In Alberta, a couple we’ll call Herb and Sally, both 53, want to make their transition from building their retirement savings to spending them. Herb has been out of work for two years, Sally, a manager in a non-profit organization, quit her job in June, giving up her $128,000 pre-tax income, and joined Herb planning a move to Mexico. The problem is whether they can afford to stop working entirely a dozen years before the more common retirement age of 65. They have a 21-year-old child who still lives at home, but they do not need to support him and he will move out if they leave the country. They have already sold a cottage, one car and an off-road vehicle in anticipation of the move. Now they want to see how their finances will hold up with no earnings, no further savings and perhaps four decades of life ahead of them.
Family Finance asked Derek Moran, head of Smarter Financial Planning Ltd. in Kelowna, B.C., to work with Herb and Sally. His view is that their plan should work, though they will have to wait seven years before they can access their Canada Pension Plan benefits. They can also count on OAS and small job pensions. What their investments will provide them is structure in their income for the next 42 years, through age 95.
tap here to see other videos from our team.