PREVIOUS OBLIGATIONS

Prepaying the car loan is the right thing to do, Perreault says. The current amount outstanding is $17,529 with a 4.9 per cent interest rate. She has $200,000 in cash earning about one per cent a year and she saves $2,017 a month after expenses. Spending one per cent to save 4.9 per cent is a good deal. Pay off the loan, he advises.

The pension buyback will boost her pension by $1,254 a year with a tentative start date early in 2017. If her life expectancy is 25 years, the implied rate of return is 6.5 per cent. If she lives 20 years, the income stream of the pension implies a 5.3 per cent rate of return. Either one beats the one per cent return on her savings account. Do the buyback, the planner says.