Solution: Sell unprofitable rentals, downsize house, compound capital, annuitize income
Family Finance asked Derek Moran, head of Smarter Financial Planning Ltd. in Kelowna, B.C., to work with Arnold and Sandy.The couple has total assets of $4.46 million, but 77 per cent of that is in Toronto real estate, including their $2.1 million home and a pair of rental properties. The rentals are poor money makers. Condo 1 with a $650,000 estimated market value and a $220,000 mortgage has net income of $4,680 per year.
In retirement beginning when Arnold is 57 and Sandy is 52, they will have two defined benefit pensions. Arnold’s would be $1,050 per month or $12,600 per year plus a bridge pension to age 65 of $160 per month. Sandy’s would be $575 per month or $6,900 per year with a bridge of $80 per month to 65. The couple has a total of $55,000 in TFSAs. They can add the maximum of $6,000 each for the next six years. Assuming that their funds grow at 3 per cent per year after inflation, they will have $143,294 in 2019 dollars in six years. If that money were spent over the next 38 years to Sandy’s age 90, it would support tax-free payments of $6,370 per year in 2019 dollars.
Source: Education Headlines (educationheadlines.net)
Siri, show me how to be totally out of touch
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