26 More articles + recipes online : www . silvergoldmagazine . ca their lifespan paying $ 1500 a month rent could be 23½ years . ( If rent were $ 2000 / month the money could fail in 19 years .) Realizing they ’ d avoid house taxes and maintenance , twenty years of safety might feel okay for them . ( If you find their option appealing , give it a thumbs-up but be sure and continue reading – you might find something even better .)
silvergoldmagazine . ca
MONEY MATTERS
HOW LONG CAN YOU LIVE ON THE VALUE OF YOUR HOME ?
– By Brian Weatherdon , MA , CFP , CLU , CPCA
“ How long could we live comfortably if we sold our home and rented one ?” Such a question is often raised these days , and not without a fearful concern that future events could be inhospitable and unforgiving , should money ever run short .
I shared this question before in the words of Joe . When I visited him one spring morning there was a for-sale sign on the front lawn . He told me , “ We have thirty-three months to live !” Joe had done his own math . He calculated that by selling the house , he would join his wife in a care home and the money would be gone in less than three years . “ We ’ ll have to die then ,” he said . My breath stopped at the horrible realization that money could dictate how long a person would live .
But that was several years ago . Let ’ s open this up and re-do the math . How long could money last if someone sold their home today to rent an apartment , for example ?
We ’ ll suggest $ 600,000 is the value received from selling . Or it could be your net receipt after clearing mortgage or other debts . So here ’ s our question : How long could $ 600,000 last if renting would start at $ 1500 per month ? We ’ ll also look at this if rental costs were $ 2000 .
Three stories here can illustrate the results and help you consider your own circumstances .
Wayne and Pat used the proverbial “ mattress ” investment , putting $ 600,000 into their chequing account . It paid no interest , incurred no tax , and seemed risk-free to them . We ’ ll assume rental increases at 3 %. By calculation ,
Sustaining Income and Retirement Lifestyles
www . GuaranteedIncome4Life . ca
Brian Weatherdon CERTIFIED RETIREMENT COACH CERTIFIED FINANCIAL PLANNER
( 905 ) 637-3500 x 223 brian @ sovereignwealth . ca
26 More articles + recipes online : www . silvergoldmagazine . ca their lifespan paying $ 1500 a month rent could be 23½ years . ( If rent were $ 2000 / month the money could fail in 19 years .) Realizing they ’ d avoid house taxes and maintenance , twenty years of safety might feel okay for them . ( If you find their option appealing , give it a thumbs-up but be sure and continue reading – you might find something even better .)
Pat ’ s sister Bev was facing the same decision but wanted to invest in guaranteed certificates . She figured 2 % was the most she could get these days , so about 1½ % after tax . With $ 1500 monthly rental costs , Bev ’ s $ 600,000 might last her 46 years . She wasn ’ t sure she ’ d even want that many years ! ( If rent were $ 2000 / month it could last 31 years .) Having thirty or more years of rental costs covered by GICs , Bev felt she could choose the apartment she wanted and safely keep her independence forever – and avoid having to ask help from her children .
Verna and Bert are our third household . They wanted three things : First , to reduce risks of outliving their money . Second , to preserve their investment capital . Third , to ultimately leave gifts for their family . In an approach we call “ life income mandates ” Verna and Bert settled on a plan aiming at 6 %, which after tax for them was near 4.5 %. They found it quite comfortable to pay higher rent for a quality and comfort . Rent starting at $ 1500 / month would leave $ 1,150,000 after thirty years . Renting at $ 2000 / month would leave $ 780,000 . They liked that their nest egg would grow , protect against inflation , provide needed resources for future illness , and allow ultimate gifts to their children and grandchildren .
Pondering becomes personal , because in reading these three stories we would really be thinking about ourselves . As you ’ re thinking about this , no one is more important than you and your loved ones . So let ’ s consider . . .
Risk : In these stories who has the most risk ? If money lasts 20 years , isn ’ t this more risky than expiring in 30 years ? Or how would this compare to actually growing your money for later needs and family gifting ?
Health care and comfort : Again , which household expects to have more in event of illness , frailty , personal care ? Wayne and Pat will be empty-handed by that time in life , so let ’ s focus more in the other two stories . If both investment