Save for retirement OR pay

off your mortgage?


Many people wonder whether they should prioritize saving and investing for retirement, or pay down their mortgage faster. It can be a tough decision. There are a lot of things to consider, and not everyone’s situation is the same. You have to make the right choice for you and your personal circumstances. Below are some of the different factors to take into account, and strategies that you can consider incorporating.


Because your mortgage payments will eventually be paid off, you could take any extra money that you have and put it towards investing and saving for retirement, instead of paying down your mortgage early. Time is one of the biggest factors when investing, so it is a big help to start as early as possible. This allows your returns to compound over time.

If you decide to invest, and do so in non-registered accounts, you could discuss borrowing money to save for retirement with your financial advisor. This may assist in tax deductions when borrowing money to invest.

Some people will prefer the peace of mind of becoming debt free and paying off their mortgage, whereas others will see the upside potential that investments have. Your mortgage interest rate, compared to the potential investment rate of return, is what you need to consider. Historically, the average annual return for the S&P 500 is around 8%.

Interest Rates

If your mortgage interest rate is higher than the return on investing you would make, it is a smart move to pay off your debt. If you talk to your advisor about this, s/he might discuss refinancing your mortgage to receive a better interest rate. Since rates are currently at an all-time low in Canada, this may be something to look into.

If you refinance your mortgage, you can take the money you are saving each month and invest it or aggressively pay down your mortgage.

When making this decision, you will also need to take into account when you will be retiring, and any other high-interest debt payments you have.


Simply put, you should determine whether the expected rate of return on an investment is greater or less than the interest rate on your mortgage. If the investment return is higher, it would be more advantageous to put your extra money there but, if it is lower, then paying off your mortgage will be a better option.

Investment returns are seldom guaranteed, so you should always go with what makes you most comfortable.

If deciding to invest, look into taking advantage of your RRSP and TFSA contribution room. Both of these are great tools that are available to almost every Canadian.

I hope that the above information is beneficial. This is never really straightforward as there are a lot of variables, and I recommend discussing all of your options with your financial advisor.

Please feel free to send this blog post to anyone you think could benefit from it. If you have any questions, please reach out to your financial advisor or myself, Brian Moylett, at, or call/text at 778-951-2806.


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