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His gross household income is $85,000
Q. I’m 55 years old, married and have a son who is 13 years old. Our gross household income is $85,000 and I have a $180,000 mortgage. I have not contributed to my RRSP in 15 years and have not started my TSFA. I have recently inherited $100,000. Please advise what is the best course of action—paying off the mortgage, contributing to an RRSP or starting a TSFA? Thanks, Ben
A: Thanks Ben for this interesting question. You don’t mention if you already have an RESP for your son’s post-secondary education? Or if you currently have any consumer (credit card) debt? Or do you have a work pension plan? Are you self- employed? You can already tell that my answer will be ‘it depends’.
RELATED: Tax-free way to pass on an inheritance while still alive
The best course of action is to line up your spending with your goals and values. If your son’s education is important, then perhaps you contribute to his RESP. If you have credit card debt, I would recommend reducing thathigh-interest debt as much as you can. (But only if there is a plan to not increase it again.) Do that before paying off the lower-interest mortgage.
Many people like to use inheritance money to buy or do something memorable in honour of the deceased person. Depending on what your share is of the household income, you could contribute to an RRSP (best if your income is higher for a better tax deduction) or to a TFSA (for any income level). To determine your best course of action, I’d suggest you speak with a financial professional to help clarify your personal strategy.
Janet Gray, CFP, is a fee-only, advice-only financial planner, money coach, educator, and personal finance speaker
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