How much has the pandemic hurt your retirement plans? We delve into the retirement portfolios of two couples hit hard by COVID-19 to see what damage was done

It’s challenging enough in normal times for retirees to find the retirement lifestyle that best fits their personal needs and finances at the same time.

But the pandemic makes it even trickier by knocking many retirement plans off-kilter.

In what follows, we describe how two couples — whose names we’ve changed to protect their privacy — have had to adjust their retirement lifestyles and spending after being impacted by COVID-19 in different ways.

We start with Deborah and Daryl Burton, a Toronto twosome in their early 70s who both contracted COVID-19 early in the pandemic. While Daryl recovered quickly with no lasting effects, Deborah is among the group known as “long-haulers” who suffer lingering symptoms.

Investment setbacks unrelated to the pandemic have forced them to reduce their budget, although coronavirus restrictions and Deborah’s health issues limit activities they can spend money on now anyway.

We then check in on Emma and Warren Fletcher, both in their late 50s, who live in a small city near Greater Toronto’s edge. Warren was the family’s sole breadwinner when he suddenly lost his sales job early in the pandemic. At that point, the Fletchers were in reasonable financial shape but unsure whether they were quite ready for retirement. So they’ve had to review and adjust their plans to the new reality.

“Although these two couples experienced the pandemic very differently, both have been able to weather their individual challenges so far by adapting their spending to fit their circumstances and values,” says Sandi Martin, a certified financial planner and partner with Spring Financial Planning. Martin helped both couples prepare spending plans, which are shown in the accompanying table. (We also show average senior couples spending based on Statistics Canada data that I’ve adjusted.)

The Burtons

The Burtons picked up COVID-19 in March. While Daryl recovered quickly, Deborah continues to experience problems with breathing, fatigue and “brain fog” (although she’s long past being contagious).

With the help of their Christian beliefs, Deborah tries to stay positive. She believes her “long-hauler” symptoms are receding, albeit very slowly. “It’s not fun but there’s nothing I can do about it,” says Deborah. “You can go down with it or you can look ahead with hope.”

The Burtons have been retired for about 15 years. Recently they’ve been forced to face difficult spending choices after seeing their nest egg whittled down by poor investment results over many years. For now, their overall spending budget is roughly $ 75,000 a year (not counting what they spend on taxes). While that above-average amount is far from hardship, it’s nonetheless disappointing compared to what they thought they could afford previously.

“They recognize they’re still very fortunate,” says Martin. “They’re quite happy they can find some balance, even though it’s not optimal, between feeling comfortable on their spending on themselves while helping their kids, church and community.”

Despite reduced means, they continue to put a high priority on spending both time and money for the benefit of their church, other charities, and their two children’s families, which includes three grandchildren. They now budget almost $ 12,000 for charities and gifts to family members.

“That’s something we like to do,” says Daryl. “We’ve heard stories of people with lots of money and they (leave it in their wills) to people they would like to give it to and that’s fine. But they never had the joy of seeing what it could do to the people they are giving it to while they were alive.”

While their restrictive budget is necessary for now, they hope to justify adding to it at some point. Years of disappointing investment results lead the Burtons to convert their portfolio into cash. When they subsequently enlisted Martin’s help with financial planning, she recommended conservative spending limits that reflected ultralow returns expected from a nest egg invested in that manner.

Their budget allocates nothing to travel and some other activities they enjoy (which they can’t do now anyway because of the pandemic and Deborah’s health issues). Meanwhile, they’ve started working with a new investment adviser recommended by Martin to create a balanced stock and fixed-income portfolio that should generate better returns over the long-term. As a result, they’re hoping to justify a bit more spending leeway when their budget is next updated, ideally around the end of the pandemic when more activities are possible.

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In normal times, with the budget they enjoyed in the past, they liked to travel to visit friends and family in Europe and elsewhere in Canada, or travel with their children while picking up the costs. The Burtons both like to stay fit with walking or hiking and Daryl likes golf. They enjoy live theatre and taking grandkids to the Royal Ontario Museum and Ontario Science Centre. In pandemic times, they’ve kept in contact with their kids and grandkids by Zoom. “Because of my illness we weren’t able to do driveway visits” last summer and fall, says Deborah.

They spend a hefty $ 31,000 a year for rent and utilities on a 800-square-foot apartment in central Toronto. While they could find a cheaper place, they enjoy its comforts, and it’s close to their children, friends, and church. They consider it home and so would be reluctant to give it up.

The Fletchers

The Fletchers are a couple in their late 50s who provide a textbook example of how to build a sizable nest egg for retirement. They did so through frugal living, diligent saving and savvy do-it-yourself investing. They’ve achieved that mainly on one income, after Emma left her professional career early on to become a stay-at-home mom for their two kids. Warren earned a good professional salary, but was never a particularly high-income earner.

When Warren’s employer laid him off suddenly in March early in the COVID crisis, they were tempted but unsure about the prospect of retirement. They knew they had done a good job squirrelling away money, but they weren’t certain they were fully ready financially and psychologically to start drawing money out.

“I needed a financial coach to say ‘you’re going to be fine,’” says Warren, about enlisting Martin’s help. “You get to the point where you’re so used to being a bit of squirrel, it’s a bit of psychological hump that I’m still working on getting over,” he says. “When it comes time to tap into it, we don’t want to continue to be real frugal when we don’t have to be. I don’t want to be some stingy guy who becomes the richest guy in the graveyard.”

After mulling over their finances and plans, the Fletchers did decide to turn Warren’s job loss into permanent retirement. Martin says it helped that they had a good handle on spending. “Because they had a good sense of what they needed to spend versus wanted to spend they could shift gears quite quickly,” she says.

The Fletchers allocate about $ 60,000 a year to ongoing, routine spending, plus $ 10,000 to support their two university-age children at home (which will end in a few years when they graduate). That lets them allocate almost $ 20,000 in discretionary spending for post-pandemic travel, bringing their total budget (not counting what they pay for income taxes) to around $ 90,000 a year. (Their income-tax bill in this budget is unusually high, and should be far less in a typical year.)

They like to eat well and spend an above-average amount on groceries. They live in a modest 1,500-square foot three-bedroom house and drive two reliable vehicles, both at least 10 years old.

They love cooking, gardening, walking, and camping. They spend carefully but are willing to pay up for quality when it counts. For example: “Camping is a low-cost activity, but buy good camping gear so you can enjoy it,” says Warren.

Warren has plans for renovation projects around the house. Emma is researching how to make the most of post-pandemic travel abroad with experiences rich in food, drink, history, culture and adventure. They will also visit friends elsewhere in Canada. They like to spend time visiting and helping their parents.

“I’ve watched some people retire and not know what to do with themselves,” says Emma. “I don’t think that’s an issue with us.”

David Aston, a freelance contributing columnist for the Star, is a personal finance and investment journalist. He has an M.A. in economics and is a Chartered Professional Accountant. Reach him via email: davidastonstar@gmail.com

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