Solution: Downsize house, pay off the mortgage, retire and make the most of savings
“I hope to continue working for as long as I can,” Marianne says. But will she be working for herself, or for the taxman? Family Finance asked Caroline Nalbantoglu, a financial planner who heads CNal Financial Planning Inc. in Montreal, to work with Marianne. While earning income, she can cover that cost, and contribute to her RRSP and other accounts. By Dec. 31, of the year she turns 71, she will need to convert her RRSP to a Registered Retirement Income Fund. Given that she is likely to be receiving employment income, she should wait until the last minute to convert to the RRIF, Nalbantoglu suggests. Her $540 monthly car payments end in two years.Marianne can defer her first RRIF withdrawal to age 72 while still working.
While she is working, meeting her expenses is not an issue. But once she retires, things become more complicated. “Marianne has a big house she can’t afford in retirement,” Nalbantoglu explains. “Downsizing is best.”