“Hello Vancouver” by Trey Ratcliff is licensed under CC BY-NC-SA 2.0
It’s time for another FIRE life update
It’s been four months since my last FIRE life update, so I thought it was about time for another one. Here’s what my family and I have been up to…
One year of FIRE 🔥
On November 18, 2022, my husband M and I celebrated one year of FIRE! To mark the occasion, I answered reader questions via a four-part AMA series:
I had a great time answering the many fantastic questions I received. (They were all so good, and I wanted to reply in detail, so it took me three months to finish the series!) 😅
A sneak peek
In case you haven’t checked out the series yet, here’s a small sample of the questions that were asked:
- How is retired life different than you thought it would be?
- What do you know now after one year of retirement that you wish you knew a year ago?
- How do you pay yourself?
- What’s your withdrawal strategy? Will it shift over time?
- From a mental health perspective, how has your first year been?
- What have you decided for extended medical insurance since you FIREd?
- How do you factor in the interest rate on the leverage when you apply the 4% rule?
- Will you revisit your health insurance decision?
- Do you find that not having coverage is making you think twice about the spending?
I hope the series is interesting and/or helpful. Feel free to continue leaving questions and comments on any of the posts—I’m always happy to reply.
New FIRE friends
Over the last few months, M and I have had the pleasure of meeting some new FIRE friends in person:
- Gabby and Ed.
- Chris and Geralyn.
- Amy.*
As the weather improves, we look forward to meeting more Vancouver-based FIRE people. It’s been a while since there’s been a Vancouver FI meetup, so maybe I (or someone else) in ChooseFI Vancouver can plan a gathering soon?
*My funny story with Amy
By the way, there’s a funny story behind how I met Amy… two years ago, she emailed to ask if I was the sister of [my sister’s name]. She was correct, but I was puzzled—how had she figured out who my sister was?!
I asked Amy, and this is what she said:
“The first time I heard your podcast, I thought to myself, did [blank] start a podcast? But then I heard your cohost say your name and you are not a teacher. I thought to myself, she sounds so much like [blank], can’t believe it’s not her. Then I read on your blog or Instagram, that you have a twin and I remembered [blank] had a twin so I was pretty sure you are her sister. Then when I saw your picture when you came out in the magazine article, I was 99% sure.”
This is the most random way I’ve ever been recognized in my life, LOL. I can’t imagine how confused poor Amy must’ve been—my sister and I are identical twins, so our voices are exactly the same!
I’m glad she took the chance and reached out, and that I finally got to meet her a few weeks ago. Hopefully, we’ll get to see more of each other in the not-too-distant future. 😀
First out-of-pocket dental and eye exams
In November, we all had our dental cleanings and the boys and I got our eye exams*. Now that M’s retired, we no longer have insurance, so this was the first time we’ve had to pay for these expenses out of pocket. (They weren’t cheap—almost $1,000 altogether. 😫)
However, I felt a bit better about our dental costs after messaging my friend Court. For one thing, she told me how much more expensive dental care is in Alberta. (It’s a weird quirk of their system.)
But Court also suggested that I look up the dental fee guide for BC to see if our dentists were charging a fair rate. I immediately did this and discovered that both of our dentists were charging exactly what the fee guide recommends.
This puts my mind at ease and makes paying for our dental bills a little less painful. I’m also cognizant of the fact that dentistry is an expensive profession to be in (and get into). Therefore, I don’t begrudge our dentists for charging what they do.
Even so, we’ll try to keep costs reasonable by sticking to once-yearly cleanings (instead of going twice a year like we did when we had coverage). To maintain our oral health between visits, we’ll continue to:
- Be diligent with twice-daily toothbrushing.
- Use our electric toothbrushes (with floss-action heads).
- Floss and use our Waterpiks regularly.
At our recent cleanings, all four of us were given clean bills of health, so I think we’re doing okay! 😁 Hopefully, our daily dental routines will continue to keep our teeth and gums healthy. (And keep high dental bills at bay.)
*M continues to see his ophthalmologist regularly to monitor his eye condition. (I shared a little bit about this in my post about why he bought a 1965 Mustang.)
Fortunately, M’s eye exams are covered by our public healthcare system and the kids get free eye exams until they’re 18. Therefore, it was only my exam that we had to pay for.
More volunteering
M and I have continued to enjoy our various volunteering commitments, which include:
- Helping in my sister’s school library (M and me).
- Driving for a local charity that benefits homeless people (M).
- Helping students in an enrichment program at a local high school (M).
- Presenting to our friend’s Grade 6 class about working in the videogame industry (M).
I guess I could also count my admin duties for ChooseFI Canada and ChooseFI Vancouver as volunteering… but those duties feel more like a fun hobby to me.
Both M and I have very much enjoyed our volunteering and feel comfortable with the amount we’ve taken on. I hope to volunteer even more as our kids get older and I have more time to give back.
How to save money on groceries
January was all about how to save money on groceries. I not only wrote an epic post about it but was also interviewed twice by the lovely Rubina Ahmed-Haq to share my best tips:
- CBC Radio—Food inflation hits a record high
- For What It’s Worth—Food Spending Hacks With Chrissy Kay
In addition, I’ve enjoyed upping my PC Optimum points game, thanks to the excellent AMA about PC Optimum points in the Canadian Ladies Money Club Facebook group.
Last year, we earned about $300 in Optimum points with little to no strategizing. This year, we’ve already earned close to $150—and we’re only two months in. It’s become a fun and lucrative hobby, and I look forward to seeing how much more we can earn in 2023.
Note: if you’re interested in learning more about the PC Optimum program, these two Facebook groups are great resources:
Keeping calm and carrying on
Our investments reached their lowest point yet in December, then recovered a little bit in January and February. As much as I hate to say it, I think this sideways market will be sticking around for a while. (Sigh!)
On top of that, the interest rate on our mortgage/investment loan has increased significantly… and our payments have risen right along with the rate. 😣 Yes, it still seems as if we retired at the worst possible time!
Despite the continuing bad news, we’re still sleeping well and have zero regrets about retiring when we did. This is due in large part to our team of CFPs. Thanks to them, we know our numbers and retirement plan are solid and that we’ll make it past these bumps in the road.
Related: In “How We’re Staying Calm in Turbulent Times”, I discuss the many contingencies we’ve built into our retirement plan
More about our FIRE journey
To learn more about our FIRE journey and how we planned for early retirement, check out the posts below:
Our withdrawal rate for 2022
We may be confident in our numbers and retirement plan, but we still have to be mindful with our spending. For us, that’s meant delaying large, discretionary purchases until our investments recover.
In 2022, this tactic worked as we managed to keep our withdrawal rate at an ultra-safe 1.86%! However, 2022 was an anomaly thanks to some one-off sources of residual income. (No, it wasn’t from ‘working’—for details, see the section titled, 5. Income, in Did We Retire at the Worst Possible Time?)
In 2023, we won’t have nearly as much income coming in, so our withdrawal rate will be higher. However, we expect that it’ll still be under 4%… based on today’s portfolio value, we’ll withdraw 3.3–3.6% for 2023.
That’s quite a bit higher than 2022. But it’s still a very safe withdrawal rate, so we feel good about that. 👍
Related: I discuss our decumulation strategy in “One Year of FIRE: Ask Me (Almost) Anything—Part 1”
Getting accurate
I wanted to be extra accurate when calculating our withdrawal rate, so I decided to calculate it monthly instead of over the whole year. In other words—each month, I divided our withdrawals by our ending portfolio balance. At the end of the year, I added up all the monthly percentages to get our 2022 withdrawal rate.
If I do it the quick way, by adding up all our withdrawals for the year and dividing that by our portfolio’s ending balance for 2022, our withdrawal rate comes out to 1.92% (versus 1.82% when calculated monthly). That’s probably close enough, but I prefer the monthly method as it’s more accurate.
I could get even more accurate by doing the math using our balance on the exact day of our withdrawals. But our withdrawals come out of our accounts on the 25th of each month—that’s close enough to the end of the month that I think monthly calculations are a good compromise.
Note: In this period of high interest rates, our withdrawals for lifestyle spending are calculated separately from our withdrawals for investment loan payments. For more details, see the section titled, How the 4% rule works with leverage in Part 3 of my One Year of FIRE AMA.
A TFSA first
Since we didn’t have much income in 2022, there wasn’t any excess cash to send to our TFSAs on January 1. So, for the first time ever, our TFSA contributions were made with in-kind transfers from other accounts.
To decide which accounts the contributions would come from (RRIFs or non-registered), we asked our financial planning team to advise us. Since they do our taxes, they’re able to see our full financial picture and do the calculations accurately.
It was decided that our non-registered accounts would be the best accounts to transfer from, so that’s what we did. (Or, really, they did for us!) We’ll owe a little bit of tax on the capital gains, but most or all of it should be offset by our investment loan interest deduction.
Transferring from our non-registered accounts to our TFSAs also helps to decrease our tax liabilities in the future. Since we’re currently in a low tax bracket, we’ll pay less tax on our capital gains now than if we wait until later.
When our RRIF minimums get larger and we start receiving CPP and OAS, it’ll be much harder to minimize taxes. So, we’re taking full advantage of the next 15–20 years to shift our money around tax-efficiently. (Yet another benefit of FIRE! 🔥)
Share your thoughts
How has 2023 been for you so far? If you’re still in the accumulation phase, have you enjoyed buying stocks on sale? What about my fellow retirees—how have you been dealing with this sideways market?
As always, I love hearing from you, so leave a comment to share your thoughts!
Support this blog
If you liked this article and want more content like this, please support this blog by sharing it! Not only does it help spread the FIRE, but it lets me know what content you find most useful. (Which encourages me to write more of it!)
You can also support this blog by visiting my recommendations page and purchasing through the links. Note that not every link is an affiliate link—some are just favourite products and services that I want to share. 🙂
As always, however you show your support for this blog—THANK YOU!
18 Comments
Christopher Mercanti
February 22, 2023 at 5:17 amThanks for sharing your story as you and your family navigate your journey, Chrissy. Having just left the paid workforce last September, I’m keenly interested in how other people are navigating their safe withdrawal strategies amid current market conditions. Cheers!
Chrissy
February 23, 2023 at 7:32 pmHi Christopher—it’s always nice to hear from you. I’m glad my updates help to shed some light on retirement/withdrawals. I hope retirement has been good for you so far!
Julia
February 22, 2023 at 1:41 pmThanks for the update Chrissy! We started the SM around the same time you reached FIRE so we’re with you on those interest rate yikes… In solidarity with sticking with the long term plan 😉
Chrissy
February 23, 2023 at 7:36 pmHi Julia—I would say I’m glad we’re not alone in our suffering with the rate hikes. But really, I wish none of us had to face this!
Yes, looking ahead at the long term is what we’ll continue to do. That helps to keep me calm and sane. 🙂
Finn Fionist
February 22, 2023 at 6:51 pmgreat post. was nice to read about updates in your family. hopefully for all of us the interest rates will stop going up soon
Chrissy
February 23, 2023 at 7:38 pmHi Finn—thanks for checking out my post. I guess interest rates are up all over the world. There’s no hiding from them!
Court @ Modern FImily
February 23, 2023 at 12:11 amLove the updates Chrissy! All in all it’s amazing to see your withdrawal rate remain below 4% even in these times. I’m sure that’s definitely helping with the sleep at night factor. As you know, we retired last year and are keeping our withdrawal rate under 4% which definitely helps us mentally. You lucky BCers and your “low” dental costs! Thanks for providing all the details, it’s appreciated!
Chrissy
February 23, 2023 at 7:44 pmHi Court—I really liked our sub-2% withdrawal rate last year! It would be nice if we could have kept it that low again this year but we can’t have it all, right? 😁
Thanks again for pointing me in the right direction so I could learn more about our dental expenses. It really helped me to feel better about the big bills!
Gabby
February 23, 2023 at 7:46 amLove the updates and the special mention, Chrissy! 🙂
Thank goodness this blog exists – a constant reminder that it is possible to retire early in Vancouver!
And thanks for all the fb group suggestions – joined!
Chrissy
February 23, 2023 at 7:47 pmHi Gabby—thanks for the kind words. I hope we can get together again soon!
Enjoy learning more about PC Optimum points! Those groups are great (but be warned—they’re not quite as friendly as our ChooseFI groups).
Moe (Moementum Finance)
February 25, 2023 at 1:43 pmThanks for this wonderful update, Chrissy! Your withdrawal rate is quite low, wow. And I must say you’re so diligent to calculate it even in monthly and daily (based on exact day of withdrawal). 😃 As for my wife and I, we are still in our accumulation years. 2023 has definitely been off to a better start than 2022 for the stock market. We’re also mainly pursuing investing in index fund as our path to FI. Question for you: I may have missed it before, but why did you choose to switch to get help from Financial Planners now that you’ve retired, than just continuing to manage your accounts/portfolio yourself? …. Thanks again for this post. Keep it up, Chrissy!
Chrissy
February 26, 2023 at 8:46 pmHi Moe—ha ha, you say I’m diligent, but maybe it’s more that I’m obsessive and a bit nerdy! It’s totally unnecessary to calculate our withdrawals rate the way I do, but I enjoy it. I’m very envious of you, your wife, and others who are in your accumulation years. My husband and I had very few buying opportunities like this when we were accumulating. 😢
I love your question! Here’s my quick reply: initially, we started working with our CFP when we decided to start leveraged investing. There are too many things that could go wrong with such a strategy, and I didn’t feel confident with implementing it myself.
But since then, we’ve realized how much value a skilled and experienced financial planner can bring to their clients. We are, without a doubt, wealthier and reached FIRE earlier because of the planning and advice we received from our CFP and his team.
There’s a lot more to say on this topic… perhaps enough to warrant its own blog post! I’ll keep you posted. 😉
Moe (Moementum Finance)
February 26, 2023 at 9:00 pmThanks for sharing how you first started working with your CFP. I definitely look forward to a separate blog post on that one day. 😎 We are using Smith Manoeuvre on our principle residence but I’m not if we should consider it as a leveraged investing. When you refer to leveraged investing, were referring to margin investing?
Chrissy
March 2, 2023 at 8:22 pmHi Moe—yes, the Smith Manoeuvre is a form of leveraged investing! Any type of investing that uses borrowed money is leveraged investing.
Our strategy works exactly the same as the Smith Manoeuvre, but I don’t refer to it as the Smith Manoeuvre because we were mortgage-free when we started our leveraged investing. Therefore, we’re not ‘manoeuvring’ non-deductible debt to be deductible. Instead, all of our debt is deductible. I hope that all makes sense!
As for margin loans, we don’t use them because we don’t want to deal with margin calls. I’m pretty risk tolerant, but that’s too risky for my liking!
Maria @ Handful of Thoughts
February 28, 2023 at 6:09 amAnother great update Chrissy. Like you we have plans to move money between accounts before “traditional retirement” age to be as tax efficient as we can. RRSPs can be a great tool but the tax implications of investing and withdrawing need to be considered for optimal tax management. It’s a nice benefit that we can withdraw from a RRSP before traditional retirement age without penalty.
Chrissy
March 2, 2023 at 8:29 pmHi Maria—it’s a smart move to take advantage of your early retirement years (pre-OAS, CPP, RRIF minimums) to shift money in a tax-optimized way. I really appreciate the flexibility we have compared to our parents, who have no such wiggle room left. Another win for FIRE!
Dividend Daddy
March 25, 2023 at 12:13 pmGreat read. You’re doing great and the withdrawal rate is very safe (even at the higher 2023) rate so you should feel good. My plan is to only spend dividends for a period of time (so I can sleep better not spending principal).
Chrissy
March 25, 2023 at 8:31 pmHi Dividend Daddy—thanks for the words of encouragement! I’m hopeful that the markets will recover this year (but I’m not not holding my breath)!
I can absolutely see the psychological benefit to only spending dividends, especially in the early years of retirement, with market conditions like we’re facing now.
It’s so important for each of us to know ourselves and go with the approach that works best for our situation (and psychology). 👍