Home Economy Unemployment, $24,000-a-year drug costs threaten to devastate this couple’s retirement plans

Unemployment, $24,000-a-year drug costs threaten to devastate this couple’s retirement plans

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Drug cost assistance is vital for this couple.National Post illustration

Situation: Mid-60s couple with tight budget and poor investment returns faces years of costly illness

Solution: Move money from savings and GICs to bonds and dividend stocks, check public drug plan

In Ontario, a couple we’ll call Phil and Terri, each 64, have involuntarily moved into partial retirement. Phil was downsized out of his job in management for a packaged goods company last year and, with his severance fully paid out, receives Employment Insurance benefits of $2,188 per month before tax. Terri, who has a severe long-term illness, works part time in local government for $1,549 per month before tax. They add Terri’s Canada Pension Plan benefit of $649 before tax. Work and pension income per month before tax adds up to $4,386. On top of that, they add $310 interest from $371,000 total savings for total pre-tax income of $4,696 a month. Terri’s drug costs, now paid by her employer, could wreck their retirement finances after retirement.

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Income and spending

When Phil’s EI runs out and Terri retires, their estimated incomes will be $1,134 CPP for Phil, Terri’s continuing CPP, $649 before tax, and her civil service pension of $1,200 per month before tax. They will be able to add two monthly Old Age Security benefits of $597 per person at 65. That will make their income before any investment returns $4,177 per month.

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