I’m 30: Has The Game Changed?

by mfd on April 7, 2009

Yes today is my birthday and yes I am now 30.

Are things different? No.

Does something feel different? Yes!

Up to this point I’ve just been watching my expenses and saving/investing without a clear plan. It’s never concerned me before because of where I stood financially in comparison to other people in my age range (see the money sense article) .  I had no debt,  plenty of savings and rrsps,  and a pretty expensive condo with tons of equity in it. This put me ahead of a large portion of people in their 20′s.  In the 30′s I’m not so far ahead and it leaves me with an uneasy feeling.  I have to ask myself, has the game changed? Am I playing baseball with a golf club?

I’m the type of person that needs to be able to see as far into the future as possible to feel comfortable. Right now the path is foggy and I feel that I’ve run out of time to make a clear path.

What can I do?

I need to take action. I need look at what I know and what I don’t know.  Once I have that then I need to make sure I’m clear on what I know and answer what I don’t know.  So lets start now…

What I know?

- I know I plan to contribute $15,000 a year to my RRSP(401K) until I retire. With a conservative growth of 5% I believe it will give me plenty of funds to act as a corner stone to my retirement.
- I’m currently implementing a version of Canadian Capitalist’s Sleepy Portfolio in my RRSP (401K). I intend to follow this strategy for the next 10 years.
- I know in 3 years we want to sell this condo and move into a house no more than $500k
- I know I want to max out RESPs (education fund) when we have kids

What I don’t know?

- I don’t know how many children we will have and how much they will cost
- I don’t know how maternity leave and child care will impact our finances
- I don’t know the specifics of my fiances pension
- I don’t know how to manage her finances to meet our overall goals.
- I don’t know what I’m going to do with my RRSP (401K) after 10 years
- I don’t know how I plan to utilize the TFSA (Roth IRA)
- I don’t know how I’m going to invest excess funds
- I don’t know how I’m going to structure our finances when we retire at 55

It’s time to get some answers because in my mind the clock is ticking. I need to have my retirement/financial plan.

Do you feel a sense of urgency on milestone birthdays (I hope not cause I can’t handle this every couple of years)?

-mfd-

{ 7 comments }

Alexandra Macqueen April 7, 2009 at 3:47 pm

Go you! Here’s my own personal approach (and I’m way over 30, FWIW): when I was a grad student, I read some military history.

One quote that stuck with me was, “No battle plan survives contact with the enemy.” This was from Moltke, whose main thesis was that military strategy had to be understood as a system of options since only the beginning of a military operation was plannable. (Here’s a fun link on Moltke: http://en.wikipedia.org/wiki/Helmuth_von_Moltke_the_Elder)

The game for me is to keep my options and my attitude flexible, while doing what I can to fulfill on my personal goals now and in the future. And always carefully amassing and shepherding and replenishing my resources.

I don’t have a set-in-stone for any part of my personal financial life, from what I think I’m going to earn in a given year (from investment returns or any other source), to when I’m going to stop engaging with the paid work force. I set goals and then take action that is designed to have me achieve them. And I evaluate and measure a lot (a lot of things, and at a high frequency).

Congratulations on your birthday, and good luck on your financial planning journey!

moneygardener April 7, 2009 at 8:39 pm

Welcome to the club. I turned 30 a few months back now and it certainly does change your thinking on financial matters. I was proud to be ‘in my twenties’ with a long time horizon and in the minority on my financial state versus others my age. Now that I’m 30 I find myself thinking about things a little differently and feeling an increased sense of urgency and responsibility…

Canadian Finance April 7, 2009 at 10:32 pm

Happy Birthday! Sounds like you’re doing good with what you do know.

The structuring for retirement is a good question… I would put something in your TFSA that is likely to appreciate in value the most. For me, I’m thinking TFSAs. Come retirement, you can pull it out tax free, where in an RRSP you’d be taxed on it. For that reason, lower returns, like bonds, make more sense for RRSPs.

Either way, if you can max your RRSPs and TFSAs, they’ll compliment each other quite nicely during retirement!

mfd April 9, 2009 at 5:57 am

Thanks for the bday wishes folks

@Alexandra – I totally agree on flexibility but at this point I’ve got huge gaping holes in my plan. I just need to hash it out and adjust it as unforeseen thing pop up.

@moneygardener – Ha I’m glad there is someone else out there that felt the same way :D

@Canadian Finance – For me at this point I have cash for the emergency fund sitting in our TFSAs. But it definitely seems to be the wrong idea and I want it in something that will grown a nice 5-7% I just haven’t had a chance to figure it out. Maybe index funds that I can shift over to a bond ladder when I retire.

tom April 13, 2009 at 10:36 am

I turned 24 last month and I can’t believe how much I been slacking off and just not being able to learn about finance for so long.

I mean i see others my age getting married, moving out, buying a house even and you look at me and i got nothing.

I mean sure i gotta take small steps moving ahead and theres lots of things to watch out for.

Bret April 13, 2009 at 1:24 pm

MFD,

You are way ahead of the game. Most people who are in their 30s and asking these kinds of questions haven’t saved anything.

My advice is the same as Alexandra’s. Start with the goals you intend to reach and invest to exceed them. Those goals will change as you have kids and get older, so keep your investments flexible and adjust them as needed.

Since you are a Canadian, you may be interested in reading a book called The Wealthy Barber. It answers most of these questions with solid advice. The only bizarre thing about the book is that the author is Canadian, but his character in the book is American. I don’t know why? Maybe he was going after a bigger audience.

Good luck.

Bret

mfd April 14, 2009 at 12:52 am

@Tom – I don’t think you should be overly concerned with how other people are doing right now. I was way behind like you and in a matter of 2 years I shot way ahead of other people in my age group.

My best advice would be have a basic plan for saving but don’t get overly aggressive. Enjoy your 20′s because take it from me time really does fly by.

@Bret – Thanks for the kind words. I haven’t read the wealthy barber but I have read other books in that genre. The issue really isn’t knowledge (I can always use more) but rather gets concrete answers to those questions. For the most part I have rough estimates and I really need to sit down and crunch the number. Basically it seems like I’m at a table with a puzzle. I have all the pieces but I’m trying to figure out how to put it together and now that I’m 30 it feels like there is an executioner standing over me with a timer waiting to go off.

Oh well I’m working on the numbers now. We’ll see how it all works out.

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