On the Right Track

Q & A

On the Right Track

Love your show & love your no-nonsense attitude towards money. I am 38 yrs old, & am pretty good with money. My only debts:
$27,000 (5.2 % interest rate) on my mortgage, which will be paid in about 2.5 yrs; $20,000 on a RAP. I have about $132,000 is RRSP & Pension plan combined. I have no unused contribution in my RRSP. I currently contribute 7% of my salary to my pension plan with my employer contributing another 5%. I also have my yearly bonus going directly into my RRSP (about $2000). After I pay my mortgage, I so plant to going back to making the maximum contribution (13%) to my pension plan. In the meantime, when I have extra money, do you recommend putting it towards retirement or mortgage?

Name withheld

You sound like you're doing great. Congrats on having achieved so much at your tender age. When it comes to maxing your retirement savings versus paying down your mortgage, my usual answer is to do both: make your maximum RRSP contribution and use your tax refund for a principal prepayment on your mortgage. If you're already maxing out your RRSP, then I'd suggest you focus on paying down the mortgage. That being said, you also have the opportunity to build a non-registered investment portfolio to supplement your retirement savings, or to achieve other goals you may have such as traveling, starting a business, or fulfilling some other dream. You are a smart chick. You're already doing very well. Make sure you're having some fun, that you have your other financial bases covered (disability insurance, your estate plan, etc.) and keep on truckin'.