This couple face ‘significant risks’ if they carry debt into retirement

The Globe and Mail – Financial Facelift by Dianne Maley

“Can I retire at age 65?” Arlo asks in an e-mail, echoing a question posed by so many people in their fifties. Arlo is 57, his wife, Alice, is 53. They are both self-employed professionals, bringing in a combined $265,000 a year before tax. They have RRSP savings but no work pension plans.

Their main asset by far is their $3.6-million Vancouver-area house. “I will work to age 70 if I have to,” Arlo writes. “I want to know if we have to sell our home and downsize, which would be okay.”

They have also been saving to help their three boys, ages 11, 13 and 18, with postsecondary education.

When they retire, Alice and Arlo plan to spend $120,000 a year – less than they are spending now. But if they hang up their hats when Arlo is 65, they will still have a mortgage to carry.

We asked Ngoc Day, a financial planner at Macdonald Shymko & Co. Ltd. in Vancouver, to look at the couple’s situation. Ms. Day holds the certified financial planner (CFP) and registered financial planner (RFP) designations, among others. Macdonald Shymko is a fee-only financial planning and portfolio management firm.

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