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Should we start investing, or stay focused on building our real estate portfolio? This is the question British Columbia-based Jennifer and Roland are trying to answer.

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A blended family with four children from 18 to 22, Jennifer, 40, and Roland, 49, have purchased a primary residence, which is also a working farm, and three rental properties.

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They are at least 10 years away from retirement but are wondering if now is the time to start investing in equity markets to help fund their retirement or if they should purchase a fourth rental property.

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They have $180,000 in a savings account. Jennifer earns about $30,000 a year after tax and Roland earns about $122,000 a year after tax. Roland has an employer pension plan that will pay about $32,000 a year before tax if he retires at 65. Jennifer is waiting to be approved for her employer pension at her new job. Their rental properties and farm bring in about $4,000 a year after expenses.

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Jennifer and Roland’s primary residence is valued at about $600,000. They have a variable rate mortgage at 3.9 per cent that costs them $2,300 a month, accounting for just about half of their total monthly expenses of $4,800. Their first rental property is valued at $405,000 and has a $150,000 mortgage at 1.9 per cent that is due in September; their second rental property is valued at $300,000 and has a $200,000 mortgage at 2.8 per cent that is up for renewal in two years; and their third rental property is valued at $280,000 and has a mortgage of about $285,000 at 6.29 per cent that is up for renewal in three years.

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Ideally, Jennifer would like to retire with Roland in 10 years when she is 50 and he is 60. Is this possible?

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What the expert says

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With a total annual income of $216,000 before tax and monthly expenses of $4,800, or $57,600 a year, Jennfier and Roland should have more than $8,000 a month that can be directed toward savings, said Ed Rempel, a fee-for-service financial planner, tax accountant and blogger.

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To maintain a retirement income of $4,800 a month after tax in retirement, they need before-tax income of $66,000 a year. Or, they need $510,000 of balanced investments earning an average of five per cent a year or $460,000 of equity investments earning an average of eight per cent a year in addition to their pensions, he said.

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However, he is concerned the couple may have underestimated expenses, and not taken into account lifestyle costs such as travel, renovations and car purchases, which could bump up annual expenses by about $15,000 or $1,250 a month. This could increase their required retirement income to $85,000 a year before tax. Or, they would need $1,260,000 of balanced investments earning an average of five per cent per year or $950,000 of equity investments earning an average of eight per cent per year in addition to their pensions.