Quit and Retire Three Years Earlier

For most people, there is a direct correlation between how worried they are about retirement income, and how much they can actually do about it. This is because the more worried you are, the closer you probably are to retirement, and the less time you have to do anything – like save up. Effective ‘saving up’ requires time. Time so your money can grow. Save an extra $200 a month, three years before retirement (at age 62), and you’ll amass a grand total of $7,887 (averaging 6% growth). Not likely to have a big impact on your retirement lifestyle.

But what if you invested for retirement when you were NOT worried about it? What if you, say, quit smoking a pack a day at age 45 and took the money and invested that instead? (For the purposes of this illustration, let’s assume a pack costs $7.00 and you smoke a pack a day so you invest, for easy figure’s sake, $200 per month. Again, average compound rate of return is 6%.)

Instead of starting to save when you start worrying about retirement (at age 62), and amassing that grand total of $7,887 by age 65, you start saving when you’re NOT worried about retirement (at age 45 – by quitting smoking and saving that money) so you end up with, wait for it, --- $91,129 !

What will $91,129 do for you at age 65? It would provide you with $456 in additional monthly income for the rest of your life (continuing to average 6% growth), and you won’t have to touch your capital. Or, perhaps, you could choose to retire earlier!

Don’t start to worry, at age 62, and save a paltry $7,887 by 65. Instead, start saving $200 more a month at age 45, when you’re not worried, and have $69,892 by age 62! Then you could retire completely at age 62, by using both the principle and interest as income from 62 to 65. $69,892 would provide you with $2,100 in income for three years! Thus, quit smoking and quit working 3 years earlier!

Of course, most of us ‘act’ when we have the ‘urge’ to act. (Note how the words ‘urge’ and ‘urgent’ have the same root.). You will tend to act on your retirement plan when it is most urgent. But long term goals are, by their very nature, NEVER URGENT! Now, perhaps THAT is something to worry about.

Rick Hoogendoorn is a financial security advisor with Cheri Crause & Associates Inc. (He quit smoking ten years ago this month.) Cheri Crause is a certified financial planner in Victoria, BC.
www.chericrause.com
rick.hoogendoorn@shaw.ca

After years of terrorizing the countryside, hunting deer, poaching livestock, killing game, Tiger grew long in the tooth. Finally, he knew it was time to retire. So he packed his bag and ambled into town to the Three Little Pigs Retirement Home Inc. He rang the bell, and the first little pig appeared on the landing above. "What do you want?" asked the little pig.

"I come here to retire," Tiger replied.

"Ooooh. I don't think so," the little pig declared. "You're not like us. You've got big teeth. Very dangerous. We can't let you in."

So Tiger went to the dentist and had his teeth removed. The next day, he returned to the Three Little Pigs Retirement Home Inc. "What do you want?" asked the second little pig.

"I have no more teeth. I come here to retire," Tiger replied once more.

"Ooooh. No, no, no. That just won't do," the little pig exclaimed. "You're different. You have sharp claws. You scare us. We can't let you in."

So Tiger went to the manicurist and had his claws removed. The next day, he returned to the Three Little Pigs Retirement Home Inc. "What do you want?" demanded the third little pig.

"I have no more claws. I come here to retire," Tiger repeated.

"Ooooh. Let me see," the little pig muttered as he disappeared from sight. Tiger heard much whispering and commotion behind the big wooden doors. "Okay, come in," said the little pig.

Tiger strolled through the doors, and there stood the three little pigs, grinning ear to ear. Suddenly they jumped on Tiger. Squealing with delight, they beat him up and sent him packing. No teeth. No claws. Yippeeee! Finally they got even with Tiger for terrorizing the animals.

Tiger should have known better. He should have accepted who he is and not try to conform to someone else's image of him. What tiger in his right mind lets a pig paint his portrait?

So, who paints your portrait?