Case Study 3: Do I have enough to retire on?

Mario and Sandra Giannelli are in their early sixties and live in the Maritimes. Mario is a health inspector and Sandra works at a local retail store. The Giannellis began to get serious about retirement planning over the past four years when Mario first started to consider retirement.

Mario has worked in his job for over thirty years; while he likes certain aspects of what he does, lately he finds that the demands that the job places on him are increasing. He finds himself constantly thinking about life after work and not having any demands placed on him. Sandra loves her work at the store and would like to keep working for as long as she can. “I really need to have an outlet where I can see other people and keep my mind working”, she says. “I can see myself being here when I am seventy”.

Mario has gone over his financial situation, looked at his RRSPs and read everything that he can on retirement. Can he really afford to retire, or is he going to have to keep working for five or six more years in order to save more money?

Their financial situation

Mario has a defined pension plan at work that will pay him $2,800 each month at age 65. Should he leave work early, his benefit will be significantly reduced. Sandra makes about $2,500 per month from her job. Outside of the pension plan and government benefits, the Giannellis have an RRSP of approximately $150,000 invested in several equity funds at BMO. Ultimately, Sandra will inherit approximately $200,000 from her parents.

Their Family

The Giannellis have two grown children and a 25 year old disabled son still at home. Both of Sandra's parents are still alive and live in another city; their health is very much a concern to Sandra and she is not sure how long they will be able to live independently.

Their concerns about the future

• Do they have enough to meet the income needs of the family if Mario retires?
• What responsibilities will they face because of Sandra's parents' situation?
• Are they properly invested in order to protect their nest egg?

What needs to be thought out

Mario needs to assess both whether he is financially capable of leaving work, and what his retirement will look like.

The following will give you a sense of the types of considerations that would be addressed when Mario and Sandra meet with a BMO Investment Professional:

• Mario must outline an activity plan for his retirement to understand how his new lifestyle will affect the Giannellis financially?
• An income and expenses review of the Gianelli's current lifestyle. What expenditures will be important to Mario and Sandra in the future? What may be the financial demands arising in the future?
• A full review of the provisions of Mario's pension plan, including benefit provisions. This will be important in considering help available to their son.
• The financial and health situation of Sandra's parents. What estate planning provisions have they put in place? How are they managing their financial affairs today?
• Sandra and Mario's current health and outlook for the future. How long does Sandra reasonably expect to keep working? Are there any challenges that Mario will face that might affect lifestyle?
• Are there other opportunities for Mario that may involve work in something that he loves that doesn't mean that he has to stop working?