Retirement Planning Expert Shares Financial Advice for Couple Seeking Income Stream During Retirement

Toronto, Canada – A couple in their fifties is facing the challenge of planning for retirement and generating a steady income stream to supplement a corporate executive’s defined benefit pension. David, 57, is preparing to retire from his high-paying job, while his 55-year-old wife, Greta, is already retired. With an adult son and a mortgage-free house, the couple’s primary concern is establishing a reliable source of retirement income in addition to David’s pension.

The couple’s goal is to attain a retirement spending of $95,000 a year after tax. They have investments totaling $787,000 and $178,000 in cash and guaranteed investment certificates, but their main question is, in what order should they use up their savings and investments, and when should they begin taking Canada Pension Plan (CPP) and Old Age Security (OAS) benefits?

In seeking advice, they approached Matthew Ardrey, a financial planner and portfolio manager, who holds the certified financial planner (CFP) and the advanced registered financial planner (RFP) designations. According to Ardrey, the couple’s expenses are expected to remain at about $95,000 a year throughout retirement, and they have assets including cash and equivalents, non-registered stocks, and TFSA and RRSP accounts, totaling $1.7 million.

The couple also plans to downsize their $700,000 home to a less expensive one in about 10 years, and they have questions about purchasing an annuity and deferring CPP until age 70 or taking it at 65. The portfolio analysis showed that about 45 per cent of their investment portfolio is in high-cost retail mutual funds, and Ardrey recommends moving them out of the high-cost investment portfolio to lower their investment costs.

Additionally, he suggests maximizing their TFSA savings and engaging the services of a portfolio manager with a focus on income generation to improve their returns and lower their volatility risk. With these changes, Ardrey believes the couple’s retirement plan can achieve a 100-per-cent success rate, giving them peace of mind in their financial preparations for retirement.

The couple’s estimated present value of David’s defined benefit pension is $1,331,310, and they have monthly outlays for various expenses including property tax, home insurance, groceries, and entertainment, totaling $7,915. Despite this detailed plan, the couple still has room for improvement to ensure financial stability as they enter retirement.