MORTGAGE CLOUDS RETIREMENT PLANS FOR THIS MIDDLE-CLASS COUPLE

The Globe and Mail – Financial Facelift By Diane Jermyn

Trysta and Janice consider themselves middle-class Canadians with “real” questions that are more valid than many presented to Financial Facelift.

Trysta is 57 and has a well-paying job in education, grossing $100,000 a year. Janice is 46 and on long-term disability that pays her $48,000 a year. They have two grown children but no “significant” plans for a legacy. Their biggest concern is the mortgage on their B.C. house. They wonder if it will stand in the way of Trysta’s early retirement.

“When will Trysta be able to retire?” they ask in an e-mail. “Is age 60 achievable? Should we pay off our mortgage? Should we downsize?” They are considering selling their home and buying a more modest house, Janice writes. They would move to a lower-cost area, so they would no longer have a mortgage. They wonder, too, how their financial portfolio should be structured.

If Trysta does retire early, their income would take a steep drop and they’d be relying heavily on Janice’s disability income in the early years.

We asked Ian Black, a fee-only financial planner at Macdonald Shymko & Co. Ltd. in Vancouver, to look at Trysta and Janice’s situation. Mr. Black holds the registered financial planner (RFP) designation.

What the expert says

“A retirement age of 60 for Trysta is an achievable goal,” Mr. Black says. Their cash flow at that time would be about $61,700 a year, short of their $66,000-a-year target. Janice’s $48,000 disability income, which continues to the age of 65 (when Trysta will be 76), would make up a good portion of their retirement income.  Click here to read the rest of the article

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