Will and Liza Darcy

• Will and Liza are both 58 and want to retire from their well-paying jobs. Liza works in education and Will at a government agency.
• Liza would like to retire at 60 and Will hopes to quit his job in 2028 when he turns 63. They are both open to working part-time until they begin collecting their government benefits at age 65, although they would prefer not to. They would like to travel to Europe in the fall and to a hot climate in the winter.
• They want to stay in their Saskatchewan home as long as they can then leave it to their two children, now in their late 20s.

Question: Can they retire early and spend $80,000 a year after tax?

Goals: Will wants to retire in 5 years when he turns 63.

Liza wants to retire in 2 years when she turns 60.

Current Income: John $106,000 Gross 74,200 Net

Liza $98,000 Gross 68,600 Net

Current investment portfolio: 90% stocks and 10% cash and bonds

Pension Plans:

John: Defined contribution plan worth $680,000 (6% contribution matched by employer)

Liza: Defined benefit plan will pay $35,000/year once she turns 60. Her pension plan is indexed to inflation. Her pension adjustment is $6000 for the current tax year.

Their Canada Pension Plans will be about 75% of the maximum and they are thinking about taking them at 65. They would also like to take their OAS when they turn 65. (NOTE: Maximum CPP for an individual in 5 years taking their CPP will be approximately $19,500 and OAS payments will be about 11,600 annually each)

Part-Time Work: Once they retire, they both plan to work part-time until they reach 65 earning about $12,000 each.

Financial Information:

Current Monthly net income: $11,900

Assets:

Cash $6,900

TFSA (Liz) $28,700; TFSA (Will) $2,105

RRSP (Liz) $45,085; RRSP(Will) $175,770

House $775,000;

Liabilities:

$87,420 mortgage at 1.99 per cent due 2026

$64,140 mortgage at 1.92 per cent due 2027

Monthly expenses:

Mortgages $2,095;

property tax $455;

water, sewer, garage $65;

home insurance $75;

electricity $110;

heating $250;

maintenance, garden $110;

transportation $436;

groceries $800;

entertainment (including travel and club membership) $1000

personal care and clothing $300;

life insurance $380;

Cellphones/TV/Internet $460;

Miscellaneous $300

RRSPs $800;

TFSAs 600;

REQUIRED:

• A retirement plan which includes:
  • A client profile indicating the clients circumstances as well as their risk profile.
  • Retirement and Financial goals for the client
  • A comparison of current income and expenses and retirement income and expenses.
  • Asset allocation for investment funds including a pie chart illustration.
  • Recommendations to the client which will help them meet their goals. Include in your recommendations assumptions that were made about: inflation, interest rates, and rates of return.
  • A communication plan for your clients.