Can Sal, 69, and Carla, 65, retire and still meet their after-tax spending goal?
THE GLOBE AND MAIL - DIANNE MALEY
Sal and Carla have run a successful consulting business over the years, saved well and used tax-planning strategies such as their individual pension plan (IPP) to ensure their financial security. An IPP is a form of defined-benefit pension plan.
Sal is age 69, Carla is 65. They have three adult children in their 30s.
In addition to their $120,000-a-year of income, the couple have substantial savings and investments. They have decided that some of their wealth will be used to fund a donor-advised fund at a local community foundation. They want to maintain their current lifestyle spending of $180,000 a year after tax when they retire in the next year or so. They are also concerned about keeping taxes and estate fees to a minimum.
Their questions: How to draw down their registered savings funds (RRSPs) to meet their $180,000 after-tax spending goal; how to maximize what they leave to their three children by reducing probate and estate taxes; and how to ensure they will have $500,000 for a family foundation, Sal writes in an e-mail.
We asked Brinsley Saleken, a fee-only financial planner and portfolio manager at Macdonald Shymko & Co. Ltd. in Vancouver, to look at Sal and Carla’s situation. Mr. Saleken holds the certified financial planner and advanced registered financial planner designations.
What the Expert says
The first task was to affirm that the $180,000 after-tax in today’s dollars that they wish to spend is sustainable, the planner says. They want something left over for their three adult children as well as funding the foundation to their long-term goal of $500,000.