National Post (National Edition)
Couple on track to the good life
In Saskatchewan, a couple we’ll call Herb, 58, and Mary, 56, are trying to time their retirements. Each has put in more than three decades working for a large company. Together, they have built up more than $1.6-million of assets with no liabilities on their balance sheet. Their lives in their town of tidy houses and church spires, wheat fields in the distance and kids playing on lawns is an image out of an earlier era. On the one hand, it would seem that with their two children looked after — the elder, age 23, grown and gone and the younger, 19, in university with an RESP for tuition and some expenses, they would have few problems. They plan to downsize their $500,000 house and move into a condo within five years, liberating $100,000 in the process. They would use the money for travel, wintering in the Caribbean. Much of their future security resides in their job pensions, yet there is more to the strength of the financial fortress that they have built.
Herb and Mary made two vital decisions: First, they held on to good jobs with solid pensions — his a defined-benefit plan with indexation, hers a defined-contribution plan with 100% matching of contribution by the employer. Those pensions will pay the largest part of their retirement income. Their other financial assets, which total $433,070, would not provide sufficient income to maintain their approximately $8,000 of monthly expenses net of contributions to their RRSPs, TFSAs and other savings.