How to travel in retirement and spoil your grandchildren?

Marie-Noëlle, age 69, and André, age 77, both retired when they turned 65.¹ While their plans have evolved over the years, today they can afford a first-class trip every two years and spend quality time with their five grandkids, as well as contribute to their education savings. Here's how their financial management and the decisions they've made are ensuring that they can take full advantage of their retirement.

Saving for retirement

Marie-Noëlle was fortunate enough to receive a pension from her employers throughout her career. And she makes no secret of the fact that it has made a big difference to her retirement savings: "I think young people today are more aware of their savings and retirement, but when I was young, I didn't think about it. If I had to do it over again," she says, "I'd start saving for retirement as soon as I got my first job!"

For his part, André has always relied on automatic savings to put money aside. "I was deducting up to 8% of my salary from each paycheque to invest," he recalls. "That's how I contributed to my RRSP, plus I made sure to always reinvest my tax refund. We prioritized RRSPs, but if I had to do it over again, I'd use a TFSA as well."

He also received a pension from his employer, but when the company was bought out in 1992, he lost this benefit. He decided to take the money he was entitled to and put it in a locked-in retirement account (LIRA). With the help of a financial planner, he opted for investments tailored to his risk tolerance, using a strategy that allowed him to diversify his portfolio. Since then, he hasn't stopped taking care of his savings.

Paying yourself a retirement income

The year he turned 71, André converted his RRSP to a RRIF and his LIRA to a life income fund (LIF). Today, his retirement income comes from his RRIF, LIF, and government pension. When he withdraws money from his RRIF or LIF, he asks that the tax be deducted at the source because he'd rather receive a net amount and know how much he has to spend. André estimates that he withdraws a total of approximately $12,000 to $15,000 net per year from his savings vehicles.

"I usually withdraw the minimum required amount from my RRIF, but sometimes I withdraw a little more for a specific purpose. For instance, we recently had to change our car. So we bought a used car and, to avoid going into debt with that purchase, I took out extra money from my RRIF and we paid cash for the vehicle," he says.

Working in retirement

Marie-Noëlle decided to make a long-time dream come true when she retired: starting her own business! While part of why she chose to keep working was to increase her retirement income, the main reason was that she wasn't ready to stop working completely. "I retired happy and with a plan, when it was most convenient for me," she says. "When I was younger, I told myself that one day I'd work as a freelancer. It's a dream I was able to make come true when I retired," she says. "I help students with editing and take on writing contracts when I feel like it. That gives me time to volunteer a few hours a week and play volleyball regularly. I love it because I'm really doing what I enjoy!"

Marie-Noëlle plans to convert her RRSP to a RRIF when she turns 71, but isn't touching it for the time being. Her retirement income is made up of her government pension, fund pensions, and her freelance income.

An evolving retirement plan

As she approached retirement, Marie-Noëlle thought about buying an old house in the country and renovating it. She also considered buying a small business, like a café or an inn. But when her daughter suggested buying a duplex with her parents, the plan changed.

"We'd sold our house and had been renting for two years, waiting to find the right place," she recalls. "That's when my daughter asked me if we were interested in buying a duplex with her and her spouse. We agreed, and we've never regretted our decision!"

The plan allowed Marie-Noëlle and André to invest in a property and help their daughter out at the same time. Things are going great in the duplex, and everyone helps pay the building expenses. The retired couple lives in the top floor while their daughter, son-in-law, and three grandchildren live on the ground floor. "It was a wonderful renovation project, and now we get to be close to our grandchildren," says Marie-Noëlle.

Taking a trip every two years during retirement

Travelling is a dream that's become a reality. "We've always travelled, but differently. We plan more than before," say Marie-Noëlle and André. “In the past, we used to just go without booking anything in advance. Now, we plan ahead. We have time to shop around for the right activities and accommodations. We go with a couple of friends and have a blast!"

Contributing to the grandchildren's education funds

Another goal that's near and dear to their hearts is investing in their grandchildren's education. "We have five grandchildren and will be contributing to their RESPs this year. It's something we'd like to do every year," says Marie-Noëlle. “We're going to put it in our budget," adds André. "That way, there won't be any surprises and we'll know we're on track!"

Enjoying retirement for as long as possible

Ultimately, Marie-Noëlle and André are looking after their finances because they want to be able to enjoy their retirement and spend quality time with their family and friends for as long as they can.

"We could always use more money, but we're happy with what we've got! Our wants and needs aren't extravagant," they say. "We can spoil our grandchildren a little and we can afford to treat ourselves from time to time. At the end of the day, that's what our retirement plan is all about: staying healthy and fit to see our grandchildren grow up!"