ADDING CHOICES

Rent is an inexpensive way to pay for shelter in the short run and a costly way to do it in the long run. Doris wonders if she could buy a small house with her financial resources. While Vancouver and Victoria are not options, it is possible to find smaller houses or condos for relatively modest sums outside of B.C.’S urban areas.

It would be tight, however. Doris could use the Home Buyers Plan to borrow up to $25,000 money for a down payment from her RRSP. The cost, of course, would be reduced income from the RRSP. Nevertheless, her rent, now $890 per month and rising every year, could be redirected to a $200,000, 3 per cent mortgage with a 25-year amortization. Payments would be $1,186 per month. She might need a part-time job for a few years to add to her savings and thus need to borrow less from her RRSP. B.C. allows persons 55 or older to defer paying property taxes at a nominal cost. Sums deferred have to be repaid when the property is sold. Finding a home in Doris’ price range could be challenging even far from the hottest markets in the Lower Mainland, but it is possible, Moran says.

Finally, Doris asks, is it possible to travel to visit her brother in the Far East once every two years without crippling her finances? Yes, the planner insists, with a couple of more years on the job and some part-time work for a few years before age 65 and perhaps even after, a plane ticket for a few thousand dollars and related expenses for modest accommodation would fit within her budget.

If Doris does not work two more years to get the full 25 years service required for full pension payments, she would be penalized with a 5 per cent loss for each year. It would be slightly less after tax, but the cost would be bearable. Her income would drop by perhaps $200 per month. Part-time work would compensate, Moran says.