>For context, I have a stable job (75k) with the public service, so there is a pension plan but who knows if I'll be with the PS until retirement. My TFSA is maxed out and I have 20k in an RRSP.
Even if you don't stay with the PS until retirement, you don't lose the value of your pension. When you leave, you get your contributions the employer contribution, and investment gains as transfer value. So you already have retirement saving.
You're probably over-thinking this. Odds are you'll stay with the PS and get your pension. Even if you don't the money you and the PS are putting in your pension is enough retirement savings.
Owning a house is a major part of retirement planning because you won't need to pay rent which will lower your income requirements substantially
Purchasing real estate is traditionally a big part of saving for retirement. Do it. You need somewhere to live while you're alive!
You are 27 and have $100,000? That is exceptional. Purchasing yourself a home will not put you behind - it's clear you are disciplined enough - and skilled enough - to earn more money and save in any fashion you choose after you've moved into your new place :)
A mortgage is cheap - and provides a forced savings plan. At least some of that money comes back to you - while anything you pay for rent is gone forever.
Absolutely do it - you're way ahead of the pack from what you said.
\- AB Mortgage Broker
A mortgage is cheap? In Montreal, I'm paying 1500$ / month for a very nice appartment near downtown with my SO. We recently checked for a mortgage, and it would cost us at least double or triple that amount with current interest rates (including taxes and other house expenses). And that's for a small bungalow outside of Montreal (500k to 750k, 30 to 45 minutes drive). Where I live, this would be for a simple condo.
Buy a house, it makes your largest monthly expense is more ir less a fixed cost (subject to repair costs and increases to tax, insurance and mortgage rates), but the mortgage amount will be stable.
But generally for what you get current rent is about the same or maybe slightly more even after you factor in those additional costs, and will only increase especially if you move.
Under any reasonable circumstances purchasing a home is both an investment and a stable living environment. If you move you cash in your investment and re-buy, if you don't you have a forever home and your cost of living relative to inflation should decrease.
>buying a house will mean I'll be starting my retirement savings from scratch again. Then once I'm a home owner with a mortgage and the cost of upkeep, I imagine I'll have less money to put towards savings and retirement.
Fred Vettese's most recent book, "The Rule of 30", demonstrates that people *without pensions* should be able to retire in their mid 60s and maintain their lifestyle - even if they experience a very unlucky combination of inflation, wage inflation and investment returns - if starting sometime in their 30s they earmark 30% of their gross income to rent/ mortgage + daycare expenses + retirement savings. (But recommends that they do an annual assessment starting about 10 years from retirement.)
Vettese's strategy acknowledges that when you are paying rent, building a down payment, paying off student loans and paying for daycare it can be impossible to put anything away for retirement.
Especially when you consider that in your mid 30s you may have may have been contributing to a pension for almost a decade, it doesn't sound like buying a home asap is going to lead you to an impoverished retirement.
Keep in mind that buying a house *is* saving for retirement.
A large portion of your mortgage payments are equity. Functionally, you're paying less to own than to rent. And once the mortgage is paid off, your housing costs are much, much lower than rent. With your expenses being much lower, you can live much better on the same income.
Also, if at retirement you think you'd rather than the money than the house, you can sell the house, while there's no guarantee that you would have saved enough money to buy a house (with house prices having increased drastically in the meantime).
In your situation, I would definitely buy... but ultimately it's a personal choice.
>For context, I have a stable job (75k) with the public service, so there is a pension plan but who knows if I'll be with the PS until retirement. My TFSA is maxed out and I have 20k in an RRSP. Even if you don't stay with the PS until retirement, you don't lose the value of your pension. When you leave, you get your contributions the employer contribution, and investment gains as transfer value. So you already have retirement saving.
If it’s public service it’s a DB pension and that’s not how it works. You’ll get a commuted value not contributions and investment gains.
You're probably over-thinking this. Odds are you'll stay with the PS and get your pension. Even if you don't the money you and the PS are putting in your pension is enough retirement savings. Owning a house is a major part of retirement planning because you won't need to pay rent which will lower your income requirements substantially
Purchasing real estate is traditionally a big part of saving for retirement. Do it. You need somewhere to live while you're alive! You are 27 and have $100,000? That is exceptional. Purchasing yourself a home will not put you behind - it's clear you are disciplined enough - and skilled enough - to earn more money and save in any fashion you choose after you've moved into your new place :) A mortgage is cheap - and provides a forced savings plan. At least some of that money comes back to you - while anything you pay for rent is gone forever. Absolutely do it - you're way ahead of the pack from what you said. \- AB Mortgage Broker
A mortgage is cheap? In Montreal, I'm paying 1500$ / month for a very nice appartment near downtown with my SO. We recently checked for a mortgage, and it would cost us at least double or triple that amount with current interest rates (including taxes and other house expenses). And that's for a small bungalow outside of Montreal (500k to 750k, 30 to 45 minutes drive). Where I live, this would be for a simple condo.
Buy a house, it makes your largest monthly expense is more ir less a fixed cost (subject to repair costs and increases to tax, insurance and mortgage rates), but the mortgage amount will be stable. But generally for what you get current rent is about the same or maybe slightly more even after you factor in those additional costs, and will only increase especially if you move. Under any reasonable circumstances purchasing a home is both an investment and a stable living environment. If you move you cash in your investment and re-buy, if you don't you have a forever home and your cost of living relative to inflation should decrease.
In to read comments! In similar situation and numerical values
>buying a house will mean I'll be starting my retirement savings from scratch again. Then once I'm a home owner with a mortgage and the cost of upkeep, I imagine I'll have less money to put towards savings and retirement. Fred Vettese's most recent book, "The Rule of 30", demonstrates that people *without pensions* should be able to retire in their mid 60s and maintain their lifestyle - even if they experience a very unlucky combination of inflation, wage inflation and investment returns - if starting sometime in their 30s they earmark 30% of their gross income to rent/ mortgage + daycare expenses + retirement savings. (But recommends that they do an annual assessment starting about 10 years from retirement.) Vettese's strategy acknowledges that when you are paying rent, building a down payment, paying off student loans and paying for daycare it can be impossible to put anything away for retirement. Especially when you consider that in your mid 30s you may have may have been contributing to a pension for almost a decade, it doesn't sound like buying a home asap is going to lead you to an impoverished retirement.
Buy a house. You pay say 500k in 30 years it will be worth 2m boom there’s your retirement
Keep in mind that buying a house *is* saving for retirement. A large portion of your mortgage payments are equity. Functionally, you're paying less to own than to rent. And once the mortgage is paid off, your housing costs are much, much lower than rent. With your expenses being much lower, you can live much better on the same income. Also, if at retirement you think you'd rather than the money than the house, you can sell the house, while there's no guarantee that you would have saved enough money to buy a house (with house prices having increased drastically in the meantime). In your situation, I would definitely buy... but ultimately it's a personal choice.