In their 40s, Luis and Martha also have mortgages totalling $435,605 owing on two properties
Situation: With only one full income and parents living for free in their rental unit, ability to save for retirement is in doubt
A couple we’ll call Luis, 45, and Martha, 40, live in Alberta with their child Alex, age 8. Martha is the principal breadwinner with a base gross income of $6,615 per month plus variable bonuses and employer contributions to a company pension plan. Luis brings home $575 per month from part time work he does when he is not looking after Alex. Including bonuses and the Canada Child Benefit, which goes to Alex’s RESP, they bring home $6,233 per month.
The problems in the case are less about attaining the goal of the target retirement income, but of getting there efficiently, Moran says. For now, the couple is substituting generosity toward Martha’s parents, who live in one unit of their rental house without paying rent, for profit. The analytical problem lies in estimating when the rental will become profitable. We hesitate to predict the parents’ future. We also do not know when Luis may return to full time employment nor what he will earn.
That’s a good return plus or minus capital appreciation. In future, the interest rate they pay, 2.94 per cent, may rise, but they may also be able to raise rents. Moreover, rental condo mortgage interest is tax-deductible. Keep the rental, Moran advises.
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