Freedom 55

Dh's 55th birthday was this week. By many definitions, that makes him a senior citizen (!), or at least eligible for some seniors' discounts (although, with the huge numbers of baby boomers entering senior citizen territory, there are fewer & fewer of those being handed out these days).

Dh was born around the peak of the post-WWII baby boom, in 1957. The boom is generally defined to include those born between 1946-7 and 1964. By some definitions, I (born in 1961) am a late/tail-end boomer; by others, an early Gen-Xer. Douglas Coupland, the author of the book that spawned the term, is actually the same age I am (I was born in January 1961; he was born in December).

While we might be baby boomers, people at my end of the boomer spectrum haven't enjoyed the same benefits those at the leading edge of the boom have (and things have only gotten more difficult over time, of course). By the time I was in university, jobs were drying up and mortgage rates were sky high (over 20% at one point in the early 1980s). By the time dh & I were ready to buy a house in the early 1990s, the interest rates had fallen somewhat (our first five-year mortgage was 11.75%) -- but Toronto housing prices had more than doubled from just a few years earlier, fed by the buying frenzy created by the earlier boomers as they entered the market. (Then they almost immediately fell (of course!) & took several years to climb back up again -- at least, in the particular area where we live. Now they're approaching ridiculous. But that's another post...!)

Around the time dh & I were at university in the early 1980s, there was a (Canadian) insurance company that came out with an ad campaign based on the theme of "Freedom 55" & promoting the idea of early retirement at 55. It was hugely, hugely successful -- so successful, in fact, that the company changed its name to "Freedom 55." Here's an article that talks about the origins of "Freedom 55"... and here's one of the more memorable Freedom 55 TV ads:



These days, we are hearing that "Freedom 55" is dead -- that we are all going to have to work more years in order to claim fewer benefits from our governments. (Freedom 65, anyone? How about Freedom 75? Doesn't have quite the same ring, does it??) With so many people (the boomers, again) retiring or poised to retire over the next few years, combined with longer life expectancies than when the programs were originally set up, pension plans are being stretched.

Canada is in better shape than the U.S. in this regard, thankfully -- back in the early 1990s, everyone began paying more into our Canada Pension Plan to ensure it could continue to meet its obligations. The amount you collect is dependent on how much you contributed during your working years, to a maximum amount. The age to collect full CPP benefits is 65, but (for now, anyway) you can apply to begin collecting a reduced pension at age 60.

Recently, the government announced plans to raise the age at which we can collect Old Age Security, which everyone gets, regardless of your work history. Currently, it's 65. If you were 54 at the end of March 2012 (which dh was), you can still apply for OAS when you hit 65. The age the rest of us can collect will be gradually pushed back to 67. I will be at or near that age by the time I can collect.

Fortunately, dh & I are not entirely dependent on government benefits to keep a roof over our head & food in our mouth during our retirement years (although they will certainly help, of course). (And, most fortunately, we live in Canada, where we don't have to keep working simply to keep enough medical insurance to ensure our basic health care needs are met.) We heard the rumblings that CPP & OAS might not be around by the time we were ready to retire. Both of us came from families who had to work hard and save for what they had, and those lessons were well instilled in us.

Right from the very beginning of our marriage, we had a savings account (although we dipped into it an awful lot in those early days...), and fairly early on, we set up a pre-authorized contribution plan to regularly divert money from our chequing account into that savings account. We started off saving quarters for the washers & dryers in our building -- and then dumping our pockets at the end of the day & saving all of our change. Every now & then we would (& still do) roll up the coins & take them to the bank -- we paid for dinner out on our first anniversary, our first microwave and I think even our first computer this way.

We started RRSPs (the Canadian equivalent of 401K plans, I think) with pre-authorized monthly contributions when were in our late 20s or early 30s. We both belong to our company's pension plan (defined benefit & well funded, thankfully) and employee share ownership plan (although I wish to heck that we had enrolled much earlier than we did).

After five years of marriage and living in a small (but very nice) one-bedroom apartment, we were pulling in enough money to afford the mortgage payments on a house. We needed some help from my generous FIL to afford the down payment -- but from then on in, it was all us.

By making bi-weekly payments, using our year-end bonuses and income tax refunds to make occasional lump sum payments (instead of buying new cars & "toys" or funding sunspot & ski vacations, as many of our peers did), and keeping our mortgage payments the same even when we renewed at lower rates, we were able to pay off a 25-year mortgage in 11 years. After that, we continued to put the same amount of money we'd been paying on the mortgage into savings. It does add up. : )

And so, even though the pundits are proclaiming that "Freedom 55" is dead, and dh has decided he will (probably) continue working for another few years, at least until I turn 55, early retirement remains a distinct possibility for us both.

Of course, the fact that we didn't have children -- and decided to stop infertility treatments before the cumulative cost escalated into high five-figure territory -- has had a big impact on our ability to even think about doing this.

But a lot of it has been the way we've lived and the choices we've made with how to spend (and not spend) or money. (And some luck, too.) Here's hoping that luck continues to hold and that Freedom 55 (or retirement at some slightly-earlier-than-the-traditional-65 date) is more than just a pipe dream for us.

There's a part of me that finds it hard to believe that I could really be retired in less than four years. (I'm not that old, am I??!) And a part of me that worries whether we can really do it financially -- even though dh has run the numbers over and over (and over and over...) and assures me that we can. We won't be buying a yacht or spending our winters on a tropical island, mind you -- but he assures me we will be able to maintain our current lifestyle & afford a nice vacation now & then. Sounds good to me. : )

I've worked long and hard at the same job (more or less) in the same department for the same company for almost 26 years straight. (If I do manage to retire when I'm 55, I'll have been there almost 30 years.) It's a very good job -- but it has its stresses, and I am starting to feel my age there. The 11-hour days (including commutes) with 5 a.m. wakeups are starting to wear on me.

I've been a good employee. I've been careful with my money. I've done all the things you're supposed to do. (Just like I did in my pregnancy... hmmm, wrong comparison to make, I think...! Maybe that's why I sometimes find it hard to believe that we could really do this?)

Would it really be asking too much to be able to retire earlier -- enjoy some time with my dh, sleeping in for a change, do a bit of travelling, some volunteer work, maybe a little part-time job or freelance work (if we feel like it -- and that's the key, I think -- working when & as much as you want to, not necessarily because you HAVE to...) and some of the other things we want to do?

My life has been pretty good with one exception: I didn't get the family I hoped for. In some ways, I feel like early retirement is my tradeoff -- my reward for enduring the years and tears of infertility & loss -- the dangling carrot, the implicit promise luring me toward the future.

Of course, if it's a tradeoff, I would have preferred the alternative. If we'd had kids -- if Katie were here today -- I would almost certainly have been working to 65. Certainly not thinking of early retirement at 55.

But we don't -- so I'm not. At least, I don't want to, if I don't have to. (Do I??)

I think I've earned it, haven't I?