I comb the blogosphere every week to come up with interesting links for this weekly column. I continue to be fascinated by bloggers who document “early retirement extreme,” (ERE) often in their 30s and 40s. It is important however to recognize that for many people, this does not mean completely leaving paid work behind. It simply means that they have accumulated a financial cushion which gives them the freedom to work less or do something different.

For example, last month Tim Stobbs wrote I Don’t Have Enough Money, But I Retired at 40 Anyway.  He says, “What I’m doing really isn’t a full on ‘I never plan to work again retirement’ but rather an ‘I plan on doing some fun work during a semi-retirement.’  And that little shift of wording regarding what I planned to do made a huge difference between being able to leave now and being able to leave two to five more years in the future.” Stobbs is going to take a stab at writing fiction first for some income and if that doesn’t work out he will consider other options.

Firecracker and Wanderer are married computer engineers who retired in their early 30s. They blog on Millenial Revolution. The built a seven-figure portfolio and live off the passive income which allows them to travel the world and work on projects they are passionate about. They offer a free 53-part series of investment workshops on their blog and they have been widely quoted in the media. But they also write children’s books, develop apps for non-profits and teach children how to code.

In a recent blog, Firecracker interviewed Derek Foster: Canada’s Other Youngest Retiree. Foster, who is well-known to savewithspp.com readers retired at age 34 and he and his wife had eight children since then. He supports his family primarily with dividends generated by his stock portfolio. However, the self-identified “Idiot Millionaire” wrote six investor books and offers portfolio picks for a fee on stopworking.ca. He also accepts paid speaking engagements.

Some people who retire extremely early go back to work a few years into their retirement and take on short-term consulting assignments for a limited period. For example, Retired Syd who packed it in at age 44 in 2007 took on an assignment for several years and returned to full-time retirement in August 2012.

Can or should you aim for ERE? It really depends on your personality and your priorities. I freely confess that I’m very far from a minimalist and I was never prepared to forgo a really significant component of current consumption to fund a frugal very extended retirement.

As Ben Carlson writes in Some Thoughts on the Extreme Early Retirement Movement, “I have a ton of respect for these people. There are so many people out there today who have a hard time saving any money at all. The fact that these people are willing and able to save enough money to become financially independent so early in their years requires a combination of discipline, hard work and planning that is rare these days.”

But like me, Carlson doesn’t see the ERE lifestyle working for him. He says,” To me, financial independence means not having to stress about money all the time; it means having enough money saved so a one-off expenditure won’t be a huge issue; it means having enough money to pamper myself every once and a while without feeling guilty; it means living life in a way that is rich to me personally.”

What does financial independence mean to you? Are you contemplating extreme early retirement?

Written by Sheryl Smolkin
	Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.

Over the last 6+ years I have had the privilege of blogging for the Saskatchewan Pension Plan twice a week. That means there are over 500 articles archived on this site that you can access on topics that range from retirement savings to income taxes to how to save money.

Whether you have recently started following savewithspp.com or you have been with us from the beginning, you may not be aware of the wealth of information  in our archives. Therefore, beginning with this week, on an occasional basis I will offer links to some of my favourite “blasts from the past.”

Today’s selection includes a series of savewithspp.com podcast interviews.

I interviewed SPP General Manager Katherine Strutt in both January 2012 and February 2015. “The SPP gives members access to top money managers they may not be able to access on their own. SPP also gives members a strong investment product at a very low price,” Strutt said in the most recent interview. “The costs of running our plan are around one percent or less, and this compares to fees in a retail mutual fund that can be anywhere between two and three percent.”

In a July 5, 2012 podcast Derek Foster, author of several books including The Idiot Millionaire and The Wealthy Boomer explained how he retired at the young age of 34 and supports his wife and five children on $40,000/year. He also talks about the advantages of saving for retirement with SPP as opposed to an RRSP.

The Wealthy Barber David Chilton spoke to us in October 2012 long before he joined and then left the popular CBC series Dragons’ Den. He offered strategies for cutting down on discretionary savings to free up more money for savings. Using cash instead of mindlessly swiping a debit or credit card is one of his favourites.

The 2014 series of podcast interviews featured financial bloggers including Retired Syd who left work behind at age 44. Her original budget for retirement turned out to be overly generous, partly because she was kind of careful the first few years since she was so nervous watching the stock market go down. But as of the date of the interview, she and her husband were still spending less than their original retirement budget.

And finally, after I read most of the books in the Joanne Kilbourne mystery series, in March 2015 I interviewed the author and Saskatchewan success story Gail Bowen.  Also a retired professor and playwright, Bowen’s writing career did not begin until age 45. She is still writing in her 70s – truly a role model for all of us who are pursuing encore careers.

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Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

Written by Sheryl Smolkin
	Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.

In October best-selling author and self-proclaimed “idiot millionaire”, Derek Foster, toured Saskatchewan talking to people about how to invest in their future.   He spoke to groups in Regina, Saskatoon, North Battleford and Kindersley about his straightforward approach to investing and why he thinks SPP is a “no brainer” for people looking for a retirement savings plan.

If you missed hearing Derek’s presentation, we’ve captured several media interviews from his visit to Saskatchewan:

Global Morning News Regina on October 23, 2014:  http://goo.gl/19f8gU;

Global Morning News Saskatoon on October 28, 2014:  http://goo.gl/6q8kUO;

CBC Radio’s Saskatoon Morning on October 30, 2014:  http://goo.gl/0OZGjh.

Do you have any money saving tips that you use to help build your retirement fund? Share your ideas with us, http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

In the last several weeks there has been a stock market correction and although the market has bounced back to some extent, for some investors it has been a bumpy ride. Here’s what several personal finance columnists and bloggers had to say about recent market gyrations.

The Globe and Mail’s Rob Carrick says Balanced is best: Never doubt long-term portfolio gains. No matter what the markets do in the short term, the long-term potential from investing is not in question. He also says As markets plunge, it’s time to take stock of Investing habits that have become sloppy. For example, many people are too financially committed to their homes and lots of households owe too much

On Retire Happy, Jim Yih shared The Five Realities of the Stock Market. He says markets go up and down but they go up twice as often and twice as much.  Logically, when markets go down, the odds are in your favour to make money in the times ahead.

What Are You Doing With This Stock Market Pullback? Sorry, but no one can help you during a market correction says Robb Engen at Boomer & Echo.  Watching your portfolio drop from $100,000 to $90,000 over the course of a few weeks is painful, no doubt. But you’d be better off sticking your head in the sand and waiting it out instead of trying to “do something about it.”

In Stock Market Momentum, Michael James on Money says the recent downtrend in stock prices has many commentators saying that we are “in a correction.” But all we can say with any certainty is that we have had a correction. It may or may not continue. Saying that we are in a correction implies that falling prices will continue over the short term, which is far from certain.

Finally, Mark Seed at Million Dollar Journey interviewed Derek Foster, “Canada’s Youngest Retiree”. While the general consensus is that investing only in stocks is too risky, Derek is sticking with dividend stocks because at age 40+ he has other income streams from his books and speaking engagements. Foster says, “Many people point to the 2008-2009 downturn as evidence that bonds will save you during downturns, but what about the 5 years since then?  Look at the long-term returns of stocks over bonds – I think the stats speak for themselves.”

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

Canada’s “Idiot Millionaire”, Derek Foster, is coming to Saskatchewan!

Derek writes about SPP in “The Worried Boomer”

At age 34 Derek Foster left the workplace and has become Canada’s youngest retiree. Investing in simple stocks he has become know as an “idiot” millionaire. In is book “The Worried Boomer” Derek dedicated an entire chapter about Saskatchewan Pension Plan.

Join Derek, the Idiot Millionaire, at one of the following events to learn about his simple investment approach and how it can be a part of your journey into retirement.

Regina: August 13 – 11:30 am

Hosted by: Regina Chamber of Commerce
Lunch at Conexus Arts Centre Theatre lobby
200A Lakeshore Drive

Register: online at reginachamber.com or 1-306-757-4658
Costs:
Members: $35 pre-registered/Door: $40
Non-members: $50 pre-registered/Door: $55

Saskatoon: August 17 – 7:30 am

Hosted by: North Sask Business Assoc & Saskatoon Chamber of Commerce Breakfast at Saskatoon Club
417 21st St E

Register: by email in**@ns******.com or 1-306-242-3060 register by 10 am August 16
Costs: All attendees $18

Bestselling Books:

• Stop Working
• The Lazy Investor
• Money For Nothing
• The Idiot Millionaire
• Stop Working Too: You Still Can

Each attendee will receive a $10.00 coupon towards the purchase of one of Derek’s book available at the event.

Canada’s “Idiot Millionaire”, Derek Foster, is coming to Saskatchewan!

Join Derek, the Idiot Millionaire, at one of the following events to learn about his simple investment approach and how it can be a part of your journey into retirement.

Regina: August 13 – 11:30 am

Hosted by: Regina Chamber of Commerce
Lunch at Conexus Arts Centre Theatre lobby
200A Lakeshore Drive

Register: online at reginachamber.com or 1-306-757-4658
Costs:
Members: $35 pre-registered/Door: $40
Non-members: $50 pre-registered/Door: $55

Saskatoon: August 17 – 7:30 am

Hosted by: North Sask Business Assoc & Saskatoon Chamber of Commerce Breakfast at Saskatoon Club
417 21st St E

Register: by email in**@ns******.com or 1-306-242-3060 register by 10 am August 16
Costs: All attendees $18

Bestselling Books:

• Stop Working
• The Lazy Investor
• Money For Nothing
• The Idiot Millionaire
• Stop Working Too: You Still Can

Each attendee will receive a $10.00 coupon towards the purchase of one of Derek’s book available at the event.

Derek Foster podcast

Hi, my name is Sheryl Smolkin. I’m a lawyer and a journalist. Today I’m pleased to be continuing the Saskatchewan Pension Plan’s series of financial expert interviews, talking to Derek Foster author of six books including The Idiot Millionaire.

After spending his 20s backpacking across Europe, Australia and Asia, Derek left the rat race at age 34 when his investment strategy made him a millionaire. Today we are going to talk about his latest book, The Worried Boomer.

Welcome Derek.

Q1. Derek, you retired six years ago at age 34 and started a new career as a financial writer and motivational speaker. Was this all part of the plan? Did you ever imagine you would be so successful?

There was no a plan at all. The only thing I did was to begin investing religiously just before I started university. I put away $200 a month and it kept growing and growing. But as far as writing a book, once I retired I thought it was an interesting story so I wrote a book and it became a national best seller. I thought this was kind of great so I wrote a few more books.

Q2. Because you are your own boss, you have more time to spend with your family and do things you enjoy. How much time do you spend writing and speaking in a typical week or month?

It really varies depending on the season. I find I do a lot of my writing in the fall after summer vacation is over and the kids are back at school. But if I was to average it out, I would say probably around ten hours a week.

Q3. Everyone I talk to is worried that they will run out of money before they run out of time. How did you figure out how much money you had to save in order to retire at such a young age?

I think a lot of people put the cart before the horse. In other words, if you ask people how much money they need to retire, many will respond “oh you need a million dollars or two million dollars.”

But if you ask “how much money do you need to live on now?” they’ll generally say $50,000 a year or $100,000 a year. The interesting thing is that they tell me the annual income they need to live right now, but for retirement they fixate on this big lump sum of money.

I think you need an annual income when you retire. So essentially all you have to do is build up an annual income stream and once it equals what your expenses are going to be, you can stop working.

Q4. You have five children. You own a four bedroom, four bathroom house in Ottawa and your family has taken trips almost every year since you have retired on less than $40,000/year. How can you afford this lifestyle? What don’t you do?

I think the main thing I don’t do is that I don’t work. It’s going to sound kind of strange, but working is the most expensive way to make money in Canada. When you’re working at a regular job, you pay Canada Pension, you pay employment insurance, you also pay income tax at the top marginal rate. And those are just the direct costs of working.

There are a whole slew of indirect costs of working. You might need to pay for a wardrobe, union dues, commuting costs, parking costs or child care expenses if you’re at that stage in life. So I basically realized that working was too expensive and I couldn’t afford it so I stopped working.

That was a big part of it, and the other thing too is that I’m not really a “stuff” guy. I don’t find I buy a lot of gadgets. For example I’ve never owned a cell phone. In my twenties I spent a year travelling around Australia and New Zealand. I had the time of my life and all my worldly possessions were contained in one backpack. So I think that’s another part of it as well.

Q5. How would you respond to people who say that they are already living so close to the line that there is nothing left over for savings?

I think sometimes people look at saving enough money for retirement as if they have to achieve the whole thing all at once. Make it simple. Start with $2 a day. Take a toonie every day from your change and throw it into a jar. At the end of the month you’ll have sixty bucks. Keep doing that month after month. If you started when you were twenty and stopped at the traditional retirement age of sixty five, you’d end up with something like $628 000 just by saving toonies which is a pretty good start. If you up that to $5 a-day you’ll have one and a half million dollars which is very good start. So start small.

Q6. You invested in the stock market to make your million, yet so many people over the same period lost almost everything. What’s your secret? How do you pick stocks?

I am not really that smart a guy so what I did is I tried to copy other people. The absolute best investor in the world is a guy by the name of Warren Buffet, and I read a lot of what he had to say about investing and copied him.

And the approach, which is really quite simple, is invest in only companies that are easy enough for a six year old to illustrate with a crayon. You want companies that sell the same boring product year after boring year. An example would be Colgate toothpaste. I mean if I invest in Colgate toothpaste all I have to rely on is that you’re going to keep brushing your teeth, and I think that’s a fairly safe bet.

Now if you look at the company they’ve paid uninterrupted dividends since 1895 so basically for 117 years, anybody who has ever owned Colgate stock has received their dividends. Which is great, so focus on those kinds of companies. Forget the casino approach where you’re looking for the next hot thing. I mean ten years ago a lot of people chased Nortel and that didn’t work out very well. Again, keep it simple.

Q7. The Worried Boomer is a primer on various types of financial instruments in which people can invest their retirement savings for retirement, but you also devote a chapter to the Saskatchewan Pension Plan. What do you think are the advantages of saving in the SPP instead of in an RRSP?

There are a couple different advantages. The first one is it’s very easy. I enjoy sitting down and reading annual reports and considering where to invest, but surprisingly some people don’t enjoy that. But the SPP allows them to just make a contribution and forget about it. It’s basically a set and forget kind of plan, which is good for a lot of people.

The second factor that I really like is that the costs are really low. If you invest in traditional mutual funds you’ll pay much higher fees than you will with the SPP. The differences can be huge. We’re talking tens, and in some cases hundreds of thousands of dollars difference just by saving on the fees.

And the third factor is that it has a very good long-term track record. I think returns have averaged around 8% over the last 25 years which is really, really good. Also in the 2008 stock market downturn the SPP fund it went down much, much less than the overall markets did.

Q.10 Do you think your savings will last for the rest of your life or do you anticipate having to going back to work for someone else some day?

No I don’t anticipate having to go back to work because I rely on dividends. Let’s suppose my money is a seed and I’ve planted a tree with it. Now the traditional investor lets his tree grow for a few years and then he wants to chop it down for fire wood and make a big gain. I am not doing that.

What I’ve done is I’ve planted a tree that’s bearing fruit every year. Every year I harvest the fruit. The next year I do it again. That’s essentially what I’m doing with the dividends. The money just keeps re-appearing every year. It’s almost like I have a little printing press downstairs, down in my basement where I’m able to print new money every year as I need it. So no I don’t really anticipate ever really running out of money.

Thanks Derek. It’s been a pleasure talking to you. I’m sure listeners will be inspired by your story and look forward to hearing more about you and your family’s financial adventures in the years to come. The worried Boomer and Derek’s other five books can be purchased from his website at www.stopworking.ca.

Thank you to everyone who entered the March contest. The winner will be contacted via email.

Get to know SPP by entering our contest on this blog.

All you have to do is answer one simple question about SPP and your name will be entered for a chance to win one of the following books:

The Wealthy Barber Returns by David Chilton

Retirement’s Harsh New Realities by Gordon Pape

Count on Yourself by Alison Griffiths

The Worried Boomer by Derek Foster

Or a $20 gift card.

There are 3 separate contests (March, April and May) each with a different question. Answer the question and enter for your chance to win by clicking here!

You can even get additional chances to win by telling a friend about the contest.

Please check out the contest today!