Should couple focus on paying off their mortgage or saving for retirement?

The Globe and Mail – Financial Facelift by Dianne Maley

It has taken time, but Jerry has built his consulting business up to the point where he is grossing $112,000 a year. That’s up from $45,000 in 2014 “and much less before,” Jerry writes in an e-mail. For the past decade, his wife Janice kept the family finances on an even keel thanks to her teacher’s salary.

Jerry is age 47, Janice is 45. They have two children, ages 5 and 8.

They have some savings and Janice will be entitled to an indexed defined-benefit pension when she retires. Their only debt is the mortgage on their B.C. home. Now that they have some spare cash, they wonder whether they should focus on paying off the mortgage or saving for retirement. They wonder, too, whether Jerry should take out disability insurance and whether his corporation might offer some tax-planning strategies.

Longer term, Janice wants to retire at age 58, while Jerry plans on shifting gradually from full-time to part-time work starting at age 60. Their retirement spending goal is $84,000 a year after tax.

We asked Brinsley Saleken, a financial planner and portfolio manager at Macdonald Shymko & Co. Ltd. in Vancouver, to look at Jerry and Janice’s situation. Macdonald Shymko is a fee-only financial planning firm.

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