Alberta couple with three homes needs to simplify their finances before retirement

Situation: Couple with solid net worth needs to reduce complexity for worry-free retirement

Solution: Sell the cottage, fill RRSP space and trim some spending and they’ll be just fine

In Alberta, a couple we’ll call Sam, 61, and Frances, 56, take home $8,600 per month. Sam runs a hardware store. Frances, who has a small office service firm, draws $1,800 per month in dividends. In their careers, they have managed to build up $869,060 in financial assets. But there are also debts for their house, their cottage and a house they own which their son occupies. Their assets including the houses, financial assets and a car, add up to $1,991,060. Liabilities total $297,275 and their net worth is therefore $1,693,785. That’s a significant sum, but the complexity of their finances is daunting.

An abundance of assets

Sam and Frances would like to retire in four years. Sam’s company stock has to be sold back to his employer when he quits. And there are those three properties. One is a primary residence with a value of $460,000. Their cottage is worth $380,000 they believe. Their $240,000 house is an income property generating no income. It is occupied by their son who pays no rent but does pay the mortgage, utilities and other operating costs. Throwing their son out of the house is not on the menu, but the cottage costs them nearly $1,000 per month in taxes and mortgage service. They also have a timeshare with a book value of $2,000. They pay $100 per month as a standby fee.

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Family Finance asked Eliott Einarson, a financial planner with Exponent Investment Management in Ottawa, to work with Sam and Frances.

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