Case study: Leaving the city behind

The house is sold, now what?

The following is based on one of Ellis Wealth’s clients. All of the names and telling details have been changed to preserve client privacy.

With all the talk about rising real estate prices in the GTA, Jennifer and Michael decided the time was right to capitalize on the value they have accumulated in their home. They were located in a highly desired area of Toronto and purchased their home in the early 1980s for less than $200,000. Their 3 kids were grown and were now off creating their own paths. They had a 5 year plan to sell their house and retire to the cottage where life moves at a different pace, while still continuing to work within their small consulting firm. Over the past couple of years they noticed many houses in their neighbourhood approaching the $1 Million mark. This became their "number” and after a discussion with a real estate professional decided the best time to benefit from a hot market was sooner rather than later. Their thinking was right and they quickly sold their house for more than asking and were well on their way to transitioning to their new life at the cottage.

After the initial shock of selling their home of almost 30 years wore off, the new shock came when they realized they had essentially become millionaires overnight. With a relatively small amount of other assets, this had greatly accelerated their planning for retirement. When they came to meet with our team for the first time, it was clear they needed a plan to ensure they would have enough to live on month to month, and not diminish their capital they accumulated over 30 years with an unnecessary amount of risk.

We worked with Jennifer and Michael to determine how much they need for monthly expenses to maintain their standard of living, and how much they would like to spend a year on luxuries such as travel or upgrades to the cottage. With the ability to supplement the income provided from investments by working in their consulting business, we developed a clear plan for them to stay on track, while minimizing the taxes they will pay every year. Working with Jennifer and Michael, we implemented an investing strategy that allows them to receive stable income growing faster than inflation and allow them a comfortable living standard they are used to.

After our initial meeting, it was clear to them that they will be alright and could continue to live life as they always have. They were also given peace of mind that if one of them should pass away, the other will be okay financially for the rest of their life. We also built flexibility into their plans because life is not a straight line and things may change. They may decide to leave a lasting legacy for their children to remember them after they are gone, or they may give to them sooner to watch them enjoy it.

Whatever they decide or however their financial goals change, we are here to work with them and inspire confidence that they will reach them.

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson GMP Limited or its affiliates.
Richardson GMP Limited, Member Canadian Investor Protection Fund.Richardson is a trade-mark of James Richardson & Sons, Limited. GMP is a registered trade-mark of GMP Securities L.P. Both used under license by Richardson GMP Limited.


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