Mary, 46, worries that being a renter will hurt her retirement plans. How much should she be concerned?

Mary is self-employed and planning to take on more work now that her son has reached his teens. Her goal is to save enough for the day when she leaves the work force. As an accountant, her skills are in demand.. She also gets child support of $800 a month and the Canada child benefit of $506 a month.

We asked Justine Kelly, a personal financial planner at Modern Cents, an advice-only financial planning firm, to look at Mary’s situation.Mary would like to stop working or reduce her workload by age 60 because of its high-stress nature. “As a check point, she would like to know how much she will have saved by age 60,” Ms. Kelly said.

“Mary has done a fantastic job at being debt-free and keeping her expenses and daily living costs low,” Ms. Kelly said. “This has helped her accomplish a respectable amount of savings as a single mother with an average income.” Mary has saved about $255,000, spread out among her tax-free savings account, registered retirement savings plan, first home savings account and nonregistered accounts. That does not include the RESP. She has invested in various guaranteed income certificates, stocks and mutual funds.

Mary could continue with the same level of income and savings while keeping her investments in a moderate-risk portfolio assumed to make a rate of return of 5.19 per cent per year, Ms. Kelly says. “With no changes to her current path, she could have a monthly after-tax income of about $3,250 plus inflation at age 60 to last her until age 95.

Mary has her savings spread among GICs, stocks and some mutual funds. “A clear review of her asset allocation and investment diversification between geographic regions and sector exposure would be prudent to ensure she does not take on more risk than required,” Ms. Kelly said. Mary should aim for a portfolio designed to align with her risk tolerance and a capital growth objective. She should target an average rate of return of 5.60 per cent or higher after fees to keep pace with inflation.

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