Our second year of FIRE included some stereotypical beach lounging! (Pictured: Kaiona Beach, HI)
Another year of FIRE!
It’s November 18 today, which means another year of FIRE (financial independence, retire early) has passed us by… and I almost forgot to write this post!
That should give you a clue as to how our second year of early retirement went! In short, it was BUSY—but all for good reason! 😉
For more details…
To celebrate our one-year FIRE-iversary, I went in-depth into our FIRE plans with a four-part AMA series:
Nearly all the info I shared in those posts still applies, so check them out for all the numbers, details, challenges, and triumphs behind our early retirement!
How it’s going
Early retirement continues to be amazing! It’s been everything M and I hoped it would be… and then some! I can’t say enough good things about living the FIRE life. 🔥
We have no regrets and do not miss our hectic, pre-FIRE lives one bit! As I look back on our second year of FIRE, these are the things I cherish the most:
- Having a full-time co-parent in M as our kids enter young adulthood (and need us as much as they ever have). 💗
- The luxury of being able to take on jobs or projects just for fun—even if they’re low-paying (or unpaid).
- Having the time to give back by volunteering, helping family and friends, and engaging in our community.
- Vacationing in Hawaii for 25 days (and not needing to ask for permission to book so much time off)!
- The frequent realization that every day is the weekend for us. 😎
- Having the time to continually chip away at long-standing items on our to-do lists (even as we continue to add new projects and tasks).
- Not needing expensive hobbies and interests to keep us happy, fulfilled, and engaged—we keep finding so many free and low-cost things to do!
- Having enough time to cook even more than we used to. (We enjoy eating out less and less and don’t see as much value in it these days.)
- Being able to spend as much time as we want on tasks that others might consider too time-consuming or not worth the effort. (For example: mending clothing, repairing our cars, DIY cosmetics, signing petitions and letters to support environmental and LGBTQ+ issues.) 🏳️🌈
- Having the mental bandwidth to work on constant self-improvement (and being able to teach our kids these skills as they need them).
For us, FIRE and all the benefits it brings are the ultimate luxuries! I can’t imagine a better use of our money than having all this time freedom. 👍
Another luxury that FIRE has given us is the time to do silly stuff. It’s a running joke between M and I that whenever he does stuff that’s 100% for leisure, he says, “This is why I retired.”
- Cuddling Mika on the couch—often for an hour or more. (M says he quit his job to become Mika’s bed.) 😆
- Learning, practising, and mastering algorithms to solve Rubik’s cubes.
- Doing jigsaw puzzles.
- Working on pencil drawings.
- Painting Ghibli movie backgrounds.
- Being the best plant dad ever!
There are so many things M fills his time with everyday—including some of these ‘silly’ things. Neither of us can imagine how we could ever be bored in retirement!
2023 was our first full year of receiving monthly withdrawals from our investments. (I’ve quite liked getting paycheque-like payments coming in every month!)
These withdrawals fully funded our non-discretionary spending (e.g. groceries, gas, utilities, etc.) and most of our discretionary spending.
We also received several large chunks of income via three large tax refunds. (They were previously held up by CRA as they reviewed our investment loan interest deductions.)
However, our regular RRIF withdrawals cover all our necessary spending, so we didn’t need the income from these refunds. We held back a little bit, then reinvested the rest in our non-registered accounts.
In addition to our tax refunds, we also earned little bits of income, which we spent on fun/extra stuff:
- A small amount we held back from our tax refunds.
- My blog (however, income was waaay down this year). 😕
- Two years of previously-earned USD blog income that I converted to CAD.
- Bank interest and cashback from our credit cards.
- Cashback rebates from Rakuten, Great Canadian Rebates, and CardSwap.
- M’s one-hour-a-week tutoring gig.
- Small tax refunds for filing medical expenses that I’d missed in previous years.
- Craigslist sales.
One source of income we don’t include
One income source I don’t include is the CCB (Canada Child Benefit). Ever since our kids were little, we’ve always invested the CCB in their informal trust accounts.
It never added up to much anyway, since our income was relatively high until M retired. Also, Kid 1 aged out this year when he turned 18—so it’s only Kid 2 who gets the CCB now!
I know we’re very fortunate and privileged to be able to invest the CCB for our kids. Many families (including my family when we were growing up) depend on the CCB for everyday expenses.
I’m grateful that the Canadian government provides this income to families who really need it (and that they claw it back from families like mine, who are self-sufficient—it’s only fair and the right thing to do). 👍
Note: Since I don’t yet have our November and December 2023 spending, I’ve estimated our total 2023 spending by adding up the last 12 months (November 2022–October 2023).
Our overall spending increased by a small amount compared to last year (about $1,500). But different categories saw dramatic increases or decreases. Here’s what went up or down significantly (and why):
What went up
- Gas: We and the kids were A LOT busier this year! (On most days, all four of us are headed in four different directions. 😵)
- Car maintenance: I needed new tires and had to replace part of the exhaust on my Mazda 5. (But M took on other repairs and maintenance himself, which saved us a lot of money.)
- Medical: We’re all healthy and well, but everyone needed more medical care this year.
- School fees: Kid 1’s graduation events, various Grade 12 fees, and university application fees really added up.
- Mika: She had her first dental cleaning ever—and it wasn’t cheap! (But the good news is her teeth are in excellent condition, with no extractions or extra procedures needed.)
- M’s classic Mustang: M did all kinds of repairs, maintenance, and improvements himself—including some big projects. Even so, we spent more on his car this year than last.
- Travel: We took our first trip out of the country (to Hawaii) since 2019! It was one of our biggest expenditures in 2023, but was very affordable for a 25-day trip. 😎
What went down
- Home maintenance/improvement: We didn’t have the huge, one-time expense of a new patio cover like we did last year.
- Eating out: It’s getting way too expensive to eat out, so we did less of it this year. (We’ve also had more time to cook at home.)
- Gifts: We didn’t have any weddings to go to this year, so that saved us several hundreds on gifts compared to last year!
- Alcohol: Who needs alcohol when retirement’s been mostly stress-free!
Our portfolio still hasn’t returned to its previous high, but it’s definitely on the road to recovery this year. I hope we’ve moved past the lowest point and that we’ll finally see a full recovery in 2024.
However, I know that’s likely wishful thinking—world events continue to create instability, which investors never like. 😓 Even so, we can and will continue to weather the volatility indefinitely.
Thanks to excellent planning and our low withdrawal rate, our portfolio is sustainable and will survive this rough patch. It’s been a longer and bumpier recovery than we’d like, but we’re still sleeping fine and feeling optimistic!
We’re continuing to withdraw from our RRIFs only. Based on today’s portfolio value, our 2023 withdrawals will work out to a 3.5% withdrawal rate. (This includes tax that was withheld, which I expect will be partially refunded to us.)
I’m very happy with our 3.5% withdrawal rate as that’s generally considered to be fail-proof—even for a retirement that will last 60+ years. Also, given that our portfolio’s still well below its peak, I’m pretty thrilled that our withdrawal rate is as low as it is.
Note that I haven’t included the withdrawals for our investment loan nor the value of the leveraged portion of our portfolio. That’s calculated separately as the math for that isn’t based on the 4% rule.
I’m very grateful that that’s the case! Due to all the interest rate increases in 2023, we’ve definitely exceeded 4% in withdrawals from that account! Even so, I’m not worried because rate increases were factored into our plans. 👍
For more info on how the math for our leveraged investments works, see Part 3 of my One Year of FIRE AMA and search for the question, “How do you factor in the interest rate on the leverage when you apply the 4% rule?”—I explain all the details there!
More about our FIRE journey
To learn more about our FIRE journey and how we planned for early retirement, check out the posts below:
Sadly, I’ll have to end this post here. 😓 I was hoping to write a lot more than this, but the realities of early retirement foiled my best plans!
I simply ran out of time and didn’t want to miss publishing this post on our actual FIRE-iversary. So I hit publish on this post anyway—short and imperfect as it may be!
To summarize our second year of FIRE, I would say it was just as wonderful as the first (and maybe even more so). M, the kids, and I continue to live our best lives and look forward to many more FIRE-iversaries to come! 🔥
I would love to hear from you and would be happy to do a mini AMA in the comments. If you have any questions you’d like me to answer, feel free to post them below!
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