peachy wrote:Instead of paying down your mortgage have you considered boosting your retirement savings?
I've waffled back and forth on the issue. A few years ago, I was 100% behind the idea of dragging your mortgage out as long as possible, and directing all your extra cash at investments. However, in the past couple of years, my risk tolerance has adjusted downwards. Right now, I think I'd rather be completely debt-free, including the mortgage, than have a $350,000 RRSP and 20 years left on the mortgage.
I just turned 35 this year, so if I pay the house off in 5 more years, I'll be 40 with no debt whatsoever, and I'll have about $5,000/month in "extra" cash I can direct at catching up on our retirement savings.
Part of it also might be that I've lost faith in the "miracle" of compound interest. It hasn't done squat for me in the past decade, and I don't see that changing dramatically in the near future. I think the guaranteed return of paying down the mortgage is the better bet, personally.
peachy wrote:118k in the RRSP plan isn't very much for two people.
Doesn't that depend entirely on their ages? It's woefully inadequate for a pair of 65-year-olds, but it'd elicit a tidal wave of high-fives for a pair of 25-year-olds, wouldn't it? Being 35, I don't think it's anything special, but it's not peanuts either, in my opinion.
Plus, there's the $80k in investment property we own, and the $30k in cash.
peachy wrote:In addition, your TFSA account only has 1600 in it. Do you have a 5k limit/year like we do in the US?
Yup. The TFSA's only started in January, 2009 in Canada, and the annual limit is $5,000 per person. Unused contribution room carries-forward indefinitely, and there's no age penalty at all for withdrawals - you just can't re-contribute money you take out until the next year. They're like Roth IRA's on steroids.
Thus, at the moment, my wife and I are allowed to have up to $20,000 in total contributions in there, but we're presently only saving about $50/month/each. We just set it up to get it done and started, figuring that down the road, we could just adjust the automatic payments upwards. So far, there have been other priorities (the mortgage, RRSP's).
To be honest, lately I've been toying with the idea of storing our emergency fund ($14,000) in our TFSA's and investing the cash in CD's, to earn at least a little tax-free interest, but I haven't pulled the trigger yet. CD rates are so low presently that it hasn't really seemed worth the hassle.
Thanks for the comments!