My Epiphany (Or One of Them)
I had a bit of an epiphany during my vacation last summer. No, not the summer that’s ending now; the previous one. And it has given me a sense of freedom ever since.
Remember how, in October 2013, I reached my milestone of getting out of debt? In hindsight, I’m so glad that Mom got to see that moment. It didn’t matter that I was 48 years old; she still worried about me and was my best cheerleader. I can still see the expression on her face through Skype when I told her. “I knew you could do it!” she said. “I’m so happy for you.” And she legitimately was.
I didn’t know then that she would be gone a year later, and I didn’t know that I would inherit so much that my debt would have been wiped out and that I would still have some money left over. I had my doubts that it would happen when she’d go, but I preferred to deny that she would ever go and refused to think of her as my retirement plan.
Then, just before Christmas after she died, the taxman figured out that I hadn’t filed in years. Many years. Many, many years. But because I had asked my employer to hold back a sizable amount per paycheque for five years, I knew I didn’t owe any back taxes and properly was owed some. Except that while I knew that, somewhere in some piles in my apartment, I had all the necessary paperwork to file, I had no idea how to get the forms going so far back and thus I became frozen into inertia. When the taxman offered to send me all that paperwork in one envelope and made me promise to immediately get a professional to file for all those back years, I jumped on the occasion to finally get that monkey off my back.
I won’t say it here, but you would shit a brick if you knew how much I got back, counting that current year (for which I actually filed early, all on my own using tax software). Deciding to invest most of that unexpected income into an RRSP, which I never had before, certainly inflated the final amount.
A few months passed and my three-week Summer 2015 vacation came. On the last week I visited my older brother in the Gaspé. Since he retired a few years ago, he spends two months in the summer in a trailer on a cliff overlooking the Gulf of Saint Lawrence where every day he gets to see the sun rise on one side of “his cliff” and set on the other side.
I had never been to the Gulf side of the Gaspé and I was 17 years old the last time I’d been on its Bay side. Although my brother and his wife had often sent us pictures of what they called their “little paradise,” none of their pictures had prepared me to what that place would be like when seen in person.
While the city boy in me couldn’t stand spending two whole months over there, I sensed on the 10-hour drive back to Montréal that the little hamster in my head had hopped on his wheel and had started to run furiously. Until then, because I was 40 by the time I started working at a steady, well-paying job, I had assumed that the earliest I would be able to afford to retire was at age 65 (or 67 under the change to the age of eligibility for Old Age Security, which has since been rescinded), and even there it would probably be tight. But the little hamster reminded me how I can live quite contentedly with little as long as all the unavoidable bills get paid and I don’t ever get back into debt. And then he reminded me of how much I already had invested and roughly how much I would be getting from my pensions.
That was the moment of my epiphany.
Speaking to my supervisor on my first day back at work, I declared, “I’ve had a fantastic vacation because I had an epiphany: in 10 years and no longer, I will retire even if it means having to eat a bit of cat food now and then.”
My supervisor was obvioulsly surprised: “But you’d be awfully young, wouldn’t you?” To which I reminded her, “Girl, I’ll be turning 50 next month! So 60 doesn’t strike me as being that young to retire.” That’s when she said that she had me pegged at 43 or 44, hence her surprise.
A few months later, during the two consecutive very long weekends I enjoyed during Christmas and New Year’s, I decided to redo from scratch my budget-slash-spreadsheet-from-hell for the next 10 years in order to uncover one single number: what would I have, give or take a few thousand dollars, even if I switched to the most conservative approach to saving for my retirement but kept the same financial discipline?
It had taken me only nine months to realize that I don’t have the nerve for mutual funds. I know that they say that you have to take the long view and not look at your RRSP’s value every day, so what did I do? I looked at it every day! By late 2015/early 2016, following a mild recession in the middle of 2015, it looked as though the Canadian economy was heading toward the precipice. So I found the best guaranteed investments I could put my hands on and figured out that I prefer having a firm number distributed over several types of savings schemes than a bigger (or smaller) “you could have” number.
What convinced me after all those calculations that I would be able to afford to retire at 60 is the commonly accepted advice that one should be prepared to live on 70 percent of their income at the time of their retirement. And you know what? Because I’m single and disciplined (although I don’t deny myself much of anything) and make pretty good money for one person, I currently sock away 30 percent of all my income that includes sizable tax returns because I’m putting much of it in a registered retirement plan. When I reach retirement in 10 …err …9 years, my days of saving massively will be over. But already I’m living on 70 percent of my income, so I estimate that my savings and my pensions will have me set for 20 to 25 years, by which time I’m pretty certain I’ll be dead.
Yes, I still have to work for a living a while longer, but I sense my parents are smiling down on my siblings and me, knowing that we’ll all be fine until we go join them. I don’t know where Mom, especially, took her financial wisdom but I thank her every day for having taught it to me. And I’m in total awe at how those two magnificent people of relatively modest means have managed so well at taking care of four kids from cradle to grave, and are still taking care of us now thanks to the memories and the love we still feel coming from them.