Retirement Savings

People retire for different reasons. A skier might retire because he’s going downhill, or an elderly chef could retire because his sage is showing. 😀 But no matter what the circumstances may be we all have to be financially repaired for retirement. This means preparing an adequately sized retirement fund.

But what is retirement savings? Some believe it’s what you have in an 401(k), IRA, or RRSP. But due to the fungible nature of money almost anything can be a part of retirement savings. There’s no need for separation. For me, the definition of a retirement fund is all the financial assets I have at the time when I decide to quit working.

This simplifies life greatly. I don’t have to choose between contributing money to my TFSA or put it towards my RRSP because both vehicles will eventually become part of my retirement fund. The only implication would be for taxes. So retirement savings is more than a 401(k) or a pension. It includes Traditional IRAs, Roth IRAs, SEPs, savings accounts, mutual funds, stocks, and annuities. This gives us a more complete picture of what we have instead of just what’s in our registered retirement savings plan. 🙂

The financial world is constantly changing and retirement is part of it. A few decades ago the retirement plan for most people was based on 3 supporting legs; work pension, personal savings, and government pension such as social security.


Fast forward to 2015 and the grim reality for most workers now is we can’t count on generous work pensions anymore. A defined benefit pension plan is as rare as a Canadian who doesn’t watch hockey. With only 2 legs to stand on the retirement stool will become very unstable. The job participation rate is at decade lows. Many jobs are either going overseas or being replaced by automation. Who knows what kind of new retirement challenges our children’s generation of workers will face?

As Wayne Gretzky once said we have to “skate to where the puck is going to be, not where it has been.” But it’s difficult to predict future pension income and social security benefits. Thankfully there is something we can do to prepare in advance, regardless of what the future brings. All we need to do is acquire a diversified portfolio of valuable assets. This can be done by growing our income streams. But not all assets have to produce cash. My farms are losing money every year, haha. But their value is growing faster than a weed. If I sell my farms when I retire and invest the proceeds I can make enough passive income to satisfy my lifestyle. Any employer or government pension would be a nice bonus but is not necessary.

The old 3 legged retirement model doesn’t work because it relies too heavily on the 2 legs which are out of our control. So let’s think outside the box and imagine that our stool can have an unlimited number of legs. 🙂 For example I have 3 legs at the moment providing me with stable income; dividends, interest, and rent. But maybe 5 years from now I’ll have a couple more legs. I can’t say for sure though because I don’t have 2020 vision. 😀 But the more legs beneath my stool the stronger my retirement plan will be. 😉

By mentally removing the leg count limit and holding ourselves more responsible for our finances instead of relying on others, we can start to address the relevant retirement questions that are important to us and look for new opportunities that fits with our goals.

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06/19/2015 3:23 am

You can easily make an estimate of your retirement income from all these sources here:

06/19/2015 5:35 am

In our retirement planning we don’t count on social security, even though we’ll allegedly get about $1k/month , and the same with pensions. I have a couple hundred a month from my last job, and some from my new job, but we just see that as bonus money when they become available. Mostly, we rely on our savings and investments for pre-401k living, and our work matched 401k plans for 60-62 year old us. This gives us a little cushion in case health care costs are underestimated or other costs factor in that we didn’t account for.
It might be conservative, but it works for us and we’ll still be retired by 42… Assuming no major financial crisis or death strikes before then. 🙂

06/19/2015 5:34 pm

Its like pun overload up there! They’re starting to rub off, I caught myself stealing a pun on my last post.

06/20/2015 10:16 am

This is something I have thought a lot about lately. Not only with retirement but also living now, the question I ask myself is, would I prefer to have a job that makes me 3000 a month that is enough to pay all my bills and then some, or would I prefer to have 30 different incomes that all make 100 a piece? This would of course hopefully continue on into retirement. Thanks for the great post

06/21/2015 12:32 pm

I see the 3 as a BIG pay raise Timeline. Personal Savings and Investments for my early retirement plan. During this time, I continue to make “small” amount of income from dividends. And slowly turn my 401K to Roth IRA. At 59 years old, my ROTH IRA will start to kick in and I get a substantial pay raise. And I’ll hold off withdrawing Social Security until 65 or 72 years old depending on my health and financial situation, obviously I get another pay raise at this point.

The taxes system is only evaluate how much “income”, not how much I actually have, so the dividend income is one of the most tax advantage in the whole complicated US taxes system. So, learn to beat the system like the riches is the BEST way to go. It all can happen because due to information technology. They wouldn’t teach this kind of stuff in school.

Mr. Retire by 35
Mr. Retire by 35
06/21/2015 2:00 pm


Great article. As we have attempted to describe our early retirement plans to some of our closer friends and family, they seem confused and wonder how someone could retire before the typical age of 65. Your 401k can’t possibly be large enough… you can’t draw on social security… the “you can’t” mentality rings through from all of them.

Our plan only has two legs (dividends and interest), but we plan to be the three-axis gyro on top keeping it upright 🙂 as the market swings, we will adjust our spending accordingly!

Glad to have found your blog. Will be following along your journey!

-Mr. Retire by 35

06/28/2015 5:59 pm

Awesome read! I agree, attitude towards your finances is half the battle. I know a lot of people who just avoid thinking about it because it is stressful to deal with.

07/01/2015 10:45 am

[…] Don’t rely on the government. Germany has ordered austerity in Greece to reduce the country’s debt pile. It’s a real challenge to pursue an even moderate left-wing policy in a world of capitalism. Pensions aren’t safe no matter where you live. Politics often compound economic problems. Last year, even in the U.S., Obama said that “in an economic shutdown, if we don’t raise the debt ceiling, [social security checks] won’t go out on time.” This is why we must develop our own retirement plan. […]