4 unconventional ways to fund retirement

Nearing retirement without a company plan or RRSPs? Here are some options.



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I have always been skeptical about RRSPs and so have contributed very little over the years.  I’m single and now on the verge of retirement. I don’t have a company pension but my kids are out of the house and my mortgage is paid off. What are my options for retirement?



I don’t mean to add to your level of anxiety, but you are in a tough situation. And while I could try to speak soothingly about easy ways to solve this problem, there are no easy ways. Yours is a cautionary tale that I hope your kids, and our readers, can learn from.

Most of the time we talk about “saving” for retirement. In your case, we need to focus on “funding” your retirement, given that you are about to end your career and enter this new phase without a paycheque. The most obvious thing for me to recommend is that you continue to work, to build up your nest egg for when you really need it. If you aren’t able to do that, and don’t want to cut your lifestyle significantly, you will need to carefully manage your income and expenses so that you can pay for the basics.

Your financial base will be OAS and CPP. Depending on your CPP contributions during your career, the two combined will give you somewhere around $16,000 per year. This won’t go very far when it comes to paying the utilities and property taxes on your home, and other day to day essentials. So how can you increase your income or cut your expenses to fund your retirement? I have a few ideas, but I don’t expect you to like any of them because they all involve tradeoffs.

1.  Sell your house and downsize early.

Many seniors talk about their house as their retirement fund. But this only really works if you sell it and put the money to work generating income. Sure, you could get a reverse mortgage but the fees are high and you are still living in a house that you can’t afford.

Instead of waiting until you’re 75 years-old, consider downsizing now. And when I say “downsize” I mean in dollars, not square footage. Say you can sell your house for $500,000 and then buy something smaller and in a less desirable neighbourhood for $300,000. This frees up about $200,000 that you can put to work in something that generates an income, like dividend stocks or bonds. Interest rates are at a record lows these days, but at least you’ll get something coming into your bank account each month. You likely don’t want to sell your house, for a myriad of reasons, but this isn’t about want, it is about need.

2.  Develop source of passive income.

This second idea is to develop a source of passive income. Some people with greater resources and expertise might look at buying a rental property or starting a business. But in your case I would keep it simple and consider renting out part of your home – for example, creating a basement suite or renting rooms to foreign language students.

3.  Move to a lower cost region or country.

To increase your cash flow you can either increase income or cut expenses. You can make your money go further by spending less of it. The wild idea would be to move to a lower cost country, like Panama or Nicaragua. But if you can’t bear to work through the tax and health care issues or don’t want to brush up on your Spanish, consider moving to a lower cost community in Canada. Elliott Lake, a community in Ontario, has been marketing itself to seniors for years, focusing on high quality of life for a lower cost. If you can dramatically cut your cost of living you can stretch your limited income further.

4.  Rely on your kids.

You think I’m joking. I’m not joking. Another option is to talk to your kids now about how they can help with your expenses in retirement. One family on my TV show Million Dollar Neighbourhood has both grandmothers living with them. This isn’t a common practice in Canada these days, but in many cultures it is. And it might work for you. Or ask if they will have the financial resources to provide you with some sort of stipend.

As I said, I don’t expect you to love any of these ideas. But I encourage you to think about unconventional ways to increase income (legally) and cut your expenses so that you’re able to fund your life post paycheque.

Hey readers: What do you think? It is easy to shoot down these ideas, but the bigger challenge is to suggest other ones to add to list. What ideas do you have?

8 comments on “4 unconventional ways to fund retirement

  1. My understanding is that OAS is based on income alone, unlike social assistance that is based on income AND assets.

    So if a person has a low income, but half a million dollars in assets that is income-protected (i.e., RRSP, home, TFSA, a hummer), they can claim OAS. Even in instances where a person may not have income-protected assets, revenue generated from half a million dollars (1% of $500,000 = $5,000), OAS does not recognize the half a million, only the $5,000.

    My thoughts are if this needs-based OAS is not self-funded, then instead of changing the eligibility age, I suggest a change that the OAS be based on both income and assets. OAS was meant to help our vunerable populations, not to shore up the inheritance of their children.


    • I think you are referring to the Guaranteed Income Supplement (GIS) which provides a monthly non-taxable benefit to low-income Old Age Security recipients living in Canada. The OAS is not based on income at all. Hope this helps.


      • Actually, I am correct. Both Old Age Security and GIS are income based. Come to think of it, GIS is also not asset based either. I am curious though about the other part of my posting regarding being income only based. Do you agree, disagree or something in between about how these two funds are distributed without an assets based assessment?


  2. There are places in Canada where triplexes are offered for $2-300,000. One apartment for the owner, one apartment pays the heat, taxes, and insurance, and the third pays for maintenance etc. In three or four years, your maintenance fund may even be in surplus. The main thing is that the house is cost free to the owner capital and management not with standing.


  3. I agree, there aren't many positive options here, but it is fortunate that she owns her house outright. I agree with selling and investing the proceeds to provide income while she rents. That way she could afford a simple retirement living on the income from those investments, plus would have the freedom to move to whereever she wishes (to be closer to children, amenities, etc.). Another option is to work past 65 and save, save, save!


  4. I would suggest the "Smith Manouver". Get a secured line of credit on your home. Use the line of credit to purchase investments. Pay off just the interest every month ….. The interest is tax deducable. I buy large cap blue chip stocks. This will provide you some extra income.


    • Yes, this is another potential option. The reason I didn't include it here was because there is a certain level of sophistication required on the investing side. I have talked to many people who borrowed to invest and got in over their heads. S.C.A.R.R.Y.


  5. Thank you so much for sharing this useful information. We must have a good plan about our life after retirement. This article gave me some idea regarding how we should invest money wisely. I will share this detail with my friends also. Keep up the good work.


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