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Kevin* has reprioritized his life choices since his wife died recently. “We spent a lot of time delaying everything we wanted to do. All of those plans have disappeared.”

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He is now ready to make new plans. Specifically, he would like to retire next year, when he turns 54, to spend as much time as he can with his two children, who are both in university. “I haven’t decided what retirement will look like. I’ve never stopped working. I may decide to take a part-time position, but I don’t want to have to work full time anymore.”

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Kevin earns $135,000 a year before tax. His annual expenses are between $40,000 and $45,000. His target annual income in retirement is approximately $80,000 before tax. If he does choose to work part time, he expects he will be able to earn about $20,000 a year before tax.

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His employer hybrid pension plan will pay a minimum of about $30,000 a year at 65. He can take it as early as age 55 but it would be reduced to less than half per year. When his wife died, Kevin claimed the one-time death benefit of $2,500. He also receives a Canada Pension Plan (CPP) survivor benefit of $8,000 a year.

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He is trying to decide when to take his employer pension, CPP and Old Age Security (OAS) to ensure he has the cash flow he needs, while maximizing tax efficiency and government benefits.

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Kevin lives in British Columbia, is debt-free and owns a home valued at $1.5 million. He has no immediate plans to downsize. Ideally, he would like to leave the home to his children as their inheritance.

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His investment portfolio is valued at $900,000 and includes $700,000 in a registered retirement savings plan (RRSP) invested in bank-managed growth oriented mutual funds, $150,000 in a tax-free savings account (TFSA) invested in a low-fee managed portfolio ($130,000) and equities ($20,000). He also has an unregistered account with $20,000 invested in individual stocks and $30,000 in cash equivalents.

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He plans to start working with a retirement planner, but would like advice on how to go about choosing a credible adviser: “What questions should I ask? Should I hire a fee-only adviser? Or should I use the financial planning services offered by my bank?”

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While he wants to enjoy life now, Kevin is concerned about ensuring his savings will last throughout his lifetime. He’d like his retirement income plan to extend to age 95 and end up having spent it all down.

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“How much can my portfolio safely generate each year? Is it reasonable to attempt to retire comfortably but responsibly next year? What is the best scenario in terms of when to start drawing from RRSPs and take my employer pension, CPP and OAS, keeping in mind the ceiling for combined CPP (survivor and personal)?” he asked.

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He added, “Are there tax strategies I can take advantage of? I’ve heard of delaying property tax as a strategy in B.C. Will I be able to leave the family home to my children?”

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What the expert says

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“To fully retire next year and achieve his target income of $80,000 a year before tax, Kevin would need about $1.4 million in investments. He is projected to have about $960,000 — about 31 per cent or about $440,000 short of his goal,” said Ed Rempel, a fee-for-service financial planner, tax accountant and blogger.