Victory Lap

Once you achieve Financial Independence, you may choose to leave salaried employment but with decades of vibrant life ahead, it’s too soon to do nothing. The new stage of life between traditional employment and Full Retirement we call Victory Lap, or Victory Lap Retirement (also the title of a new book to be published in August 2016. You can pre-order now at VictoryLapRetirement.com). You may choose to start a business, go back to school or launch an Encore Act or Legacy Career. Perhaps you become a free agent, consultant, freelance writer or to change careers and re-enter the corporate world or government.

What the first week of Retirement is really like

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By Fritz Gilbert, RetirementManifesto.com

Special to the Financial Independence Hub

I have no idea why I’m fascinated by the “First Week Of Retirement,” and I’m curious if others also wonder about it? I suspect many do and dedicate this post to those of you who wonder what the first week of retirement is really like.

Now that I’m living the first week of retirement, how would I describe it? Is it what I thought it’d be, or is it different? Is it a big deal, or just another week? Is it weird, or normal? Is it scary, or exciting?

Yes to all of that. And no to all of that.

What does Retirement taste like?

Have you ever tried to explain what something tastes like? Let’s go with chocolate, as an example. How would you describe it? What words would you use? Describing the first week of retirement is like describing the taste of chocolate. It’s really good, but it’s hard to describe.

Yeah, the first week of retirement is alot like that.

It’s good, but I can’t think of the right words to describe it. Regardless, today we’re going to try.

What the first week of Retirement is really like

Is It Like Taking A Vacation?

A Vacation In Norway. Is it like that?

As I write these words, I’m 5 days into my retirement (a true rookie). Is the first week of retirement like being on vacation? On one hand, kinda sorta, but that falls far short of describing the reality. It’s similar in that you’re off work for a few days, but it’s very, very different in the knowledge that You’re Never Going Back To Work.is

 

A Vacation that never ends will always feel different than a two-week vacation. Full Stop. So, imagine the first half of your vacation, where you’re all pumped up and excited. But you know it lasts for the rest of your life. Yeah, it’s more like that.

Only different.

I love swimming in my local mountain lake.

Is it like Saturday every day?

With less than a week of retirement under my belt, the “Saturday” analogy seems to be a better description of what the first week of retirement is really like. Like the Saturday’s you’ve experienced for decades, you’re free to do what you want to do. You’re ok letting your email go unchecked for a day or two. You can stay up later, you can sleep in.

You’ve got time to head up to the lake for that swim.

But it’s different because you know that there’s no Monday looming on the horizon.

What’s chocolate taste like?

Yeah, it’s hard to describe.

Is it scary, or exciting?

I had a friend ask me if I was “scared.” I answered that I was 98% excited and 2% scared. Sure, there’s some apprehension, but it’s a really small piece of my mindset in Week 1. At this stage of the game, I’m just learning my way around this thing called retirement, and enjoying the sensation of the very first Tastes Of Freedom I’ve worked so hard to earn. It’s only scary if you make it scary.

I know we’ll travel through many phases during our retirement journey, and I’m sure some will be more “scary” than others. We’re planning to take it all in stride. One day at a time, with some thoughts on where we want this thing to lead while leaving some freedom to enjoy the Serendipity of the thing.
You can choose what you want your retirement to be. Don’t choose scary. Life’s too short.

Choose the attitude with which you’ll live your life.

I’m choosing excited (and yeah, just a wee bit scared). Continue Reading…

Retired Money: How to be financially, physically and emotionally fit for Retirement

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My latest MoneySense Retired Money column, which has just been published, looks at a self-published book by the semi-retired (at age 64) Howard Pell. His book is titled Retire Fit, Fit & Fit. Click on the highlighted headline to retrieve the full MoneySense column: Retirement fitness involves mind and body, as well as money.

So what does the Fit, Fit & Fit mean? It’s in the headline of this blog as well as the adjacent photo taken from the book cover, which is the book’s subtitle. So it’s referring to being all three of financially fit, physically fit and emotionally fit for Retirement.

There are plenty of books about financial fitness so Pell pays only lip service to that aspect: what he brings to the table is insights on how to integrate finances with physical and emotional fitness. (To some extent, so does the book I co-authored with Mike Drak: Victory Lap Retirement)

Pell, who is based in Waterloo, Ont., does add a few newish terms to the semi-retirement lexicon.  He dubs the lifestyle “voluntary unemployment” but like many at this stage, finds the word “retired” inadequate. He tosses out several alternatives but the best one is his suggestion to simply adopt the Spanish word for “retired,” which is Jubilado (for males) or Jubilada (for females.”) He would use the term to signify anyone who is financially, physically and emotionally fit.

I can certainly relate to his observation of the semi-retired life that  “The big difference is that now all my deadlines and commitments are self-imposed.” Of course, as the old quip goes about driven self-employed business people: “My boss is a slavedriver.”

Pell also went personally through the “glide path” to semi-retirement described in other Retired Money columns and here at the Hub, via working a three-day week for his then employer during the last two years of his time there. This is a good way to test out your financial fitness while also clearing time for more physical fitness and — perhaps the toughest challenge — preparing for emotional fitness for retirement (I’m speaking for myself here.)

Finding the sweet spot

A Venn diagram on page 7 of Pell’s book (shown adjacent) illustrates that the sweet spot is the intersection where financial, emotional and physical fitness all converge.

If they don’t, and you became financially fit by selling out either your physical and/or your emotional health, the retirement your finances make possible may be a very limited and unsatisfying one.

It’s also possible to be only physically fit or only emotionally fit but lack the financial resources for retirement. The need to keep working to pay the bills will be frustrating, especially if all your peers have retired.

Continue Reading…

Why Sean Cooper quit his full-time job after 8 years

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What a thoughtful goodbye email. Gosh, it’s hard to keep a secret! I guess everyone knows about my mortgage burning story, even my colleagues at work!

 

By Sean Cooper

Special to the Financial Independence Hub

If you follow me on Instagram, you may have already heard the big news. After 8 years, I’m quitting my full-time job at the pension consulting firm. I gave my employer plenty of notice. I handed in my resignation 2 months ahead of time. June 1st will be my last day in the office. To celebrate this big career milestone, I’ve booked a weeklong trip to New York City and Boston.

I always planned to quit my full-time job. I just didn’t think it would happen so soon. I’m at a crossroads in my life. I’m 33 years old and not getting any younger. It’s time to make some tough “adult” decisions. I can either take the easy road and keep working for a company where I’m comfortable, or take the hard road and become a full-time entrepreneur. I chose the latter.

Keeping a promise to myself

A promise I made to myself after I burned my mortgage in September 2015 is that I’d slow down and get a better work-life balance. Unfortunately, that just wasn’t happening.

I’m someone who’s super ambitious. So, 6 weeks after burning my mortgage papers, I started writing a book. With the success of my book and speaking career, I’m finding myself busier than ever. I’m probably working harder now than when I was paying down my mortgage (no joke).

I’m still putting in the 80+ hour workweeks, waking up at 6:30AM and working until midnight or 1AM most days – and for what? I’m mortgage-free. I don’t have to work this many hours, but the problem is I love what I do. I enjoy my side hustle as a personal finance journalist, money coach and speaker more than my full-time job. I couldn’t keep working at this insane pace forever. I was tired all the time. Something had to give.

So with mixed emotions, in early April I made the difficult decision of choosing my budding career as a personal finance expert over my full-time career. It wasn’t an easy choice, but I was ready to make the jump.

Taking a risk

This was probably the most difficult decision I’ve ever had to make. It wasn’t easy to walk away from a steady, full-time job with benefits and a defined benefit pension plan. It was especially difficult for someone as risk adverse as me (I did after all pay off my mortgage in record timing in 3 years).

When I shared the big news with those closest to me – friends, family and coworkers – I didn’t know what to expect. Thankfully everyone has been supportive of my decision. Saying goodbye to my coworkers will be especially tough. My coworkers are like family to me. They were there when I burned my mortgage and launched my book.

It’s going to take me a while to get up and running. Luckily I have time and money. My house is paid off. I also (still) rent out the main floor of my house. The rental income alone can support me. I also have savings to last me for the years to come.

From a personal standpoint, it helps that things are less complicated. I’m single (I’m half joking when I say I’m still looking for a frugal girlfriend). I don’t have a spouse or children to look after. (Although this is a double-edged sword since I don’t have a spouse’s income to rely on either.) I’d probably hesitate to do the same thing if my circumstances were different and I was married with children.

You’ll never get rich working for someone else

Continue Reading…

FP: How tax-efficient ETFs can help dividend and fixed-income investors

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My latest Financial Post column (on page FP8 of Friday’s paper) looks at how certain tax-efficient ETFs can provide investors with a measure of tax relief in their non-registered portfolios. You can find the full column online by clicking on the highlighted headline here: Friends with Benefits: How ETFS can help keep the taxman at bay.

By definition, investing in taxable (non-registered) accounts is inherently tax inefficient. Outside registered plans, fixed income is the most harshly taxed asset while deferred capital gains is most favorably taxed.

In between are dividends. As anyone who receives T-5 or T-3 slips at tax time knows, dividends create a yearly tax liability, although as Markham-based fee-for-service financial planner Ed Rempel observes, those with annual taxable income under $47,000 will pay little or not tax on Canadian dividends.

Foreign dividends are highly taxed like Canadian interest, but qualifying Canadian dividends generate the dividend tax credit. This eases the pain but retirees are often irked by the dividend “gross-up” rules, which can bump them into higher tax brackets and result in clawback of government benefits like Old Age Security. Continue Reading…

7 steps to Financial Independence

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By Laura Martins

Special to the Financial Independence Hub

Financial Independence (aka “Findependence”) is something that many of us are working towards, but which very few actually achieve. Having a high-paying job alone does not guarantee financial independence. While making more money does make Findependence easier to achieve, the important thing to focus on is what you do with your money, rather than how much you earn.

It’s also important to understand that financial independence will take time and planning. With the right goals and steps in place, Findependence can be achieved, but it’s important to be persistent and patient.

In most cases, financial independence doesn’t mean you won’t work ever again, but it brings freedom so you can enjoy your life and work on the things that matter to you. Here are seven key steps to develop financial independence.

1.) Get to know your money

Before you can begin to work on your financial independence, it’s imperative that you know exactly what your money is doing. You must know how much is coming in, and how much and where you are spending it.

Develop a habit of checking your bank account. Ignoring it is one of the fastest ways to lose track and lose money. It might seem obvious, but developing financial independence means spending less than you earn.

Spend a few weeks or months tracking your finances and create a budget. It’s important that it’s realistic so you can stick to it.

2.) Remove non-essentials

Once you understand your finances, it’s time to find the areas where you can save more. This is one of the hardest parts on the journey to financial independence, but also one of the most important steps.

Look at your spending and assess what you don’t need. In other words, you should try to minimize your non-essential expenses. That might mean cancelling your gym membership, reducing the amount of streaming services you pay for or making more meals at home. While these things might seem small, they will all add up, and after a few months it might make a noticeable difference to your bank account.

3.) Increase your income

Now that you understand your finances and have your spending under control, it’s time to start saving more. Continue Reading…