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One Year of FIRE: Ask Me (Almost) Anything—Part 2

big beach ucluelet 1

Little Beach in Ucluelet, which we visited during our first year of FIRE

Part 2 of my FIRE AMA

On November 18, 2022, my husband and I celebrated our first year of FIRE (woo hoo)! 🔥 To mark the occasion, I asked all of you to send me your questions… and did you ever! I received 41 incredible questions, and am answering them in this AMA (Ask Me Anything).

A couple of weeks ago, I published Part 1, which covered about half of the questions. I’d planned to reply to the other half here in Part 2, but I’ve again had to split half of them off into another post! 

These questions were just too good to not spend a lot of time answering in detail, so my replies are long. That meant I reached a comfortable word count of about 6,000 halfway through this second set of questions.

That’s about 20 minutes of reading, which is plenty! So as not to put you to sleep, I decided to save the remaining questions for a third and final instalment in this series, which you can jump to here: One Year of FIRE: Ask Me (Almost) Anything—Part 3

And for those who missed it, here’s the link to Part 1: One Year of FIRE: Ask Me (Almost) Anything—Part 1. (I ended up creating one more post, One Year of FIRE: Ask Me (Almost) Anything—Part 4 to feature some excellent new questions I received.)

With that, let’s get started with Part 2!


  • The questions have been organized in the order that they came in.
  • Some readers included additional info with their question(s). This info appears in italics immediately after the question.
  • The (Almost) in Ask Me (Almost) Anything is there to safeguard my family’s privacy—I’ll only share info they’re okay with sharing.

Part 2 questions

These are the questions I answered in this post (scroll to the end for the questions I answered in Parts 1 and 3):

  1. How do you pay yourself? 
  2. Do you live off of dividends or cash in stocks or GICs? 
  3. Do you pay yourself monthly?
  4. Why do you believe some popular bloggers hate the 4% rule so much? 
  5. What’s your withdrawal strategy? Will it shift over time? 
  6. What would be the biggest pro to having both of you at home all the time? 
  7. What’s the biggest con? 
  8. Do you find that your to-do list takes even longer to complete now that you have all the time to “procrastinate”?
  9. What are your “big goals” to try and accomplish during these first ~5–10 years while you’re retired years before your peers?
  10. How is your income working for your family now that you have more free time? 
  11. When you mention withdrawing 4% of your account, plus cost of living, does this mean that the 4% is based on the current account balance, like at the beginning of the year, or is it based on the initial account balance? 
  12. How is your nest egg invested? 

One Year of FIRE: Ask Me (Almost) Anything—Part 2

Alright, now that we’ve got the preamble out of the way, let’s get to the main attraction—your questions! 


This lovely lady reached out to me several years ago with the sweetest, most thoughtful messages. She and her husband reached FIRE around the same time as us and are living a fabulous FIRE life. (Congrats to you, my friend!) Here are her questions:

Richnesswithinn: Do you live off of dividends or cash in stocks or GICs? 

Chrissy: Great question! Here’s a brief overview, then I’ll go into more detail below that:

  • We’re fully living off of our portfolio, which is 100% stocks.
  • We try to only hold about two months of cash.
  • We sell some investments to make our withdrawals each month. 
  • Those withdrawals come to our joint bank account as cash deposits.
  • We use this cash to cover our living expenses. (Which means it’s mostly used to pay our credit cards—we pay for everything we can with our credit cards so we can earn cashback.)

For many reasons, including the ongoing tax bleed and lack of diversification, we try to avoid dividends as much as possible. Instead, we’re total return investors, which means we focus on overall growth in our investments.

If you’d like to learn more, here are some of my favourite resources, which compare total return and dividend investing:

We also hold minimal cash and $0 in GICs and bonds. That’s because these financial instruments are a major drag on returns. So… that leaves only stocks, which we’re 100% allocated to. (Or really, closer to 200% if you consider the fact that about half of our portfolio is leveraged!) 

I realize that this is very aggressive and not at all appropriate for 99% of retirees. However, I’m a maximizer, so this is what allows me to sleep at night! I take a lot of comfort in knowing that our money is working as hard as it can, earning as high of a return as possible (without speculative investments). 

I hope that all makes sense! Let me know if anything is unclear.

Richnesswithinn: How do you pay yourself? 

For example, knowing approximately what your bills are or get your credit card bill and say… ok that is 10 shares of Apple.

Chrissy: There’s not enough info about the minutiae of retirement withdrawals, so I’m happy to share how we handle this. To pay ourselves, we make regular, scheduled withdrawals from our investments via an SWP (systematic withdrawal plan).

To figure out how much these withdrawals should be, I calculated how much we’d need to cover our spending for the year. (This was easy to do as I’ve been tracking our spending in YNAB since 2015.) I then took that annual total and divided it into a monthly amount.

I gave this amount to our financial planner and his team, then they asked if this was what we needed pre or post-tax. I told them post-tax, then they did the math to check if it would fall within our RRIF minimum withdrawal requirements. (If it’s within RRIF minimum amounts, no withholding tax will be deducted.)

They then filled out the forms for us and sent them off to schedule our withdrawals. Each month, some of our investments are sold, then the cash is sent to our joint bank account

Note: I don’t know exactly what happens on the backend as far as deciding which investments to sell. (We’re invested in institutional-class mutual funds, and hold 4–5 funds in each of our RRIFs.) My assumption is there’s a predetermined directive that our investment manager uses to automate the trades. 

I suppose one could also pay themselves in the way you’ve suggested, basing it on specific bills and investments. It certainly sounds like a fun way to do it! However, I’m guessing this would get old pretty quickly as it also sounds like a lot of work!

If we weren’t working with an expert team of CFPs and instead DIY investing, this is probably what I’d do: I’d start by calculating our total annual spend required, then work out a monthly amount we’d need to sell/withdraw.

Then, each month, I’d sell whichever ETF(s) would help to bring our portfolio back to the correct asset allocation. I’m sure there’s probably a way to automate this—perhaps using Passiv. (Note: that’s a referral link.)

However, I’m not sure how this works if you’re trying to stay within RRIF minimums like we are. This could require a more formal setup. I would think most brokerages have systems for this and staff who can provide some direction.

For more details about our withdrawal strategy, see Part 1 of this AMA. In reply to reader Sheryl’s question, I share the order of accounts we’re withdrawing from, how we’re minimizing taxes and more.

Richnesswithinn: Do you pay yourself monthly? 

Chrissy: Yes, we do! What that looks like is one withdrawal each from my Spousal RRIF and M’s individual RRIF. (Both withdrawals are the same amount, on the same predetermined date.) These withdrawals are then automatically sent from our RRIFs to our joint bank account.

Our withdrawals come monthly, but we could’ve timed them however we wanted. For example, we could’ve mimicked a bi-weekly paycheque by scheduling one withdrawal on the first of the month and a second on the 15th.

However, we decided to keep things simple by scheduling both withdrawals to happen monthly on the same day. We’ve been receiving monthly payments from our investments since August, and it’s worked well for us so far.


C first reached out to me as a listener of my former podcast, Explore FI Canada, and has since become a reader of my blog. It’s always nice to see an email from him in my inbox. 🙂 He sent an intriguing question:

C: Why do you believe some popular bloggers hate the 4% rule so much? 

Personally, I see it as a guide, which I believe most people do. But some of the bloggers almost always try to put it down. 

Chrissy: Ooh, the first controversial question in my AMA—I like it! I’m not an expert and I can’t profess to know exactly what these bloggers are thinking, but I’ll share some of my theories below:

  • They’re actually right, and the rest of us are wrong about the 4% rule.
  • They used different assumptions and methodologies to test the 4% rule—resulting in more pessimistic findings. 
  • They’re extra-cautious and prefer a lower withdrawal rate themselves.
  • They want to err on the side of caution so as not to risk harming readers who follow their recommendations.
  • They’re not considering the nuanced factors and assumptions that go into the 4% rule—any of which could vastly change the end results (e.g. percentage allocation to equities).
  • They’re not taking into account the many ways retirees can be flexible with their withdrawals (thereby allowing them to safely use the 4% withdrawal rate).

I could be totally off-base with these theories, but those are my best guesses. As for me, I suppose I should throw my hat in the ring and share my thoughts on the 4% rule. Here they are:

Unlike the bloggers you mention, I don’t hate the 4% rule. Conversely, I have a lot of faith in it and so does our team of financial planners. Like you, I see the 4% rule as a flexible guide—not a strict and static withdrawal strategy. 

I didn’t come to this conclusion quickly or easily. Instead, my faith in the 4% rule is based on 8+ years of learning about it and detailed discussions with our planning team. It’s also based on how we’re invested (a high percentage of equities, which makes the 4% rule safer). 

For many reasons, I consider 4% to be a safe and conservative withdrawal rate. Even so, M and I prefer to have a buffer. Therefore, we’ll try to keep 4% as a worst-case withdrawal rate and aim for a percentage slightly lower than that.

While I know 4% is safe and we don’t need to withdraw less, doing so gives us added psychological comfort. (Just as some people derive psychological comfort from holding multiple years of cash.) 

What about you, C (and everyone else)? I would love to hear your theories on why some bloggers dislike the 4% rule so much. Leave a comment to share your thoughts. Also, let us know the withdrawal rate you’re aiming for and why. I’m very interested!

Note: I go into even more detail with the 4% rule in my reply to Anonymous later in this post.


Anyone who’s followed me for a while knows that Court from Modern FImily is one of my FIRE besties. She and I operate on very similar wavelengths, and are constantly messaging and bouncing ideas off each other. Of course, she had some excellent questions for me—here they are:

Court: What’s your withdrawal strategy? Will it shift over time? 

Chrissy: I shared the details behind our withdrawal strategy in my reply to Sheryl’s question in Part 1, so jump back there to read all about it. But the second part of your question is a fantastic talking point, so I’ll focus on that in this reply.

Yes, our withdrawal strategy will for sure shift over time. Many factors affect our long and short-term calculations, including:

  • How much we spend per year.
  • Large, one-off expenses.
  • Any income we earn or receive.
  • How much we receive in government benefits (e.g. OAS, CPP).
  • Which tax bracket this income pushes us into.
  • Which tax credits and deductions are available (or not).
  • Inflation.
  • The interest rate on our investment loan.
  • Whether we decide to downsize or not. (And if we do, whether we buy or rent afterwards.)
  • How much we can sell our house for.
  • Our longevity.
  • If one of us passes away early.
  • If we or our kids become disabled or chronically ill.
  • How much we have left in our RRIFs when the minimum withdrawals are higher.

I’m likely forgetting a few more factors, but you probably get the picture. As you can see, there’s a myriad of factors that’ll affect our withdrawal strategy. To ensure we stay on track, we’ll revisit our plans annually (at minimum) plus anytime something changes.

For us, this means meeting regularly with our financial planner and his team. Then, with their expert guidance, we’ll check our numbers, assess our options, then decide what, if anything, needs to change. 

We’re confident this process will give our portfolio the best chance of surviving long term. 👍

Court: What would be the biggest pro to having both of you at home all the time? 

Chrissy: By far, the biggest pro to having both of us home is there are now two full-time parents in our house! It’s been so nice for all of us to have M around to do even more with the kids. 

Don’t get me wrong—M was always very involved and helpful as a dad and I’ve loved my role as a full-time stay-at-home mom. Neither of us has any complaints about our pre-FIRE parenting roles. It’s just that life is even better now, with family time no longer limited by M’s work schedule. 

Though we’re not needed to wipe snotty noses or help with bath time anymore, our teenagers do still need us! (Even if they’re reluctant to admit it. 😆) M and I see it as such a gift that we can now both be there, full time, to provide our kids with company, support, guidance, and love. 

Related: Spouse FI: The Lifestyle Option and How Much Does It Cost to Be a Stay-at-Home Parent?

Court: What’s the biggest con? 

The biggest con would have to be that I’m getting less uninterrupted alone time. (I’m an introvert, so there’s no such thing as too much alone time!) Pre-COVID, I’d grown used to having the entire house to myself for hours on end while the kids were at school and M was at work. 

It was gloriously restorative to have that quiet time to recharge my introvert batteries. Though most of my days were spent doing chores and prepping food for dinner, it was still so nice to do those things by myself! I loved and cherished those long periods of solitude. 

These days, our house is basically a revolving door as both of our kids come and go at different times throughout the day. Then, with M retired and home full time, there are almost no hours in the day when I get the house to myself anymore!

I hope this doesn’t sound whiny or as if I’m complaining. I know I have an amazing life and am grateful for every moment of it. Also, I really do enjoy having M and the kids around! It’s very much a non-issue and a first-world problem to want the entire house to myself. 🙄 

I also know this is but one season in my life and it, too, shall pass. One day, I may very well be old and alone, pining for the days when my home was noisy and full. And so, I’m learning to embrace this new normal and am becoming a better, more flexible person for it. 

(That said, you can bet I’ll savour every last second whenever I do get the house to myself right now, LOL!)

Court: Do you find that your to-do list takes even longer to complete now that you have all the time to “procrastinate”?

Chrissy: Well, I am a member of the FIRE community, so being efficient, optimized, and productive is coded into my DNA! (It’s basically a given that I’ve never been much of a procrastinator!) 😆

However, it’s true that M and I now “have all the time to procrastinate”. And it’s also true that our to-do lists can take longer to complete. But it’s not due to procrastination! It’s because we can slow down and take our time now.

While we’d always chosen to live at a slower pace than most families, retirement takes it to a whole other level. Since we don’t have to rush, tasks like cooking and home maintenance do indeed take us longer to complete—and that’s a really good thing!

We’re very much enjoying the luxury of slowly doing a task for the sake of doing it—not just to get it done. (For example, when M bakes a pie.) Having extra time also allows us to be more methodical and careful as we work, leading to better end results. (We experienced this when restoring our window sills earlier this year.) 

I’ve always been a proponent of slow living, and FIRE has allowed us to slow things down even more. I hadn’t anticipated this as yet another benefit of reaching FIRE, but I’m glad it is and thankful that we get to fully utilize and enjoy it!

Court: What are your “big goals” to try and accomplish during these first ~5–10 years while you’re retired years before your peers?

Chrissy: My biggest, overarching goal is to continue helping our kids to grow into the happiest, most successful people they can be. (Whatever that may mean for each of them.) At 14 and 17, they’re on the cusp of young adulthood and it’s such an exciting time. 

M and I can’t wait to see where they’ll go in the next 5–10 years. We’re so incredibly grateful that we get to be right there, guiding and supporting them as they move toward their next big milestones.

However, our kids are needing us less and less, so there is some time for me to pursue other goals. I’d say they’re all very much aspirational and fall under the umbrella of “enjoying and living our FIRE life to its fullest”:

  • Maximizing time with people I care about.
  • Staying healthy (both physically and mentally).
  • Continuing to learn new skills.
  • Helping and giving to others in meaningful ways.
  • Being open to new interests and experiences.
  • Letting life unfold as it may. 

I’m sure some of you are wondering, “Don’t you want to do anything that’s more significant or tangible? There’s got to be more to FIRE than this!” It’s true—my list probably doesn’t look all that impressive or ambitious.

It must seem odd, after seven years of focus and hard work to reach FIRE, for me to retire into… living. There’s no world travel, no entrepreneurial ventures, and no big, hands-on projects. What gives?

Well, now that M and I are FIREd and fully immersed in our new, retired lives, we’re just taking it in. Much to our surprise, we’re loving it just as it is, and are happy to see where life leads us next. 

We naturally fell into this mindset as we wandered through our first year of FIRE. But when I read this comment on Part 1 from my friend Chris, I realized that maybe M and I could get more intentional about our unintentionality:

“As for finding something to do, let time be organic and find where it wants to go. I had zero idea when I left work that I would find a very rewarding, educational and fun side income as a writer & photographer across western Canada. Then to shift away from that to focusing on our small business so my wife could start a new career to try new experiences. 

My freedom because of FI is what allowed her to do this and so that I could take over her work at the store. Now in the next stage of FI I have focused on local governance and as you know being recently elected.

Basically what I am getting at is that it isn’t about being retired but rather making space in your life after a focused period of dedicated career working years. That space opens you up to almost anything and the beauty is that now we can walk, run or heck take a lot of siestas along the way on this new path.”

I 100% agree with everything Chris shared in his comment, and I fully intend to have a lot more conversations with M. Instead of just half-consciously letting life play out, what if we were more mindful and intentional about it?

How much better could our second and subsequent years of FIRE be if we were even more thoughtful about this open space we’ve given ourselves? I don’t know, but I’m excited to find out!


Anonymous emailed me not once, but twice to send in their questions! They’re all fantastic, so I’m glad Anonymous took the time to reach out. Here are their questions:

Anonymous: How is your income working for your family now that you have more free time? 

Basically I was wondering, now that you have more free time on your hands (this is assuming that you have more free time) are you finding that you need more income to finance the extra things you now can do?

Chrissy: Excellent question! This has been an interesting evolution for M and me. Pre-FIRE, we’d always enjoyed eating out and travelling, so we assumed that we’d do even more of both in retirement. 

We also thought that M would want to try some new hobbies and that we’d have to spend on equipment, supplies, or lessons. However, our spending projections for these categories were higher than needed. Here’s why:

Eating out 

Now that we have more free time, we’ve been cooking even more at home. (Including making our own artisan pizzas in M’s pizza oven!) Most of our home-cooked meals cost $2 or less per serving.

This makes it very hard to justify the $15+ per serving for restaurant food. As a result, we rarely eat out anymore. Instead, we save it for special occasions or to try dishes that are new to us or difficult to make at home.


Having extra time means that activities that once felt like onerous chores now feel more like fun hobbies. Some of these hobby-like activities include:

  • Shopping regularly at thrift stores.
  • Waiting for used items to come up on Craigslist and Facebook Marketplace.
  • Fixing and maintaining our own cars.
  • Home improvement projects.

I also shared a long list of our favourite fun and frugal activities in Part 1 of this AMA. All of these activities not only save us money, but also do away with the need to take on expensive hobbies and activities to fill our time. 


We love travelling and were very much looking forward to doing more of it once we retired. But in our current phase of life, we’re opting to stick closer to home. Mostly, it’s because our kids are busy with school and can no longer take time off to travel during the school year.

Travelling during school breaks is an option, but it’s not ideal. For example, we prefer to spend the two-week winter break enjoying holiday activities with our families. It’s also a pricey, chaotic time to travel. Therefore, we’ve never gone away during their winter break. 

The kids’ spring break is also two weeks long, but if we’re travelling by plane, we prefer to go away for at least three weeks. This helps to disperse the high cost of flights, hassles of flying, and jet lag recovery over a longer trip. 

We love slow travel, so exploring one location for 3+ weeks is a perfect pace for us. That means two weeks off for spring break isn’t long enough for any far-off travels. So, that leaves the two-month-long summer break (which we happily used to meander around Vancouver Island this past summer). 

We could consider a far-flung family trip for summer 2023. But if I’m being realistic, we’ll likely stick close to home again for the following reasons:

  • One or both kids may want to take a summer school course or get a summer job.
  • Vancouver’s gorgeous in July and August, and we prefer to be here to enjoy the nice weather.
  • We want our kids to hang out with their cousins, who we don’t see much during the school year.
  • We want to do more bike riding with my dad, and summer is the best time for us to do that.
  • I’m still figuring out how to reconcile my love of travel with climate guilt over the extremely high CO2 emissions from flying.

One more thing

There’s also one more factor in our decision not to travel… and that would be the unknown of whether our portfolio will recover in 2023. We went into FIRE knowing that we’d cut down (or cut out) luxuries should the markets drop, and that’s exactly where we are right now.

I’d always planned for a flexible withdrawal strategy in retirement, so we’re just following through with that by minimizing large, non-essential expenses (such as travel). Fortunately, it hasn’t felt deprivational because there are so many other reasons for us NOT to travel right now. 

Had our kids been younger and we’d been in a position to take long trips with them, I’m sure we’d feel very different about this self-grounding! Looking at it that way, the timing of the market crash and our kids’ phase of life was pretty darned ideal. 😉

So, for now, we’re just going to assume that we won’t be doing any world travel until:

  • Our investments bounce back.
  • Our kids no longer want to travel with us or can take a long trip with us.
  • They can be left to care for themselves, the house, and Mika on their own. 

Until then, we’ll continue to enjoy being the homebodies that we are, with the odd staycation sprinkled in. 

Related: Did We Retire at the Worst Possible Time?

Anonymous: When you mention withdrawing 4% of your account, plus cost of living, does this mean that the 4% is based on the current account balance, like at the beginning of the year, or is it based on the initial account balance? 

Example: assuming you withdraw annually. You have $1,000,000 in your account on the first of January, you withdraw 4% of the $1,000,000, the first of the next year your balance is $925,000, do you withdraw 4% of the original $1,000,000 or 4% of the $925,000? 

Chrissy: I’m glad you asked this question because it’s such a common one. I’m happy to share my thoughts and add some extra details. To better understand the 4% rule, it’s important to learn about the nuanced factors that affect it. 

So, I’m going to take a stab at explaining it. (But keep in mind that I’m just a money nerd, not a licensed expert!)

1. The basics of withdrawals

To answer your question, the 4% rule is based on the initial account balance. Then, every year after that, you adjust that amount by increasing it for inflation. Let’s use your example of starting with $1,000,000:

Year 1 

  • Starting balance: $1,000,000
  • Cost of living withdrawal: -$40,000 (4%)
  • Balance: $960,000

Year 2

  • Cost of living withdrawal: -$40,000 (4%)
  • Inflation adjustment: -$1,200 (3% of $40,000)
  • Balance: $918,800

So that’s the basic math of withdrawals with the 4% rule. However, I gave a very simplistic example—there’s more to it than this…

2. Investment growth

If you were to keep your money as cash and withdrew 4% plus an inflation adjustment every year, you’d run out of money after about 20 years. That’s not good! This is why we must invest our retirement savings.

One of the assumptions the 4% rule is based on is that your nest egg is invested and earns an average of 8% per year. If we take this 8% of annual investment growth into account, the math looks quite different:

Year 1 

  • Starting balance: $1,000,000
  • Cost of living withdrawal: -$40,000 (4%)
  • Balance: $960,000
  • Investment growth (8%): +$76,800
  • Closing balance: $1,036,800

Year 2

  • Cost of living withdrawal: -$40,000 (4%)
  • Inflation adjustment: -$1,200 (3% of $40,000)
  • Balance: $995,600
  • Investment growth (8%): +$79,648
  • Closing balance: $1,075,248

As you can see, based on an 8% return, the portfolio’s not only sustainable, but growing slightly every year. Of course, this is another simplified example—markets don’t return a stable 8% every year.

However, it demonstrates how powerful it is to keep your money invested, even in retirement. Without investment growth, the 4% rule won’t work and your money will run out. But where does the 8% return come from? I’ll discuss that next…

3. Asset allocation

The 4% rule is based on several assumptions, one of which is an average 8% return on investments. But that 8% number didn’t come out of thin air—it comes from the average long-term return of a 50/50 stock/bond allocation.

The beauty of this for the FIRE community is that most of us are comfortable with a much higher allocation to equities. (Typically, 70–100%—even in retirement.) This bodes well for FIRE seekers because the returns on a 70/30, 80/20, 90/10, or 100/0 portfolio range between 9–10%.

Therefore, if you’re invested in more than 50% in stocks, the 4% rule is even safer for you! That’s very good news, but it’s time to bring you back down to Earth with the next factor.

Note: We’re invested in 100% equities, which gives us a 10% annual average return. But to be extra safe, we use an 8% return for our calculations. This gives us yet another buffer, just in case.

4. Inflation

As we all know, the low 2 to 3% inflation we’d all been used to is out the window now and for the foreseeable future. Unfortunately, increasing our withdrawals by inflation of 6% or more likely won’t be sustainable when using the 4% rule.

So, what to do? Well, the first thing is don’t panic! Some of the research I’ve found showed that even with 5% inflation, a 4.5% withdrawal rate could still be safe. My friends Mark and Joe at Cashflows and Portfolios also found that the 4% rule can still work with high inflation.

I’m an optimist, and am hopeful that inflation will come down in the next year or two. It likely won’t go back to 2 or 3% for a while. But I think 4% inflation over the next five or so years is a realistic prediction. That’s a much more manageable number than the current 6 to 8%.  

Another important factor to keep in mind is that retirees are humans. We’re not unthinking robots who’ll continue to spend our portfolios into oblivion. Humans possess the ability to be flexible and creative when needed.

That means we’ll find ways to ensure our portfolios last, even in the face of high inflation. For example, there are many ways to decrease one’s spending so as not to need an inflation adjustment every year. 

My family is a real-life example of this. Our essential spending has either stayed the same or decreased every year since 2015. (Even in 2022, when inflation in Canada has been around 6%, we’ve kept our spending about the same as in 2021.)

Also, given how young most FIREees are when they retire, there’s always the option of going back to work to supplement spending. (Even a bit of income from a part-time job could make an enormous difference.) 

In addition, there are worst-case scenario backups such as downsizing or moving to a lower-cost area. In short, the 4% rule can already handle high inflation without any mitigation measures. But if you’re worried or want to be extra safe, further backups are an additional safeguard.

5. Large expenses

If you did your retirement planning correctly, you would’ve factored large, one-off expenses into your FI number. The way we built these expenses into our plan was to add them all up, then amortize them across the remaining years of our expected lifespan.

For example, if you were to plan for a replacement roof every 20 years until you die, that means you’d need three roof replacements. (This is based on someone retiring at 40 and living for another 60 years until 100.)

If a new roof costs $10,000, and you’d need three of them, that’s $30,000. Over 60 years, that’s $500 per year you’d need to add to your annual spending. This process would be repeated for all other expected large expenses (replacement vehicles, gifts to kids, renovations, etc.)

Let’s say all your future large expenses add up to $300,000. When divided by 60 years, it works out to $5,000 per year. Add that to the $40,000 per year for your regular living and you get a total of $45,000. Multiply that by 25, and you get $1,125,000, which is what you’d need for the 4% rule to work in this scenario.

Now, here’s where things get interesting… consider the fact that you won’t be spending on these large expenses right away. That unspent money will stay invested and continue to grow for you until you spend it way down the line.

On top of that, your withdrawal rate will be lower in the years you’re not spending on these large expenses. (You’d saved $1,125,000, but are only withdrawing $40,000. $40,000 ÷ $1,125,000 works out to a 3.6% withdrawal rate!)

Of course, when it comes time to spend that money and pay for the large expenses, you may end up with a higher withdrawal rate that year. But hopefully, the growth of the money (while it was unspent) will help to offset the impact of the eventual large withdrawals.

6. Above-average years

Another important factor to keep in mind is that the 4% rule is based on average historical data—specifically, that the stock market grows, on average, by 8–10% per year. Now, remember the big years we had just before the January 2022 market crash? 

Here’s how the S&P 500 did from 2019–2021:

  • 2021: 26.89%
  • 2020: 16.26%
  • 2019: 28.88%

Between 2019 and 2021, you could’ve easily withdrawn your $40,000 in any of those years PLUS given yourself a large bonus. And you still would’ve been far under the 4% withdrawal rate. (Mind you, it wouldn’t be smart to go overboard with withdrawals in these years. You’d need to leave enough invested to provide growth for lean years.)

However, you can see how a flexible withdrawal strategy could be much better than rigidly withdrawing 4% of your initial account value (plus inflation) every year. Instead, you could plan to withdraw more in the good years and less in the bad years.

Phew, that was probably more info about the 4% rule than you were asking for! But I hope you can now see how it’s both more complex and more flexible than it seems at first glance. To me, it’s all good news as it shows there’s more leeway with the 4% rule than many think.

Note: Once again, I’m just a money nerd and not any kind of expert—if anyone is confused or catches errors in my math or breakdown of the 4% rule, please do me a favour and point it out. I’d appreciate your feedback and corrections so we can all learn.

Anonymous: How is your nest egg invested? 

Perhaps not exact investments, but maybe a percentage by investment type? Or whatever you are comfortable sharing with your readers.

Chrissy: We’re invested 100% in equities, and always have been, except for a couple of years. (Between 2015 and 2017, I shifted to 90/10 equities and bonds.) I quickly saw the light and went back to 100/0 and have stuck with that allocation since.)

Prior to discovering FIRE, I was invested in dividend and blue chip mutual funds from my mom’s big bank plus some Canadian bank stocks. After I discovered FIRE, I started DIY index investing and moved everything into index ETFs.

I tinkered around a bit with the asset allocation, and eventually settled on this:

  • 25% Canadian broad market equities
  • 18% US broad market equities
  • 18% US small-cap value
  • 18% international broad market equities
  • 18% international small-cap value
  • 3% emerging markets equities

However, in 2017, I decided to use our home equity to invest. But I was only willing to implement this strategy with the help of an experienced expert. I soon found the expert I was looking for, and after several detailed discussions and much research and thought, we moved our investments over.

It was hard for me to let go of DIY investing, which had become a fun hobby. But I’ve since embraced having professionals manage our investments and know that we’re far better off for it. 

We’re now invested in a globally-diversified portfolio of institutional-class mutual funds and have been very happy with our returns. Of course, just like most investors in 2022, we’ve experienced paper losses

But we’re confident that our investments will, over the long run, provide us with all the income we’ll need (and then some).

Share your thoughts

We’re almost there—30 out of 41 questions answered! I’ll share the rest in about two weeks, but you can check out a preview of Part 3 in the box below. I hope you’ll come back to read the last batch of questions (and my replies).

But before you go, I would love to hear from you. As mentioned in my replies above, here are some of the topics I’d love your feedback on:

  • What are your theories on why some bloggers dislike the 4% rule so much?
  • What withdrawal rate are you aiming for and why?
  • Did you catch any errors in my math or breakdown of the 4% rule?

Feel free to also leave your thoughts or questions about anything else in this post!

Part 1

These questions were covered in Part 1:

  1. How is retired life different than you thought it would be? 
  2. How many hours are you putting into your side hustles on a weekly basis?
  3. Do you ever get bored?
  4. Do you ever feel guilt about not being productive enough? 
  5. What advice do you have that would allow me to speed up my path to FI/RE?
  6. What is your decumulation strategy?
  7. Have you altered your strategy since starting? 
  8. Are there any surprises during your year?
  9. Are either of you planning to return to the workforce in the future?
  10. What have you discovered you liked doing that didn’t cost a lot?
  11. Any thoughts on getting already FIREd up people together?
  12. What surprised you most about your new life after achieving FIRE a year ago? 
  13. If it was something you didn’t anticipate, how did you adjust to it?
  14. How do your real expenses after FIREing compare to what you had projected?
  15. Any unexpected expenses, and how did you deal with them?
  16. Still in terms of expenses, are you spending more now after FIREing compared to before FIREing?
  17. What do you know now after one year of retirement that you wish you knew a year ago?
  18. What would you do differently if you had to do it over again?

Part 3

And these were the questions I answered in Part 3:

  1. What have you found to be the most challenging, but unexpected, adjustment that you’ve had to make in your transition to a FIRE’d life? 
  2. From a mental health perspective, how has your first year been? 
  3. Have you found it to be recharging or does it create extra anxiety at times? 
  4. When you say, you are going to withdraw from your investment, is there a strategy that you put in place? 
  5. Another question is on your RESP, how are you using it? 
  6. How do you organize your day to be so productive? 
  7. How much time do you dedicate to blogging? 
  8. You said, you are active on social media like Twitter. Do you have any tips so we won’t be on all time checking our phones? Do you dedicate specific time?
  9. What have you decided for extended medical insurance since you FIRE’d? 
  10. How do you factor in the interest rate on the leverage when you apply the 4% rule? 
  11. How would you handle a 50% market drop (in your leveraged portfolio)?

Part 4 (bonus)

I added Part 4 to answer these bonus questions and comments:

  1. Do you include wellness care in your list of medical expenses? 
  2. Will you revisit your health insurance decision? 
  3. Do you find that not having coverage is making you think twice about the spending? 
  4. As a parent, now I am curious about how I can ensure they take care of their health when it’s so expensive… 
  5. Do you have life insurance and if no, why not?
  6. What do you do for travel insurance?
  7. Do you ever think about how your kids will afford rent when it comes to that? Or do you expect to be a multi-generational home? 
  8. How 50% leverage can take your net worth to $0.
  9. Less leverage looks better.
  10. The Smith Manoeuvre helps. 
  11. Another twist with the Smith Manoeuvre.
  12. Shrinking leverage.
  13. Adding more leverage (and the effect on returns).
  14. Tax advantages.
  15. Use caution with the 4% rule.
  16. It depends where you start.
  17. Averages and Monte Carlo simulations.
  18. Use actual long-term data.
  19. The future will be different.
  20. Variations on the 4% rule.
  21. It’s a complex subject.

Support this blog

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  • Reply
    Christopher Mercanti
    December 7, 2022 at 9:54 am

    Another great update, Chrissy! I’m finding these extremely helpful as I navigate my first few months of early retirement. Happy Holidays to you and your family!

    • Reply
      December 8, 2022 at 8:58 pm

      Hi Christopher—it’s so nice to hear that these updates are helpful. I myself would love to read more info about early retirement in Canada, and I hope more Canadian bloggers share their experiences and tips. Happy Holidays to you as well (your first holiday as a retired person)!

  • Reply
    December 7, 2022 at 12:24 pm

    Hi Chrissy,
    Your updates are interesting and should be very helpful to those who are considering FIRE.
    You mentioned that you are 100% invested in equities and 50% leveraged. How do you factor in the interest rate on the leverage when you apply the 4% rule (is it just part of your expenses). The 4% rule as you describe it is meant for unleveraged portfolios, I believe. 50% leveraged portfolios would have different long term growth rates from what you are assuming and also would have blown up a few times in my lifetime. How would you handle a 50% market drop (think 2008) with 50% leverage, your portfolio balance would be zero at that point.

    • Reply
      December 8, 2022 at 9:02 pm

      Hi Max—great question. You’re right that leveraged investments and the cost to maintain the loan are separate (but also not) from the 4% rule. There’s a lot of interesting info I can share about this, and it’ll take more than a comment to do that!

      So, if you don’t mind, I’ll add it to the list of questions in Part 3 as I’m sure others will probably want to know more as well. For now, the short answer is the leveraged portion is both calculated on its own, but also taken into account with the rest of the portfolio. I’ll share more details in Part 3!

  • Reply
    December 10, 2022 at 7:40 am

    Hi, just wanted to say that I love your attitude, which shows in how you view the timing of your retirement. Some could say it was terrible timing, but you are able to turn it into a good thing because of your kids’ ages and maybe you have less FOMO about being lean and not travelling than you would’ve at another season in life. I think you and M are going to do just fine 😊 (not that you need that from me/anyone else – you’ve clearly thought it all through!)

    • Reply
      December 10, 2022 at 9:38 pm

      Hi Cee—thank you so much for your sweet comment. I think I take after my dearly departed mom in that I’m an optimist who always tries to make lemons out of lemonade. 😊

      Being such a Pollyanna can be a weakness sometimes, but it sure helps when living through the trying times we’re in right now!

      Your comment made me smile and warmed my heart. Thank you for taking the time to read and share your support. ♥️

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