They might have to work longer to be able to help their children, or they could sell the house, keep some of the proceeds for themselves and gift their children $250,000 each
After doing volunteer work overseas for the last five years, the couple has some catching up to do with their finances and to prepare for retirement.Spending five years overseas doing volunteer work “getting by on a shoestring” has set Kai and Sandra back financially. Now they wonder if they can catch up with their savings, help their two children financially, pay off the two mortgages on their principal residence and retire in comfort.
Sandra asks if she should buy back the years of pension she lost while she was on leave. They ask as well if they can afford to “hand off the house” – and their mortgage debt – to their children at some point.We asked Jeff Ryall, an investment counsellor with Cardinal Capital Management in Winnipeg, to look at Kai and Sandra’s situation. Mr. Ryall holds both the certified financial planner and the chartered financial analyst designations.
Can they give their house to their children and still meet their retirement lifestyle goals? The answer is no, not unless they are willing to work a few more years. A better alternative would be to sell the house, keep part of the proceeds for themselves and give their children money for a down payment.
“All of the factors identified above will have an impact on how much assets they need to retire with, including a cushion to allow for flexibility if their goals change in the future,” Mr. Ryall says. A large portion of their retirement income after turning 65 will come from government benefits and Sandra’s pension. Pensions and government benefits range between 85 to 90 per cent of their retirement income, the planner says.
Sandra Kai Home Mortgage Age Cent Rrsp Savings CPP Winnipeg Ontario
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