Harriet will be free to travel and help her parents following some tweaks to her finances with this five-star plan
Solution: Sell unproductive rental unit and keep working until 60 to minimize retirement risks
“Should I sell or keep the rental property?” she asks. “It is not much of a money maker. Would that help my retirement?”Harriet’s work and way of life is about independence and prudence. She has diversified her investment assets into solid real estate which, including her home, comprises 80 per cent of her total assets. That’s a hefty allocation for one asset class and, even more so, to investments which produce hardly any income.
It would be possible to use Harriet’s equity in the rental property much more efficiently, Winkelmolen says. If the $540,000 property is sold less the $210,000 mortgage due, net $330,000 and five per cent, $27,000, is sliced off for fees and selling costs, $303,000 would be left. Harriet has $63,000 of TFSA space on top of a recent $500 contribution. If the $63,500 TFSA contribution grows at three per cent after inflation with $6,000 annual additions for the next 19 years to her age 60, then it would become $262,048 and support payouts of $11,840 for 35 years to her age 95.
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