Retirement Strategy 101: Get help!

These days there is a lot of media coverage on the high cost of living and of housing in Vancouver, and how this makes it difficult to buy a home in Vancouver. However, it’s not just those trying to get into the market who are affected by Vancouver’s expensive real estate, but also the boomer and senior generations. This growing demographic group is either retired or approaching retirement in record numbers and in many instances without being adequately prepared. Like no other generation, today’s seniors have been living longer, spending more, and saving less. While Canadians in general save less today than in the past, this has far more of an impact on seniors who have less time and in many cases no extra funds to build savings.

Financial Planners recommend trying to enter retirement debt free. In the ideal situation all of us would be wise to pay off our debts and have “financial freedom” in our golden years. However the reality is that for many this is not a possibility. The economy and financial markets have eroded investments. Declining health or loss of a partner, combined with inadequate or no insurance and a lack of understanding of money and finances, has led to a situation where people are increasingly approaching retirement carrying a mortgage and other debts.

What advice should we give to today’s seniors? Should they allocate more of their funds today to try and pay down or pay off their mortgage before retiring? Would they be better putting these funds into savings where the funds can grow and provide income in their retirement years? Many seniors who experienced the depression era lived within their means and now own their home free and clear and don’t have a mortgage. However, given the high cost of living in Vancouver they didn’t have money left over to save and invest, leaving them house rich and cash poor.


For those with equity in their homes but little in the way of investments to provide an income in retirement years, one possible solution is to arrange a mortgage and use it to fund an investment that can provide a steady tax efficient monthly income stream. Why? Current tax rules allow for interest on funds borrowed to invest (whether through a mortgage, reverse mortgage, or bank loan etc.) to be claimed on personal tax returns. This provides some tax relief.

This concept continues to be an important financial strategy for seniors. For those who wish to continue to live in their homes it provides a means to do so along with a source of income for the growing “house rich and cash poor”.  This type of leveraged investment also helps in diversifying an investment portfolio by reducing exposure to one just asset class, namely real estate. (November, 2012) HomeEquity Bank enewsletter, Vol. 2  Issue 10

Today’s financial professionals are trained and equipped to provide advice on the suitability of investment or borrowing strategies. Find someone who understands the specific needs of seniors and who you trust for advice. Friends, family and Seniors’ Associations can all be good starting points to finding professionals who can assist you in creating a financial retirement plan.


Julie focuses on finding the best mortgage fit for her clients. As an Accredited Mortgage Professional (AMP) with over 13 years experience in banking and finance she is able to provide advice on all aspects of choosing a mortgage including rates, terms, payment options and pre-payment flexibility. By listening to her clients needs, she creates specific financing solutions and helps her clients save money over the life of their mortgage.

This article is in no way intended to substitute for competent legal and financial advice.

Julie Isaac
B. Com
Accredited Mortgage Professional


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