Taking Bits and Pieces From Each Lever

This is part 2 of the series on how to execute an early retirement, with financial planning veteran John Kalos.

In this episode, we use our financial plan as a case study so that you and other Canadians can get some insights on how to execute an early retirement.

The goal is to give you a better understanding of what a financial plan should include, what it can do for you, and give you some insider tips from a real ex-banker on what to look out for when you encounter a financial planner or advisor trying to sell you a service like that.

If you do have some questions for John (the financial planner we used), or if you'd like to discuss potentially having him take a look at your financial situation too just like he did with my family, then you can sign up for a free consultation with him by going to buildwealthcanada.ca/john. It's totally free, and there's no obligation or anything like that.

• Receive a free consultation with John and have your questions answered at www.buildwealthcanada.ca/john.
• Kornel's investing course with free sample lessons at www.BuildWealthCanada.ca/invest
• Top Tools and Resources for Financial Independence (for Canadians): Sign up anywhere on www.BuildWealthCanada.ca for a free guide on all the top tools and sites that I’ve personally used to help us achieve financial independence in our early 30s. They’re also what we use now to optimize and manage our finances, and ensure that we’re paying the lowest fees while getting solid returns on our investments. 

1. You and I went through the entire financial planning process together, with you as our financial planner. After you created the financial plan for us, one of the insights that came out of it, which goes against what we hear in the media a lot is that if you were to retire or semi-retire right now, you don't necessarily always need a 1 million dollar or more investment portfolio to pull it off.For example, our portfolio wasn't at $1 million and all the numbers supported that we still have enough for a full retirement right now. Why do you think we often hear in the media how you need that $1 million dollar portfolio, and why is this not necessarily always the case?
2. To give everyone listening some actionable things that they can do when searching for a financial planner that's right for them, what are the red flags to look out for when meeting with a financial planner/advisor?
3. I really like the process that you and I went through when you did our financial plan, and I think it's a really good example of what the process should be like. So now that we've talked about the negative things to look out for and what we don't want, can you give us a brief overview of your process?. I know this is something you've been optimizing for 20+ years so can you also highlight the critical pieces in the process that everyone should have when working with a financial planner?
4. When you did my plan there were several critical components that you made sure you factored in that could really make a huge impact on whether someone can retire early or not. For anybody looking to do an early retirement, what were these key components that can really shorten the number of years that you need to work? Also, let's break this question down into 2 parts. First, let's talk about the controllable factors (ex. Spending, part time work, etc.) which we can all focus on that have the biggest impact on how early we can retire.And then after that, let's talk about the factors that we can't directly control, but that absolutely need to be factored into the financial plan, no matter who your financial planner or advisor is, because they have such an enormous impact on our ability to retire early (ex. Inflation, CPP and OAS).

5. What I really liked in particular was the summary page that you produced where it talked about things like what's the most we can spend annually and still have enough to stay retired? And how much we actually need to retire? Using our actual numbers and financial plan as a real life example, can you speak to what the results for us were in the context of, what are the answers that we should have from our financial planner when getting a financial plan like this done>

Early retirement execution questions:

1. Now that we have all the numbers we need from doing a financial plan, let's switch gears and talk about how to actually execute an early retirement or semi-retirement once you know you have enough in your investments.To start, how should our portfolio change when we move from an accumulation phase (where we're working full-time, saving and investing), to the decumulation phase where we're not working at all or only working part-time.
2. When in retirement, should Canadians tweak their portfolio to generate more yield and try to live off that? or do you suggest just selling-off a percentage of the portfolio every year during good years and keeping a cash cushion during that bad years so that we're not selling our investments when the markets are down?
3. For the fixed income portion of our portfolio how do you decide between using bonds vs doing a GIC ladder?
4. What size of a cash cushion do you suggest for people in retirement or semi-retirement?
5. How should early retirees deal with moving money out of the RRSP early? (Explain what the basic personal amount is here too please)
6. What type of investments should you keep in each of your accounts to help minimize your taxes?