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For professional couple with six-figure income and young child, retirement at 55 is just a dream

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Situation: Professional couple with six-figure income but no company pension wants to retire at 55  

Solution: The numbers say it won’t work before age 60 and that 65 would be the safer bet

In Ontario, a couple we’ll call Terry, 42, and Connie, 38, are raising their year-old child, Lou. Barely at the beginning of middle age, they have a $575,000 house, nearly $374,000 in RRSPs, and only one significant debt — their $295,900 mortgage. Their after-tax income currently checks in at $8,260 per month. Terry, a computer scientist, and Connie, a part-time financial consultant, believe that there is life after 9 to 5, but their goal of retirement in 13 years when Terry is 55 is problematic. 

“We worry how long Terry can maintain his current, demanding pace,” Connie explains. “He may need to throttle down before his mid-50s. Would that work?“

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Family Finance asked Derek Moran, head of Smarter Financial Planning Ltd. in Kelowna, B.C., to work with Terry and Connie. “For their ages, they are off to an excellent start,” Moran explains. “Their mortgage debt can be paid off in a dozen years. Then their expenses will drop by the amount of their discontinued mortgage payments.”

Currently, Terry and Connie bring home $8,080 per month from regular salary. Terry gets a variable bonus of 15 per cent of salary. It is not guaranteed, so it is not included in calculations, Moran explains. They add about $180 per month from the Canada Child Benefit, which is not taxable.

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