Lifestyle | Retirement at 55 to travel? Yes, but …

Posted at 6:00 a.m.

The situation

Frédérique*. However, 46, is looking for financial planning advice from her work retirement project in ten years, at 55.

Especially since the main hasty retirement project of this single lady. Moreover, mother of a 18 -year -old pre -university cégépian is to increase her travel activities with an annual budget “at least double”, or about $ 20,000, compared to the amount included in her current life -current budget.

“I have good income (approx. Nevertheless, $ 195. Furthermore, 000 in salary, bonis and residential rents) and personal assets for just over a lifestyle | retirement 55 travel? million dollars,” said Frédérique during a discussion with The press.

About a third of these personal assets (approx. Nevertheless, $ 500. Therefore, 000) consist of financial assets in registered savings accounts (RRSP, CELI), which each have a few tens of thousands of dollars in usable contributions.

Also. Similarly, the other two thirds (about 1 million) of the personal assets of Frédérique represent the land value of his family home and a residential quadruplex.

These two real estate properties are still subject to mortgage loans. Similarly, the sales of around $ 250,000 each are half of their respective land value.

Also. Meanwhile, Frédérique plans to keep its real estate properties – his house first, then his quadruplex – as long as possible over the years of retirement, for a possible inheritance lifestyle | retirement 55 travel? transfer to his son.

In this context. Moreover, Frédérique seeks advice to optimize her financial planning and his tax situation over the next few years, in order to financially validate his hasty retirement project at 55 years.

“Am I on the right track to have sufficient budgetary and financial autonomy for my retirement project in ten years? With a lifestyle budget of around $ 90,000 per year, including my travel projects? »»

The situation. the questions of Frédérique were submitted for Consulting Analysis to Léa Saadé and Julien Trudel-Clermont, who are financial planners at Ig Patrimoine Management in Brossard.

M^me Saadé is also a regional vice-president at IG. vice-president of the board of directors of the financial planning institute.

Lifestyle | retirement 55 travel?

The advice

From the outset. the financial planner Léa Saadé notes that Frédérique* benefits from a “remarkable asset” for a 46 -year -old person with a hasty retirement project in ten years.

However, it points out that most of this active value approaching around 1.4 million is made up of real estate properties: its family home and its rental quadruplex.

Also. unlike lifestyle | retirement 55 travel? financial assets in retirement savings or investment accounts, real estate assets would be much less monitoring at the start of Frédérique’s retirement, as and when he needs increased income to support a trapped lifestyle.

In fact. estimates the financial planner Julien Trudel-Clermont, considering that the Frédérique’s start-up budget would be increased around $ 90,000, and that it would maintain the good continuity of his contributions and yields in her registered savings accounts (RRSP, Celi) during the ten years by his retirement, Frédérique could find himself at risk of 65 years, or his tenth year of active retirement.

How to reduce this risk?

First. the two financial planners advise Frédérique to use his good income (about $ 195,000 per year in salary, bonis and residential rents) and his reasonable lifestyle to maximize his annual contributions in his lifestyle | retirement 55 travel? accounts recorded with tax advantages. By prioritizing his RRSP with his tax deductible contributions before then going to his Celi account.

In parallel, M^me Saadé and Mr. Trudel-Clermont recommend that Frédérique revise her mortgage payments to favor the loan reimbursement on his house compared to the. loan on his residential quadruplex.

For what ?

Because the costs of financing the quadruplex are deductible from the gross rent income from Frédérique. sums up Julien Trudel-Clermont.

By doing so. Frédérique maintains the tax optimization of his taxable income which promises to be relatively high until the beginning of his retirement in ten years.

Also. Frédérique could benefit from an end of mortgage payments on his house in the budget planning of his first years of retirement and lifestyle | retirement 55 travel? travel projects.

This termination of mortgage loan on his house would also be a budgetary asset. which could facilitate his next important financial planning decisions at the start of retirement in ten years.

For example, indicates Mr. Trudel-Clermont. Frédérique could postpone the start of public annuities (RRQ Provincial and Federal PSV) as late as possible) instead of starting them from his 60^e (Request preceded) or its 65^e Anniversary (regular request), and deprive yourself of a significant bonus of the amount of these annuities until the end of life.

Another example: with the end of mortgage payments on his house. Frédérique would also have more flexibility during his first years of hasty retirement to adjust her retirement savings withdrawals as his budgetary needs and tax optimization among his retirement income.

In lifestyle | retirement 55 travel? appearance harmless. this search for increased budgetary flexibility for Frédérique at his start of retirement after 55 years could prove crucial for the realization of important projects such as his travels and the sale of his residential quadruplex to his son.

“For the moment, reports Mr. Trudel-Clermont, our main financial planning hypotheses (return on RRSP and Celi assets, inflation rate, etc.) for Frédérique according to his increased lifestyle budget at the start of retirement point to a risk of lack of liquidity after 65 years. from his tenth year of retirement, without the contribution of the net amount of resale of his quadruplex” (after after capital gain tax).

In other words. if Frédérique neglects to revise and adjust her financial priorities over the ten years before the start of her hasty retirement, she may then have to give up travel lifestyle | retirement 55 travel? projects and the sale of the quadruplex in her son.

* Although the case highlighted in this section is real, the first name used is fictitious.