FP Answers: Can we retire in 7 years at 55 even though we have a $525,000 mortgage now? — via financialpost
FP Answers
With $600,000 in your RRSPs, if you each drew $20,000 for 10 years from age 55 to 65, you’d have $200,000 in your RRSPs even if the investments made no interest. So, yes, based on the numbers provided, you can retire at age 55.Article content You’re making mortgage payments of about $78,000 per year, and I’ll assume you need $60,000 to live. Add the two together and you need an after-tax annual income of about $140,000. You may also be contributing money to your work pensions. With $600,000 in RRSPs, I’m sure you’re still making contributions, which may be limited to $10,000 per year, depending on income and pension adjustments.
Financial planning is about discovering what’s possible, which includes lifestyle choices and planning efficiencies. For example, assuming an after-inflation return of three per cent on your investments, rather than spending $60,000 per year in retirement, you could spend $78,000 indexed at three per cent to age 100. At age 100, you will have a house worth $8.5 million, about the equivalent of $1.
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