Are winds in the right direction for Nancy and Nathan to reach their early retirement goals?

Special to The Globe and Mail – By Dianne Maley

Vancouver professionals Nancy and Nathan are in the enviable position of being able to contemplate retiring from their jobs at age 55 while still enjoying a comfortable standard of living.

He is 42, she is 40. They have two children, age 6 and 9. Together Nathan and Nancy bring in $170,000 a year in employment income plus $4,000 a year in net rental income from an investment property. Nancy has a private practice that she plans to continue part-time after she leaves her current job. Both contribute to defined benefit pension plans at work indexed to inflation. At age 55, Nathan will get a pension of $27,345 a year in today’s dollars, while Nancy will get $13,415 a year plus a bridge benefit from 55 to age 65 of $5,350.

“We are wondering how we should be dividing up our extra money among RESPs [registered education savings plans], RRSPs [registered retirement savings plans] and mortgage prepayments,” Nathan writes in an e-mail. If they retire early, will they still be able to pay for their children’s university education? “How much should our RESP account have when the kids are 18, assuming a four-year degree?” Nathan asks. “Are we saving enough to retire at age 55?”

Their retirement spending goal is $80,000 a year after tax.

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

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