Retiring Early – Part 3 (Conclusions)

Continuing from Retiring Early – Part 1(Expenses), and Part 2 (Income), we will trek on with Part 3 – my conclusions regarding retiring early. This article will focus primarily on the savings required to meet our retirement goals at certain pre-defined ages that make sense for us.

Here are some tables summarizing our income, expenses, and required savings per year (assume RRSP withdrawals/taxation) if we retired:

@ age 45: Savings Required: $1,133,000

Age CPP OAS Pension Pre-Tax Income After-Tax Income Expenses Savings Req After tax Savings Req
45-51 0 0 0 0 0 $44,616 $44,616 $60,000
52-59 0 0 $20,016 $20,016 $17,427 $44,616 $27,189 $33,500
60-64 $6,996 0 $20,016 $27,012 $22,722 $44,616 $21,894 $26,000
65-85 $6,996 $11,784 $20,016 $38,796 $31,021 $44,616 $13,595 $15,000

@ age 52: Savings Required: $359,780

Age CPP OAS Pension Pre-Tax Income After Tax Income Expenses Savings Req After Tax Savings Req
52-59 0 0 $32,702 $32,702 $26,856 $44,616 $17,760 $21,000
60-64 6996 0 $32,702 $39,698 $31,596 $44,616 $13,020 $14,500
65-85 $6,996 $11,784 $20,016 $38,796 $31,021 $44,616 $13,595 $5,680

@ age 55: Savings Required: $149,194

Age CPP OAS Pension Pre-Tax Income After-Tax Income Expenses Savings Req After Tax Savings Req
55-59 0 0 $39,600 $39,600 $31,533 $44,616 $13,083 $15,000
60-64 $6,996 0 $39,600 $46,596 $35,914 $44,616 $8,702 $8,900
65-85 $6,996 $11,784 $39,600 $58,380 $43,202 $44,616 $1,414 $1,414

The problem with retirement projections is that it makes too many assumptions. Who knows if my wife will continue working until retirement, or if OAS will exist, or even if the tax brackets will be the same. I guess we just work with what we know at the current moment and adjust as we need to. I also only have a 10% contingency built in. Some of you may be more comfortable with a 20% contingency fund.

One tax issue I didn't deal with is converting the RRSP to an RRIF once I turn 69. An RRIF has an increasing withdrawal schedule starting at the age of 69 (4.69%). This can lead to large taxation hit IF you have a large RRSP remaining at this point. If I follow this plan and die broke, the RRSP balance will not be too large in any of the scenarios described above and the tax will be minimalized.

In Summary: If we were to retire: @ age 45, we would need a Savings of $1,133,000. @ age 52, we would need a Savings of $359,780. @ age 55, we would need a Savings of $149,494.

Assumes that our savings during retirement grows at the rate of inflation (extremely conservative) AND that we'll die broke.

Another bold assumption is that OAS will by FULLY intact when I reach 65. If OAS gets canned (or reduced) by the government sometime in the future, that would add an additional $235,680 ($11,794 x 20 yrs) to my required savings + income taxes charged to the additional savings. A large hit indeed.

Considering that I'm going to have $1 million in net worth by the time I'm 35, this whole retire early thing should be no problem right? ;)

Hope you enjoyed the early retirement series. I learned a lot by writing this series and hopefully you picked up a few things also. Let me know if you have any questions.

Have a good weekend!

Other Articles in the Series:

Part 1: Early Retirement – The Expenses

Part 2: Early Retirement – The Income

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FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.
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Ajay Pruthi
6 years ago


I am not able to understand, there is nothing mentioned in the article about investing.

For your retirement, you need to invest money and it should grow multiple times. Just savings can`t help you achieve your retirement goals.

There is nothing about inflation, rising health care costs etc.

9 years ago

How this math works if you are married and your spouse is, for example, 7 years younger than you? Is it different if the age difference is 2 or 5 years? What is affect of the gender? Statistically life expectancy for women is significantly more.

11 years ago


I would think conventional wisdom typically pegs a 4% withdrawal rate as having a fairly good possibility of allowing for your capital to remain intact for the long term. That would imply an income before tax of 4% x $600,000 = $24,000 today. Let’s say with exceptional growth and major contributions you somehow got to $1M you still would only be halfway there in 5 years. And that would be in inflation-depleted dollars. You should probably figure out what expenses may be new or increases in retirement and those which will be reduced or eliminated. Perhaps you won’t need nearly as much as $80k. Most people would try to retire with no mortgage which is not something you’ve put on the table.

11 years ago

I am 40 and have 500,000 in a self administed rrsp and $100,000 cash and another $50,000 for a down payment for a house, I am married with one child, live in a shoe box which I rent, I currently make $60,000 ok here is the Dream I want to retire in 5 years and not have the wife work , will still work but do not to stress about bringing home the paycheque cause the work does not always guarentee $ on a steady bases. this is what I want income of $80,000 from the rrsp and the $100,000 cash . $80,000 will allow me to purchase a $500,000 home make the mortgage payments eat utilities etc have a holiday here and there and maybe save a wee bit. any tips out there is this possible or am i out to lunch

11 years ago

-JR: I’m interested in investing through ATM machines. How did you start? You can email me at “sig_hup at”

12 years ago

ah yes…was probably thinking GIS

you don’t happen to know where I left my reading glasses ?

“getting old ain’t for sissies”

12 years ago

I’m old and easily confused and have the attention span of a gnat but….

wouldn’t the yearly income figures used in the 55+ area – specifically age 64

disqualify you from recieving any payment from OAS at age 65 ? or greatly reduce those sums

assuming of course it still exists

12 years ago

From Post #14

Claudia: Thanks for the heads up. Although it doesn’t look like it, when I did my calculations, I did account for the reduction of CPP due to retiring early (along with the 15% allowance).

For example, retirement @ 45:
Earnings years: 60 – 18 = 42years
15% of lowest years deducted = 42 – 6 = 36
sum of earnings (from age 18-45)/36 = ~$40k
According to the calculator: CPP @ 60 = $6,996/year

Ah, I did make a small mistake. If I retire @ 50 or older, my CPP payments @ 60 will increase slightly from $6,996 to $7,260 / year.


I may not be following this correctly, but I don’t agree with this logic. Here is my thinking:

You can’t take all of your annual earnings and then average them out to about $40k in today’s dollars from 18 until 45 at which point you retire. You have to look at each year separately since any amount over the cap ($46,300 in today’s dollars) can’t be used to supplement previous or future years.
Thus, you would have 27 years of income vs. the expected 42 years (retire at 60 after working from the age of 18) or a little less than two thirds. (Taking the 15% of lowest earning years doesn’t matter since both the 27 years and the 42 years are affected by the same ratio.)

Thus, wouldn’t you expect to receive only 2/3 of the $6,996? It doesn’t matter if in those 27 years you earn $1M/year since it is capped at $46,300 in today’s dollars – earning more doesn’t have an impact on years where you aren’t working. Now if you earned the maximum of $46,300 in today’s dollars in all of your working years (minus the 4 years or 15% of 27) you would get about 2/3 of the $8,688 by my way of thinking.

I haven’t found anyone post a calculator which can help with this but I’m sure some financial planners like Ed Rempel could offer a professional opinion on this.

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