In the months leading up to the birth of their first child, Bob and Betty wondered how this new stage of their lives might affect their financial position.
Betty would be taking parental leave, so the household income would drop. When she returned to work, there would be child-care costs and saving for higher education. In time, they might have a second child.
“I worry that we are not managing our savings as well as we should, and that our current lifestyle cannot be maintained once kids are in the picture,” Betty writes in an e-mail. “Will we need to adjust in other areas? Will things be tight in the year I am on maternity leave with only 10 weeks of [employment insurance] top up from my employer?”
Well, the little one has arrived so they’re about to find out. “We welcomed a baby girl on July 2,” Betty writes. “Life is certainly different, and we are settling into this new chapter.”
They are well-positioned financially. At the age of 30, both have good professional jobs, bringing in a combined $175,000 a year before tax. Bob, who makes $83,000 a year in the health-care field, has a defined-benefit pension plan. If he stays put, he can retire in 25 years – at the age of 55 – with a monthly pension of $2,886, plus a bridge benefit of $720 a month until he turns 65.
We asked Linda Stalker, a certified financial planner at Henderson Partners LLP of Oakville, Ont., to look at Bob and Betty’s situation.