At my husband’s 50th birthday party, we joked that we would never be able to retire. We weren’t really joking at all. Between James and me, our household income had never exceeded $82,000 a year in our lives. We had poured nearly everything we had earned into paying off our home in London, Ont., and putting our two kids through university. On James’s 50th birthday, we had a total of $50,000 in our RRSPs, no company pensions, no stocks, no bonds. The one thing we did have was a lot of stress, worrying about how we could ever hope to quit work.
Fast forward to today. James is 65; I’m 62. He retired at 61; I quit full-time work at 58. We’re not rich by any means, but we have a condo, live well, and spend three months every winter in Florida.
How did we go from no-hopers at 50 to comfortably retired just a few years later? The key was realizing how much we could accomplish in just a few years if we put our minds to it.
At 50, our biggest asset wasn’t money in the bank, but our ability to save. We’re not penny pinchers but we’ve always known the value of a dollar. James and I were married in 1966. He was 22 and a printing press operator. I was 20 and a secretary with Ontario Hydro. We lived in a small apartment in London and in just two years saved up enough for a small down payment on a farm house near Cheltenham, Ont.
It seemed like a dream come true. We had both grown up on farms and thought we would love to return to the country. Wrong! We were shocked to find we were miserable. Friends and family were too far away. The commute to our jobs was a daily chore. We didn’t last even two years in the country, before the For Sale sign was planted on the front lawn and we were moving to the suburbs around London.
That was when we learned a fundamental lesson: life will surprise you. Our next surprise came when our son Peter was born in 1971. I had always loved my job at Ontario Hydro and we certainly needed the money I earned, but I thought I would be a bad mom if I went back to work only a few months after Peter was born. So I quit my job. I guess I had images of being June Cleaver.
Oh, boy, did those fantasies dissolve fast! I soon realized that I wasn’t cut out to stay at home with only a small baby to keep me company. Within another few months, I was climbing the walls with boredom and pining for the chatter and buzz of an office. I tried to go back to Ontario Hydro, but there was nothing available, so I settled for a new job as an administrative assistant with a restaurant supply company. When our daughter Amanda was born in 1973, I took a few months off and that was it.
In those early years, James and I felt that we had to squeeze the most out of every dollar. We concentrated on paying down our mortgage, saving for our kids’ university education and setting aside a bit of money each year for a family vacation. We visited Florida for a couple of weeks every winter with the kids, staying at campgrounds to keep costs down. We loved those trips. They were our reward.
When the kids started university, we had saved enough to cover about two years’ worth of studies for each of them. They both had summer jobs, but it wasn’t nearly enough to cover all their school expenses. So we also pitched in to help each of them pay for their final two years of study. Peter is now a mechanical engineer and Amanda is a kinesiologist. It cost a small fortune to educate them, but it was worth every penny. We’re as proud as can be of them.
By the time James turned 50, our house was paid off and both of our kids were on their own. So when we decided to get serious about our finances, we could focus on putting away money in a way that we never could before. Our first step was to educate ourselves. We bought basic books on personal finance and signed up for free seminars at our local library. We began to study personal finance magazines and the investment sections of newspapers. We discovered that investing and retirement really isn’t all that complicated.
The key to it all is living on less than you make. Given our empty nest situation, that was actually pretty easy for us. We took every penny that used to go to paying the mortgage and kids’ tuition and we poured that money into our RRSPs.
We learned early that the easiest way to save is to never see the money. So we set up automatic withdrawals of about $1,800 a month that went directly into retirement savings. Some years were leaner than others but we usually ended up living on James’s salary and saving mine. That meant we were saving $20,000 to $25,000 a year.
To help us save money, we decided to downsize our space. We sold our home in the suburbs and we moved to a condo in downtown London that was about half the size of our previous home. To our surprise, the move didn’t save us a lot of money, but it did improve our lives in ways we never expected. We found that we loved living in a place where we could walk to stores and restaurants. We didn’t miss cutting grass or shovelling snow one bit. We made lots of new friends. I can honestly say it was the best decision we ever made.
When it came to investing, we realized from Day 1 that we weren’t risk takers. We learned all we could about mutual funds, especially the fee structure. We avoided funds that charged front loads and back loads. We paid special attention to how much each fund charged in management expense ratios and we kept our fees as low as possible. At the time, we were both working and we felt comfortable with an asset allocation of 65% stocks and35% bonds.
Then the unexpected happened yet again. I began to experience horrible stomach pains. At 58, I had to have major surgery for an autoimmune disease. I was exhausted and had to quit my job at the restaurant supply company. Suddenly we were a one-income family. When I recovered, I started working as an usher at a local theatre. I could work only a day or two a week and I made only about $100 a week — a big cut from what I had been earning.
But even with that financial setback, our eight years of concentrated saving had done wonders. We were pleasantly surprised to see that, by our early 60s, we were in a position to retire with a nest egg of about $340,000. The only change we’ve made since James quit his job is to become even more conservative. Today, our asset allocation is 70% bonds and 30% equities. We also keep $50,000 in GICs and Canada Savings Bonds as an emergency fund to ride out market downturns like the current one. Our strategy may be too conservative for some people but it lets us sleep at night.
We’re busier now than we’ve ever been and money has turned out to be a far smaller issue than we thought. We live primarily on what we receive from government benefits — about $19,000 — plus an additional $8,000 or so from our RRSPs. James has now joined me in working as an usher at the local theatre and between us that generates another $12,000 or so of income every year.
I volunteer a few hours a week at the library and James does the same at the local golf course so we can golf at a reduced rate. We take day trips to Stratford, Ont., and Toronto, and we visit family and friends as often as we can. For the first time in our lives, we have to use a day timer to keep track of our busy schedules.
We’ve been surprised by how cheap it is to live well in retirement. For instance, we’ve been able to go from two cars to one, because our new downtown location allows us to walk more than we used to. Not that we’ve given up driving. In fact, we drive to Florida every year. It’s cheaper than flying and the road trip adds to the adventure. Right now, we’re planning a trip to see family on the East Coast next summer. James’s sister Louise will be celebrating her 50th wedding anniversary and we plan on joining in the celebrations. Our lives are rich in every way. It’s all turned out so much better than we expected back when we were 50.