The real estate boom of the past few years has had a major impact on Canadian’s net worth. By some estimates, the average homeowner has as much as 50% of their total assets invested in real estate. By downsizing in later years, hundreds of thousands of dollars could become available at a critical point in retirement.
How should withdrawals be structured early on, in light of this huge capital inflow? Is it advantageous to sell a property, or continue to own it and potentially collect rental income? These complex questions require a sophisticated optimizing engine. For too long, the only tools available to financial planners and future retirees could not address this complexity. Now, leading edge software such as Retirement-Optimizer has become available. It allows you build a complete retirement plan and use a sophisticated computer solver to determine the best time to downsize, given all of your other parameters.
Don’t let 1-dimensional analysis prevent your retirement plan from maximum net worth.