Jed and Leah are truly part of the 'sandwich' generation. Preparing for retirement, the couple are also spending much of their time helping their aging parents and an adult daughter to boot.
"They're in their late 80s, so they need help," Jed says. "Our daughter's a single mother so it's basically the same thing."
Yet money isn't the prime concern for Jed and Leah regarding their pending retirement.
The couple has actually done a fair bit of saving for it. They have more than $750,000 in RRSPs, and their TFSAs are maxed and have reaped some considerable tax-free returns.
Jed, 62, has already retired once and collects a pension. But he continues to work, earning $70,000 a year, while Leah, 58, earns about $24,000 annually.
So if money isn't their primary worry, what is?
Finding the right time to retire, Jed says.
"We don't even have time to take a vacation, right now."
On the upside, the delay will allow them to clear up some debt. At the moment, they're still carrying two mortgages -- both on income properties, including one in the U.S. The properties, which pay for themselves, should be mortgage-free in the next decade, and the American house figures largely in their retirement plan.
"We want to spend winters down there as soon as we retire," Jed says.
Jed and Leah realize retirement isn't far away, so in the meantime, they are examining their finances thoroughly to make sure they can truly afford to carry two residences.
"We're aiming to cover expenses of about $5,000 a month after taxes, and I think we can do that, but maybe I'm wrong," he says.
Then there are other financial dilemmas of retirement; like whether they need to shake up their investment portfolios or whether they should take CPP sooner or later.
"What should we be doing to meet our goal, or are we already on the right track?"
Certified financial planner Darren Quiring with Edward Jones in Winnipeg says Jed and Leah have more than enough to retire right now.
"They do have the financial green light to go forward with their plans, but it seems their life priorities are telling them 'not yet,' " says Quiring, also a professional money manager.
While money is always an important part of the equation, it's by far not the only consideration. The fact is, it's best to pull the plug on work when Jed and Leah are ready emotionally as much as financially.
But once they do retire for good, their income from various sources is such they will be accumulating wealth rather than eroding capital throughout much of their retirement.
Quiring crunched the numbers and found Jed and Leah's current income-producing assets are worth almost $1 million, and their value will continue to increase to about $1.2 million for a number of years before declining to a little more than $750,000 by age 90.
Even better, this estimate does not include the value of their principal and vacation residences, which can always be sold if necessary.
"My assumptions are conservative -- a five per cent return -- and should be fairly achievable with their current portfolios," he says. "I also assumed inflation would be three per cent instead of the Bank of Canada target of two per cent."
Even their cost of living has been overestimated, starting at $5,500 today and increasing over time to keep pace with inflation to more than $12,500 in after-tax dollars by 2045.
Yet Jed and Leah could take a few steps to make their situation even better. One would be seeking lower cost management of their investments. Most of their investments are mutual funds. While these offer diversified, professional management that is relatively worry-free, they have enough assets for low-cost, individualized, professional money management.
"They should probably not have $750,000 invested in just mutual funds, so they need to take their investment advice to the next level because they're likely paying too much for professional money management."
Mutual-fund fees tend to average about 2.5 per cent a year -- though the fees Jed and Leah pay could be quite a bit lower. To find out for certain, they need to ask their financial institution to provide them with the annual fee cost -- the management expense ratio (MER) -- for their portfolios. If they are paying about 2.5 per cent on their investments annually, this is a potential headwind in the future to ensuring their wealth keeps ahead of inflation.
For example, if they need to make a five per cent annual return to make their retirement work long-term, that means they actually must earn 7.5 per cent if the fees cost 2.5 per cent of their total assets per year. Furthermore, if inflation is three per cent a year, they would then need to earn 10.5 per cent annually, or they would be at risk of losing purchasing power as they age.
While they can't control markets or inflation, they can control fees by seeking lower cost alternatives.
"With professional money-management services through a brokerage, for example, they would be paying between one and 1.5 per cent annually," Quiring says.
"Basically, when you have more assets to invest, money managers start cutting their costs."
In addition, they need to meet with estate-planning specialists -- a lawyer and accountant -- who can help them preserve their wealth as much as possible if they choose to leave something behind for loved ones or charities.
Their accountant should also be familiar with U.S. tax laws since they own property down south.
And as for their CPP question, there's no reason to delay in Quiring's opinion.
"Because we cannot predict date of death, the answer is ASAP," he says. "Would you like money today or money tomorrow? The answer is today."
Overall, however, Quiring says Jed and Leah's retirement will be well funded for a very long time.
"I congratulate them on accumulating their wealth -- being net savers all their lives -- because now they have the flexibility to make the decision to retire whenever it suits them," he says. "Now all they have to consider is reducing the fees on their investments and getting all the required professionals involved -- the accountant, the money manager and lawyer -- to make sure their retirement is done the right way."