Are You Retirement Ready? Plus, Unlocking the Benefits of Secondary Suites

Neil:

Welcome back to "Getting Your Sh*t Together"*, the podcast where we help you make smart decisions about your finances, investments, and mortgage strategy. I’m Neil, and as always, I’m here with my co-host, Jerome.

Jerome:

Hey everyone! We’ve got a packed episode today. We’re diving into something that touches all of us... eventually—retirement planning. Specifically, what you need to do if you’re about 10 years out from retirement.

Neil:

Exactly. It’s an eventuality and like taxes and death there is no escaping from it (at least for most people). A lot of people don’t realize how much time it takes to get your retirement plans in order. We’re not just talking about throwing money into a savings account. It’s about making sure all your bases are covered, especially with how long people are living these days. So, first question, Jerome.. When should I start to prepare for Retirement?

Jerome:

<<your response>>..

Retirement isn’t just a few years of relaxing on the beach anymore. People are retiring for 20, 30, even 40 years! And that comes with a whole new set of challenges. So, if you’re 10 years out from retirement and haven’t done any planning or haven’t prepared, then it might be too late.

But, how do you know if you are prepared? You can never be 100% sure given the curveballs life throws at you but there are some critical steps you need to take now.

Neil:

We’ve put together a checklist of 10 key points that anyone nearing retirement should consider. Let’s go through them one by one. First up: assessing your financial standing.

Jerome:

That’s the foundation. You have to know where you stand financially. What assets do you have? What debts are you carrying? What are the different sources of income and what expenses you need to support in retirement. Things will evolve over time and so you need to plan accordingly. You can’t start making retirement plans until you have a clear picture of your current financial health.

Neil:

Which brings us to creating a budget. Start living on a budget now that reflects the lifestyle you want in retirement. Get used to managing your expenses and identifying areas where you can save.

Jerome:

And while we’re on savings, don’t forget to maximize your retirement contributions. If you have employer-sponsored retirement plans or other investment accounts, now’s the time to ramp up contributions, especially if there are any catch-up provisions. Don’t forget about the elusive “reduction of taxes” at source to help with this as well.

Neil:

Absolutely. And next, diversify your investments. You want to protect yourself against market volatility, so spreading your money across different assets—stocks, bonds, real estate—will give you a balanced portfolio that can weather the storms. If you have not managed your investments till nor or do not know much about investments, then be sure to seek out help. You sure do not want to take too much risks or gamble with what you have saved.

Jerome:

Then there’s paying down debt. No one wants to enter retirement with a ton of debt dragging you down. Prioritize paying off credit cards, loans, and any other debt with hefty interest rates and try to keep it that way. Might be helpful to look at a consolidation strategy to get some of these under control now, while your income is still good.

Neil:

Now let’s talk about the mortgage. If you still have one, this is a big one: evaluate your mortgage strategy. Should you try to pay it off before retirement or do you have better use for those funds. How about getting a HELOC before you stop working?

Jerome:

I think a lot of people overlook the idea of getting a HELOC while they’re still working. Lenders are more likely to approve you while you have steady income. A HELOC gives you financial flexibility if you need access to funds later on in retirement. Plus there is no interest if you do not use it!

Neil:

Speaking of flexibility, let’s talk about the rising cost of senior living and home assistance plans. It’s something that catches a lot of retirees off guard. You might be healthy now, but you need to plan for the possibility of needing assisted living or in-home care. Demand for such services is increasing with our aging population and so those costs are also skyrocketing.

Jerome:

Exactly, and that’s where something like a reverse mortgage might come into play. It’s not for everyone, but if you want to tap into your home’s equity without selling, it’s a tool that can help supplement your retirement income, especially if you’re facing high healthcare or senior living expenses in your later years. It shouldn’t be your primary retirement income strategy but it does have a place in a comprehensive retirement plan.

Neil:

And let’s not forget about healthcare costs in general. Once you are retired, you may not be covered under your former employer’s plan or may need to pay more to get similar coverage. OHIP (i.e. Ontario Health Insurance Plan) may not cover or be sufficient for all your healthcare needs in your senior years. Planning for how you would cover these costs can save a lot of stress later when means are more limited.

Jerome:

Another thing we’re seeing more of lately is adult children looking to parents for help, especially with early inheritance. With the higher price of homes, younger generations are struggling to get into the housing market, and parents are often asked to dip into their retirement savings to help.

Neil:

That’s a tricky situation because while it’s natural to want to help your kids, you also need to make sure you don’t jeopardize your own financial security. This is where working with a financial planner is so critical—they can help you balance those priorities.

Jerome:

Which brings us to the next point on the checklist—working with a financial planner and investment advisor. Having professionals guide you through these decisions makes a huge difference. They help you see the big picture and ensure you’re not overlooking something crucial, like tax planning or estate planning.

Neil:

Exactly. The earlier you start working with someone, the better they can help you craft a plan that takes all these variables into account. Retirement isn’t a one-size-fits-all situation, especially with the way things are today.

Neil:

Now, let’s talk about the final item on our checklist and this is something which is often overlooked. Retirement planning is not just about the numbers and finances—you need to invest in yourself too.

Jerome:

This is such an important factor. Planning for retirement isn’t just about making sure you have enough money. It’s about setting yourself up for a fulfilling life. Retirement can last a long time, and if you’re not keeping yourself active—mentally, physically, socially—it can feel like you’re just waiting around.

Neil:

That’s why, as you approach retirement, it’s important to stay engaged. This could mean pursuing hobbies, interests, or even passions that you’ve put on the back burner while you were working full-time. Find things that bring you joy and fulfillment.

Jerome:

And don’t underestimate the importance of staying physically and mentally active. Whether it’s volunteering, joining community organizations, or even taking up something completely new—like furthering your education or maybe even starting a small business—these things help keep your mind sharp and your body healthy.

Neil:

Absolutely. Maybe you work part-time doing something you love, or you start a side hustle that gives you purpose. Even just being more involved in your community can make a big difference. You don’t have to retire from life when you retire from work.

Jerome:

Right. Retirement doesn’t mean you have to slow down. Staying active, whether mentally or physically, is key to enjoying those years. It’s about making the most of that free time in ways that enrich your life. Develop your good habits now, while you are both mentally and physically capable.

Neil:

Exactly, because having a financially secure retirement is only one piece of the puzzle. You want to make sure you’re living a retirement that’s fulfilling. So as you go through your financial checklist, don’t forget to plan for your personal happiness and well-being too.

Jerome:

And isn’t that a huge part of retirement planning that often gets overlooked? It’s not just about having enough money to live, but also about having enough meaning to enjoy your life.

Jerome:

So, to sum it up.. Retirement planning is not just about putting money in an account and hoping for the best. You’ve got to think long-term and factor in all the different things that can come up—whether it’s healthcare, senior living, helping your kids, market downturns, your physical and mental wellbeing and feeling useful.

Neil:

And it’s also about keeping your options open. That’s why tools like reverse mortgages, HELOCs, and working with professionals are important. You need a toolkit of solutions, because you never know what curveballs life might throw your way.

Jerome:

I couldn’t agree more Neil, retirement planning is about flexibility and preparation. The earlier you start putting these pieces together, the more peace of mind you’ll have when you actually retire.

Neil:

So, if you’re 10 years out from retirement, now’s the time to get serious about your planning. Go through that checklist—evaluate your mortgage, pay off debt, boost your savings, and start thinking about those long-term healthcare costs. And most importantly, talk to a financial planner.

Jerome:

I can’t stress enough “Don’t wait until the last minute”. Start your planning now, and you’ll be in much better shape when retirement comes knocking.

Neil:

Thanks for tuning in! If you’ve got questions or need help getting your finances in order, feel free to reach out.

Neil: Hey everyone, welcome back to "Getting Your Sh*t Together." Today, we’re diving into something that’s not only a smart move for current homeowners but also something buyers can consider when looking at properties: secondary suites. Jerome, I think a lot of people underestimate the value that adding or buying a home with a secondary suite can bring.

Jerome: You’re right, Neil. Secondary suites—whether it's a basement apartment, a laneway home, or an in-law suite—are more than just extra space. They’re an opportunity for homeowners to increase both their income and the overall value of their property. This is a strategy that more people should be thinking about, whether they’re already in a home or shopping for one.

Neil: Exactly. So, what is a secondary suite? Well, it’s a separate, self-contained unit within your property. It could be a basement apartment with its own entrance, or it could be a standalone unit in your backyard. Either way, it’s a space you can rent out to bring in additional income. And let’s face it—who doesn’t want a little extra money coming in each month?

Jerome: That extra rental income can make a huge difference, especially when it comes to managing mortgage payments. Think about it: instead of covering the entire mortgage out of your pocket, you have someone contributing by paying rent. It’s essentially turning your home into a financial asset that helps pay for itself.

Neil: Exactly. And this isn’t just for people who already own a home. If you’re in the market to buy, consider properties that have the potential for a secondary suite. Maybe there’s an unfinished basement, or you have room to build a laneway home down the road. These are the kinds of features that can turn a regular home into an income-generating machine.

Jerome: That’s a great point, Neil. We’ve worked with many clients who have turned an underused basement into a fully functional rental unit, and the impact on their financial situation was immediate. It’s not just about the here and now either—this is a long-term investment in your property.

Neil: And speaking of long-term, there’s the added benefit of increasing your home’s value. A property with a secondary suite is more attractive to future buyers, especially in competitive markets. Buyers love the idea of moving into a home that already has income potential built in.

Jerome: Right, it’s one of those rare opportunities where you’re getting both short-term and long-term benefits. You have immediate financial relief through rental income, and down the road, when it’s time to sell, you’ve got a more marketable property. It’s a win-win.

Neil: And let’s not forget another key benefit—this can be a great option for homeowners who live alone or seniors who want to stay in their homes longer. Having someone else on the property can provide peace of mind and even a sense of security, not to mention the financial help.

Jerome: Yeah, and it’s not always about renting to strangers. We’ve seen cases where families create secondary suites for aging parents or adult children, keeping everyone close but giving each person their own space and independence. It’s about flexibility and making your home work for your needs.

Neil: Exactly. Whether you’re buying or already own, having the option to add a secondary suite gives you that flexibility. And if you’re worried about the upfront costs, there are plenty of financing options that can help. This is where we come in as mortgage brokers—our job is to help you figure out how to make this work financially.

Jerome: Right. We can help you explore options like refinancing or tapping into your home equity to fund the addition or renovation of a secondary suite. And if you’re buying, we’ll show you how the potential rental income can be factored into your mortgage qualification. That extra income can make it easier to afford a larger or more desirable home.

Neil: It’s about making informed decisions that benefit you financially now and in the future. Whether you're adding a secondary suite or buying a home with that potential, this is a strategy that can really enhance your financial stability.

Jerome: And the best part is, you don’t have to figure it all out on your own. We’re here to guide you through the process, help you explore your options, and make sure you’re getting the most out of your home.

Neil: Exactly. So, whether you’re thinking about buying, renovating, or just maximizing the value of your current home, consider the benefits of a secondary suite. It’s not just extra space—it’s extra income, extra value, and extra security.

Jerome: Thanks for tuning in, everyone. If this sounds like something you want to explore, we’re here to help. Reach out anytime, and let’s see how we can turn your home into a powerful financial asset.

Neil: And don’t forget to subscribe to the podcast for more tips on getting your financial sh*t together! Until next time, keep thinking outside the box when it comes to your home’s potential.