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Retired on a Fixed Income
A retired couple who want to downsize from the plantation-style home they raised their kids in. She had a stroke last year and uses a wheelchair most of the time. Their kids and grandkids live across the country so visits are not regular. They are now on a fixed income and money is tight. He is has a small company pension plus they receive their government pension. All they need is 1,000 square feet to live in, plus a 400-square-foot studio apartment for an occasional guest, or for live-in help either of them might require in the years ahead. The picture that they have always held for their retirement still remains; however, financially their outlook today looks a lot different from what they had imagined. In spite of this fact, they are likely to live another two or three decades and would like to trust that they will be able to meet their financial needs now and future. Today, they pay a greater percentage of income to pay for utilities (gas, electricity, phone, cable TV, water etc.) then what they once paid in mortgage, interest and taxes combined. How much money will they need and for how long?
 
AGE: 65 YEARS TO FINANCIAL FREEDOM: Retired
HOUSE HOLD INCOME: $45,000
ASSETS:    
  Registered funds: (RRSP, 401K, etc.) $ 150,000
  Non-Registered funds: (Cash, Stocks, Bonds, G.I.C.s/CDs) $ 25,000
  Real Estate Equity: $ 225,000
  Business Retained Earnings: $ 0
       
  TOTAL ASSETS: $ 400,000
PROJECTED GROWTH    
  Total asset growth Years: 20 x 10% Interest/Yr = $ 400,000
  Annual growth@ 10% Interest/Yr = $ 40,000

FUTURE INCOME NEEDED FOR FINANCIAL FREEDOM

 $ 45,000
  Calculation based on current income projected at a 3% rate of inflation
PROJECTED RESULTS PRODUCE SHORTFALL – FINANCIAL OBJECTIVE NOT MET $ 5,000
OPTIONS TO MEET FINANCIAL GOALS:
  1. Increase investment dollars
2. Establish a higher return (potentially more risk)
3. Extend time frame for Financial Freedom (work longer)
4. Downgrade lifestyle
5. Join the Institute For Financial Learning