Situation: Couple with solid income and hefty savings worry that unemployment would wreck plans
Solution: Stress test employment and investment income to find total income in tough times, trim spending
A couple we’ll call Tom, 53, and Sylvia, 51, live in Alberta. They have two children in their twenties studying at post-secondary institutions in the province. Tom, an engineer whose current job does not come with a pension, and Sylvia, a local government employee who will have a job pension, bring home $16,000 a month but worry that the state of the energy industry will not support Tom’s job much longer. Recovery of the Alberta economy to its pre-oil-price-collapse level seems distant, Tom admits. Would retirement income without his job, and potentially even the loss of Sylvia’s job, support the retirement they imagined before the energy industry entered its time of troubles?
“We want to make sure we have enough money to maintain a comfortable way of life in retirement,” Tom says. “Our minimum requirement for retirement is what we spend now, but without adding to savings. Will that work?”
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Tom’s gross pay is as much as $240,000 a year, but there is no assurance it will continue. If he does lose his job, Sylvia’s $80,000 annual pay before tax would be a lifesaver.