Planning For Retirement in Canada Through Victories And Setbacks
Couples Retirement Plan
My husband and I married young, and shortly thereafter, discovered we were unable to have children. We decided to spend the first five years traveling the world, backpacking in Europe, exploring caves in Belize and relaxing on sandy beaches in Anguilla. The last thing on our minds was planning for retirement.
Daniel rushed home from work one day, bubbling over with excitement. He had found the perfect little house, a small colonial right outside of Hamilton, Ontario. It would be our first home, and as soon as I saw it, I fell in love. Within a month, we were turning the key to the door of our new home.
I had always been an avid gardener, so when Daniel and I accidentally discovered that the owner of a local plant nursery was retiring, we jumped on the chance to start our own business. With just under $10,000 in cash investment, I was the proud owner of my own nursery.
It took awhile for the business to take off, and we were keeping it alive mainly through Daniel's income from work in the beginning. Two years into the business, we were earning more than $200,000 in net profits. It was then that we started talking about retirement planning in earnest. We had only $1,500 in savings, and knew we needed an aggressive plan to make up for the time we had lost.
We made an appointment to discuss our needs with a financial planner. Andrew came out to our home, and for more than two hours, he discussed all of our options, from annuities to stocks, bonds and mutual funds. By the time he left, we had a solid idea of how we needed to proceed. We would have to start retirement planning immediately.
Financial Planner's Recommendations:
Daniel was 46, and had only saved $15,000. I had saved $6,000 from my former job's retirement account. At 41, I had a little more time to save than Daniel had, but I would still need to play catch up. The adviser told us that we would need to save 28% of our income in order to be able to enjoy a retirement income of 75% of our current earnings.
We set up a retirement plan immediately and started contributing each month. We had been putting away the maximum and finally making up for the time we hadn't been saving when disaster struck.
My sister Gloria, her husband and two sons had been returning from a camping trip in heavy rains when their car skidded off the road. Both my sister and her husband were killed instantly, leaving their two children without parents. Overcome with grief, Daniel and I decided that we would take in the boys and raise them. Gary was 14 and Kevin was 11 at the time. Almost overnight, we were parents with a host of new responsibilities.
The next few years were a challenge, with me trying to run the business, Daniel working overtime at work and the boys quickly growing into young men. When Gary graduated high school, we tapped into our retirement savings to send him to a 4-year university in Michigan. He got a partial scholarship, but we were still on the hook for the room and board, books and tuition that the scholarship didn't cover.
By the time that Kevin started college three years later, we had two sons in college and a financial mess on our hands. Things weren't doing so well in the plant nursery due to a dip in the economy. People simply were not spending money on home improvement the way they had in the past. After floundering for a few years, we made the difficult decision to sell the business.
Although we had made a little profit from the sale of the business, the loss of income was a hit to our family. A year after Gary graduated from college, we were contemplating selling our home and moving to a smaller apartment or a senior living facility. We were only a few years away from paying off our home, so we decided to work through it and stay.
The year Kevin graduated, we decided to take another look at our retirement accounts. We had a lost quite a bit when the economy tanked, and having to put the boys through school meant that we had slipped even further behind. Our financial adviser told us that we needed to start being more conservative in our savings plan while being more aggressive about saving.
Life Annuities Used To Balance Our Portfolio
He recommended moving some of our stocks into high yield bonds and GICs. He also recommended two life annuities to balance out our portfolio. We purchased a few municipal bonds that day and inquired about life annuity rates. We were just a few short years from retirement---I was already in a state of semi-retirement---and time was getting short for us to make sure we had enough to take us through our golden years.
Gary married his wife Angelina just a year after his college graduation. The two of them settled into a home not far from ours, and within a year, they had opened a small restaurant that served local university students. Daniel retired that same year, and the four of us ran the restaurant as a team.
It will be about another 5 - 7 years until I retire. In the meantime, I split my days between making sandwiches in the restaurant and playing with our new granddaughter Holly. We have already set up a college savings fund for her, in hopes that by the time she graduates high school, she will have what she needs for higher education.
Canadian Annuity Rates
The Canadian annuity rates we found allowed us to enjoy a healthy return on our investments. We are also getting good returns on our stocks and GIC's. I have confidence we will have enough to get us through retirement, with the life annuities as a strong base.
We learned a lot about money and family and saving for the future. We could have never predicted the circumstances that would befall our family, but our years of financial preparation gave us the cushion we needed to get through our obstacles.