The financial independence retire early movement is getting a lot of attention lately. While it’s nice to see the movement gaining traction, I feel most of the major media coverage has been very early retirement focus. I think this is paints a very bad picture of what financial independence retire early (FIRE) is about. Furthermore, most of these FIRE stories are US related. As a Canadian, I want to hear more Canadian financial independence retire early stories. Therefore, I started an interview series with a focus on financial independence retire early in Canada.
If you are reading this and are Canadian, financially independent, retired early, or getting close to these major financial milestones, I would love to hear from you.
Today I am fortunate to be able to interview MR. and MRS. who are living the FIRE lives already.
Q1. That is amazing that your husband retired this year at 56 and you are on track to retire next year at 55. What originally sparked your interest in personal finance? Who discovered the idea of financial independence retire early (FIRE)?
We went to a presentation in our community by David Chilton called the Wealthy Barber. We think he made us see the value of making smart choices with our money and the difference it can make down the road. It was a great read (at that time) at a young age and inspired us to take a more proactive approach regarding our finances. Many years later, MRS. stumbled on Mr. Money Mustache that inspired us to start making more serious plans towards FI. Physicians on Fire also had a wealth of excellent financial information and we really enjoyed the blogs he connects the readers to. It was through that blog that we were connected to Tawcan and really appreciated your Canadian perspective.
Q2. Did you have to convince each other about early retirement? What made you decide to retire early rather than retire at the typical retire age?
No, not one bit! We have very similar interests involving outdoor adventures, travel, sports and hobbies. We always needed more time outside of work so it was an easy decision. We decided to retire early because we could and had so much we wanted to do. We think for us this decision came later in life as it really just evolved over time. MR’s father passed away before he had a chance to retire and we always felt he lost out on some great years that we hoped to have. We believe it impacted us on making sure we will enjoy some of that time as time is never guaranteed.
It is important to note that when we read blogs on retiring early, most people are much younger than us. Yet, within our work and community and families, we are considered early retirees. It feels early to us but we enjoyed our work over the years and also did a lot of things that we wanted to do.
Q3. You and your husband raised three kids. What approaches did you use to make sure they grow up as financial responsible adults? Did you give them any allowance? Was the allowance tied to household chores? Do you have any advice to me and my wife and how we should teach our 5 year and 3 year old kids about money?
We did not pay them to do chores as nobody pays us, its part of being part of our family.
We did encourage the kids to get jobs that did not interfere with their high school education. They were also told at a young age that they would be paying tuition and personal spending money at university and we would cover additional expenses as required. We always felt that our kids appreciated the money we spent on them and never took it for granted.
We think we should have educated them a lot more on finances as its really important. It should have been talked about more and all the advantages to spending wisely and making good investments. They could have really benefited by learning from us. We taught by example but I don’t think that goes far enough.
We also should have worked the kids harder throughout their childhood and adolescence. Our culture does far too much pampering and then we send them out into a very challenging world after they graduate!
4. You paid off your home early and invested your money instead of moving to a bigger home. Were there any factors that made you make this decision? Do you ever regret not moving to a bigger home?
We traveled to third world countries in our early twenties and saw how little other people have in the world and discovered the following:
- Saw a consumer driven lifestyle of western culture
- Became very aware of how privileged we were living in Canada
- People that have very little are sometimes happier than those that have so much.
These experiences really shaped our values at a young age and we have continued to travel to third world countries over the years. We had thought about buying a bigger home, nicer home, car, etc. many times but we think our core values always kept us where we were. We are very happy in our home and believe that we would be working a lot longer if we had continued to want more. It became an easy choice as we always said that if buying a nicer home meant working longer, we were not interested. Or the person that wants the bigger home has to work longer! One advantage for us now in retirement is that we do not need to downsize and have a costly move.
Q5. What is your investment strategy? Do you invest in mutual funds, index ETFs, dividend growth stocks, individual stocks, or rental properties? How are you diversifying your investments?
We have mutual funds in a company DC pension. Otherwise we have ETFs (not so much indexes but more targeted like dividend ETFs), dividend stocks, GICs. Diversify with ETFs for US and International.
Q6. You mentioned that money to you is about freedom that it brings. You actually don’t require a lot of money to be happy, and you have more than you need or will likely spend. Can you expand on this idea? Have you always approached money this way? Or there was a mentally shift years ago? If a mentally shift, how did that happen?
We value the planet and live a fairly simple life. We made decent money over the years but for the most part we spent less than we earned while enjoying life. We can do some amazing trips from where we live that usually cost us very little but provide a ton of joy! We also love biking within the community where we live and not using the car when we can. We cook our own food, grow a garden and hang our laundry in the summer. Its super rewarding to know we can live gently in the world and retire early.
In our opinion, It makes no sense keeping up with the latest decorating trends or buying a fancy car that sits in the driveway a lot more than its worth. I think that shift slowly grew over time. We definitely have a world view that appears very different from the majority of people we know in Canada. I think we both struggle with a consumer lifestyle that impacts the planet and really does not bring any peace or joy to life.
Q7. Who takes care of the household finance like paying bills and financial planning? Are both of you involved equally? If not, how do you make sure the other person is up-to-date on household finance?
We are on the exact same page regarding financial decisions but MR. does all the investing and any household finances. We make joint decisions on every financial decision. MR. is very detail oriented with a strong interest in finances and investing. We have very detailed spreadsheets on all our finances so it’s easy for MRS. to view at any time. This works well for us.
Q8. Tell me some of your financial mistakes. What have you learned from these mistakes?
A big mistake was investing in the stock market when we were younger and lacked education about the choices we made. We lost some hard-earned money that taught us valuable lessons. At that time, we also learned that some of the professionals in the industry provided poor advice. It’s important to either find a good financial planner or become well educated yourself. Nobody will look after your hard earned money like you do.
Q9. Do you take advantage of TFSA and RRSP? Do you plan to withdraw early from RRSP before age 71? If so, what are you early withdrawal strategies to minimize RRSP tax penalties?
Both TFSA and RRSP. We will withdraw from RRSP early to make up any shortfall from dividend income. Try to stay in lower tax bracket by limiting RRSP withdrawal. Last place to draw from will be TFSA.
Q10. What is your withdrawing strategy once you are living off your investment? Do you plan to tab into your principal in the first five years? Or do you plan to utilize distributions/dividends?
We plan on living off dividends if we can. Otherwise start drawing down RRSP.
Q11. What do you see yourself in 5 years and 10 years from now? What are the top three things you are looking forward to?
That is a simple question. We will be spending time doing the things we enjoy most yet also giving back to the world in some way. It’s important to continue to live with purpose and we both intend on doing that when we are both retired. We will also spend a lot of time with family, friends, travel and go on many adventures. We worked hard and we will play hard in retirement and will not waste time. Time is a precious gift.
We are open about retiring early but do not share financial details. That is a good question about money being a taboo subject. I think for us it is that many assumptions can be made that are often incorrect when people have detailed information about our personal finances.
Q13. What would you tell someone like me who is trying to achieve financial independence? Do you have any advice for financial independence retire early?
We think you should always live a rich full life for today. However, if you are resourceful, and make a decent living, you would benefit greatly by working towards financial independence as early as you can afford. It will provide freedom to live life as you choose.
Love the planet and you will likely reduce many line items from your annual budget. Take time to understand the consequences of how we treat the planet and it may be easier to make those important changes.
About three years ago we changed to a plant-based diet for health and environmental reasons. The big surprise is that it is a lot less money on our food bill (likely 50%) and once you learn to cook like that, we think the food is a lot better.
Thank you MR. and MRS. for your excellent insight on the financial independence retire early movement in Canada. I really liked how you put so much emphasis on the environment.
Dear readers, are you enjoying the Canadian Financial Independence Interview Series? Are you a Canadian that is financially independent or retired early from your career? Or close to reaching this key financial milestone? If so, I would love to have a chat with you. Give me a shout!
And in case you want to read the other interview series.
- FIRE Canada Interview #1 – Vancouver reader J
- FIRE Canada Interview #2 – How I became financially independent at age 32
- FIRE Canada Interview #3 – Why I decided to keep working despite reaching FI at 38
- FIRE Canada Interview #4 – Cash flow is the oxygen of financial independence
- FIRE Canada Interview #5 – Creating a long term plan
- FIRE Canada Interview #6 – Create a net worth statement
- FIRE Canada Interview #7 – Do Absolutely everything and never sacrifice or struggle at all
- FIRE Canada Interview #8 – Building a rental property empire
- FIRE Canada Interview #9 – Relocating to Spain
- FIRE Canada Interview #10 – Kids are as expensive as you let them be
- FIRE Canada Interview #11 – Vancouverites retired in their 30’s
- FIRE Canada Interview #12 – Being a valuist