Wednesday, February 27, 2013

Retired at 48 Spreadsheet Calculators

In our book Retired at 48, we described how we used an online retirement planner provided by GlobeInvestorGold to predict how much money we needed to retire and how long that money would last.  It accepted a comprehensive set of input parameters including current and retirement ages, current investment total, current salary, projected annual savings and retirement expenditures. Taking these inputs, it created a chart showing how the money would grow during the saving years and draw down during the retirement years.  It basically told you whether you were on target to make your retirement goals with your current set of parameters, or whether you needed to save more, work longer or spend less in order to achieve these goals.

This tool provided an excellent starting point, but lacked some capabilities that we desired.  The biggest gap was in trying to plan our retirement as a couple.  We wanted to be able to represent our ages (current, retirement, life expectancy) and income sources (salaries, pensions) separately, but still treat the overall saving and spending targets as a couple.  The tool also did not reflect recent new legislation that increased the old age security payout age to 67, and did not allow for the options of taking Canada pension plan at an age earlier or later than 65.

To meet our needs, I reverse engineered the functionality of the tool, reproduced it in a spreadsheet and added the additional features that I desired.  Simulating the results of the online tool, the spreadsheet started with a year beginning balance, estimated investment growth plus additional savings to project a year end total during the saving years.  In the retirement or spending years, the spreadsheet tracked the retirement spending, offset by company or government pensions where applicable.  I added a column to update actual year ending balance, so that at the end of each year, the projection could recalculate with more accurate data to start the next year.  I also provided a column for entering actual savings each year, so that the actual investment growth could be tracked.  With these extra features, we were able to simulate a wide variety of scenarios, in order to land on the one that allowed us to achieve our early retirement.

Even after publishing the book, I have continued to enhance the spreadsheet to make it more easily adaptable to different situations.  My spreadsheet now provides a full set of input parameters for each spouse, including specifying the existence of a company pension, the age when it would start paying out and whether or not that pension is indexed for inflation. We will continue to use this spreadsheet to verify year after year whether our original retirement projections are still on track.  If they are not, we will have to take remedial actions such as reducing spending until we fall back in line.

As discussed in detail in the book, we use several other spreadsheets to track our investments and dividend payouts on a monthly basis. Filters are used to provide a quick summary of our investment holdings per account, per market sector, per market capitalization, etc. to ensure that we remain properly diversified in order to reduce risk in our portfolio.

There are a few extra worksheets that we use regularly, which were not included in the book:

This worksheet summarizes the dividend payouts per month or quarter per account.  This is useful for ensuring that there is enough cash flow to pay our bills each month.  If the dividend payout of any stock either increases or decreases, these tables highlight the impact to our monthly cash flow.

We keep one worksheet like this per year, to provide a snapshot of our portfolio by account, month by month, and year by year.  This helps us understand whether or not our portfolio is growing as expected.  We also keep a running total of the dividends paid out per month to our non-registered account, to aid us during tax season.

I have created a sample set of my spreadsheet calculators and worksheets, including ones represented in the book and those that are not.  I will make them available to anyone who has purchased my book and wants to try using them.  Simply send an email to and specify the full name of the person to whom the book is dedicated.  I will email you back with the spreadsheet.  If you have questions about the how to use spreadsheets, you can comment on this blog post.

Tuesday, February 19, 2013

Free University Lectures from Coursera

A friend recently told us about, an organization that partners with universities across North America to provide free, online courses on a wide variety of topics including Business, Finance, Education, Computer Science, Mathematics, Law, Medicine, Humanities, Science, Music and Film.  The courses are taught by professors from the sponsoring universities, and can be streamed over the internet or downloaded as video files to play on your computer/audio devices.  They seem to range from 5-12+ weeks and may include homework or reading assignments and optional quizzes to test retention.  At the end of the course, a final quiz is given and a certificate is issued upon successful completion.  However there are no obligations and you can un-enroll from a course at any time.  This seems perfect for retirees looking for interesting activities without spending much money!

We have signed up for a 5 week course called The Language of Hollywood: Storytelling, Sound, and Color, taught by Scott Higgins, Associate Professor of Film Studies at Wesleyan University in Connecticut.  It looks at how changes in technology affected film making in terms of plot lines, directing and acting choices. The course focuses mainly on movies from 1928 through 1958, which starts off with silent movies, then investigates the impact of the adding sound, then colour to films.

Each week we watch a video where the professor introduces the major topic that will be explored, and then view two assigned movies that illustrate his points.  Prior to each movie, there is a short clip where he outlines what to look out for.  After watching the movie, there is a longer lecture where he disseminates and provides fascinating analysis on the film and how it reflected the topic in question.

It is up to the participant to find his own copy of the movies to watch, either through purchase, DVD rental or streaming online. Many of the movies on the syllabus are old and rare, but luckily, one of the other students on the course has been posting them on YouTube (many thanks for this!) The course had already started 2 weeks ago when we learned about it, so we have some catching up to do.  The first week was on silent movies. We learned how the lack of sound influenced film making in terms of style, visual imagery, lighting and plot. 

So far, we've watched the first movie called "Street Angel", a 1928 silent film by director Frank Borzagi, starring Janet Gaynor and Charles Farrell.  This film, set in Italy, featured many concepts of silent films including operatic melodrama and thin plot lines that didn't necessarily make sense and relied much on coincidence.  A poor girl (Angela) tries her hand at solicitation and pickpocketing in an attempt raise money for her dying mother's medicine.  Caught on her clumsy first attempt, she is sentenced to the workhouse.  She escapes to find her mother already dead, runs away to start a new life and finds love with an artist (Gino).  Just as they are about to be married, Angela is recaptured by the law and sent back to jail, leaving Gino desolate and disillusioned.  But in the end, love is transcendent and conquers all.

The story is told visually as much as possible, with emotions magnified through facial expressions, exaggerated gestures, lighting and musical score.  Shadows are used frequently to create an expressionistic style and level of abstraction.  When the prisoners are led into the workhouse by the guard, their shadows precede them by a few seconds.  The professor pointed out motifs that repeated throughout the film, including the use of windows, fog, whistling, and the angelic painting that Gino paints of Angela, which becomes a symbol of their love and leads to their eventual reconciliation.

If this course is any indication, then we have many hours of stimulating learning ahead of us.  I have already signed up for a course on photojournalism called "The Camera Never Lies" that will start in June, and one on Social Psychology in July.

Sunday, February 17, 2013

My Rule of Thumb for RRSP vs TFSA

Much has been written on whether the RRSP or TFSA is the better savings vehicle. The RRSP reduces your taxable income in the contribution year, which in turn reduces your tax burden. The benefits are felt immediately but funds are taxed when you withdraw from the RRSP in the future.  The money that you can contribute to a TFSA does not impact the current tax return, but is tax-free upon withdrawal.

Obviously those with enough money would max out on both, since they each have their strengths.  For everyone else, the question of which is the better choice?  Common wisdom has been that those in a higher income bracket should lean towards the RRSP, while the lower income bracket should go for the TFSA.  The former require the RRSP contribution to reduce the amount of income tax they need to pay.  The latter don't pay much income tax anyways and want to keep their income low in the years when they withdraw from their savings vehicle, in order not to trigger government pension clawbacks. (e.g. Old age security)

I've always used a more generic rule of thumb, that could apply to any income bracket:
  1. Contribute to the RRSP up to the point where you don't have to pay tax anymore.  You can use various online tax calculators, as listed in my book Retired at 48, to estimate how much this would be. 
  2. With any spare money, contribute to the TFSA until you max out. The sooner you start contributing to a TFSA, the more that money can experience compound growth tax-free. 
  3. If there is still spare money, then increase the RRSP contribution so that you actually get a refund back.  

Tuesday, February 12, 2013

Read an Excerpt from Retired at 48

We are a middle-aged married couple living in Toronto, without children, in a  mortgage-free home. We each had successful professional careers, but it had always been our goal to retire early. By retirement, we mean no longer having to work anymore, ever. We do not mean trading in an initial career to take on a less-demanding or less-stressful job, probably for less pay. Work never defined us and was merely a way to make money so that we could enjoy life. There was so much that we wanted to do, but there was never enough time on the weekends or on our all-too-brief vacation days. So the sooner we could dispense with work and get on with life, the better...

So starts the memoir Retired At 48 - One Couple's Journey to a Pensionless Retirement.

Click here to read an excerpt of Retired At 48 and view the Table of Contents

Monday, February 11, 2013

How to Buy Retired at 48 as EBook or Print book

The book "Retired at 48 - One Couple's Journey to a Pensionless Retirement" is a memoir that documents our path to early retirement without a company pension. It describes:
  • How we created budgets and tracked spending habits
  • Tools we used to calculate 
    • How much we needed to retire with our desired lifestyle
    • How many years the money we saved would last for
  • Our strategies used to save and invest to grow our nest egg
  • Considerations for reducing expenses after retirement
  • Ways to structure our investments to minimize tax burden annually and over the course of our retirement years
  • How to create a post-retirement income flow to pay for monthly expenses
Whether or not retiring at 48 is in the cards for you, this book is useful for anyone who needs to fund all or part of his own retirement using personal savings.

Look for “Retired at 48” at:

Wednesday, February 6, 2013

Parallels of Retirement Planning to the Project Management Triangle

Anyone who has had any exposure to project management has been ingrained with the concept of the Project Management Triangle.  The corners of that triangle represent time, cost and scope.  Modifying the value of any of these factors could affect the other two.  If it is necessary for a project to be delivered sooner, then two options are to increase cost (with more overtime) or decrease scope of functionality.  Adversely skewing these factors could impact the overall quality of the deliverable.

It is interesting to note how much this paradigm applies to retirement planning as well.  Time maps very closely to age of retirement. Cost equates to the amount of savings needed to fund the retirement.  Scope can be compared to the type of lifestyle you can sustain in your retirement years, whether that is measured in terms of vacations, hobbies, homes, vehicles or whatever is applicable.

If you want to retire early with an extravagant lifestyle, then you would need a large amount of savings.  If you don't have the savings, then you either need to work longer to both save more and reduce the number of years of retirement, and/or cut back on the lifestyle.

These were the factors that we juggled when trying to determine when we could retire, how much we needed to save, what type of lifestyle that would afford us, and how long the money would last for.  The tools and calculators described in our book "Retired at 48" helped us play out different "what-if" scenarios that led to our establishment of our balanced retirement triangle.

Saturday, February 2, 2013

How I Got My Book Published at Iguana Books

Spurred on by repeated questions from friends and family about how my husband Rich and I were able to achieve early retirement at age 48 without the aid of a company pension, I decided the best way to share our experiences would be to write a book about it.

As it turns out, writing the manuscript for "Retired at 48" was the easy part. Since we had spent so many years planning, researching, and executing the ideas and strategies for our retirement, writing the book became just a matter of organizing our thoughts and documenting what we did.  It took about six weeks to complete, writing on a part time basis whenever we were not busy doing other fun activities.  Rich was my first editor, tirelessly reading and re-reading chapters, providing valuable feedback and suggesting ideas for new topics.

The difficult part was figuring out how to get the work published, without spending an unreasonable sum of money that exceeded our discretionary budget for the year.  Approaching the larger publishing firms would probably be futile, as they generally do not accept unsolicited manuscripts from an unknown writer who is not represented by an established agent. I attended the book and magazine festival "Word on the Street" to get more information about publishing and self publishing.  Booths and pavilions sponsored by various publishing firms featured author talks and readings.  The Scribendi Wordshop Marquee provided exactly what I was looking for–lectures on writing and publishing.

At a talk called "How to Get Published in Perilous Times", I learned about Iguana Books.  This is a small Toronto-based publishing firm that actually encourages the submission of unsolicited manuscripts. If upon review, they find the manuscript to be of acceptable quality, they will provide an estimate for how much it would cost to edit and produce the book as an ebook, as well as optionally in print format for print on demand sales.

It is up to the author to fund the creation of the book in the desired formats, either by writing a cheque, through fund raising or by soliciting advanced book orders.  Without the financial risks of providing a monetary advance for a book, or the costs of carrying any inventory when selling a book, Iguana Books is able to offer a larger royalty than many other publishers.  Iguana Book's standard contract offers the author 85% royalties on the net sales of each ebook and 10% for each print book.  Obviously, I am motivated to try to sell more ebooks!

Scribendi, the sponsor for the talks at this pavilion, is an organization that provides professional editing and proofreading services. They offer a free 1500 word edit of your manuscript as a promotional trial of their work. I decided to take the opportunity to have the first few pages of my manuscript professionally edited before attempting to submit it for review to Iguana Books.  I figured it was important to try to impress right from the start, so that the reviewer would keep reading.

My efforts paid off, as shortly after I submitted my manuscript, I received an email back from the editor of Iguana Books.  Not only was he interested in publishing my book, but he made the comment that "This is the best-written, best-organized unsolicited manuscript I can remember seeing."

The contract negotiations began to determine how much it would cost me to pay for the creation of the book.  I pondered the options of fund raising or trying to solicit advanced orders.  Ultimately, since my book did not require that much editing, the cost was manageable and I decided to fund the project myself.  I will be thrilled if I can at least make back my initial investment.  But even if I don't, this was an fun and worthwhile experience.  I slotted the expense under my entertainment budget for the year.

The process of polishing the draft manuscript included working with an editor.  The editor's first pass through the manuscript addressed any issues with grammar or sentence structure, requested clarification or expansion on some points and verified all my references as well as the validity of my URL links.  A couple more passes were required for minor tweaks.

I had to obtain written permission to use any images that were created through screen capture of websites that were included in the book.  It was necessary to adjust the dimensions and resolution of my images to meet the publishing requirements in the various formats, as well as converting them to black and white.  A designer created the look for the front cover of the book using a photograph that I provided, which was taken at our family island getaway.  I was requested to write a synopsis and an author's biography for the back cover.  Once all these steps were completed, the manuscript was ready to be produced as a print and an ebook.

An author's site and blog was created for me on the Iguana Books website where my book will be sold.  It will also be offered on major book seller sites such as Iguana Books Amazon, Chapters-Indigo and iBookstore.  Iguana Books will help to market my book to some degree, but I also need to work on self-promotion, which does not come natural to me.  The writing was the fun part; the selling and marketing aspect, not so much.

I wrote this book for the fun of it, because I enjoy writing.  It was not with the intent to start up a secondary career, so hopefully I have not accidentally "un-retired" myself.  I'm enjoying my retired life way too much for that!