Give Me Back My Five Bucks

The goal of early retirement

At least once a year I have bit of a breakdown about my early retirement plan. Even though I run the numbers every year to make sure I’m still on track, I somehow end up convincing myself that I’m not saving enough. This happened last week, and I promptly took an entire evening away from packing up my house to play in spreadsheets and run numbers through about a million online retirement calculators. I also tried to share my panic and frustration with RD, but because he’s got a nice government pension waiting for him when he retires, he didn’t really understand where I was coming from.

Early retirement is my number one financial goal. Right now my goal is 55-57. This has been what I’ve wanted since I started taking a keen interest in my finances back in 2006, and I don’t see it changing anytime soon. But what does retirement actually look like? Taken from a 2013 post I wrote, retirement to me means having the freedom to do whatever I want to do, without the obligation to work for a living. I guess you could call it financial independence, rather than retirement.”

Freedom. It’s a word I’ve been using a lot lately. I recently freed myself from my mortgage, and the lifestyle I desire now (as well as in retirement) allows me the freedom to make whatever choices I want to make. I want my life to be open to all opportunities, and perhaps as I get older, those opportunities will become more defined.

Related: Why 20-somethings might have trouble retiring by 65

I may not know what retirement looks like for me from a day-to-day point of view just yet (because a lot can happen in the next 25 years), and that’s okay. Right now, I want to live in a small (tiny) home in (or near) my hometown. But just like in life, I don’t think retirement needs to look a certain way in order to be happy. I may have this exact lifestyle for the rest of my life until I die. Or maybe a family is in my future. Or maybe as soon as I retire, I’ll want to move somewhere exotic or travel the world with my husband. I guess the point is, it doesn’t matter what I want to do when I’m older, it just matters that I’m taking the steps now to allow me the freedom to make those choices later.

Back in 2006, I was saving $50/month towards retirement. I’ve come a long way since then, but the $950/month I’m currently saving is still not enough. Once employer contributions kick in, that amount will increase to $1,200. If my average annual salary is around $80k, and I want to be saving 20% of my gross income towards retirement, then I should be at about $1,350/month.

I’ve got some time to think about it before I set my 2016 goals, but I’m fairly confident that I can save that amount, as well as save for travel and any other savings goals that may come up (my total savings rate should be about 50-60%). I’m just not sure how to adjust my auto-debits, as my income can fluctuate quite a lot from month to month.

How much are you putting away towards retirement? 
Does the amount you’re saving align with your retirement goals?

Author: Krystal Yee

I’m a personal finance blogger and marketing professional based in Vancouver. I’m a former Toronto Star (Moneyville) columnist, author of The Beginner’s Guide to Saving and Investing, and co-founder of the Canadian Personal Finance Conference. When I’m not working, you can usually find me running, climbing, playing field hockey, or plotting my next adventure.


  1. Jordann says:

    At first glance it seems like you are saving a lot, but then I remember that your goal is early retirement, not just retirement.

    Myself, I’m saving $500 per month towards retirement, and I plan to retire at the typical age 65. I haven’t spent a lot of time thinking about retirement planning because I have a lot of other goals I’d like to get out of the way that are demanding my time (and money) like buying a house, maybe having a kid and replacing my car (eventually). Those are all going to take money, and retirement is taking a back seat to those.

    Really, I like what you’ve defined retirement as, the ability to do what you want. I could totally get on board with that earlier than age 65, so we’ll just have to see how things pan out. If I end up being a perma-renter or moving somewhere with a lower cost of living, early retirement may well be on the table.

  2. Leigh says:

    I save about $50,000 per year towards retirement, including my employer’s matching contributions. I plan to retire in my thirties, so that isn’t quite enough. Once I’ve paid off my mortgage, then I will switch that money over to taxable investments for early retirement.

    (To be fair: my gross income falls in the mid to high $100,000 range annually, but $50,000 is still a decent chunk of that.)

    • Krystal Yee says:

      Wow that’s amazing Leigh, congrats on being able to save so much! Inspiring me to dig deeper and save more. :)

  3. Jennifer says:

    Thank you for sharing.

    I make more than 10K less than you and save 35% of my income each year. Plus I have a pension I’ll get at 55.

    I used to live in Vancovuer and know it’s expensive, but I would aim higher than a 20% savings rate.

    I started using YNAB and it made it easy to pay myself first, and I auto debit all my savings. If you did that and then added all freelance income to retirement savings you’d be in great shape!

    • Krystal Yee says:

      My savings rate will actually be about 50-60%, it’s just that 20% is directed specifically towards my retirement. The rest is saved towards travel, upcoming major expenses, emergencies, a future down payment (?), or whatever else life throws my way. I’m positive a portion of that savings will eventually be directed towards retirement in my TFSA.

      • Jennifer says:

        My 35% is for retirement alone, with 20-30% more going to planned spending for vacations etc. I live off ~30% of my income.

  4. Anonymous says:

    I’m finding the Tangerine references on your blog to be a bit thick. Can you please clarify if you have some sort of arrangement with them?

    Anyway, this is a great post. I would advise that the Registered Dietitian that you’re living with should certainly be saving for retirement outside of his pension. The government he works for could change the pension rules so that he can’t draw on it until he’s 67 (or older), it could remove the inflation indexing, or make a number of other changes that reduce its worth.

    Looking forward to more posts!!!

    • Krystal Yee says:

      Oh, Tangerine isn’t paying me to talk them up in this capacity. I have worked with them in the past, but this is not part of it. I’ve been using them (as well as PC Financial) for years. Just recently PCFinancial redesigned their website and I’ve been on a bit of a Tangerine kick lately in moving all of my daily banking over to them. :) The tweets I posted are just ones that directly relate to this post (about retirement panic), and it just happened to be part of a Tangerine Twitter party from a few weeks ago.

      Also yeah RD is saving outside of his pension, but he just doesn’t share the same panic (or passion) as me when it comes to retirement savings.

  5. Michelle says:

    We are putting a good deal towards retirement. We want to be financially independent by the time we are 30-31, since we don’t know what will happen in the future with our online business and we want to be as safe as possible.

  6. jim says:

    It all depends on the life style you want in retirement.

    You wont be able to predict that until you know things like actual rate of return closer to your retirement age.

    I would say 15% a year would be a reasonable goal for now.
    If you want to save more cut back on your travel. You can’t travel now and in retirement. Money saved now will compound.

    So figure out what your rate of return is and when you will have around 2,000,000 to have a comfortable retirement. Currently this will generate around 80K from a mix of stocks and bonds.

    I retired at 57 I had planned for 60 but the market has been good the last 5 years. so I pulled the plug early.

    No pension plan except CPP. when I turn 60 or 61 CPP will add more.

  7. BP says:

    My husband and I both max out our 401k and traditional/backdoor Roth IRA every year, that comes out to $55-60k/year including employer match and pension. We also save about half of our take-home every month in a mix of bonds and taxable funds (about $60k/year that really is a catch-all bucket for retirement and long-term savings, we have a separate emergency fund that earns literally zero interest). On top of that, we max out our HSA savings limit $6-7k as a medical fund, which will offer the same tax benefit as Roth if we end up not using most of it until we retire.

    We are both in our 30’s; neither one of us are planning to retire early since we love our jobs. However, I don’t plan to work until I am 85 either! At this time we plan to review our financial plans every year and we expect the savings rate to go down slightly when/if we decide to have kids. We don’t have any other liability except for our mortgage.

  8. Derek says:

    I personally don’t worry about having auto-Debits set up for everything. I get paid in two separate chequing accounts and it varies from biweekly deposit as to which account has the funds for my RRSP deposit. It’s then just the discipline to make the deposit via online banking every Friday. For me this is less trouble than trying to balance transfers between the two accounts to ensure auto-debits don’t overdraw me.

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