As house prices grow ever higher, renting is looking increasingly attractive (or inevitable) these days.
And starting in January, mortgages will become even harder to attain, thanks to a new "stress test" being imposed on borrowers.
Conventional personal finance wisdom sees a mortgage as a kind of forced savings, allowing homeowners to build equity for their future retirement.
But for those who choose to rent or are forced into renting, the question of how much to save for retirement becomes one they have to actively think about.
Certified financial planner and New School of Finance founder Shannon Lee Simmons told HuffPost Canada that as housing prices rise and incomes fail to do the same, home ownership is getting "really really unrealistic for so many people."
"The goal of owning a home in an economy where you have to carry a mortgage that's more than five times your salary — your take-home income — is absurd. And it shouldn't be a goal," she says.
Other experts like Nobel Prize-winning economist Robert Shiller in the past have argued that buying property is a choice, not an investment. Simmons also cautions against over-leveraging yourself by putting too much of your money into housing.
"I don't think people should be investing in the housing market at the risk of their own personal finances."
Watch: 3 questions to answer before wading into the buying vs. renting debate
Simmons says the question of how much to put away if you're not paying into a mortgage is a tough one to answer, but that "10 per cent plus" of your after-tax income is a good rule of thumb.
She says that although this number may be higher for some and lower for others, if 10 per cent seems unattainable, "you should maybe take a look at your overall finances."
"You'll notice that it says 10 plus, because I think it shouldn't be lower than that if you're renting," she says.
As for where to put that money, Simmons says she's "a big fan of TFSA first and then RRSP."
Everyone can be safe and happy in retirement even if they never own a home.Shannon Lee Simmons, certified financial planner
"If you only make enough money to save enough and you don't even max out the TFSA, then your income is probably not high enough that you're really missing out on the tax savings of the RRSP," she says.
From a tax planning point of view, the TFSA matches a house in that both investments are growing tax-free over time.
Simmons says if you can't pay off a mortgage that is five times your salary in 20 years, it's "totally cool" to keep renting affordably and making up the difference in your savings.
"It's OK to never own something, you can still have an OK retirement," she says.
"Everyone can be safe and happy in retirement even if they never own a home."
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