Buying a home is not a retirement plan
THE STACK #25According to StatCan, Homeowners are 1.4 times more likely to hold debt in retirement than non-owners.
This isn’t only mortgage debt. 28% of homeowners carry consumer debt into retirement. A similar study found that having mortgage debt was a significant and positive factor in the probability of holding consumer debt.
Buying a home is not a retirement plan.
You need to go beyond relying on your home equity to fund every emergency and invest in income-replenishing assets that can cover your daily living expenses at retirement.
Here are three things you need to do stat if you want to retire comfortably, without debt 👇🏾
THE STACK
Step 1: Front-load your retirement
This should be the first major financial goal you tackle. Front-loading your retirement helps you cross retirement off your list and set it aside so you can focus on other financial goals down the line. Plus, you give your investments enough time in the market for compound interest to work its magic.
Step 2: Invest in income-replenishing assets
Your earned income stretches a little further when you invest in assets that grow and are liquid. Doing this will help you achieve any pre-retirement goals faster, such as purchasing a home. The wisest decision you will make is to let your assets pay for your home instead of borrowing against your home to fund your lifestyle.
Step 3: Set up withdrawal buckets
Set up withdrawal buckets that will provide your primary source of income at retirement, a cash cushion during stock market dips and income without selling your investments.
Purchasing a home before funding your retirement could put a strain on your cash flow and have you delay your retirement contributions until it’s too late. You don’t want to rely on CPP or your kids for grocery money.
THE TOOL
BOOK RECOMMENDATION
Balance by Andrew Hallam shows you how you can optimize your income for maximum happiness by investing responsibly and spending on things you hold most dear.
THE ACCOUNTABILITY
We are a few days away from Q4. What progress have you made with your financial goals so far?
Have you:
Reduced debt?
Increased your income?
Invested?
Set up beneficiaries for your RRSP and TFSA?
Purchased term life insurance?
If you have, please share your wins. I would like to hear them and celebrate with you.
You can send me a DM on Instagram or reply to this email.
THE COURAGE
THE KNOWLEDGE
SUCCESSOR HOLDER
A successor holder, if named, will become the new holder of a registered account immediately upon the death of the original holder. The successor holder takes on ownership of the account without having to sell the assets in the account.
You can name a successor holder in your TFSA and RRIF but NOT an RRSP.
That's all for this week.
Looking forward to hearing about your wins.
But until then...Keep Stacking!
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