Home Economy How this B.C. couple with 60% of wealth locked up in their...

How this B.C. couple with 60% of wealth locked up in their home can keep the house and still retire well

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Situation: Couple’s wealth is mostly in their home and much retirement income will be from job plans

Solution: Keep the house, sell TFSA and non-registered assets to pay off mortgage

In British Columbia, a couple we’ll call Victor, who is 61, and Betsy, who is 56, live in a townhouse. Each is a manager in a large organization. Their issue is peculiar to folks who work for companies that have defined benefit pensions and live in hot urban real estate markets. The DB plans limit RRSP room to what is left after the employer makes contributions and forces employees to contribute. Sixty per cent wealth is in their home and a very large part of their retirement income will be from their job pensions. They see themselves locked into retirement plans and worry about keeping their home. As we’ll see, however, their financial futures are secure.

”Can we keep the house or should we downsize?” they ask.

(E-mail [email protected] for a free Family Finance analysis.)

Much of their wealth is locked up in their home and estimated in the commuted value of their company pensions. Commuted value is the capital required to pay the pensions. They cannot get to it unless they cash out — a process that would deprive them of professional asset management, guaranteed income and complicate their tax planning.

Family Finance asked Graeme Egan, head of CastleBay Wealth Management in Vancouver, to work with the couple to find ways to estimate and manage their retirement income.

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