Colin, 55, and Marcella, 54, from Halifax are on the cusp of a major life transition. With their child in university and their nest effectively empty, the couple is eager to trade their high-earning careers for a life of travel and hobbies. Their ambitious goal is to retire within the next one to two years, but they seek validation that their substantial nest egg can make this dream a secure reality.
A Deep Dive into the Financial Blueprint
The couple has aggressively saved to build an impressive investment portfolio valued at approximately $2.75 million. Their target is a combined after-tax retirement income of between $140,000 and $150,000 annually.
Their assets are diversified across several accounts. The cornerstone is nearly $2 million held in Registered Retirement Savings Plans (RRSPs), complemented by about $290,000 in Locked-In Retirement Accounts (LIRAs). These registered accounts maintain a 60/40 split between equities and fixed income. They also hold about $140,000 in Tax-Free Savings Accounts (TFSAs), currently in GIC funds.
Beyond their investment accounts, Colin and Marcella have significant equity in their Halifax home, valued at $1.1 million with a modest $70,000 mortgage set to be paid off in March 2027. They also anticipate $125,000 from the sale of an inherited property, part of which will clear a $40,000 Home Equity Line of Credit (HELOC).
Their current high cash flow of about $230,000 annually—which includes savings—is expected to drop to around $115,000 in retirement after mortgage and debt payments cease and contributions to registered plans and employee stock purchase plans stop.
Key Questions for a Secure Future
Despite their diligent preparation, market uncertainties give the couple pause. "We think we have done all the right things, but uncertainty in the markets causes us concern," Colin said. Lacking defined benefit pensions, they will rely entirely on their investments, Canada Pension Plan (CPP), and Old Age Security (OAS) benefits.
This reliance on government benefits raises strategic questions. Colin wants to know the optimal time for both of them to apply for CPP and OAS to avoid any clawback. They also hold various life insurance policies and wonder if they should maintain individual term life policies with four years remaining.
Their core dilemma is clear: "Do we need to downsize our home? Adjust our portfolio? Are we able to leave the work world behind in 2026 or 2027? If not, then when?"
The Verdict from a Financial Expert
Graeme Egan, a financial planner and portfolio manager at CastleBay Wealth Management Inc. in Vancouver, reviewed their situation. His analysis offers the couple encouraging news.
"Colin and Marcella have done an excellent job saving. Based on a simple overview of their investment accounts, retiring in 18 months when their mortgage is paid off is a reasonable and attainable financial goal," Egan stated.
He projects that, assuming a five per cent pre-tax return on their registered accounts over the next year and a half, their net worth should grow to approximately $3,050,000 by March 2027, not including any additional savings. This robust financial position suggests their dream of an early, active retirement is well within reach, provided their portfolio is managed with a sustainable withdrawal strategy.
