Can Pat afford to spend more on travel without jeopardizing her long-term financial security?

Gavin John/The Globe and Mail

With her 60th birthday approaching, Pat is looking to map out her future to see whether she can spend a little more. She has some pension income, some savings and a mortgage-free, lakefront house in small-town British Columbia.

“I’m new to the financial planning world,” Pat writes in an e-mail. She is recently widowed with two adult children who are financially independent. Her challenge is to balance future needs – possibly for assisted living – with shorter term goals such as building a new deck “and occasionally vacationing in a warmer climate during the winter.”

Pat’s income is $5,390 a month from her late husband’s defined benefit pension of $3,260 and $2,130 in disability pensions. At age 65 her disability pensions will end but she will receive a work pension of $1,080 a month plus government benefits, depending on when she decides to take them.

“After expenses, I stash whatever money remains in my savings account,” Pat writes. “When tax season arrives, I make a plan with my bank whether to invest money in an RRSP or tax-free savings account,” she adds. “I need help understanding what type of retirement I can expect with my limited resources, and how I can make informed financial decisions that align with how I want to live my life in the future.”

At some point she plans to sell her house and perhaps buy a condo apartment in town. Her retirement spending goal is $50,000 a year after tax.

We asked Warren MacKenzie, head of financial planning at Optimize Wealth Management in Toronto, to look at Pat’s situation.

What the expert says

Pat wants to know whether she can afford to travel more and spend some time down south over the winter.

Pat could easily spend more, Mr. MacKenzie says. Because her lifestyle is modest, she could spend an additional $1,000 a month for the next decade and still have enough to pay for an assisted living home if she needs one at age 70, he says. Pat has a chronic health condition that could worsen over time.


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