Greetings,
If you’re like us and keep up to date with the FIRE community online then I’m sure you’ve had this thought or conversation amongst your household many many times.
“how much is enough?”
Also, if you’re like us… you likely are made up of 2 different ideas of what enough is. Getting these thoughts on the same page is a large part of the battle if you want to progress towards an early retirement or any form of lifestyle that is outside of the box.
If you’ve been following along our journey for the past year then you’ll be able to guess that our household income is above the average in Canada. We’re by no means “rich” or rolling in money, but we are comfortable and we are fortunate enough to be able to afford our living situation and put a decent sum of money aside each month for future us to use and enjoy.
So if you make a good income, surely you’ll have “enough” to retire much earlier than the average household right? Well that’s the problem. We have a hard time with knowing exactly when that “enough” has been reached.
It’s not a matter of whether or not we’re going to reach our goals, it’s more a matter of what exactly the goal should be and how to shift your mindset to not needing millions of dollars in a nest egg to fall back on before you even take the smallest of chances in your professional and personal lives.
The other day we posted on our instagram (@FindependenceCanada) about taking a “gap year” from your career. To those of us in Canada and/or North America in general I’ve rarely heard the term gap year for the traditional use between high school and university and even more rare have I heard it used by grown professionals wanting to take a break from their work.
The main conclusion I can come up with is that we fall into two categories:
Category 1 is the group that make a low-mid-high income but also spend right about what they earn, so they are never able to build up any form of buffer or retirement nest egg and are never able to get the breathing room required to pursue other passions or activities outside of their work.
The second category are those who live on much less than they make likely with a savings rate of close to 50% if not higher in some cases. These people are saving in their retirement accounts, have cash in the bank, maybe are well on their way to having a home paid off etc. yet these people also have no real freedom. – Sure this group will likely sleep better at night knowing they have an emergency fund and cash in the bank should things go wrong, but this group still won’t do things like the gap year we were talking about earlier, they likely won’t ever quit their jobs even if they aren’t happy there. They stay the course and plug away until retirement just like the group in the first scenario do, the only difference is they have a larger nest egg and can afford a couple extra trips etc.
This group still likely doesn’t feel like they have “enough”.
SOME SIMULATIONS
I want to use a few scenarios here with a future value calculator to illustrate my thoughts.
First off, let’s assume that both Mrs. FIC and I continue working where we’re currently located, keep collected a small raise each year, and continue to live a fairly frugal lifestyle.
Now this is roughly the amount of months until we’d reach 65 years old, or traditional retirement age here in Canada.
.6% interest per month equates to a return of around 7.2% per year which is decent but not really excessive when you see what the average rate of return is in a simple index like the Dow or S&P500.
$5,000 is a lofty goal but reachable to be put away per month if we factor in both of our employer pension funds as well as work savings and our own savings per month.
I think we can all agree that $11 million dollars is “enough” to retire on but at what point did that become enough? And was it worth working as hard as we do, living in Northern Canada away from our friends and family just to sock money away and hope that we have long happy lives past the age of 65?
This is better, this puts us right around 51 years old. $3.6 million dollars again seems like “enough” to us. But again – this is putting in another 20 years of our lives in jobs we enjoy, but that are very taxing on our bodies and mental health when you factor in things like working night shifts and dealing with the seclusion from friends and families.
OUR GOAL
Here’s a look at 5 years from this point in time, if we were able to keep our discipline and keep hitting our savings goals month after month:
So if the average household would be ecstatic with the thought of accumulating almost $700k in liquid assets why then does this number scream “not enough!” to us? Is it because we have a point of reference of what “could be” in the above simulations?
This number is our goal for 5 years from now, and by all accounts should be enough for us to then pull the plug and look elsewhere but even five years out I’m sitting here going “nope, nope, definitely not”. And the humorous part to this is that we personally know people who are well over this type of number and are closing in on the numbers in the first two examples who still aren’t even dreaming of backing out yet – and it’s not because they absolutely love their jobs either.. it’s because its “not enough”.
So how are we thinking of getting rid of this scarcity mindset?
Well, we’re brainstorming together to come up with ways to detach ourselves from the need to accumulate mass amounts of money before then unlocking the ability to live the lives we want.
The first thought that was inspired more from the culture in Europe where Mrs. FIC is from is to ask work for an unpaid leave and to have ourselves a gap year before baby FIC. is too old and settled into school but also old enough that we don’t need to carry him all over the place.
The hope with this is that we could itch the travel bug more thoroughly than we currently can with a week here or a week there, it would give us a chance to truly put our careers on the back burner and focus on just our family and adventuring for a change. Maybe after a good reset it would re-invigorate us to continue on our way and continue to stock money away planning for our futures.
The second thought is the idea of “coasting FIRE” for those unfamiliar with the term of “coast FIRE” its basically the thought that once you’ve got enough saved up where it will continue to compound and grow until retirement all you have to do in the meantime is make money to pay for your current living costs and maybe a little extra for your travelling etc.
This idea is really high up their on our lists and it sounds absolutely great! Maybe by us having a gap year we’d be able to convince ourselves that we are capable of doing something like this, or at least that it’s achievable sooner than 20 years from now at least.
So many options, so many variables, so many thought provoking ideas all from the one thought: “what is enough?”.
Let us know your thoughts on what enough is for you below in the comments or over on our instagram @FindependenceCanada. Also subscribe to our blog and follow along with our journey to see where we end up with all of this. I’d love to be able to fast forward a few years from now and see what our goals and progress are.
Thanks for stopping by,
FIC.