Hey guys,
Am looking for some critique and optimization on my current plans. Any advice would be very recommended. Here goes:
Married, (30y.o./28y.o.) 2 kids (1 y.o./3 y.o), living in Alberta
Our target is to retire in 10 years with house paid off and living on $50,000/yr. Current savings target is $1.25M between RRSP, TFSA and eventually non-registered.
My Income: $200,000 / year
My RRSP (Work): $140,000 - Mix of low income ETFs (Bonds, Foreign and Canadian Capital)
My RRSP (Personal): $90,000
My TFSA: $70,000
Principal Residence: $150,000 of capital (Value $450,000, Remaining Mortgage $300,000) -Variable rate (now 3.15%)
Rental Property: ~$10,000 of capital (Purchased at $420,000, now valued at $300,000, remaining mortgage of $290,000) - Fixed Rate (2.95%)
Spousal Income: Currently $0 as she is staying with kids but in future will be $70,000 once back in workforce
RRSP (Work): $30,000
TFSA: Not eligible as dual US citizen
The savings plan is:
1. Start using my remaining yearly RRSP contribution room to fill my wife's RRSP (I have only 6% remaining after work match each year)
2. Wife to begin contributing to her RRSP once making a salary until its full - target to balance out values or our two RRSPs by the 10 year mark (might be tough)
3. With remaining savings each year, fill both RRSPs, my TFSA, RESPs and pay off principal residence mortgage until gone
4. Sell Rental property for a capital loss (it's been cashflow negative for a while) and save credits for future withdrawals from non-registered accounts
5. Once Wife's RRSP is full, she opens a non-registered account and invests in Canadian dividend paying stocks
6. If I run out of places to put money after mortgage, open a non-registered account with swap based ETFs.
Once we reach our $1.25M target between all accounts we begin withdrawing at 4% rate:
1. Take out equal amounts from each RRSP as low as possible to not trigger major income tax
2. Supplement any spending with withdrawals from our non-registered accounts (Canadian dividends + capital gains). Deferred capital loss should offset most capital gains.
3. Eventually tap TFSA last if needed - continue to transfer money into it each year to maximize contribution room
Final notes:
I follow Canadian Couch Potato model portfolio. Keep all bonds (20% allocation now) in my RRSP and most aggressive Foreign / Canadian Capital ETFs in TFSA.
I hope that's thorough enough. Please let me know if there's anything in my plan that you'd recommend optimizing!
Brad