{"id":496912,"date":"2026-06-13T00:22:08","date_gmt":"2026-06-13T00:22:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/496912\/"},"modified":"2026-06-13T00:22:08","modified_gmt":"2026-06-13T00:22:08","slug":"after-paying-off-a-large-debt-can-ivan-63-retire-this-year","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/496912\/","title":{"rendered":"After paying off a large debt, can Ivan, 63, retire this year?"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

The 63-year-old’s assets include $555,000 in a RRSP plus $380,000 in a defined contribution pension plan at work.Ashley Fraser\/The Globe and Mail<\/p>\n

Ivan is 63 years old and he is on his own again. After some difficult years, he is striving to catch up with his registered savings plan so he can retire soon. <\/p>\n

He has a partner who lives separately and a mortgage-free house in small-town Ontario.<\/p>\n

Ivan moved to Canada from Europe in 2000 and is earning $167,500 a year plus bonus in a managerial role. <\/p>\n

Ivan wants to know when \u201cenough is enough in saving for retirement,\u201d he writes in an e-mail. He has two grown children who are successful in their own right, so he has \u201cno plan to build an inheritance.\u201d<\/p>\n

Ivan\u2019s assets include $555,000 in a registered retirement savings plan plus $380,000 in a defined contribution pension plan at work to which he and his employer contribute. He\u2019ll also have a foreign pension of about $12,000 a year.<\/p>\n

\u201cI paid a very large debt until last year and currently save about $2,000 a month to my RRSP,\u201d Ivan writes. He is trying to catch up with his $53,000 of unused RRSP contribution room. He\u2019s also planning to build up his tax-free savings account to cover the cost of a new car and house repairs.<\/p>\n

\u201cSignificant travel costs will come up this year and next, perhaps paired with some unpaid leave, so savings may not be sustainable at this level,\u201d he writes.<\/p>\n

Can Naresh and Whitney, both 51, retire in five years and leave no money behind?<\/a><\/p>\n

He wants to stay in his house as long as possible, and he is arranging a $585,000 home equity line of credit to that end. <\/p>\n

His retirement spending goal is at least $60,000 a year after tax, rising with inflation. <\/p>\n

What would a sensible drawdown plan be? <\/p>\n

We asked Warren MacKenzie, an independent financial planner based in Nova Scotia, to look at Ivan\u2019s situation. Mr. MacKenzie has the chartered professional accountant designation.<\/p>\n

What the expert says<\/p>\n

Ivan is in good health, so he wants to be confident that he\u2019ll have enough income to last him even if he lives to be 100, Mr. MacKenzie says. He is planning to retire at 65, but he wonders if he could retire earlier.<\/p>\n

When Ivan retires, he should convert his RRSP to a registered retirement income fund (RRIF) and his defined contribution pension plan to a life income fund (LIF) to take advantage of the $2,000 federal pension income amount, the planner says. \u201cMost of his cash flow requirements will come from these registered accounts.\u201d <\/p>\n

If Ivan retires at the end of 2026, his cash flow needs in 2028 \u2013 the first full year in which his income and expenses will be typical of future years \u2013 will be $98,400, which will come mainly from RRIF and LIF withdrawals. His cash outflow will be $62,600 for basic lifestyle expenses, $20,200 for income tax and $15,600 for travel.<\/p>\n

To maximize the amount of income that is taxed at the lower rate, he should draw enough from his RRIF and LIF to give him taxable income of $58,525. That will use up the lower tax rate of 19.5 per cent. He could take the rest from his cash and TFSA. <\/p>\n

Mr. MacKenzie\u2019s calculations show that Ivan can retire at the end of 2026 and achieve his spending goals \u2013 assuming he earns an average rate of return of 5 per cent on his investment portfolio.<\/p>\n

While he might be earning more than that now, Ivan is taking more risk than he needs to, the planner says. Ivan has 90 per cent of his combined portfolio in stocks and stock funds. \u201cBased on stock market performance history, he is taking more risk than necessary to achieve a 5-per-cent target,\u201d which is all he needs to meet his spending goal. <\/p>\n

Rather than reducing his exposure to near-record-high stock markets, Ivan hopes to build up a cash reserve that could see him through a downturn in the markets, the planner says. Ivan is targeting a cash reserve of three years\u2019 worth of expenses.<\/p>\n

\u201cIvan believes that if he works until age 65 and builds up the cash reserve, then if there is a significant market decline, he will not have to sell his stocks in order to pay bills,\u201d the planner says. <\/p>\n

\u201cThe problem with this plan is that if there is a downturn in the market it may happen before he has built up his cash reserve fund,\u201d Mr. MacKenzie says. \u201cIt is also possible that with a significant downturn, it might take longer than three years for the markets to recover.\u201d<\/p>\n

Ivan should therefore move to an asset mix with a lower exposure to equities, the planner says.<\/p>\n

Can Fiona, 51, afford to take early retirement?<\/a><\/p>\n

Ivan says there is a history of longevity in his family, so he expects to live well into his 90s. So, it makes sense for him to delay Canada Pension Plan and Old Age Security benefits until age 70.<\/p>\n

By delaying, the CPP benefits will be 42 per cent higher and OAS 36 per cent higher. <\/p>\n

Based on an assumed annual return of 5 per cent with inflation running at 2 per cent, with Ivan\u2019s planned level of spending, the projections show that by 2062 he will have about $100,000 left. He will run out of savings the following year, when he is 100. He will still have his government benefits, but by then his house will have been sold.<\/p>\n

Ivan should keep his financial plan updated, Mr. MacKenzie says. \u201cThat way, if there is a negative change in his situation, he will have time to lower his spending and reduce the possibility of using up all his capital.\u201d<\/p>\n

In his late 80s, Ivan might decide to sell his home and move to a retirement home that costs $7,000 per month with today\u2019s purchasing power. \u201cGiven that he wants to stay in his present home for as long as possible, he has worked on getting approval for a $585,000 home equity line of credit (HELOC), which he could draw on if he needs additional cash flow,\u201d the planner says.<\/p>\n

If later on Ivan finds he\u2019s low on cash, he could consider a reverse mortgage, the planner says. A reverse mortgage is similar to a HELOC, except that no payments need to be made on the annual withdrawals.<\/p>\n

It\u2019s worth noting that Ivan has an $80,000 investment in undeveloped land, which has minimal value because the developer is waiting for municipal approval. If and when the municipality gives its approval, and the development proceeds, based on the current price for building lots in the area, in five or 10 years\u2019 time, this investment could be worth $800,000, Ivan estimates. <\/p>\n

Client situation<\/p>\n

(Income, expenses, assets and liabilities provided by the applicant.)<\/p>\n

The person: Ivan, 63.<\/p>\n

The problem: When will he have enough saved to retire and how should he go about drawing down his savings?<\/p>\n

The plan: Retire at year end, postpone government benefits, convert RRSP to RRIF and locked-in retirement account to a LIF. Consider moving to less risky investments and revisit plan regularly.<\/p>\n

The payoff: An earlier retirement without jeopardizing his financial security.<\/p>\n

Monthly after-tax income: $11,400.<\/p>\n

Assets: Cash $20,000; TFSA $25,000; RRSP $555,000; employer defined contribution pension plan $380,000; residence $800,000; undeveloped land $80,000. Total: $1.86-million.<\/p>\n

Monthly outlays: Property tax $550; water, sewer, garbage $50; home insurance $120; electricity $100; heating $85; maintenance $150; garden $50; transportation $350; groceries $550; clothing $50; gifts, charity $100; vacation, travel $900; dining, drinks, entertainment $340; personal care $20; club membership $30; sports, hobbies $50; subscriptions $60; health care $100; health, dental insurance $90; communications $160; RRSP catch-up $2,000; pension plan contributions $1,600. Total: $7,505. Surplus goes to RRSP, TFSA and unallocated spending.<\/p>\n

Liabilities: None.<\/p>\n

Want a free financial facelift? E-mail finfacelift@gmail.com<\/a>.<\/p>\n

Some details may be changed to protect the privacy of the people profiled.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: The 63-year-old’s assets include $555,000 in a RRSP plus $380,000 in a defined…\n","protected":false},"author":2,"featured_media":496913,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[72,176,2726,61,60,174,175],"class_list":["post-496912","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-finance","tag-financialfacelift","tag-ie","tag-ireland","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/496912","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=496912"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/496912\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/496913"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=496912"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=496912"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=496912"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}