Thirty-something couple, with a $1,000 a month golf habit, want to retire by 55. Can they do it?
Situation: Couple in mid-30s wants to retire in mid-50s with a financially secure future
Solution: Plan will work if they maintain RRSPs, RESPs, build up TFSAs and other savings
In Ontario, far from the high costs of Toronto, a couple we’ll call Matt, 39, and Kate, 37, are raising two kids ages 8 and 10. They bring home $11,500 per month from his job in the plastics industry and hers in hardware sales and add $134 from the Canada Child Benefit. Their goal: raise the kids and retire at 55 with $60,000 in after-tax income. They expect to stretch their savings four decades to Matt’s age 95.
They are well on their way, for they own their home with no mortgage. The problem is that, although their present finances are in excellent shape, they have yet to build sufficient savings to make their plan work starting in 16 years. They have $355,000 in RRSP and TFSA savings, $68,000 in their children’s Registered Education Savings Plan, and a fairly expensive way of life with three cars, and a $12,000 annual golf club membership. As well, they would like to give their two children $30,000 each in 2019 dollars for weddings or a good start in adult life.
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Family Finance asked Eliott Einarson, a Winnipeg-based financial planner with Ottawa’s Exponent Asset Management Inc., to work with Matt and Kate. Out of their monthly income, they allocate $1,000 for golf, $2,500 for RRSPs, $500 for TFSAs, $200 for RESPs, and $3,484 to cash savings earmarked for house repairs or other miscellaneous expenses.