This short lesson is based on a real question from a couple in their early 40s who had just paid off their mortgage. It’s a great example of the transition many people face: shifting from debt repayment to focused investing for retirement. We walk through a clear, simple framework to start building wealth in the next phase of life.
If you’re in your 40s, mortgage-free (or close to it), and wondering how to catch up on retirement savings—this is for you. You’ll learn the key steps to get started, why it’s not too late, and how to make smart use of TFSAs and RRSPs.
Q: We are in our early 40’s and have 2 young teens. We just finished paying off our mortgage and are now free and clear. Because our goal was paying down the mortgage, we had no extra cash to save or invest. But now we want to use our mortgage payments to start planning for our retirement. What is your advice? Should we start investing in today’s markets?
My Answer:
Congrats on paying off your mortgage! Now is the perfect time to rev up your savings and start investing.
My advice is to use a combination of Tax Free Savings account and Registered Savings Plans. We will choose the amount to save in either TFSA or RSP dependant on your current tax bracket and your future projected tax bracket at retirement. Investing in equities is a long-term proposition and the longer your money has to grow, the better off.
We will need to assess your timeline, risk tolerance and objectives for your investing.
Luckily, in your mid 40’s you still have 15 or 20 years to aim for growth before shifting gears to the retirement phase of your lives.
So, here are the 5 points I shared:
- Live within your means. With the mortgage paid off it will be easy to want to spend more as a reward. Maintaining the same spending habits as before will be a key to success.
- Understanding the power of compounding. Simply put, this means that your original investment amount will continue to grow more and more as the earnings are reinvested. Your Registered Savings and Tax Free Savings Account are perfect for this.
- Start now. The longer you have to invest, the more successful you will be.
- Maintain a debt free lifestyle by not accumulating any high interest debt like credit cards or unsecured loans.
- Be flexible! Life will change and your roadmap will have a few bends, but stay accountable and maintain your financial plan and coaching with me.
Staying on track and becoming invested is the key to achieving any of your dreams, financial and personal. I love being here for you and helping to coach and guide you along the way.
If you need a check in or just some good old encouragement, call me!
