Case Study 4: Refusing to quit

Gavin Messmer is a sixty-four year old engineer living just outside of Montreal. He currently works for the province and can take his full pension next year. When his Financial Planner talked to him about his future plans, Gavin refused to consider that he was going to retire. “Why should I quit?” he asks. “I am as young as I ever was, I love what I do and I am going to keep doing it for as long as possible!”

Gavin and his wife June lead a comfortable lifestyle. June notes that one of the drawbacks to Gavin's work has been the time that he has spent away from the family. “It was hard when we were raising our two boys”, she notes. “Now that he is in his sixties, I hope that he will be able to spend more time with his new grandchild. Besides, at this point in my life, I would like to do some more traveling and really enjoy our life together.”

Recently, Gavin has talked about starting his own consulting business. “I think that it is time for me to use the knowledge that I have built up for my own advantage. It's a big step and a large financial commitment, but it is something that I need to do.”

Their financial situation

The Messmers are in very good financial shape. Gavin makes a six-figure income, has a full benefit package and an RRSP approaching $200,000. He currently deals with several investment advisors; he has a spousal RRSP worth $72,000 invested in mutual funds at BMO. In addition, the Messmers carry a mortgage of $100,000 on their $600,000 home and have few other debts.

In addition, June and Gavin have a $150,000 GIC inherited from June's mother at BMO.

The Messmers also have the benefit of Gavin's pension plan commencing next year. The plan will provide them with an income of $5000 per month before taxes.

Their Family

June and Gavin have two sons who live elsewhere in Canada and three grandchildren, including a new grandchild born last month. June has recently returned from helping out with her daughter-in-law and plans to go back again soon for an extended period. June's father is in a long-term care facility in Ontario and she also travels there often to visit him. He has enough money to fund his living expenses.

Their concerns about the future

• Making an investment in their own business
• Consolidating their investment holdings
• Paying taxes
• Looking after the needs of June's father and managing his estate
• Balancing out work and life enjoyment in this next phase of life

What needs to be thought out

Gavin considers himself a young man and doesn't foresee the time when he is less active. June, on the other hand, is concerned how this pace could affect his health.

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

• Understanding how Gavin sees his commitment to his new business from a time and financial standpoint. Does this new job mean that he will continue to work at the same pace? What kind of benefit package will he carry to the new job to protect his family and his lifestyle?
• How the couple can consolidate and simplify their investments. Does Gavin have the time to manage everything?
• Understanding June's current level of understanding in the areas of investment and financial planning. Does she take an active role in understanding the family's finances? Is she aware of where all of the assets are?
• What kind of insurance protection does Gavin have in place should he encounter a health issue in the future?
• Do the Messmers have a lifestyle plan in place to help them balance out their lives between business and time with the family? Is it necessary for Gavin to work as hard as he does, given the financial situation they are in?
• What kind of support do they want to provide to their children or grandchildren in the future?