By Bruce Sellery  |  MoneySense  |  April 18, 2012


My husband and I are both in our 30s and we withdrew from our RRSPs under the first-time Home Buyers’ Plan (HBP). Our question is whether it is worth it for us to pay off the HBP loan, which is about $35,000 between us. His parents say that having an RRSP is useless because it only lowers the pension amount that we can get when we retire. My husband has a pension plan as a federal government employee and I have one through my work at a hospital. My husband earns a $60,000 per year, while I earn $39,000. Money is a bit tight right now as we are trying to pay off more of our mortgage every month and I just found out today that I’m four-weeks pregnant. We are so confused about whether to pay more on our mortgage, buy RRSPs, or pay off our HBP loan. Please guide us on what to do.


In-laws are great. They have a never-ending supply of embarrassing stories from your husband’s past, and if they live nearby, perhaps they will provide some childcare for you in the future. (Congrats on the baby news by the way.) But in-laws don’t necessarily provide the best financial advice.

RRSPs won’t affect pension income

Your husband’s parents told you that an RRSP would lower the pension amount you get when you retire. According to Jason Heath, a CFP with Objective Financial Partners in Toronto, that is inaccurate. “Neither of these pensions are means-tested. That is, they have absolutely nothing to do with your other sources of income.”

Perhaps your in-laws were thinking about Old Age Security, which does get clawed back if your income exceeds a certain level. But given how long it will take before you start collecting OAS, it will be impossible to say what the program will actually look like and how much you’ll be able to draw from it 30 years from now. Instead, it makes more sense to focus on things that will provide the best life for you post retirement. read full article