Darren and Merella, aged 72 and 63 respectively, are contemplating their retirement plans. They aspire to maintain their current monthly after-tax income of $15,000, which equates to an annual expenditure of $180,000. This goal presents a challenge, as they seek to ensure their financial security and provide for their adult children. Their current financial situation includes a defined benefit pension of $118,450 annually for Darren, and an average annual consulting income of $100,000 for Merella. Their combined monthly income, including Canada Pension Plan benefits, totals approximately $15,000. The couple owns a house in the Greater Toronto Area and three rental properties, all mortgaged. The key question arises: should they consider selling their properties to meet their retirement spending goal? The expert, Ian Calvert, suggests that their current income is sufficient to cover their target spending after tax. However, the couple's net worth of $3,412,000 is heavily concentrated in real estate, posing a risk of liquidity and concentration. Selling one of the condos could help address this issue and shift their assets towards a more diversified investment portfolio. The potential proceeds from the sale, after taxes, could be allocated to a strong dividend yield investment portfolio, ensuring a steady income stream. Additionally, they should prioritize funding their children's savings accounts, providing them with financial support and education in personal finance. The plan involves a strategic approach to selling assets, diversifying investments, and managing expenses to meet their retirement goals while ensuring a comfortable lifestyle for the family.
