By Mary Teresa Bitti
James* and his wife Lillian would like to retire at the end of 2024, but only if they can ensure they are able to enjoy a lifestyle that affords them the ability to enjoy trips to Europe and Asia each year and not feel financially constrained.
In the past few years, Lillian, who will turn 60 this year, has scaled back to work from home on a part-time basis, which provides her flexibility and a healthy work-life balance. She earns about $25,000 a year.
James, 67, who has built a highly successful career advancing research and advocacy both in the private and public sectors, has also pared back his consulting projects and works about 30 weeks a year, earning a pre-tax annual income of $196,100. His current net monthly income is $8,426 (combined, their current monthly net income is $11,123, but their average monthly expenses are $11,993).
However, the grind and hassles of extensive work-related travel are taking their toll on James. If he has to, he could take on consulting work.
Lillian recently learned she is eligible for a defined-contribution pension valued at $109,570, which is invested in a balanced fund, and wonders if she should move the funds to money market, equity or bond funds.
“It was unexpected and feels like ‘found’ money,” she said.
James is eligible to collect a public-sector pension this coming fall. It is a contributory defined-benefit pension plan indexed to inflation and will pay an estimated $30,028 (before tax) per year. However, it will pay an estimated $50,225 if he continues to work until he’s 70, and $62,677 if he works until he’s 72.
“At that point, my wife will be 63 and we will still have some good years ahead of us to enjoy retirement,” he said.
The couple is based in
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