Open this photo in gallery:Mark and Rebecca have a jointly held consulting company from which they each draw a salary, leaving any surplus over their basic living expenses in the corporation.Blair Gable/The Globe and MailPlease log in to bookmark this story.Mark and Rebecca are at a “turning point of sorts, where the past is no longer indicative of the years ahead,” Mark writes in an e-mail. He is 62 years old; Rebecca is 59.They have recently finished paying off the mortgage on their Montreal-area house. And their 24-year-old son, who still lives at home, has finished his graduate studies and is working full time, so they no longer have education-related expenses.Mark and Rebecca have a jointly held consulting company from which they each draw a salary, leaving any surplus over their basic living expenses in the corporation. They are drawing a combined $130,000 a year after income tax and Quebec Pension Plan contributions. They hope to retire in about five years with a spending goal of $80,000 a year after tax.Perhaps the biggest challenge Mark and Rebecca face is an imminent $1-million inheritance. They want to leave the money to their son but realize they may need to use some of it themselves. In the meantime, they’re agonizing over how to safely invest it given the “current market conditions,” Mark adds.Should they dive into the stock market all at once? Or invest in regular instalments? Should they set up a ladder of guaranteed investment certificates?We asked Matthew Ardrey, a certified financial planner and portfolio manager at TriDelta Private Wealth in Toronto. Mr. Ardrey also holds the advanced registered financial planner designation.What the Expert SaysMark and Rebecca would like to preserve the inheritance money for their son as part of their estate. “Thus, we looked at their retirement plan as if there was no inheritance at all,” Mr. Ardrey says.Assuming their son moves out when they retire, their spending will drop to $80,000 a year and then to $70,000 a year five years after that. All expenses are subject to 3-per-cent inflation. “There are some minimal surpluses preretirement that are saved to their tax-free savings accounts,” the planner says.Their Quebec Pension Plan entitlement is based on their estimated amounts of 88 per cent of maximum for Mark and 92 per cent of maximum for Rebecca. These are taken at retirement, along with Old Age Security benefits. Life expectancy for both is age 95.The forecast has them starting to draw dividends from the $300,000 saved in the corporation at retirement. “These are $3,000 per month and last for 10 years before the assets are exhausted.” As well, Mark has a pension of $7,600 a year, which is indexed to inflation.Their current asset mix is almost 97 per cent cash and GICs. “This creates a low expected rate of return of 2.24 per cent,” Mr. Ardrey says. “Based on these assumptions, the plan fails when Rebecca is age 93.”To ensure the viability of this plan, Mr.
Sab. Feb 8th, 2025
