They are also spending all their income and then some, with their monthly allocations topping $7,500, including meager $100 contributions to their RRSPs. The couple’s current monthly budget allots $2,459 for their home mortgage and other costs for servicing unsecured debts.
Altogether they spend 44 per cent of their monthly take home income on mortgage payments and servicing loans, while other expenses, such $200 per month for dog walking, add up quickly.
$683 per month or $8,196 per year of previous debt service payments can now go to retirement savings.
To that they already contribute $100 per month, and will have freed up an additional $1,017 per month from spending cuts and $683 from debt service payments they no longer have to make, for a total contribution of $1,800 per month.
With age credits and splits of eligible pension income, after 10 per cent average tax they would have $4,260 per month to spend.