I plan on taking my CPP and OAS at 65, which I estimate will be $750 and $425 net a month respectively. I currently work part-time, earning about $1,300 net monthly. I plan to keep working part-time until my 58-year-old wife retires in May 2022. She currently nets $3,000 per month from her employment. She has a defined benefit pension with OMERS, which is estimated to pay her $1,900 net monthly until she turns 65, and then will be integrated with her CPP, reducing her pension to about $1,400 net monthly. She also plans on taking her CPP and OAS at 65, which are estimated to be $550 and $425 net monthly.
We own our own home, estimated to be worth $200,000. We have no debt. Our joint chequing account has $5,000 in it, which we try to maintain at this level. We have a joint non-registered investment account, to which we contribute $150 per month; it’s worth $222,000, all invested in equities paying $6,000 annually in dividends. We also have a joint cash savings account of $13,000 earning 2% interest, to which we contribute $1,500 monthly. We use the money in this account to make our yearly January 1 $6,000 lump-sum payment to our TFSAs.
My TFSA is currently worth $48,300, all in cash earning 2.1% interest. This account acts as our emergency fund/large purchase account. We have budgeted $35,000 to come from this account for a new vehicle purchase within a year or two. Last August, I withdrew $22,000 from my TFSA (which was worth $70,000 at the time) along with $18,000 from our joint savings account, and loaned this money to our daughter towards paying off her $40,000 in student loans. This loan is at 2.5% for a term of 84 months. Our plan is to contribute her monthly loan payments of about $500 to my TFSA until I’ve paid back my $22,000 TFSA withdrawal.
My wife has maximized her TFSA contributions. She currently has $14,200 in cash earning 2.1% interest in one TFSA, and a second TFSA worth $79,700 that’s invested entirely in the Successful Investor Growth and Income Fund (which has an MER of 1.5%). Once her cash TFSA reaches $25,000 we transfer that amount to her equity TFSA.
She also has an individual RRSP and a Spousal RRSP invested in the same fund, worth $58,700 and $192,200 respectively. I have a self-directed RRSP account all invested in equities worth $49,900, which pays about $2,000 in yearly dividends. I also have an equity mutual fund RRSP account worth $50,100, with an MER of about 2.5%.
As DIY investors, we don’t have a financial advisor, but have used planners in the past and often refer to their recommendations to see where we are according to their projections of income. We’d appreciate your take; are we on track to leave an inheritance of $250,000 to each of our three children?
–Bob and Janet
A. Janet and Bob, you’ll have no trouble leaving $250,000 to each of your three children.
To show this, I’ve prepared your net worth statement, identified your after-tax spending, projected your net worth into the future, and offered some planning ideas followed by an investment suggestion.