Author Topic: Reader Case Study: Are We Ready to Do This?  (Read 1353 times)

Bolshevik Artizan

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Reader Case Study: Are We Ready to Do This?
« on: January 28, 2015, 08:51:53 AM »
Hi there,

Canada-based couple, male 45, female 38. One child (3 yrs); female's parents live with family and pay for their own food but not rent or utilities or insurance owing to low retirement income.

Income: joint CAD$300,000 (male $210,000; female $85000) Also CAD$21,000 from rental property (see below)

Expenditure: $2000 food, gas and transport; $250 utilities; $250 for three cellphones and internet; $3500 (I know!) rent in Greater Toronto Area.

Assets: RRSP/401k: male $645,000 blend of DC and DB schemes; female $100,000. Total contributions are CAD$40,000 p.a. See below - these contributions would drop significantly to approx 20000 pa from next year if as planned we walk away from work in its current form.
Real Estate: Male: Paid off apartment in UK worth $800,000CAD; female: Mortgage of $100,000 CAD on  condo worth $185,000 in UK
Savings: $280,000 in UK funds and cash yielding 5% pa; $140,000 in mutual funds, cash and stocks (including TFSA) earning 6.6% pa in Canada.
currently saving approx $80,000 pa

the plan: sell UK homes and purchase one car + family home in semi-rural British Columbia for c. $650K including closing costs in early 2016, yielding a further $150,000 in to savings from male property, giving a total asset base of $570,000 plus RRSP/401(k) program value of $750,000 by January 2016, as well as paid-off home. Use proceeds of female house (approx $60,000 after closing costs) to buy 2nd hand car and furnish home.

Female will continue to work full-time in a job she enjoys until age 50 earning approx $65-85,000 pa; male will freelance/contract to leave summers free for time with son and pottering around the house, being a house-husband/Daddy and following his income-free passion for writing. Estimated male income max $50,000 pa. Estimated retirement savings would continue to be approx $15-20K pa, plus yield from current RRSP/401(k) programs of approx 5-6% before inflation or $35-40K. We would plan to draw down on these funds when male reaches 62 and female reaches 55 - period from male 57-62, female 50-55 we would run a coffee shop or similar store where we want to locate (tourist area) for a few years.

The Question, Mustachians: Have we done enough, or should we carry on for another year or two in the high-income jobs? Apologies if I have left out any relevant detail, please let me know if so.

Thanks

Bolshevik Artizan