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Part 2 of 3-Part Series

It is important to note that when taking the summation of your retirement accounts, only the qualified accounts are used. This means you could have a large amount in unqualified accounts or investments which will affect the real-life number and differ from the retirement ratio. Of course, there are other factors to consider, such as if you decide to reduce your annual spending in retirement, which would increase the number of years your retirement savings will last. In reality, most people’s annual spending does decrease significantly during retirement. At that stage in your life, mortgages have likely been paid off and you no longer need to contribute to your RRSP’s, RESP’s, RISP’s etc. Commuting and transportation costs disappear as do costs of caring for you children. Perhaps you and your partner no longer need multiple cars in the family.

If you plan to travel a lot, those are extra costs, and usually this will increase your spending, but smart travel budgeting can actually decrease your spending. This is because often those dreamy destinations have much lower costs of living than Canada which is one of the most expensive in the world. Planning to visit and travel to these places has a cost to get there, but once you are there, it is very easy to live very well at a very low cost. It is quite easy in this day of Airbnb and similar services to find very nice accommodations for very reasonable or even downright cheap prices. Food is a very large expense here in Canada, but in these places, it becomes so cheap to eat amazing meals, it’s almost negligible. After visiting these places, the opportunity to live permanently in one of these paradises opens up. Be it throughout the whole year or perhaps only to escape the winter, it is quite feasible to hop between your old and new homes and this could also decrease your cost of living if planned properly and done right. But let’s not get ahead of ourselves!

Part 3 continued next week.