BENEFITS BY AGE

Retirement at 60 will work. If the present $100,000 RRSP balance plus $31,500 from the TFSAs is added immediately, then with the same three per cent real return for 30 years, it would generate $6,709 per year. Thus from Jack’s age 60 to his age 65, he would have $47,216 pension plus the $10,000 bridge, RRSP income of $6,709, TFSA income of $2,150 and $10,800 annual rental income for total income of $78,875 before tax.

With appropriate splits of eligible income and no tax on TFSA income, they would pay tax at an average rate of 12 per cent and have $5,640 to spend each month. Lower income would maintain the untaxed Canada Child Benefit, boosting spendable income to about $6,000 per month until the last child to leave home is 18, in about a decade.

When Jack is 65, Susan will be 57. He will lose the $10,000 job pension bridge but gain $13,610 CPP and $7,040 OAS.

His total income including rental income will be about $78,670 per year before tax and about $5,700 after 13 per cent tax and no tax on the TFSA payouts for total income after tax of $6,600 per month.

Finally, when Susan is 65, the couple’s income would rise with her OAS, $7,040 and her estimated $3,400 CPP to a total of $89,110.

Allowing for 14 per cent tax on all income other than the TFSA zero tax payouts, the couple would have $6,500 to spend each month. Their present frugal spending of $5,400 per month when RRSP and, TFSA savings are removed would be supported at every stage. Though CCB payments would have ended by Jack’s mid-70s, they would have a surplus for travel or aid to their brood.

Jack can afford to retire at 60 if he wishes. The family’s retirement income, with two kids still at home will amply cover their costs.

When the last kids leave home in no more than 15 years, Jack and Susan will have even more discretionary income.

Jack and Susan will have to cover dental expenses in retirement.

If they prefer to self-insure those expenses rather than buy extended medical and dental benefits, they will have the income and/or savings to do it. They will have no life insurance for it’s very costly to buy at their ages. Nevertheless, it’s going to be a financially solid retirement, Moran concludes.