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Home ownership is not a retirement plan.

But sometimes, things work out that way. Take this story related by a reader recently. Her mother-in-law recently sold her home for something in the area of half-a-million dollars. This 68-year-old is described as receiving about $600 a month from the Canada Pension Plan and Old Age Security, with little in personal savings.

“The house proceeds have to last the duration of her retirement, including rent, health care etc.,” this reader wrote. “How can I build a suitable portfolio for her? What online platform should we be using? What is a reasonable rate of withdrawal?”

Ideally, this reader’s mother-in-law would have some retirement savings to draw on so that she wasn’t dependent on selling the house. Houses may figure into your retirement planning, but it’s nice to be in a position where selling and downsizing are done for lifestyle reasons more than financial necessity.

On the plus side, there’s roughly half-a-million dollars available thanks to the sale of that house. Using this money effectively is vital, so let’s not jump into any investment decisions right away. First, it makes sense to buy a consultation with a fee-for-service financial planner – someone who provides planning services for an hourly or flat fee and doesn’t sell products.

A planner can help this reader’s mother-in-law determine her living costs. Then, using realistic forecasts for investment returns and inflation, the planner will determine an appropriate amount to regularly withdraw from the house sale proceeds to supplement CPP and OAS payments.

The calculation of a sensible withdrawal rate is where the planner really earns the hundreds or thousands of dollars charged to the clients. The amount needs to be sustainable through stock market ups and downs, and interest rates that will likely remain modest by historical standards, even as they move higher in the months ahead.

Only now does the choice of investments come into play. Some fee-for-service planners can help with this, but many are not licensed to discuss specific investment products. The most they can do is go over the right mix of stocks, bonds and cash. Another option is to find an investment adviser to handle the account, while another is to use a robo-adviser that builds a portfolio according to the specifications laid out in the financial plan.

An investing account at an online broker is one more possibility, but it requires a serious degree of investing expertise. Mistakes or even inattention over a few months could have a seriously negative impact on those home sale proceeds.

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