Couple has a compelling reason for wanting to break with the retirement mould
Traditional financial planning models are designed to build portfolios that will fund a 30-plus-year retirement after age 65. But what do you do if your goals don’t align with that model?
That’s the question Manitoba married couple Frank* and Heather are trying to figure out.
“We want to seize the day,” he said.
In this case, that day will happen in three years, when Heather turns 50 and fully retires and Frank turns 59 and partially retires. For years, they have been working overtime, eliminating debt and saving as much as possible to realize this vision for a compelling reason.
“Heather is extremely healthy today, but she is also a childhood cancer survivor and has had a few health scares,” Frank said. “Given all that she’s been through, we don’t want to wait until 65 to retire.”
Both Frank and Heather work in health care and bring in a combined annual income of about $200,000 a year before tax. Frank is self-employed and once he shifts to working part time, he anticipates his annual income will decrease to about $50,000.
A self-taught do-it-yourself investor, Frank has built a $1.6-million investment portfolio that generates about $52,000 a year in dividends. The couple reinvests this money into their registered retirement savings plans (RRSPs, $880,000) and tax-free savings accounts (TFSAs, $260,000). These accounts are largely in Canadian stocks with a global footprint. The RRSPs also include $175,000 in guaranteed investment certificates (GICs).
They also have $109,000 in locked-in retirement accounts (LIRAs) and $70,000 in a registered education savings plan (RESP) for their daughter, who has just completed her first year of university. The LIRAs hold segregated mutual funds and the RESP holds a mutual fund,
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