July 14: BEST FROM THE BLOGOSPHERE

July 14, 2025

Don’t trap yourself in these seven pre-retirement “money drains”

Those of us who have reached a certain vintage may remember the yuppie-era boast that “whoever has the most toys at the end is the winner.”

Not so fast, writes Vishesh Raisinghani for Money Canada.

“You probably know the importance of retiring with a hefty, well-diversified portfolio of assets. But what if you’ve spent some of your money accumulating things that look like ‘assets’ but are actually hidden liabilities,” he asks.

He then identifies these “tempting, but deceptive money drains that many people trap themselves in before retirement.”

Brand-new cars: “Splurging on your `dream car’ can be the ultimate temptation,” he writes. But a new car loses 30 per cent of its value after about two years, he continues. “Buying a modestly used car at an affordable price is a better way to secure your financial future,” he suggests.

Timeshares: Buying a timeshare to get winter access to a sunny beach is another tempting thought, he writes. “Timeshare ownership involves steep initial costs, recurring maintenance fees, low resale potential and rigid usage schedules,” he points out.

“On top of that, the secondary market is notoriously poor, and many owners struggle to exit their agreements. Sales tactics can be aggressive, and the contracts themselves are often complex and difficult to navigate,” he warns.

Luxury collectibles: “Luxury consumers are a fickle bunch and what’s considered valuable today may not be as valuable by the time you retire,” he notes. So, such items as “vintage cars, designer handbags and luxury watches” may not turn out to be the profitable investment you hoped for.

Buying a mansion or home upgrades: Canadians, he writes, collectively own a whopping $4.7 trillion in home equity. But, he warns, you can “go overboard” with home ownership. “Buying a house that is far beyond your budget or too big for your needs can make it tougher to pay off the mortgage or maintain the property when you’re on a fixed income. It’s also a good idea to avoid excessive and frequent renovations to try and add value to the property,” he notes.

Lottery tickets or speculative investments: Spending money on lottery tickets or “unproven and speculative investments” is particularly bad for “when you’re older and approaching the end of your career,” he writes. Instead of trying to get rich quick, get rich slow with “blue chip dividend stocks, bonds, or gold.”

Multiple or excessive mortgages: Those of us with more than one mortgage, or a big one on a rental property, should realize that as we age, our “capacity for risk is much lower,” he warns. “With this in mind, consider lowering or paying off all the mortgages on your rental properties. If you can’t, sell a few units to pay off the loans on others in your portfolio,” continues, adding that as “a retired landlord, you can’t afford a sudden housing market crash or interest rate volatility.”

These are all good points to keep in mind when you are entering your fixed-income years.

It’s important, as well, to realize that the more you put away for retirement today – in the now – the more wiggle room your future you will have to handle rising costs. If you don’t have a retirement plan at work and are spinning your wheels on saving for retirement, a trusty partner is the Saskatchewan Pension Plan. With SPP, all you have to do is contribute any amount (up to your registered retirement savings plan limit) each year.

SPP will invest your savings dollars in a professionally managed, low-cost pooled fund. When it’s gold watch time, your SPP income options include receiving a monthly annuity payment for life, or the more flexible Variable Benefit.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Money Canada

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