When they were young parents, Josée Ouellet and Michael Vautour dreamed of the very popular concept of Liberté 55. They achieved their goal almost six years ahead of schedule! For the past three years, the duo has been living off their rental income and have begun to disburse their RRSPs. New objective: to empty these RRSPs… to then fill them again when part of the real estate assets will be sold. Overview and expert opinion.
In 2019, Michael, 49, left the workforce and joined his spouse in managing their rental properties.
Over the past 20 years, they have worked on their own, but with a common goal: no longer having to hold a job to live. To achieve this, they bet on real estate. They now own six buildings (totalling “42 doors”) which will be fully paid for in about 10 years.
In their quest for financial independence, they also kept a close watch on their finances (hello, budget!) and contributed to their RRSPs, but only a little.
Complete RRSPs
Michael Vautour worked for 31 years, mainly as a director in a multinational microelectronics company. His defined contribution plan, he placed it in a life income fund (LIF). He slowly but surely contributed to his RRSPs and those of his wife. The latter took care of both the children and the administration of the couple’s rental properties.
Five years before his retirement, Michael significantly increased his participation in his RRSPs, using up his unused contribution room. “And I still have some left,” he said. As for their tax-free savings account (TFSA), they have contributed very little to it to date.
In their life as new retirees, the lovebirds only need about $60,000 a year to live on. Their house is fully paid for. And the couple’s three children (aged 25 to 30) have left the family nest.
They do not have a big lifestyle, but do not deprive themselves of anything. They like to go on adventures in their old Westfalia, with which they have, among other things, toured Canada. They are sports and outdoor enthusiasts. The two Estriens also give a lot of time to their community through volunteer work.
In the Excel document that he prepared himself, Michael Vautour set a timetable for himself and his wife for the next 40 years.
We have given ourselves 13 years to empty our RRSPs and then we will live on our rental income. Of course, when we begin to sell a first building, we will therefore re-contribute to our RRSPs and begin to fill our TFSAs.
Michael Vulture
A good strategy?
Even if he does not have all the figures in hand, Martin Lalonde, president and founder of Rivemont Investments, recommends Josée Ouellet and Michael Vautour to continue contributing to their RRSP, but also to their TFSA.
PHOTO ROBERT SKINNER, LA PRESSE ARCHIVES
Martin Lalonde, President and Founder of Rivemont Investments
The older you get, the more diversification you want to have in your holdings. Their story is beautiful. They achieved their goal. The question is not whether they will have enough money until they die, but how they can avoid paying too much tax.
Martin Lalonde, President and Founder of Rivemont Investments
For the portfolio manager, the RRSP must occupy a place of choice in the couple’s portfolio. The latter would not be interested in betting only on real estate to ensure his old age.
“The RRSP is a tax shelter, just like the TFSA. An RRSP provides tax-sheltered returns. The couple should therefore maximize their contributions to these registered accounts. Avoid putting all your eggs in one basket. »
Moreover, suggests Martin Lalonde, as Josée Ouellet and Michael Vautour will probably not lack money until the end of their days, they should already be thinking about estate planning.