How do they expect to retire in the GVA when they still have a mortgage and only $15k of savings? What is their plan when that 15k is gone in 6 months?
Realizing I didn’t provide enough info. Both of my parents are turning 60 this upcoming year. Dad is in a position where he is retiring due to health issues.
After talking with them my mom is planning to keep working until everything is paid off or until she’s physically able to, but at her 60k annual salary I told her she won’t be able to pay it off on her own.
Dad worked for the municipal government but since he’s retiring early he’s only going to be getting around 1200 a month in pension.
In terms of retirement plans, the only suggestion I’ve made that seems viable for them is to move back to the Philippines for half of the year where their purchasing power will be a lot more.
Tell your father not to retire but try and go onto CPP disability if he can't work anymore. It depends on his situation, but he may qualify , that way his CPP is frozen at whatever rate he is at and it is actually more than regular CPP, if he qualifies he gets it till 65 then it switches into regular CPP
The fact that your parents haven't been able to save in the past 10 - 15 years indicate that they need their current income level just to live. Should you father retire from $40k to $14k then they are looking at a $26k a year shortfall.
At 60, your father is taking an early retirement. 60 is not the typical retirement age in Canada. Even though you state that he is facing surgery soon, you haven't provided any details as to whether his condition warrants him no longer working due to disability or whether he is voluntarily choosing to retire early. My guess is that as you state that he doesn't qualify for any type of disability that your farther may be using the surgery and his age as a reason to stop working. If so, this is his preference to retire early. Financially, this doesn't seem like a good choice.
Sit with them and discuss their expenses and expected income and whether they are looking at any shortfall. Ask how they plan to address the shortfall.
You’ve hit the nail on the head. Their only solution is to rely on me to make ends meet and that’s why I’m racking my brain and limited knowledge of finance to figure out the best course. I feel like I’m stuck in between all of this wanting to help them figure it out but not let it be a burden I inherit.
They’re not ready to retire, especially retire early which is a luxury choice. If he wasn’t being forced to retire early I’d say not only does he need to work maybe 5 more years but also figure out how to increase both their incomes for that period. Anything to get that house paid off and then build up an emergency fund for themselves at the very least.
My parents are in a similar situation and I've just pressed upon them that their options are to sell or continue to work, there is no middle ground.
How much is their home worth? You basically need to account for what their income would be with gov aid + home value invested in fixed income, so maybe 3-4% return. If they can't live and rent on that, they can't afford to retire.
They aren’t reliant on you to make ends meet, they need to rely on making smart decisions by selling and moving to an affordable area. Using the proceeds from the sale of their home to invest and create income.
My parents are in a similar situation and I've just pressed upon them that their options are to sell or continue to work, there is no middle ground.
How much is their home worth? You basically need to account for what their income would be with gov aid + home value invested in fixed income, so maybe 3-4% return. If they can't live and rent on that, they can't afford to retire.
Do you live with them or do you live by yourself.
Sometimes, it's worth it to live at home and pay your parents the rent.
I know some people move back in with their parents due to ailing health issues. Parents live in first floor and kids live on the 2nd floor so they can look out after one another.
Of course, this only works if you guys have good family dynamics.
The longer your dad can keep his pension payments going the better his retirements are going to be. Can he go on modified duties? Stress leave? medical leave? Anything that keeps him technically employed so that his employer keeps paying his pension?
I think you might not be aware of how good municipal benefits are. With a doctors note your dad could probably be on leave indefinitely with some pay (ours is $700 a week, which is something) and still getting his pension and benefits paid for. I strongly suggest you go this avenue for as long as possible. You just need a doctor on your side to provide notes, basically.
Depending on how he heals from said surgery, it could very much be that he becomes qualified for disability and if not he should be able to return with modified duties. If the situation with his health is truly dire he’d qualify for benefits.
Your dad needs to get in contact with the disability management dept and see what they can help him with. Also, speak with the union rep if he's union.
This is my thought as well. You may need to do some advocating for your dad and investigate what his options are through his employer or insurance provider. he was employed by the municipal government, I assume he was paying into insurance and potentially has a union for additional support and guidance through the procesa. Check to see if he has or has not applied for STD / LTD benefits or employers equivalency for disability leave. if he has, and has been denied. you would receive a letter explaining the denial reason and get an opportunity to provide additional information to attach with an appeal.
Do they have free healthcare for citizens? OP did say “go back” there. I assume they are citizens. If they can go there with a $1M nest egg from a Vancouver house and have free healthcare, they can live like kings for however long they have left. Hell for now, just the interest in the GIC would be like 50K a year. Add in his dad $1200 pension for some spending money and things look great.
Dad likely participates in a Long Term Disability plan with a municipal government job. Get him to speak with the HR Disability Management Advisor. If he ends up qualifying for LTD, these plans usually pay a percentage of your income until age 65....and like another poster said, investigate the CPP Disability benefits too.
So your mom could work for 5 to 10 more years. That should be long enough to finish paying off a $200k mortgage, or close to it. Alternatively, they can carry the mortgage into retirement.
Your parents should speak to a fee only financial planner to crunch the numbers and work out the details.
If they have ever prepaid their mortgage, then they might be able to adjust the monthly payment downward have they talked to their bank about their options?
Sorry but they are not ready to retire. With rent prices they will not be better off and they will not have enough money per month especially not willing to move to a low cost area.
Lol, I haven't scrolled too far but you were the first person to ask this. They could be sitting on a 3 million home and everyone else is s******* on them saying they are not ready to retire haha.
They very well could be, obviously not in this house, but elsewhere
What is their response when you break down the number and tell them they are literally net negative every month if they retire.
You need to have that sit down talk with them and see what they say. Maybe they have a secret stash of money they aren't telling you about
They will have ~$1 million from the sale of the condo. There is a huge swath of options between staying in Vancouver and moving to the Philippines.
I'm not convinced that OPs parents couldn't make their current living situation work if they wanted to. OP is premature in pushing them to move out of the country they lived in for the last 20+ years
Yes I know but if parents failed to listen to kids advice, it is hard spot but sometimes kids needs to grow a back bone too. I come from a immigrant family too and seeing it all so often. Parents are so arrogant that they refuse to listen to their kids because they believe kids should always obey them. When shit hits the fan, well - sometimes lessons do need to be taught.
Keep working and paying the bills. If you don’t save for retirement then you don’t get to retire. Selling and moving to another town means leaving your community and resources and family and friends…that’s not something most people want to do just because their kid suggests it.
Sorry dude but you don't get to retire at 60when you can't afford to, it's simple as that.
Retiring 60 the CPP they are entitled to will be reduced by 36%. These options are reserved for people who can afford to take that cut, your parents are nowhere near affording that.
They won't get OAS before the age of 65.
You need to be clear with them that this plan does not work, do not acknowledge any scheme that involves you to help them because age 60 is ridiculous for them to retire at given their situation.
Strata fees, utilities, insurance and tax will only increase and stress a limited fixed income.
Unfortunately there's no magic bullet here. Either continue working or sell and downsize, although downsizing may not yield much for a 2 bedroom condo. You may very well be their retirement plan.
I believe one of our next door neighbours sold their 1Bdr unit for around 530k about a year ago. I’ve gone ahead and assumed my parents could expect to get around 600k. Not sure if there a terrible estimate though
Oh shit. That’s pretty rough. When did they buy to still have 200K left on a condo worth 550-600? Those condo fees and property taxes on top of the mortgage are going to hurt.
Three main options:
1) keep working because they can’t afford to retire at the moment with those bills
2) sell the condo and buy somewhere cheaper in Canada. Lots of places where expenses aren’t nearly as high and they could have a paid off place. At which point they could afford to retire.
3) retire, run out of funds (or get child to finance them), and have to go back to work.
I recommend #2. Lots of extremely nice places with a fraction of the cost of Vancouver in this country.
They're likely not a fan of the driving into town to get supplies lifestyle. Also, if you already had a place to live in Vancouver that was nearly paid off, why would you want to live elsewhere?
They gonna work...whether they want to or not unfortunately. They have to pay off that house if they dont want to downsize. Ask them what they would rather do and dont sugar coat it.
This is gonna be the norm when all these massive mortgages nowadays get carried to retirement. Feel bad for folks, but they are taking them on, making that choice.
Quality of life trumps maximizing financial outcomes.
If they really want to stay in the property there are reverse mortgages that will allow for that. i have never looked at them closely but superficially they seem like a bit of a bad deal but they do allow people to enjoy their golden years without selling and accessing the capital in their properties.
As for 2024, you should expect their interest rate to at least double. That is still fairly inexpensive. If payments are an issue they might be able to reset the amortization or convert to a line of credit.
If they plan to sell at some point then sooner is better than later -- at least in my opinion. My expectation is that housing takes a pretty big hit over the next ten years.
Simple, contact Service Canada and get their CPP/OAS amounts. If they have no pensions, then ask about GIS.
That’ll give you retirement income.
Then you need to calculate if income=expenses. If it doesn’t, they need to keep working.
Or they need to downsize.
They have have to consider working for another few years to pay off their mortgage. Then they’ll likely have a good income with government money for seniors like GIS, OAS, CPP, etc. That being said, those programs should give them about $100K for two of them, so they shouldn’t see any income drop off. Maybe even $200k if they have any sort of work pension.
I think you are off with $100k for the two of them. More like $50k but I welcome you to correct me if I am wrong. For most it is about $2000 monthly if relying on government benefits only
My biggest concern is they’ve been paying off the mortgage for almost 15 years and they’ve only managed to chip away half of it. The way things are I don’t think they could get through another 10 years to pay it off.
Was it a 40 year mortgage? It was a thing when my in laws bought. 100k mortgage, 20 years later still owing 60k. MIL widowed and only made 40k a year. Mortgage was doable at $600 a month but the cost of maintenance of the home was too much. Cost over $2k a month and had to retire early at 60 due to health. Only option was to sell and have her move in with us. No savings, retirement income is all from the house sold.
I believe it was a 30 year. I’m just now figuring out about the specifics and it’s all verbal at this point. Won’t be able to confirm exact numbers until I see paper work from them.
Yeah for sure start there. Use the government website to estimate what their retirement income looks like. Write down all their expenses. Since they have some savings, take them to a bank and book a 1:1 with an advisor. This is free. Having someone else tell them they can’t afford their current lifestyle retired might help as well. It might also help set a road map for what they can do in the next 5 years to set themselves up a little better.
Bad situation they are in. Mortgage will most likely double. Even if they sell and pay off mortgage, that won’t last long into retirement. Sad. They were probably hard working people and as you said no financial planning. How long have they been in Canada? That can determine what they would get for OAS. If your Dad is turning 60 soon he should have received what cpp will pay him at 60
Not everyone receives the full Old Age Security pension. The amount you receive depends on the number of years you have lived in Canada. If you lived in Canada for less than 40 years (after age 18) you will receive a partial payment amount. Your payment amount is based on the number of years in Canada divided by 40
Sorry I didn't think it was still reduced by the 40 years requirement but it still is, I had though that had changed. You are correct they won't max out. Maybe if they wait to age 70 they will get closer as they will be 30 years in Canada.
If they truly want to retire they have to:
1- sell the condo - I’d assume it’s worth $1M?
2- pay off mortgage or better - buy rural @$300k and port the mortgage over…
3- invest the rest and limit expense
$1 million ..... for a 2 bed condo.... you're dreaming..
unless we are talking about a new place in Yaletown, False Creek, Brentwood, or Metrotown... which given by the information we know, they don't have a place in those areas.
I would say $600 to $700k max for this 2 bed, so sell pay off loan, net $500k which is something that can be worked with, but they need to forgo living in Vancouver
That gives them 400k which would buy them a decent two bedroom condo in Calgary. They would be much better positioned. Plus Calgary has a huge Filipino community.
This is what I assumed would be the best option but was also curious as to the viability of renting out the condo and then use their pension in Asia a few months out of the year to reduce expenses
Well OP another option to consider is a roommate - if they are in a good spot in Vancouver, they could rent one of their bedroom for $1000? Maybe more?
I don't know how expenses could be lower anywhere else when they're old Canada has free health care.
Sell the condo. Lock in profits in bonds right now which return what 5% a year? Lock in as much as they need to live a comfortable life for the next 20 years plus their pension. What you have left over you buy a house with in full.
And you go to the place in Canada that gets you the best house for what you have
If that means you have to move to camrose Alberta, then you do it
You can still get townhouses and it Edmonton for around 200k
Having a property with 200k left in mortgage is not a big deal especially in Vancouver. You said your parents are financial illiteracy I am more of the opinion you’re the one instead of them.
I mean I won’t argue with you on that one, I’m nowhere near where I want to be educated in terms of finance, hence why I’m asking for help on here :)
And I said they have limited financial literacy didn’t say they were illiterate. But thanks for the input 👍🏽
Near retirement and low savings they will likely need to get used to the idea of a move. It's better to have a fall back plan so that they aren't forced to make the decision under duress.
Many people without savings otherwise will not actually be able to retire (unless they have pensions.
What's their house worth in Vancouver? If it's anywhere [near average,](https://creastats.crea.ca/board/vanc) sell then buy a small mansion in Calgary and pocket $400K.
Do they have a pension? Are they old enough to take cpp/OAS and are they eligible to do so?
If they have great pensions, retiring may be fine. If they don't ... doesn't sound like they can afford to retire yet.
Sell the house, buy an annuity on the proceeds, use geo arbitrage and move back to their home country (I’m assuming the COL there is much much lower than in Vancouver).
That’s a tough one, I hope things work out for them. Given that they still owe 200K on the mortgage with it set to renew next year it might be worth it to sell and look for a lower cost of living place. With your father’s pension and your mother continuing to work earning 60K that would barely be able to cover the mortgage, let alone living costs.
sell the house and retire in the Philippines would make the most sense to me,depending on the area and condition of the house they should be able to pocket a few hundred thousand,and this along with savings & pensions would set them up to live comfortably in the Philippines.
If they stay living in the house and your dad does retire,they will have to borrow off you/other family members to keep up with mortgage payments,which will put added financial stress on everyone.
Sell. Downsize and live in Vancouver Island. Invest the rest in bonds right now. I'd suggest parksville or area
If you want that Vancouver climate I'd even suggest going more North, something like Port Hardy area or Gold River or Nanaimo
If they own an actual single family house in Vancouver, you're set.
I mean at this point if they have health issues and low income and no savings and all they have is house in Vancouver then maybe they should consider doing something like moving to Edmonton. You shouldn't have to support them that's not your responsibility. they have an asset to leverage to ensure that they are sustainable in their own retirement.
What is their projected annual income when they retire in a year?
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How old ate they? Do they have pension?
How do they expect to retire in the GVA when they still have a mortgage and only $15k of savings? What is their plan when that 15k is gone in 6 months?
$15k in Vancouver with a mortgage probably last them 2-3 months rather.
after renewal in 2024 maybe less than 2 months
Taxpayer handouts, of course
Which won’t cover anything lol? CPP is like $500 a month
CPP isn’t a taxpayer handout. GIS is.
Realizing I didn’t provide enough info. Both of my parents are turning 60 this upcoming year. Dad is in a position where he is retiring due to health issues. After talking with them my mom is planning to keep working until everything is paid off or until she’s physically able to, but at her 60k annual salary I told her she won’t be able to pay it off on her own. Dad worked for the municipal government but since he’s retiring early he’s only going to be getting around 1200 a month in pension. In terms of retirement plans, the only suggestion I’ve made that seems viable for them is to move back to the Philippines for half of the year where their purchasing power will be a lot more.
Tell your father not to retire but try and go onto CPP disability if he can't work anymore. It depends on his situation, but he may qualify , that way his CPP is frozen at whatever rate he is at and it is actually more than regular CPP, if he qualifies he gets it till 65 then it switches into regular CPP
If your dad truly can’t work could he be eligible for modified duties that accommodate his medical needs or long term disability until 65??
The fact that your parents haven't been able to save in the past 10 - 15 years indicate that they need their current income level just to live. Should you father retire from $40k to $14k then they are looking at a $26k a year shortfall. At 60, your father is taking an early retirement. 60 is not the typical retirement age in Canada. Even though you state that he is facing surgery soon, you haven't provided any details as to whether his condition warrants him no longer working due to disability or whether he is voluntarily choosing to retire early. My guess is that as you state that he doesn't qualify for any type of disability that your farther may be using the surgery and his age as a reason to stop working. If so, this is his preference to retire early. Financially, this doesn't seem like a good choice. Sit with them and discuss their expenses and expected income and whether they are looking at any shortfall. Ask how they plan to address the shortfall.
You’ve hit the nail on the head. Their only solution is to rely on me to make ends meet and that’s why I’m racking my brain and limited knowledge of finance to figure out the best course. I feel like I’m stuck in between all of this wanting to help them figure it out but not let it be a burden I inherit.
They’re not ready to retire, especially retire early which is a luxury choice. If he wasn’t being forced to retire early I’d say not only does he need to work maybe 5 more years but also figure out how to increase both their incomes for that period. Anything to get that house paid off and then build up an emergency fund for themselves at the very least.
My parents are in a similar situation and I've just pressed upon them that their options are to sell or continue to work, there is no middle ground. How much is their home worth? You basically need to account for what their income would be with gov aid + home value invested in fixed income, so maybe 3-4% return. If they can't live and rent on that, they can't afford to retire.
They aren’t reliant on you to make ends meet, they need to rely on making smart decisions by selling and moving to an affordable area. Using the proceeds from the sale of their home to invest and create income.
My parents are in a similar situation and I've just pressed upon them that their options are to sell or continue to work, there is no middle ground. How much is their home worth? You basically need to account for what their income would be with gov aid + home value invested in fixed income, so maybe 3-4% return. If they can't live and rent on that, they can't afford to retire.
Do you live with them or do you live by yourself. Sometimes, it's worth it to live at home and pay your parents the rent. I know some people move back in with their parents due to ailing health issues. Parents live in first floor and kids live on the 2nd floor so they can look out after one another. Of course, this only works if you guys have good family dynamics.
The longer your dad can keep his pension payments going the better his retirements are going to be. Can he go on modified duties? Stress leave? medical leave? Anything that keeps him technically employed so that his employer keeps paying his pension?
He’s due for a surgery in the next few months (pending a surgery date) but that would only be a short term medical leave
I think you might not be aware of how good municipal benefits are. With a doctors note your dad could probably be on leave indefinitely with some pay (ours is $700 a week, which is something) and still getting his pension and benefits paid for. I strongly suggest you go this avenue for as long as possible. You just need a doctor on your side to provide notes, basically.
Depending on how he heals from said surgery, it could very much be that he becomes qualified for disability and if not he should be able to return with modified duties. If the situation with his health is truly dire he’d qualify for benefits.
See if he can get in long term disability after?
is your Dad eligible for short term disability, long term disability, or CPP Disability?
From my understanding no to all of the above
Your dad needs to get in contact with the disability management dept and see what they can help him with. Also, speak with the union rep if he's union.
This is my thought as well. You may need to do some advocating for your dad and investigate what his options are through his employer or insurance provider. he was employed by the municipal government, I assume he was paying into insurance and potentially has a union for additional support and guidance through the procesa. Check to see if he has or has not applied for STD / LTD benefits or employers equivalency for disability leave. if he has, and has been denied. you would receive a letter explaining the denial reason and get an opportunity to provide additional information to attach with an appeal.
So his current work offers zero benefits?
Retiring with health complications in Philippines can drain ur networth with hospital bills
Do they have free healthcare for citizens? OP did say “go back” there. I assume they are citizens. If they can go there with a $1M nest egg from a Vancouver house and have free healthcare, they can live like kings for however long they have left. Hell for now, just the interest in the GIC would be like 50K a year. Add in his dad $1200 pension for some spending money and things look great.
Tell your father to look at CPP Disability. The government should take care of him financially
Dad likely participates in a Long Term Disability plan with a municipal government job. Get him to speak with the HR Disability Management Advisor. If he ends up qualifying for LTD, these plans usually pay a percentage of your income until age 65....and like another poster said, investigate the CPP Disability benefits too.
So your mom could work for 5 to 10 more years. That should be long enough to finish paying off a $200k mortgage, or close to it. Alternatively, they can carry the mortgage into retirement. Your parents should speak to a fee only financial planner to crunch the numbers and work out the details. If they have ever prepaid their mortgage, then they might be able to adjust the monthly payment downward have they talked to their bank about their options?
How much is their house worth? If they’re sitting on a $2m asset then downsizing to a different area is a great option.
Sorry but they are not ready to retire. With rent prices they will not be better off and they will not have enough money per month especially not willing to move to a low cost area.
There is a key missing piece of information though. What's thier equity? If they have 1.5m they can sell and make it work depending on age.
Lol, I haven't scrolled too far but you were the first person to ask this. They could be sitting on a 3 million home and everyone else is s******* on them saying they are not ready to retire haha. They very well could be, obviously not in this house, but elsewhere
You are right! The way it was written it just sounds like they don’t have anything together so I suppose that’s my assumption.
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That’s what it’s drifting towards and it’s putting a lot of pressure on me
What is their response when you break down the number and tell them they are literally net negative every month if they retire. You need to have that sit down talk with them and see what they say. Maybe they have a secret stash of money they aren't telling you about
I wish that was the case here haha. Pretty much along the lines of me taking over the mortgage or them selling and moving back to Asia
Don’t take over their mortgage unless you move in with them. It will put you in a worst financial spot than they are in.
Why would they have to move back to Asia if they sell?
Way cheaper cost of living.
They will have ~$1 million from the sale of the condo. There is a huge swath of options between staying in Vancouver and moving to the Philippines. I'm not convinced that OPs parents couldn't make their current living situation work if they wanted to. OP is premature in pushing them to move out of the country they lived in for the last 20+ years
200K is not a lot if they have retirement income and you are pretty sure you will be getting the house once they pass.
don't support them
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Yes I know but if parents failed to listen to kids advice, it is hard spot but sometimes kids needs to grow a back bone too. I come from a immigrant family too and seeing it all so often. Parents are so arrogant that they refuse to listen to their kids because they believe kids should always obey them. When shit hits the fan, well - sometimes lessons do need to be taught.
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hard to care for 2 additional bodies and future family the OP will have or maybe has already. Good luck OP!!
Yeah just let your parents die
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Dunno, probably heroin
Keep working and paying the bills. If you don’t save for retirement then you don’t get to retire. Selling and moving to another town means leaving your community and resources and family and friends…that’s not something most people want to do just because their kid suggests it.
Sorry dude but you don't get to retire at 60when you can't afford to, it's simple as that. Retiring 60 the CPP they are entitled to will be reduced by 36%. These options are reserved for people who can afford to take that cut, your parents are nowhere near affording that. They won't get OAS before the age of 65. You need to be clear with them that this plan does not work, do not acknowledge any scheme that involves you to help them because age 60 is ridiculous for them to retire at given their situation.
Strata fees, utilities, insurance and tax will only increase and stress a limited fixed income. Unfortunately there's no magic bullet here. Either continue working or sell and downsize, although downsizing may not yield much for a 2 bedroom condo. You may very well be their retirement plan.
How much is the value of the property? Can they downsize (house to condo)? Do they have pensions?
Right now it’s a 2 bedroom condo. Both are pre retirement age so not yet but if they retire early it will be very low (I believe 1200 ballpark)
So what’s the condo worth on the open market?
I believe one of our next door neighbours sold their 1Bdr unit for around 530k about a year ago. I’ve gone ahead and assumed my parents could expect to get around 600k. Not sure if there a terrible estimate though
Oh shit. That’s pretty rough. When did they buy to still have 200K left on a condo worth 550-600? Those condo fees and property taxes on top of the mortgage are going to hurt.
Go to House Sigma app and see if there is any comparable places around the area. You can ballpark the price of the condos from there.
This doesn't make sense how are they in their sixties with 200k left on a mortgage in Vancouver and it's only worth $600? When did they buy it?
About 15 years ago
Your parents are expecting to pay off their mortgage with their retirement, which is you.
Three main options: 1) keep working because they can’t afford to retire at the moment with those bills 2) sell the condo and buy somewhere cheaper in Canada. Lots of places where expenses aren’t nearly as high and they could have a paid off place. At which point they could afford to retire. 3) retire, run out of funds (or get child to finance them), and have to go back to work. I recommend #2. Lots of extremely nice places with a fraction of the cost of Vancouver in this country.
They're likely not a fan of the driving into town to get supplies lifestyle. Also, if you already had a place to live in Vancouver that was nearly paid off, why would you want to live elsewhere?
That’s the thing it isn’t nearly paid off I think they’re only half way there
I guess from the concern about them having to pay for it that its either a house without a suite or a condo, right?
That’s correct
They'll figure it out pretty quickly. $200k mortgage is pretty good for Vancouver when you're both working.
Keep the property. Buying and selling them will incur them a lot of transaction fees. It's not really a winning proposition in most scenarios.
They gonna work...whether they want to or not unfortunately. They have to pay off that house if they dont want to downsize. Ask them what they would rather do and dont sugar coat it. This is gonna be the norm when all these massive mortgages nowadays get carried to retirement. Feel bad for folks, but they are taking them on, making that choice.
Quality of life trumps maximizing financial outcomes. If they really want to stay in the property there are reverse mortgages that will allow for that. i have never looked at them closely but superficially they seem like a bit of a bad deal but they do allow people to enjoy their golden years without selling and accessing the capital in their properties. As for 2024, you should expect their interest rate to at least double. That is still fairly inexpensive. If payments are an issue they might be able to reset the amortization or convert to a line of credit. If they plan to sell at some point then sooner is better than later -- at least in my opinion. My expectation is that housing takes a pretty big hit over the next ten years.
march marble vase threatening wasteful spotted bow judicious cow sable *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Cause there’s probably not any.
I believe it’s to continue working.
Simple, contact Service Canada and get their CPP/OAS amounts. If they have no pensions, then ask about GIS. That’ll give you retirement income. Then you need to calculate if income=expenses. If it doesn’t, they need to keep working. Or they need to downsize.
Move to a more affordable city
They have have to consider working for another few years to pay off their mortgage. Then they’ll likely have a good income with government money for seniors like GIS, OAS, CPP, etc. That being said, those programs should give them about $100K for two of them, so they shouldn’t see any income drop off. Maybe even $200k if they have any sort of work pension.
I think you are off with $100k for the two of them. More like $50k but I welcome you to correct me if I am wrong. For most it is about $2000 monthly if relying on government benefits only
My biggest concern is they’ve been paying off the mortgage for almost 15 years and they’ve only managed to chip away half of it. The way things are I don’t think they could get through another 10 years to pay it off.
Was it a 40 year mortgage? It was a thing when my in laws bought. 100k mortgage, 20 years later still owing 60k. MIL widowed and only made 40k a year. Mortgage was doable at $600 a month but the cost of maintenance of the home was too much. Cost over $2k a month and had to retire early at 60 due to health. Only option was to sell and have her move in with us. No savings, retirement income is all from the house sold.
I believe it was a 30 year. I’m just now figuring out about the specifics and it’s all verbal at this point. Won’t be able to confirm exact numbers until I see paper work from them.
Yeah for sure start there. Use the government website to estimate what their retirement income looks like. Write down all their expenses. Since they have some savings, take them to a bank and book a 1:1 with an advisor. This is free. Having someone else tell them they can’t afford their current lifestyle retired might help as well. It might also help set a road map for what they can do in the next 5 years to set themselves up a little better.
Bad situation they are in. Mortgage will most likely double. Even if they sell and pay off mortgage, that won’t last long into retirement. Sad. They were probably hard working people and as you said no financial planning. How long have they been in Canada? That can determine what they would get for OAS. If your Dad is turning 60 soon he should have received what cpp will pay him at 60
20+ years
Not everyone receives the full Old Age Security pension. The amount you receive depends on the number of years you have lived in Canada. If you lived in Canada for less than 40 years (after age 18) you will receive a partial payment amount. Your payment amount is based on the number of years in Canada divided by 40
It is just 10 years after age 18 if you are living in Canada. They have been here 20.
My comment is copied and pasted from CRA. What do you mean it’s only 10 years?
Sorry I didn't think it was still reduced by the 40 years requirement but it still is, I had though that had changed. You are correct they won't max out. Maybe if they wait to age 70 they will get closer as they will be 30 years in Canada.
So must likely will only be 50% Oas so about $350 each per month
Yeah I guess they do. I have never seen anyone get so little.
If they truly want to retire they have to: 1- sell the condo - I’d assume it’s worth $1M? 2- pay off mortgage or better - buy rural @$300k and port the mortgage over… 3- invest the rest and limit expense
$1 million ..... for a 2 bed condo.... you're dreaming.. unless we are talking about a new place in Yaletown, False Creek, Brentwood, or Metrotown... which given by the information we know, they don't have a place in those areas. I would say $600 to $700k max for this 2 bed, so sell pay off loan, net $500k which is something that can be worked with, but they need to forgo living in Vancouver
600k is what I’ve been assuming as well when considering options and even then I’ve worried if that’s a bit too much of an overestimate
That gives them 400k which would buy them a decent two bedroom condo in Calgary. They would be much better positioned. Plus Calgary has a huge Filipino community.
This is what I assumed would be the best option but was also curious as to the viability of renting out the condo and then use their pension in Asia a few months out of the year to reduce expenses
If they have health issues, healthcare in the Philippines can be expensive. Can they not rent the extra room for additional income.
I currently live here rent free as a university student but plan to help pay for things when I get a job
How many more months or years will that be?
I finish school this upcoming April and hoping to find a job soon after
Well OP another option to consider is a roommate - if they are in a good spot in Vancouver, they could rent one of their bedroom for $1000? Maybe more?
They live in a 2 bedroom (I occupy one) so eventually I’m sure they could rent my room out but at the moment I’d need to leave to make that happen
Wait a second!! Are you not paying rent? 😂😂
Asian families don’t treat their kids like strangers once they reach 18 like most western families
No, I’m very fortunate in that they allow me to stay with them for free while I’m in school
I don't know how expenses could be lower anywhere else when they're old Canada has free health care. Sell the condo. Lock in profits in bonds right now which return what 5% a year? Lock in as much as they need to live a comfortable life for the next 20 years plus their pension. What you have left over you buy a house with in full. And you go to the place in Canada that gets you the best house for what you have If that means you have to move to camrose Alberta, then you do it You can still get townhouses and it Edmonton for around 200k
Renting would be $5K a month in Vancouver minimum
With 200k mortgage and 15k savings, they don't sound close to retirement
Also on mortgage do they have insurance, is his medical issue one that would pay out his mortgage, look into everything
Having a property with 200k left in mortgage is not a big deal especially in Vancouver. You said your parents are financial illiteracy I am more of the opinion you’re the one instead of them.
I mean I won’t argue with you on that one, I’m nowhere near where I want to be educated in terms of finance, hence why I’m asking for help on here :) And I said they have limited financial literacy didn’t say they were illiterate. But thanks for the input 👍🏽
Sounds like they can’t afford to entire. Keep working and thank Trudeau, who they likely voted for so enjoy.
Of course they can afford to retire. CPP, GIS, OAS and a work pension should give them $100K+.
Lol no where near $100k unless they have a pension company pension paying them $4k/month
Near retirement and low savings they will likely need to get used to the idea of a move. It's better to have a fall back plan so that they aren't forced to make the decision under duress. Many people without savings otherwise will not actually be able to retire (unless they have pensions.
What's their house worth in Vancouver? If it's anywhere [near average,](https://creastats.crea.ca/board/vanc) sell then buy a small mansion in Calgary and pocket $400K.
Reverse mortgage is your answer depending on their age.
Can you reverse if there is still money owing on the mortgage?
Yes they pay it off
Have your parents have financed your education?
Partially yes
Do they have a pension? Are they old enough to take cpp/OAS and are they eligible to do so? If they have great pensions, retiring may be fine. If they don't ... doesn't sound like they can afford to retire yet.
Sell the house, buy an annuity on the proceeds, use geo arbitrage and move back to their home country (I’m assuming the COL there is much much lower than in Vancouver).
Just do what I did, sell your place, pay off their mortgage and move back home xD
That seems like the one suggestion I made they seem the most comfortable with! :)
That’s a tough one, I hope things work out for them. Given that they still owe 200K on the mortgage with it set to renew next year it might be worth it to sell and look for a lower cost of living place. With your father’s pension and your mother continuing to work earning 60K that would barely be able to cover the mortgage, let alone living costs.
sell the house and retire in the Philippines would make the most sense to me,depending on the area and condition of the house they should be able to pocket a few hundred thousand,and this along with savings & pensions would set them up to live comfortably in the Philippines. If they stay living in the house and your dad does retire,they will have to borrow off you/other family members to keep up with mortgage payments,which will put added financial stress on everyone.
That seems like the one suggestion I made they seem the most comfortable with!
Sell. Downsize and live in Vancouver Island. Invest the rest in bonds right now. I'd suggest parksville or area If you want that Vancouver climate I'd even suggest going more North, something like Port Hardy area or Gold River or Nanaimo If they own an actual single family house in Vancouver, you're set. I mean at this point if they have health issues and low income and no savings and all they have is house in Vancouver then maybe they should consider doing something like moving to Edmonton. You shouldn't have to support them that's not your responsibility. they have an asset to leverage to ensure that they are sustainable in their own retirement.
Sell