Can you retire or not at 55 ?

Can you retire at 55 or not, now that is a very good question? Especially if your like me and over that bench mark already. It makes it rather difficult but not impossible.
I was surprised to learn that most of my fellow Canadians like us have little or no savings. To put another wrinkle in our Financial mix is the fact I have been on forced retirement for 12 years. Due to a motor car accident, when I went over a cliff up in Cape Breton dropped 60 feet and rolled another 100 feet down the slope. The irony of this was I was selling Accident and Disability Insurance for Combined Insurance of America at the time.

Now you say, hope you had coverage. I had Short Term Disability but no LTD as I was not in the company long enough. Also when you are self-employed no Unemployment Insurance or Workers Compensation. Had to fight for about 6 years with both the Medical Field and the Government before I could get CPP. ( Canada Pension Plan Disability)

So we have been down to 1 salary all this time and have learned to live within our means and still save a little. Those of you who are single, either through your own choice or due to other circumstances would understand. Just how hard it is to actually sock anything away. How life forces you to stay in the same old, even if you hate it due to the way the economy is at present.

Seems better the Poison you know than the Poison you do not know.
They ( Financial Experts) keep saying that you must have 5 times your annual salary before you can consider retiring in both cash and stocks. Then you must limit yourself to a 3.5 or 4% of your worth to live on for the year. Providing of course that you have no other debts when you do retire eg. mortgage,loans, credit card issues. Although a Mortgage also means that you have some equity in the house and could over here when your 65 take out a CHIP ( Canadian Homeowners Investment Plan) to approx.. value of 40% of your home. No repayments for as long as you live in the home. Now this would work well for most people my age or older as about 70% of us actually own our home out right or have enough equity in the home for this to work.

Lets go back to the 3.5 or 4% you take out per year (assuming that you have no company or other pension plan to fall back on, apart from Old Age and CPP at least here in Canada at 65 and 60 years of age. A couple would get just on those around 18-20k per year). So at 65 years of age to retire 4% of 400k is 16k plus the 20k from the government for a total of 32k) that is between 2-3k per month.) Depending on the interest rate on the investment it would be enough to live on and to be able to Travel not First Class but Economy to distance places. Now if you want to retire at 55 in this case you would need 600k and only be able to take out 3% per year. Of course this assumes that you do and can take out more early on and less as you get older ( in moderation) depending on how the market does and interest rates.

You could also buy something inexpensive right now in Florida as in RV parks RV's are good value and will get better as the
older Generation Snow Birds (non baby boomers), hate to say it move on. Live there for 6 months come back to Canada to renew your visa's visit some family and friends and head back for another 6 months. Rent out your home, furnished ( as you get more money) and depreciate your home and furniture as an expense against the rent on your taxes; for several years and presto you can live very well. With the rent covering all or most of your immediate expenses. This is one of the options we are seriously considering down the road.


We are also lucky that Mrs. OT has a government pension that would allow her to retire at 55 but with 50% of her salary but at 59 she would get 70% of her salary. It is a hard call and one we haven't completely decided on yet.

So this is one of the the other reasons we down sized now to a 1 bdr; while most of the people we know think we are foolish to go smaller but we didn't need or use another 3 bdrs and etc full of stuff as it was. Now should my wife decide to retire at 55 we can take the hit on the pension and still manage.

We are also now mortgage free and can sock away a little more and still take Holidays while we are still fit and healthy.

So most experts seem to agree on the fact that, we are in a small group of people who can retire early and comfortability who have a Public Sector Pension, even without additional money in the Bank or Investments.

So it seems with the last stock market crash that the Freedom 55 is slipping away from some (esp those who want to live in exotic places and drive fancy cars, who are unable to live within their means).

Those who have a Public Sector Pension and with those who learn to economize without a pension and if both groups take a good hard look; a hard realistic look can and will have a brighter future. At least that is what I think. What do you think?