This is the first in a Reflections series that features retirement-age Canadians. We ask them how their plans for this stage of their lives have played out.
Married since 1969, John and Pauline Shore have never shied away from debt.
But they borrowed only with a purpose: to tap a line of credit for RRSP contributions, buy a second house in nearby Waterloo, Ont., to defray university living costs for their daughters or invest in rental properties to generate extra income.
It’s a strategy that has enabled the couple to retire comfortably (and debt-free) even though they had no work pensions until later in their respective careers.
“We are not particularly scared of debt,” says Mr. Shore, 72, a British-born car mechanic who owned four car franchises over a 10-year span and earned a university business degree. “You can imagine with a car dealership I owed millions of dollars [on paper].”
Ms. Shore, 73, a former nurse who later turned to teaching, shares her husband’s assessment. “We knew it was debt but we didn’t consider it debt because we knew it was in our favour,” she says. “It wasn’t for a Caribbean holiday.”
For the Shores, self-employment meant they were not contributing to a pension early in their working lives.
At 44, Mr. Shore sold the dealerships, as he and his wife thought it unlikely their daughters would want to join the car business. Unexpectedly, and thanks to his auto industry contacts, Mr. Shore received an offer to teach automotive technology, later business studies, at Fanshawe College in London, Ont. The college job came with a pension and, after an almost 20-year teaching career, Mr. Shore retired at 65.
“The last thing on my mind was pensions until I got this teaching job,” he says. “All of a sudden I realized I could do 20 years and get a pension. I lucked into that.”
Early on, Ms. Shore had no pension either.
Born in Canada but raised in Britain, she returned here in 1965 to work as a nurse at a hospital in London, Ont. After she and Mr. Shore married in 1969, she left nursing to raise a family. In her 40s, she began a new career teaching English as a second language but the full-time contract work came without pension benefits.
At 56, she earned a master’s degree in education and two years later joined Conestoga College in Kitchener, Ont., as a co-ordinator of English-language studies. The full-time job came with a pension. “I adored the job but I also knew that every day I worked was going to make retirement more palatable,” says Ms. Shore, who retired at 71 after 15 years with the college.
With a young family, the couple did not have a lot of disposable income. But in their early 40s they decided to make a firm commitment to max out their RRSPs, including Ms. Shore’s spousal plan, even if it meant borrowing. They took out a line of credit at the bank to make the contributions, applying the tax refund toward repayment of the loan.
“We did so religiously and it was just a way of life,” says Ms. Shore.
In the early 1990s, with no pension in sight for Ms. Shore, the couple purchased several duplexes in Stratford as an income stream for her retirement. “I always believed in bricks and mortar,” she says. She still recalls the dismissive response of their then-financial adviser who questioned the merits of real estate investment.
The Shores’ one major regret was the purchase of Nortel stock that later cost them thousands of dollars in lost savings in the late 1990s. After that, they focused only on dividend-bearing bank stocks.
Over time, the duplexes provided a steady stream of income. In retirement, the Shores kept only one duplex, now with a fully-paid mortgage.
The couple’s willingness to borrow strategically also applied to their purchase of a four-bedroom house in Waterloo as a home for their three daughters studying at the University of Waterloo in the 1990s. The parents paid for the girls’ tuition and covered the house mortgage payments. In turn, the daughters rented to fellow students, retaining the income for living expenses.
“It meant they got out of university without debt,” says Ms. Shore, citing the rationale for buying the Waterloo house. As soon as the daughters graduated, the Shores sold the house at a modest profit.
As a couple, the Shores typically made decisions together about their financial options.
But they chose different options on when to collect the Canada Pension Plan – Mr. Shore did so at 60 while Ms. Shore waited until 65.
“I had read articles on the pluses and minuses of doing it,” says Mr. Shore, choosing to take the CPP, given debates at the time about its future. In retrospect, he says he should have waited to collect the monthly sum, which pays less than that for his wife.
Now able to travel, a luxury not open to them as a young couple, the Shores seem content in their decisions to borrow with purpose.
“It was the right thing to do,” says Mr. Shore. “Debt to us was not a problem.”