Can Valeria, 53 with investments worth $1 million in RRSPs, TFSAs and GICs, retire in two years?
Valeria, 53, is considering retirement in two years. She has a substantial investment portfolio worth over $1 million, including RRSPs, TFSAs, and GICs. Her goal is to achieve a monthly income of $4,500 before tax during retirement, similar to her current financial needs. With her current financial situation and goals, can she retire comfortably in two years?
Valeria's financial situation is strong, with a debt-free home in Nova Scotia and a valuable investment portfolio. She has a defined employer pension plan with a bridge benefit that will provide a steady income until age 65. Additionally, she has a substantial amount in cash, cashable GICs, and a well-diversified investment portfolio. Her annual income is $92,000 pre-tax, and she plans to retire at 55.
Eliott Einarson, a retirement planner at Exponent Investment Management, believes that Valeria is well-positioned to retire at 55. According to Einarson's calculations, her modest income goal and healthy RRSP balance will allow her to meet her cash flow needs in retirement using just her employer pension and registered assets until age 65. Once the bridge benefit ends, CPP and OAS can more than replace that income without increasing her marginal tax rate and putting future OAS benefits at risk.
Einarson suggests that Valeria should put the taxable long service award into her RRSP. He also recommends holding longer-term growth investments in her TFSA to maximize tax-free compounding, while keeping the rest of her funds in cash and some GICs for a more conservative overall allocation. This approach will help her manage her asset allocation and spending goals effectively.
Valeria's financial plan seems feasible, but it requires careful consideration and professional guidance. By working with a qualified financial advisor, she can create a retirement plan that aligns with her income options, asset allocation, and spending goals. This will give her the confidence to make informed decisions about her retirement and ensure a comfortable lifestyle throughout her retirement years.
