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Educational savings

Their first spending priority has to be seeing their three children through post-secondary education. The present RESP has a balance of $89,830. If contributions continue at $500 per month for two years, by which time all kids will be past the age 17 limit of the Canada Education Savings Grant’s annual contribution of the lesser of $500 per beneficiary or 20 per cent of contributions, the fund would have $104,230. If divided three ways, the kids would have about $35,000 each for post-secondary studies. It would be sufficient for four years of tuition at any post-secondary institution in Alberta if the kids live at home.

A survival budget

At present, the couple is living off $19,000 cash in a savings account and Agnes’s $1,200 monthly salary. Their $8,743 monthly budget will have to be adjusted downward if Charles does not find another job. There is not a lot of fat in it, but RRSP contributions of $1,200 per month should stop. Charles no longer has a salary and Agnes’ salary is too low to be taxable. The food budget, $2,400 per month, could be trimmed by $1,000. Dining out at $375 per month could be cut down to $175. Clothing and grooming could drop $100 to $250 per month. Travel could drop by $100 to $150 per month. These adjustments could bring allocations down from $8,743 per month to $6,143.

Retirement plans

To support expenses in future after their cash runs out, the couple has $279,000 in a non-registered investment account. If they set aside $50,000 for a motorhome they would like to buy, they would have $229,000. If that sum, invested to generate 3 per cent after inflation, were annuitized to pay out all income and capital over the 37 years to their age 90, it would generate $10,330 per year.