THE GLOBE AND MAIL - DIANNE MALEY
Gabriel and Ivy have well-paying professional jobs, three children and a mortgage-free house in small-town British Columbia. Gabriel works in health care, Ivy in education. They are both age 54 and earn a combined $182,785 a year.
“We are very frugal,” Ivy writes in an e-mail. “We do all our own home repairs, shop at thrift stores and rarely eat out.”
Short term, they want to “get the kids through bachelor’s degrees” – one has already finished university – and buy an electric car. They have about $144,000 in a registered education savings plan for tuition.
Both Ivy and Gabriel have defined benefit pension plans that will pay a combined $61,550 a year at age 65, indexed to inflation. That’s when their bridge, or early retirement, benefits end and they begin drawing Canada Pension Plan and Old Age Security benefits. Their initial pensions in 2027, the first year they are both fully retired, will total $67,884 a year, including the bridge.
“Can we afford to retire at age 57?” Ivy asks. “If not, what age would be appropriate?”
Their retirement spending target is $65,000 a year plus $15,000 a year for travel.
We asked Ian Black, a financial planner at Macdonald, Shymko & Co. Ltd. of Vancouver, to look at Gabriel and Ivy’s situation. Mr. Black holds the advanced registered financial planner (RFP) designation as well as the trust and estate practitioner (TEP) designation.
What the Expert Says
“Yes, they can afford to retire at age 57,” Mr. Black says. Gabriel and Ivy could afford to retire now, although waiting until each attains age 57 reduces the penalty they would pay for starting their pensions early, the planner says ...