Downsizing million-dollar home the key to helping this woman get out from under heavy debt load
Situation: Woman in mid-50s worries she won’t be able to retire with heavy debts and low savings
Solution: Downsize house, use liberated cash to pay debts, invest surplus and have adequate income
A woman we’ll call Laura, 54, lives in B.C. Divorced, she has two grown children, one with a severe disability. A civil servant, she takes home $5,548 per month. She lives with the severely disabled child who we’ll call Pat, 31. Pat’s in-home care is provided and paid by public agencies; those expenses are outside of Laura’s personal budget.
Pat will move into a government funded residence in 2018 with all costs paid by the B.C. health system. Then Laura can focus on her own future: retirement at age 60 and choices of what to do with her present home — keeping it, renting out space she no longer uses, or downsizing to a townhouse with a price tag about half that of her present $1,050,000 house. Money is tight because Laura had to borrow to buy out her house in a divorce, and was unable to make the most of her RRSP and TFSA space.
Family Finance put the problems of when to retire and where to live to Derek Moran, head of Smarter Financial Planning Ltd. in Kelowna, B.C.