Retirement planning would be so much easier if we knew when we’re going to die

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By Jonathan Chevreau

My latest MoneySense blog is on the pros and cons of Extreme Early Retirement, or its opposite, which one reader dubbed “Extreme Working.”  It was in response to my recent column in the magazine about extended longevity, a theme we regularly explore here at the Financial Independence Hub’s “Longevity & Aging” section.

David Headshot small2
David Davidson

As mentioned in the MoneySense version of the blog, one of the readers highlighted — Oakville-based David Davidson — also sent along a photograph of himself, which we’re running here (on the left).

What this all comes down to, and as I commented on Twitter after the original MoneySense blog was posted, is that “Retirement planning would be so much easier if we just knew the exact date of our death!”

Of course, few of us know that so there’s always going to be a tradeoff between planning for a long life that never materializes; and under-saving and living in the present, only to find yourself running out of money before you run out of life.  Personally, I’d rather err on the side of the first possibility but as you can see below, some readers (including David shown above), make the case for the second possibility, or a balance between either extreme. Some on Twitter are in the same camp, including Ryan (@simplemoolah):

“LOL.  Since we don’t — Don’t blow it all today. Live in the present & enjoy every moment but also plan for your future.”

Or @LynneOlver, also on Twitter:

“Lots of great nuggets there. I favour the ‘spend it while you can enjoy it’ view, but everyone’s circumstances are different.”

To the Twitter community, please note that Comments are also welcome at the bottom of any of these blogs. For continuity and archiving purposes, here’s the original version of the blog that first appeared at MoneySense:

By Jonathan Chevreau

My recent column on planning for longevity attracted some good counterpoints from readers. In it, I suggested that with life expectancy rates steadily on the rise, people shouldn’t get too hung up with early retirement.

However, I recognize that my own preference to “just keep working” (at least for the time-being) is not necessarily shared by everyone.

There’s more to life than working

Click to the comments section of the story, and you can see one reader was concerned “the author can’t think of anything they would rather do with their time than work.” He or she cites such non-paid activities as volunteering, cultural activities, and visiting friends and family:

“Those activities would be mentally and socially stimulating, and wouldn’t require that I have to be somewhere at any given moment. I would be in charge of when and how often I participated.”

Well sure, but I’d argue much of that can be accomplished on nights and weekends. I don’t see paid work and other rewarding activities as being mutually exclusive. I certainly can see plenty of things I’d love to do that don’t result in attaching an invoice. One reason for my focus on “Findependence” has been my wish to pursue longer-term creative projects.

I’ve also argued that as the Boomers shift gradually into semi-retirement, they can find a more comfortable balance of paid work and those rewarding alternative activities. Several years ago, my wife went down to a four-day work week, precisely so she could visit her aging parents in the country, usually on Fridays. Both have since passed away and she has returned to a five-day week but the point remains. Those who are really well to do and who have an extensive network of friends and family can go to a three-day week if necessary, or do what one self-employed colleague of mine does: she works from home from 8 am to 2 pm, then takes the rest of the day off for all these other activities.

45 years of working is enough

While it wasn’t posted as an online comment, I also received an email from an Oakville reader happy to be identified by his real name (and supplied the above photo): David Davidson is 62 (as I will be in a few months) and has been working full-time since he was 17.

“After 45 years I think I’ll stop working and enjoy the fruits of my labour before it’s too late … I do get exasperated by all the ‘keep working and never spend your money’ retirement articles I see these days.”

While Davidson agrees with my skepticism about “extreme early retirement” he draws the line at planning to work into advanced old age and having to save enough money to last beyond 100 years of age:

“That seems like ‘extreme working’ to me and a way to ensure the financial management business hangs on to my money as long as possible.”

Davidson says he has “scrimped and saved all my life to pay off the house, and put my children through university debt free, all while maxing out both my and my wife’s RRSPs and TFSAs.  This was not easy and involved a lot of long hours and sacrifice from everyone.”

Now that they are totally debt-free and the children launched, the couple have more than $1 million in combined registered savings “and we intend to spend it.” (She has a small indexed pension; he does not.)

Delaying CPP until age 70

As a hedge against extended longevity, they won’t take CPP until age 70, but it has “long been my plan to have all the savings spent by our mid-80s.  After that, if we need money, we’ll have the house to sell (it’ll probably be too much for us to look after by then anyway) and we can rent an apartment or whatever.”

Davidson says his parents and grandparents had minimal expenses once they passed age 80:

“My father and his wife are both 89, in good health until recently, and don’t spend all their CPP & OAS (neither has a pension); my mother and my wife’s mother were the same.  My wife’s father died at 68 so there is a downside to planning to live a long time – you might not make it.”

Well, yes, we all realize that. As a friend of mine says, “Live every day as if it were your last, because one day it will be.”

Enjoy the good early years of Retirement

Davidson sensibly counsels enjoying the “really good early years of retirement, before infirmities and just plain exhaustion set in.” He describes my hail-and-hearty 98-year-old friend Meta who still works part-time as “an outlier: the reality is most of us aren’t like that.  My father rode his motorcycle until he was 88 so he’s been as healthy and active as anyone could wish for.  This year at 89 he has inoperable cancer and most would say he’s had a good long life.”

 

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