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Retire your debt before you do

Friday, March 9, 2018   /   by Ruth Ballantyne

Retire your debt before you do

(NC)-While retiring debt free is a goal for many, with competing financial priorities such as saving for retirement, home ownership and the day-to-day living expenses, how do you make this dream a reality?
 

"While paying off your mortgage and debt before contributing to your RRSP may seem like the thing to do, it is not always realistic," says Jason Round, head of Financial Planning Support at RBC Financial Planning. "It is best to find a balance between paying down debt and contributing to your RRSP, even when RRSP returns are lower than mortgage interest rates. The capital invested in your RRSP will produce compound interest in a tax shelter - creating a substantial nest egg for your retirement."
 

Round provides three tips to a debt free retirement:
 

• Understand trade-offs - Recognize that while you may be contributing to your RRSP regularly, paying down debt will impact your savings.
 

• Set-up regular RRSP contributions - Consider an automatic RRSP contribution to save while continuing to pay off your debt. The tax refund generated by RRSP contributions can be used to pay down debt.
 

• Restructure your debt - Start reducing your high-interest debt (credit card) then focus on managing low interest debt (mortgage).
 

It is always a good idea to talk to a financial planner who can go through a financial review with you. A Financial Planner will provide advice to help you pay down debt while staying on track with your investments.
 

To see how RBC can help, visit: http://www.rbcfinancialplanning.com/

Ballantyne Professionals | RE/MAX Realty Services Inc.
Ruth Ballantyne
295 Queen Street E
Brampton, ON L6W 3R1
905-456-1000

Information is provided exclusively for consumers’ personal use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Data is deemed reliable, but is not guaranteed accurate by the MLS®.
Information is provided exclusively for consumers’ personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Data is deemed reliable, but is not guaranteed accurate by the MLS®. Copyright 2021 Last Updated September 26, 2021
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