Retirement Planning: Can Jeremiah and Kimmy Afford Their Splurge?

Jeremiah, 66, and Kimmy, 63, a retired couple in Toronto, are evaluating their financial capacity to maintain a generous lifestyle that includes supporting their children and enjoying family vacations. With a combined net worth of approximately $5.33 million, including a home valued at $2.2 million and $2.9 million in invested assets, the couple is seeking assurance that their spending plans are sustainable. This analysis examines their financial situation and the recommendations of a financial planner.

Financial Snapshot

Jeremiah and Kimmy’s financial standing includes:

• Assets: $5,333,632 (as of March 14, 2026)
  • Joint bank account: $94,780
  • Joint GICs: $20,000
  • House: $2,200,000
  • Jeremiah’s TFSA: $80,483
  • Kimmy’s TFSA: $97,199
  • Jeremiah’s RRIF: $1,530,237
  • Jeremiah’s LIF: $324,895
  • Kimmy’s RRIF: $871,984
  • Kimmy’s LIF: $69,517
  • Kimmy’s pension (present value): $44,537
• Monthly After-Tax Income: $15,416 (from RRIFs and LIFs)
• Monthly Expenses: $15,280
• Liabilities: None

Spending Plans and Financial Goals

The couple plans to spend aggressively in the coming years to support their children, including funding their daughter’s medical school education and enjoying family vacations. Their planned spending is structured as follows:

• 2026-2029: $183,000 per year (after tax)
• 2030-2034: $152,000 per year
• 2035 onwards: $122,000 per year

Specific planned expenses include $30,000 annually for travel with their children for the next few years and $100,000 total for their daughter’s medical school tuition over four years. They also anticipate expenses for a new car ($60,000 in 2030) and a wedding ($20,000 in 2028). They intend to downsize from their current house to a condo around 2035.

Expert Analysis

Matthew Sears, an associate portfolio manager and certified financial planner at National Bank Financial in Toronto, assessed Jeremiah and Kimmy’s situation. He determined that their retirement goal is achievable with 116% coverage, suggesting they could potentially spend even more than planned. His forecast assumes an annual rate of return of 5.02% and an inflation rate of 2.1%.

Sears’ analysis included a volatility analysis, running 1,000 market simulations. The results indicated successful outcomes in 814 of 1,000 trials, meaning the couple is projected to avoid a shortfall in retirement in the vast majority of scenarios. The largest potential shortfall identified was $683,000, which could be covered by the equity in their home.

Key Recommendations

• Defer Government Benefits: Deferring Canada Pension Plan (CPP) and Old Age Security (OAS) benefits to age 70 is a beneficial strategy, potentially increasing their benefits significantly. Jeremiah is expected to experience an OAS clawback initially, but this is projected to cease with reduced spending and income.
• Portfolio Diversification: While the couple has a conservative investment approach, focusing on Canadian dividend-paying stocks and GICs, Sears recommends diversifying a portion of their stock exposure to U.S. And international markets to reduce risk and access broader investment opportunities.
• Re-evaluate GIC Strategy: As their GICs mature, they should consider alternatives like bonds or bond funds for potentially better long-term returns.
• Insurance Review: Given their lack of debt and other financial obligations, they may not need to renew their term life insurance policies.

Alternative Spending Scenarios

Sears explored alternative spending scenarios:

• Maintaining Current Spending: Continuing to spend $183,000 per year would not be fully sustainable, potentially depleting their investment assets by age 87 or 84, necessitating a sale of their home or condo.
• Modified Spending Plan: Spending $183,000 until 2030 and then reducing to $152,000 per year would extend sustainability but could still lead to shortfalls, requiring a condo sale around age 97 or 94.

Conclusion

Jeremiah and Kimmy are in a strong financial position to achieve their retirement goals, including supporting their children and enjoying travel. By implementing the financial planner’s recommendations, particularly regarding diversification and government benefit deferral, they can enhance their financial security and potentially reduce the need for significant spending cuts in the future. Their detailed budget and proactive planning demonstrate a responsible approach to managing their wealth and ensuring a comfortable retirement.