a DM and live the rest of your days in nirvana! There are some fabulous medical centers there as well with Western trained doctors, so sell all...and live happily ever After!
 
I believe you must reside in Canada 180 days per year or so to keep healthcare coverage, so my idea of completely moving to a "cheap" country is out (unless you have other insurance plans).
The idea mentioned a while back of becoming debt free is generally a good one. Unless you have a loan for investment purposes with interest deductible against Cap. gains from the investments. I've had one loan for 33 years and another for 13 years where I have ONLY paid interest, so have rarely owed taxes. My ideal goal is to die with none of the principal ever being paid. It is also the way we wind up using our paid off house as collateral for an investment loan--as a way of having a "mortgage" that is deductible. You may have heard it called the "Smith Maneuver". Mortgage payments are deductible in the US but not here of course.

Yes, I need to look into that because I am not going to forego my healthcare, especially in retirement. So living full-time in a foreign country is probably out. I believe the “180 days” is a significant number for tax purposes and not for healthcare, but maybe I’m wrong. Healthcare is under provincial jurisdiction so the rules differ among the provinces. In Ontario, the rules are “complicated”.

But my current thinking is, if I can get a job (with adequate insurance) in Grand Cayman before retirement, buy a place and slowly pay it off, I might have a vacation home after retirement that I can rent out when I’m back in Canada. I’d like to be a snowbird.
 
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Works differently in the U.S. than in Canada, but I delayed my planned retirement from age 66 to age 70; one of the reasons was to keep "building up" the investments from which I will start living soon, and there is a substantial benefit from the government social security benefits. But I still got 60+ dives last year while working. I will turn 70 this year, so I will be retiring from full time work, but I am fortunate enough that I will be able to some part time consulting, on the order of about 20-25% of "regular" hours. The retirement planning and being debt free will cover the basics; the part time consulting will cover the luxuries like warm water live-aboards.
 
Never too late to see a CFA! And why fret over retirement? If you don't have ties to NA, move to Indonesia, become a DM and live the rest of your days in nirvana! There are some fabulous medical centers there as well with Western trained doctors, so sell all...and live happily ever After!

Maybe...:p
 
Retirement planning is both pretty straightforward and complex at the same time. My wife and I have backgrounds in finance, so I guess it is something we thought about for years before we both retired a few years ago (she several years before me). The simple part is that your cash inflow (income and whatever principle you can afford to spend) has to equal your outflow (expenses) - and you can come at it from either side.

So you might determine what you think you would need to spend each year for everything, including diving trips - and then compute how much savings/investment you would need to generate that cash. You, of course, probably want to minimize the cash needed, and there are lots of ways to do this (the complex part). If diving is really a big deal for you, then you really might want to look into moving to somewhere where the living is easy, cheap, and dive-friendly. My sister retired to "old" Florida, where the cost of living is pretty low (at least relative to New England, where I'm from). She and her husband do lots of shore diving in the Florida springs (just the cost of air) and the occasional boat dive off the east coast, where they occasionally get a reduced rate deal for locals with the dive op where they got certified.

The other approach is to estimate how much financial resources you think you will have on retirement, plus any payouts from a retirement plan or social security (or whatever the equivalent is). That's what you have to work with, and you need to make your budget fit that. Also remember that you can eat into your savings a little if you have to. The ideal is to have enough funds that you can live off the interest/dividends plus what you get from social security, and never have to use any principal. But then you will never get the pleasure of spending that principal. The rule of thumb is you can spend 3-4% of your total savings plus income each year. Better than rule of thumb is to create a spreadsheet that has for each month (each row) a column for current savings balance, expected misc income, total available (the sum of the first two), expected interest earned on that money,if invested (expected interest rate times the total available ), other income, then add all the income (interest, soc security, other misc) to the beginning balance and subtract expected expenses to get an ending balance. This becomes the beginning balance for the next month (row). create enough rows to cover you from now to when you reach, say, 100 years old. Now you can play around and see how long your funds will last based on various estimates of income, expense, and interest rates. Oh, and if you want to get fancy, estimate a monthly inflation rate and multiply each monthly expense by that to get the expected inflated rate of spending over time. (I said it could get complex).

Depending on the gap between what you think you will need and what you think you will have, and how many years before you retire, you can come up with a maximal savings/earnings plan for the next few years.

I know some people say spend and enjoy now while you can, but I'm of the balanced school which says enjoy life now but life does not stop when you retire, so you will want some financial ability to keep active and alive, at least for a while.

As I posted in another thread on purchasing island property, we were able to find a property on a nice Caribbean Island that we use for several (winter) month per year plus a few additional 2-week trips, and this is where I do all of my diving. We rent the place when we are not there, and so far the rent has covered 100% of our costs each year, and the appreciation has matched what we would have realized by investing the money in the financial markets instead. So essentially a free property. And I get a local resident rate at a few of the dive ops here (only $30 to $60 per 2-tank boat dive), which is something I have seen at other locals as well. And by being here long term I have met several folks to go shore diving with. So those are benefits as far as keeping diving costs down.

Good luck @Dogbowl !!
I think about things pretty similar to mi000ke but have to confess I'm a finance guy too but not personal finance. I've gone through a few iterations of spreadsheets over the years. When I first started, I would use some of the free retirement calculators that the financial firms put out on their websites to sanity check the answers I got from my own spreadsheets to give me comfort that my math was sorta right. There's also some mildly fancier versions that can be purchased. I bought one a few years ago for something like $25 just so I could have it on my own computer. For me one of the hardest things is the key assumptions you have to input like how much are you going to spend each year, what % returns will your get on investments, inflation rate, etc. I find that I like to flex those numbers some to make sure I understand how it impacts the calculations if things don't work out the way I expect.
 
Nowadays, its more likely how long do you expect to live? Our CFA had me going till 90! I said no way my friend...back that number down some :)..I'm leaving no tequila undrank!
 
Yes, I need to look into that because I am not going to forego my healthcare, especially in retirement. So living full-time in a foreign country is probably out. I believe the “180 days” is a significant number for tax purposes and not for healthcare, but maybe I’m wrong. Healthcare is under provincial jurisdiction so the rules differ among the provinces. In Ontario, the rules are “complicated”.

But my current thinking is, if I can get a job (with adequate insurance) in Grand Cayman before retirement, buy a place and slowly pay it off, I might have a vacation home after retirement that I can rent out when I’m back in Canada. I’d like to be a snowbird.
Yeah, normally we're snowbirds 3 months (Jan.-March) on the FL panhandle, which may cost us about $5K in condo rentals--not bad for 3 months. It's the off season on what they call the "Tundra", and shore diving is just OK, boats go out weather and no. of divers permitting. S. FL condo rental costs are considerably more, off season (summer for there) or not.
I am curious about the "complicated" Ontario healthcare rules, as I was under the impression that all provincial systems are the same in requiring 180 days residing in Canada. I'm surprised to hear that is incorrect. Can you provide me some basics about the Ont. system? Just curious.
 
We are off to Hawai'i in April and will be looking at houses on the Big Island ...The problem is that the prices keep coming down and it looks like everything is for sale so we need to find out why...

gee, do you think it might have something to do with the active volcano on the island?
 
https://www.shearwater.com/products/teric/

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