Woman aiming for $35,000 a year retirement income worries small savings not enough to reach goal

Situation: Woman, 60, with no company pension and low six-figure savings worries about future income

Solution: Reducing spending alone will support retirement and more working years add security

A divorced Ontario woman we’ll call Nancy, 60, is approaching retirement in five years with trepidation. Her company, a small business providing subsidized housing, does not offer a defined benefit pension. She will be on her own.

“I want a retirement income of $35,000 per year after taxes,” Nancy said. “How long will I have to work to reach that goal? Should I continue contributing to my RRSP or open a TFSA?”

(E-mail [email protected] for a free Family Finance analysis.)

Family Finance asked Derek Moran, a fee-only financial planner who heads Smarter Financial Planning Ltd. in Kelowna, B.C., to work with Nancy. “On the good side of this case is that Nancy has no debts. However, her resources for making large changes to her financial reserves are quite limited. Still, there is a good deal we can do to increase potential retirement income,” he said.

Nancy raised four children, now adults, with little financial help from her former husband. She continues to help the children with modest gifts. She gets tax relief via annual refunds of about $1,000, but her cash flow is tight and fully allocated.

One daughter and her husband live with her, but have no money to contribute to her expenses.

Top