Sally is 59 years old, and after 35 years of working for the same company, has decided to take the offered severance package of $80,000 at the end of the year. Adam is a 61 year old business manager (earning $90,000 annually) who has been with his current employer for eight years. There are no pension plans at all with this employer, but he enjoys the work environment. Besides, with grown up children and being mortgage free, he feels staying in a good working environment beats jumping around jobs at his age. He wasn’t planning on retiring until 65, but would now like to retire to be with Sally.

Other details: If they retire at age 60 – both of them would cease working completely. If they waited until age 65, Adam would still be working at his current job until age 65, but not Sally. She would retire regardless, but work part‐time at the local supermarket receiving $ 20,500 annually net of all deductions to supplement her CPP income until Adam’s 65th birthday. At this point they will start their CPP and OAS. If they both waited until age 70, they hope that neither of them would be working after 65, so they will completely be depending on their savings, investments and retirement funds. They will both defer collecting CPP and OAS until age 70. So they’ve set up a meeting with you and your retirement planning team to help them with the answers. They hope to live past age 90, but just to play it safe, they would like to plan until age 95 as they are in fairly good health. Their Financial Situation After 37 years of marriage, they are mortgage free and plan on downsizing from their $900,000 home to a townhouse, hopefully this will resulting in money left over to help create more retirement income. Two years ago Adams’ mother passed away and they used the inheritance to buy a condo in Phoenix, Arizona. Current value of the condo is $450,000. But he purchased it for $350,000. They also want to keep in mind their two daughters (aged 32 and 27, both married) and their two grandchildren (Raven is aged 2 and Martin is 5). They would like to help out with the grandchildren’s education plus have the flexibility to help Sally’s aging parents. If they could assist each grandchild through a family RESP and gift $5,000 per year until their 18 birthday respectively, they would be over the moon! Overall they feel that retirement would allow them to enjoy their newfound freedom. This means travelling to exotic places, spending winters in Arizona and downsizing to a home with less upkeep (at least in the early years). Afterwards, they see themselves spending more time closer to home, with family and friends, especially their grandchildren. Finally, in the latter years, their main concern is more about managing health and wellness. Adam and Sally can only go by how healthy they are now and look at their family history to try and figure out what they might need in terms of healthcare in the future. They want to plan ahead as they don’t want to be a burden, financially or otherwise, on their family. 

Financial Situation as of Today Sally’s Assets: 

Severance Package $ 80,000 

DC Plan Value $ 112,000 

TFSA Value $ 25,000 

RRSP Value $ 30,000 Adam’s 

Assets: 

TFSA Value $ 60,000 

LIRA Value $ 190,000 

RRSP $ 145,000 

Sally and Adam’s Joint Assets: 

Principal Residence $ 900,000 

Arizona Condo. $ 450,000 

USD Joint Open Investment $ 255,000

1. If it’s financially possible for both of them to retire at this point in their lives. Or

2. Should they wait until Adam’s normal retirement age being 65?

3. They have heard a lot about deferring collecting CPP and OAS until age 70. If they did this, would it hurt them financially? Is it necessary for Sally to wait until her 70th birthday or could she apply when Adam does? They would like to explore all three options in order to make an informed decision.