12 simple rules for “retiring rich”
Most Canadians aim to become rich enough to retire. And Canada’s huge and very profitable financial industry focuses on helping us get there.
Whether we pin hopes for our golden years on superior investment returns or a winning lottery ticket, we have the same end goal. Surely when we are ready to retire, the funds will be there. Or so we hope.
Retiring rich is about more than being lucky. Investment returns, albeit important, are only the tip of the “retiring rich” iceberg. No matter what your age is today, implementing the following principles will dramatically improve your formula for retiring rich.
1. Spend less than you earn. This no-brainer escapes many. Fortunately, it’s never too late to start.
2. Little things can make a difference. Instead of buying a double double each morning, invest in Tim Hortons shares. They more than doubled in the last five years. Dividends tripled.
3. Keep your hands in your pockets. Don’t draw down your retirement savings until you actually retire. Plan to withdraw only the minimum payment after you retire.
4. Teach your children well. They need to learn how to earn money and spend it wisely long before they leave home. Lead by example and don’t protect them from consequences. Believing your children deserve every penny you can spare is a great way to derail your own retirement plans. They should make their own way, just like you are doing.
5. Invest in things that don’t depreciate. Just to be clear, cars and recreational toys are expenses, not investments.
6. Delete “I’m worth it” from your vocabulary. Never use this phrase to justify spending money you don’t have. Try to remove emotions from your spending decisions.
7. Watch less TV. Really! Read a good non-fiction book or Proverbs instead. That you won’t be tempted by commercials is a bonus.
8. Choose neighbours who are less well-off than you. Research shows that your economic happiness has more to do with the income of your friends and neighbours than your own. Resist the pressure to “keep up with the Joneses.”
9. Keep track of your spending. Especially if you still have debt. This is the best (some say only) way of objectively evaluating your spending habits. Money conversations will be less emotionally charged when you can refer to facts rather than only feelings.
10. Get exercise and eat wisely. You’ll have fewer medical expenses and be able to work longer. Many people are forced to retire before they planned due to medical issues.
11. Make friends. Especially with family. They remain kin no matter where you live. Friends transcend financial riches any day of the week.
12. Be generous. Money can buy happiness, but only if you give it away! Being generous off the top will improve your perspective on other spending. And if you are fortunate enough to retire rich, make sure your generosity outlives you.
It’s no coincidence these recommendations are all based on biblical teachings. That’s another reason to make them part of your retirement formula this year.
Henry Friesen aims to retire “rich” near Winnipeg.
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