Lindsay

Lindsay, 32 years old, is a successful lawyer residing and working in Downtown, Vancouver.

At a recent review meeting, Lindsay inquired about whether it makes sense for her to purchase a condo. She made it very clear that she would like to retire with a decent retirement income and not have to work too much longer than her original goal of age 60.

Lindsay makes $155,000, pays $1600/mth in rent and spends $4500/mth excluding savings.

Current net worth:

• RRSP: $71,500 (Saving $1834/mth)
• TFSA: $40,000 (Saving $458/mth)
• Life insurance cash value: $30,000
• Cash: $41,500 ($650/mth)
• Total monthly savings: $2942

Based on the above savings, at age 61, Lindsay will be able to generate $75,000 after taxes indexed for inflation.

Lindsay has asked us to put together a scenario if she were to make a home purchase of $500,000:

• 20% down payment: $110,500 from liquidating all of her assets
• Mortgage: $400,000 at 2.9%, ($1661/mth)
• Savings ability is reduced to $850/mth to her RRSP and expenses are increased due to strata and property taxes.
• Retirement at age 61: $37,500 after taxes indexed for inflation or she can work an extra 7 years to achieve an income of $75,000.

As a result, Lindsay has decided not to purchase a property for the time being and will reassess at a later time.