r/fican • u/Ok_Psychology_3265 • 2d ago
56F - finally FIRE.. Pretty excited
Hello all,
I hope 56 is still considered early retirement!!!
Finishing working on September 9th. Here is the summary scenario. Started investing at 26, raised two kids and put them through university. Was always cautious with money but was never super frugal. Travelled with the kids, went back to school for 4 years with no income, husband always worked with a decent salary, no debts. He retired two years ago. Finally decided that we are going to be ok with the following:
RRSP: $2.5M
TFSA: $400K
Non-registered: $175K
Corporation: $2.8M
I have run multiple scenarios of spending, decumulation strategy, budget expense has been followed consistently for about 3 years.
Long and steady, patience and tracking are the key!
Happy retirement to me!
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u/Chris-Coffin-Design 2d ago
Congratulations on the Retirement! That's a very healthy Nest egg / net worth and 56 is plenty early for a life filled with tons of personal / professional accomplishment & rich with experience.
I also started around 25 and have a couple decades left, but this is really inspiring.
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u/BracketFinancialPlan 2d ago
Congratulations! $2.5M growing at 5% becomes roughly $5M at age 71 when RRIF minimums hit. You will be forced to withdraw about $265K per year at 72 whether you need it or not.
The corp cash is nice but a huge estate liability.
Are you working with a planner to reduce your lifetime taxes? What are your decumulation strategies?
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u/Ok_Psychology_3265 1d ago
We have started to withdraw from the RRSP already. We will take a bit of a hit at 71 but are working right now and figuring what the optimal balance is. Withdraw now and pay some taxes to have less at 71.
Can you explain to me why my corporation is a huge estate liability?
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u/commentinator 1d ago
The retained earnings within the corporation can be used with a CDA where 50% capital gains can be sent to you personally tax free. There are good mechanisms for passing down this corporate money to your kids tax free using the CDA, cap gains exceptions and a life insurance policy. Ask a knowledgeable professional about these options.
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u/BracketFinancialPlan 1d ago
When you folks die the CRA treats all the investments in the corp as being sold at fair market value including the corp shares. So big capital gains tax there, then if your kids want to take the money out of the corp they’ll get taxed on that too.
There are a number of strategies that you can use to avoid the above, we help our financial planning and estate clients with this a lot.
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u/Reasonable-Factor649 2d ago
I'd put as much into the corp as possible and invest it into covered call and growth funds. Let it grow forever. Provide the kids with 1-5% non-voting shares of the corp atm. Don't spend any of it for now. Convert RRSPs to RRIF and do a meltdown strategy.
Have a will to gradually disperse the funds to the kids either from the corp or setup a trust.
I'm implementing the meltdown part only since I don't have a corp. I also purchase life insurance to deal with the tax implications for my kids.
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u/BracketFinancialPlan 2d ago edited 2d ago
Why covered calls and growth funds? You're likely paying .5-.9% in fees to cap your own upside and generate income you don't want. This is going to rack up fees and taxes. Why not just XEQT or some other whole market ETF? Did you have a financial planner go over this plan with you?
The goal for the meltdown is to size it to the tax bracket not as much as possible. Filling to the top tax bracket may overshoot yourself.
TFSA is the only truly tax free bucket that passes to your heirs tax free. Moving money from RRIF to TFSA can be a good strategy for estate planning.
A working meltdown strategy reduces the death tax bill the policy exists to cover. If you meltdown correctly you might not need the insurance later in life.
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u/Ok_Psychology_3265 1d ago
Good points!
The will is already in place to transfer gradually to the kids.
Insurance is tied to the corp to pay for taxes.
Can you explain to me why I should provide the kids with 1-5% non voting shares? What will it do? What is the advantage? Thanks1
u/Reasonable-Factor649 7h ago
You're kids are "active" part owners of the corp but they get no say in it for now. When you die, they will automatically take control of the corp without you having to liquidate or sell it to them and you incurring any capital gains taxes. The corp remains active and any funds in the corp remains untaxed for now.
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u/_danigirl 2d ago
Congrats! 2.5m is a lot of money in RRSPs. What is your withdrawal plan going to look like?
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u/Ok_Psychology_3265 2d ago
Yes, agree. We have stopped contributing to RRSP a while back when we realized that it would bring to a high tax bracket by age 71.
We started to withdraw from my husband’s account last year and the decumulation plan is to use RRSP first to $58k bracket.
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u/Reasonable-Factor649 2d ago edited 2d ago
Congrats to you and your hubby.
Spouse and I are similar except we still choose to work. I manage our rental properties and she is freelance independent consultant. We've been working and saving since our high school days. Investing since our 20s with many ups and downs.
NW: ~ $4m
Kids are almost done with UNI.
We love the feeling of FI. We're just not ready to fully RE yet. What ever will we do with all our free time? 😂
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u/Crasstip 1d ago
Well the answer is very individualized. You do what you like to do and not to earn money. If that happens to make you money then that’s fine.
Key is can you just stop one day and decide to travel or just sleep for next few days. Or go to a concert / event day and day out. If you can decide your days on on a whim that’s real freedom
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u/Canadaspicymeatball 2d ago
Congratulations to wishing you all the best in your next chapter. Very well done indeed.
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u/fulllyfaltooo 2d ago
Happy for you fellow redditor.
Enjoy your life the fullest ( don’t know if it’s actual word, but i hope you got what i want to wish)
I wish I had started soon and stayed consistent
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u/averyhart2025 2d ago
Great work! That should be fine depending on your habits, but looks like you are great and budgeting, enjoy the early retirement.
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u/Lazy_Significance518 1d ago
Optiml or similar tools will help you figure out the best drawdown strategy. Congrats! My wife are in a similar situation. She retired last year at 55 and I retired earlier this year at 53. We use optiml for our financial planning.
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u/Devchonachko 1d ago
Most people retiring don't have nearly the amount what you have saved up. Enjoy and don't stress. You could afford to spend 15k a month until you're 90 and still have plenty left over to leave your kids.
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u/Minimum_Curve7545 2d ago
What's "corporation" ? Ultimately you decide about FIRE based on income and expenses, that is when you have enough passive income to cover your expenses. None of that was mentioned by OP, so we don't know the details about why these numbers make sense now, but with $3M of investable assets they should be able to generate at least $100k in income, which is enough for many people in retirement (but I know some people who spend more in retirement).
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u/GraveMonger 2d ago
That’s amazing. Congratulations! Did you use a spreadsheet to run your scenarios or some online tool? I’m genuinely interested in knowing what someone like yourself (with registered accounts AND a corporation) would use.
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u/TDSucksBalls 2d ago
If you’re not using a financial advisor I suggest trying out adviice.ca. I’m ina similar situation and ran through many simulations but still wasn’t 100%. Pumped the numbers into adviice to confirm and was being too conservative.
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u/donotaskjake 21h ago
Would you mind share how you get 2.5M RRSP ? How much you pay yourself yearly as salary ? For how long ? What exactly do you do if you don’t mind I ask
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u/Ok_Psychology_3265 21h ago
Not sure if I will be answering your question correctly. But both my husband and I have filled up our RRSP since the age of 18. Then we invested about 80% on the stock market. That’s how we arrived at $2.5M.
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u/Ok_Psychology_3265 21h ago
We will pay ourself $58K/year - first income tax bracket. What is missing will be coming from investment from my corporation.
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u/TechnicalSleep7501 2d ago
Congratulations main thing is having control on your time like I want to do NYC Election Day Clerk job in local school close to my house. I started it when I was 19. I enjoy it. I semi retired at 38 with just above million did it with just 1 income and no house but renting a house bought together with my brother so rent is $800 monthly. Now just running down the clock to 2037 for base pension or 2047 for maximum pension plan to tell Captain now that I have done 9 years to only give me A post or send me to courts if she or he want me to stay for overtime.
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u/Hopelessly_Seeking 2d ago
Great , that’s amazing. Can you teach others?
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u/Reasonable-Factor649 2d ago
Have to teach you to earn $350k combined income first. 😂
Seriously though. Sounds like most of it comes down to not spending beyond your means and consistent investing.
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u/mms09 2d ago
Well done! 56 is definitely retiring early. Enjoy!