Indebted rich but time

Retirement stresses you out a bit, much to the madness? Young people are saving less than their parents The former CEO of Alcan joins the a.c. CGI Zenn as in target acquisition

One of the founders of Gap dies aged 81 We can not predict everything. "With my spouse, I had developed a good strategy, but I am now divorcing, the house is sold, I became a tenant and I do not know what to do to prepare for my retirement," says Lucia. The professional of 45 years receives a salary of $ 72 300. She has accumulated $ 7100 in the pension plan from his employer and has $ 9775 in RRSP. "I have almost no assets," says she. In fact, it has more debt: $ 28 360 line of credit and $ 2,600 in unpaid balances on their credit card. "However, adds it, I love my job and I plan to remain active professionally until the age of ... we'll see! "

His debts and income for retirement concern. It would also become owne

Debt and retirement first

The financial planner Richard La Ferriere, TD Waterhouse, initially asked Lucia to list of expenses. The budget showed a surplus of $ 31. "After my review, there was a deficit of $ 250, tells the planner. When they make a budget, people want to happen! " It affects net income of approximately $ 44 000, it spends its entirety.

But all is not bleak. "The good thing, says he, is that it gives us time because she wants to work until age 70." By continuing to work after 65 years, she improves her pension from the RRQ of 6% per year until age 70. However, in its projections, Richard La Ferrière subtracts 50% of the pension "because his divorce is not settled and I do not know the impact of the division of family assets." A 5% salary Lucia is poured into the supplemental pension plan from his employer. She also believes that its income should grow by 3% per year. In retirement, she wants to reach the equivalent of 65% of its net income for life or $ 28 500. To achieve this goal, Lucia will pay $ 185 per month into an RRSP, calculated our planner. "This is not insurmountable, but it would have to make budget adjustments." It should pay particular line of credit as quickly as possible. In addition to weigh heavily on its budget, the $ 800 per month allocated to debt repayment would not permit him to meet the debt ratio mortgage lenders. It also drags the ball a recurring balance of $ 2,600 on his credit card. Its interest costs would be lower if it transferred this debt on its credit line. The dream of a new property can fit into this picture? To meet the target debt ratio as a criterion for financial institutions, Lucia can not allocate more than 32% of its gross income to housing costs. Considering the budgetary situation of Lucia, our planner instead sets this ceiling at 25% or $ 1512 per month. It has touched an upcoming bonus of $ 8000 and thought to use it to repay its debt. In view of its proposed ownership, better keep the money for the downpayment. "It would be nice to reduce the debt but it will prove she has savings to borrow for the house," retorted the planner. He calculates that Lucy could get a property with a value exceeding $ 200 000. With a down payment of 5% and mortgage insurance for $ 3977, the loan would total $ 193 977. An interest rate of 4.85% and produces monthly payments of $ 1112. Add $ 300 for property taxes and $ 100 for heating, and reaches the $ 1500 set limits. But this program depends on reducing its debt and better control its spending. Fortunately, she has time before her.