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Kathy,* 50, and Trevor, 53, have two financial goals they want to achieve before Kathy retires at age 55 and Trevor retires at age 60. They want to pay off the mortgage on their primary residence and build up $500,000 in easy-to-access investment income — they are thinking about a laddering strategy for guaranteed investment certificates (GICs) — that will allow them to spend three months out of the year travelling and help their two young adult children, should they need it.

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Kathy earns $117,000 a year before tax and will receive an annual employer defined benefit pension of $62,400 (also before tax) if she retires at 55. Trevor earns $145,000 a year before tax and will receive $78,000 a year before tax from his employer defined benefit pension at 60.

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The couple’s primary home is valued at $1.2 million and they have a $240,000 mortgage at 5.59 per cent, which matures in just under 10 years and costs them $2,400 a month. They also have a rental property valued at $620,000 with a $178,000 mortgage at 3.6 per cent interest that matures in 17 years. The property generates a small net annual income of $1,500. They would like to keep it but only if it makes sense.

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They are considering two strategies. One is to sell the rental property and use the proceeds to pay off their current mortgage and invest the rest. The other is to keep the rental property and refinance it to pay off the mortgage from their primary residence.

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The family’s monthly expenses are about $12,000, a figure that includes costs associated with competitive sports and transportation costs for both children. With both children in university this fall, this will free up at least $600 a month.

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The couple have experimentally invested $8,000 in cryptocurrencies. “I’m not sure where it falls into overall planning and funds for crypto are limited,” said Trevor.

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Both Trevor and Kathy have life insurance through their employees and they each have $250,000 in term insurance that matures in 2035. They have an opportunity to convert to whole life policies, but aren’t sure if that is necessary, especially since premiums will likely be expensive. Or should they forego the policies and direct that money to ETFs or other savings products?

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What the expert says

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To meet their goals of early retirement, saving $500,000 is an appropriate amount, said Ed Rempel, a fee-for-service financial planner, tax accountant and blogger. To pay off the mortgage in the next five years, Kathy and Trevor will need to invest $6,300 a month in GICs — their desired strategy — and increase their mortgage payment by $2,200 a month to $4,600. The problem: they only have about $1,700 in monthly cash flow available now, said Rempel.