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The Case of the "Golden Years" Retiree 

Couple at Home

Bob & Ruby

Bob & Ruby Clarke are 63 years old, and they have three children who are in their mid-30s. 

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Goals:  

They are concerned that their portfolio, consisting mainly of GICs, may not retain its purchasing power during retirement. They would like a second opinion.

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Since they are comfortable with their retirement and are confident they aren’t going to spend all of their money, they would like to see their money go towards causes that are near and dear to them

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Background Information: Assets & Debts

$70,000

Family income (pre-tax) from benefit pensions, CPP and OAS (when they turn 65) 

$180,000

Invested in TFSAs

$445,000

Invested in RRIFs

$300,000

Invested in non-registered account

Current Situation: 

  • They have recently retired, are comfortable with their retirement income plan, and feel that they have more than they need to live on.

  • They have helped their children out considerably as they’ve grown up with education costs and down payments on their first homes, so they do not feel obligated to leave a large inheritance.

Recommendations: 

  • Donate their highly appreciated non-registered account to set up the ‘Clarke Family Foundation’

    • They avoid having to pay the capital gains on these investments, and they also will get to see their money do good in their community for years to come

    • Since they would need high enough taxable income in order to utilize the large charitable tax credit, it could be a good opportunity to de-register RRIF assets

  • After completing a proper risk profile assessment, it was determined that Bob & Ruby would be comfortable implementing a portfolio consisting of 80% stocks/20% bonds

    • They understood that the dividend yield on their portfolio would provide them with regular income that is more tax-efficient than interest income, and also has a history of growing faster than inflation which means they get an annual raise each year

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Solutions: 

  • They were able to start the ‘Clarke Family Foundation’ with a $200,000 contribution.

  • This avoided having to pay a very large capital gains tax bill.

  • The foundation will distribute at least $8,000/year in perpetuity to causes that are important to them, even after they have passed.

  • By de-registering most of Bob’s RRIF, their taxable income throughout retirement was significantly less.

  • With the new portfolio implemented, the increased expected return on their investments helps to continue to grow their nest egg for the next generation.

Stories of Success Straight from Our Clients

“The process that Nonny follows has helped us consider our bigger picture and has led to some strategies that we may not have originally used when building our Financial Plan.  The ideas about charitable giving through the Cardinal Foundation were particularly helpful and allowed us to ‘Do well by doing Good’. The collaboration between Nonny and our professionals has led to a coordinated approach with our retirement plan and has helped us be as tax efficient as possible when building our investment plan and distributing our retirement income. We have also always found his Team to be courteous, professional and responsive when assisting us with the various tasks and items that need follow up and we feel the level of service is one of the reasons we enjoy working with them.”

- Jim and Merna B.              “Golden Years” Retiree

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