Contributed by Edvard Ryder, Sun Life Financial
Canadians are split when it comes to paying down the mortgage or saving for retirement. Many want to pay down their mortgage as quickly as possible now, so that they can use their home equity to help pay for their retirement. That might not be the best way to go since you can’t be sure now much your home will be worth in the future. And will that home equity provide enough money to pay for the retirement lifestyle you want to live?
Get the best of both worlds. Contribute to an RRSP and use the tax refund to pay down your mortgage. This strategy will give you all the advantages associated with paying down your mortgage and investing for your retirement.
In the end, choosing the “right” thing to do depends on your particular financial situation and your long-term goals. But don’t lose sight of your retirement. More Canadians are living longer. That means retirement income needs to last a long time – 20 to 30 years or even longer.1
1 “Canadian face more years of saving, work as chief actuary increases life expectancy.” Financial Post, April 16, 2014.