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Case study: For a single dad with two kids, having a roadmap for the future is key

This is the fourth post of a five-part series on retirement planning and financial wellness for different life stages and family circumstances.

George* is a 38-year-old single dad of two school-age boys, Andy and Marcus. He works full-time as a chef in Montreal and has no company pension plan, although he has managed to put about $50,000 into RRSPs over the years and continues to contribute about $200 a month.

Prior to the separation with the boys’ mother a year ago, the family lived in a three-bedroom home in Montreal. The home has since been sold and the proceeds of the sale were split between the two of them. A portion of George’s half is currently sitting in a tax-free savings account until he has a better idea of what his long-term financial plan will be. His former partner moved back to her native Europe and has the boys during the summers.

After the sale of the house, George moved in with his dad, Jeremy. The two have always been close, especially since George’s mother died several years ago. When George’s relationship broke down, he and his dad discussed a number of living arrangements but settled on this one for a number of reasons. First, while Jeremy is a pretty active 75-year-old, he has been lonely since his wife’s death and could use some company and a bit of help around the house. Also, because George works very late hours at the restaurant, often until 3 a.m., childcare for Andy and Marcus is difficult to obtain. The boys don’t need a lot of caregiving – Andy is 8 and Marcus is 10 – but still need supervision. Jeremy’s house is also close to George’s work. And, finally, George would rather pay rent to his dad than a landlord – which is not only cheaper but will also allow them to do some needed renovations with it, building equity in the home that George will eventually inherit from his dad. And, having grandpa around is good for the boys, who are still adjusting to their parents’ breakup.

Now that the basic living situation has been worked out, George is looking ahead to what needs to be done to secure his children’s future and his eventual retirement. His main concerns are having enough life insurance in case something happens to him, having enough to pay for his kids’ university and retirement investments because he doesn’t have a company pension plan.

Experts generally recommend buying life insurance that’s seven to 10 times your salary, according to the government of Canada. Because he is relatively young, George figures he will get lower rates than older people do and has hired an insurance broker to help him find the best policy.

Although George’s ex is promising to help pay for the children’s education, George wants to make sure he has enough for them to go to university. When the boys were born, his parents opened Registered Education Savings Plans (RESPs) for each of them, to which Jeremy has continued adding $25 a month. George is especially keen to build on the RESPs, as the government adds to them through the Canada Education Savings Grant. With the average cost of post-secondary education hovering at about $20,000 per year, George knows he faces the double challenge of saving for his children’s education while trying to save for his own retirement.

Luckily, George has very little debt other than a credit card, so he is able to direct his money towards these savings goals. He has an appointment with his financial advisor to determine how much of the proceeds from the home sale he received should go towards the RESPs, his RRSPs and emergency savings.

The last couple of years have been a little unsettled for George and his boys. But this single dad now feels he’s found the right recipe for a more stable future for him, his children and his dad.

Next in our series: Francesca and Angelo are empty nesters who want to know if their nest egg is large enough for all their financial goals.

*George is not an actual person, but his story is indicative of what many single parents are facing when it comes to financial planning and retirement. It should not be construed as financial advice. Reach out to a financial advisor to discuss your situation and try out the Canadian Retirement Income Calculator to help determine what you need to achieve your retirement goals.

This post is one of a five-part series on retirement. Visit the rest of the posts in the series: Dustin and Anna; Jaspreet and Matt; Trish; Francesca and Angelo

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