How to Cover Living Costs While Waiting for an Inheritance

Esther, you’re facing a common retirement crossroads: balancing income needs, housing choices, and the desire to enjoy travel while you’re still healthy. Below I outline the main considerations—CPP and OAS timing, how travel and inheritance factor into planning, and what to think about with your condo and home equity.

CPP/OAS strategy without other pensions

The Canada Pension Plan (CPP) can be taken as early as 60 or deferred up to age 70, and deferral increases your monthly benefit. Because you already began CPP at 60, there’s little to change there, but for others: if you expect to live into your 80s or beyond, deferring CPP can produce higher lifetime income and a greater guaranteed, inflation-indexed floor for retirement.

If you start CPP early and continue working, you keep contributing until at least age 65, which can raise your CPP somewhat, though usually not as much as deferring the benefit would.

Old Age Security (OAS) can also be deferred to age 70 for a larger monthly payment. Before starting OAS you should weigh the same longevity trade-offs as CPP: more income later versus more cash today. Another important consideration is the OAS clawback: when net income exceeds roughly $95,000 (projected for 2026), OAS payments begin to be recovered at 15 cents on the dollar. That can create an effective marginal tax rate well above normal income tax rates if your income is in that range while drawing OAS.

Given your expected modest retirement income, starting OAS immediately could be costly. There may also be eligibility for the Guaranteed Income Supplement (GIS) if your income is low, which could affect your net income planning.

Travelling in retirement

Your wish to travel while you’re still active is a valid and important priority. Retirement planning often focuses on minimizing the risk of outliving your savings, sometimes at the cost of missing experiences you’ll value most. Striking a balance between preserving capital and enjoying life now is one of the tougher emotional and financial trade-offs in retirement planning.

Consider budgeting for a travel fund within a broader retirement plan so you can capture meaningful experiences without unduly risking long-term financial security.

Counting on an inheritance

It’s common to hope an inheritance will fill gaps in retirement income, but it’s risky to rely on it in your core budget. The timing and amount can change unexpectedly, and even with good visibility into a parent’s estate, delays or adjustments are possible.

Because you expect a substantial inheritance at some point, it’s reasonable to plan around that prospect cautiously. In the meantime, focus on bridging strategies that don’t lock you into an immediate sale of your home unless necessary.

Real estate strategy in retirement

Owning versus renting is often framed as a simple financial win for buyers, but the financial case for a principal residence is more nuanced. A primary home is usually a place to live first and an asset second; its long-term price growth often tracks inflation and wage growth rather than delivering outsized investment returns. Owning also brings ongoing costs: property taxes, maintenance, renovations and financing expenses.

For you, selling the condo would not be a financial failure. Renting can free up equity and reduce responsibilities, which can be attractive if you want mobility for travel or to downsize. If you rent, consider options that offer longer-term stability—senior-friendly apartments or communities where you can stay as you age—instead of short-term rentals where you might face sudden moves late in life.

An alternative to selling is accessing the equity in your mortgage-free condo. You could take out a conventional mortgage or a home-equity line of credit (HELOC) and use those funds to supplement retirement income. A HELOC is flexible: borrow as needed and pay interest only on amounts drawn.

If qualifying for a conventional mortgage or HELOC is difficult because of lower retirement income, a reverse mortgage is another option. Reverse mortgages allow homeowners to borrow against their home value—often up to about 55%—without an income test. These typically carry higher interest rates than a HELOC, but they can provide cash flow without monthly payments, to be repaid from your estate or when the home is sold.

Using a loan or reverse mortgage to bridge to an expected inheritance can let you stay in your condo for years longer and preserve flexibility. If the inheritance materializes, you can use it to repay debt or to buy a smaller place later.

Summary

Start planning now: even modest, timely steps improve choices and reduce stress. In your case, your debt-free condo is a valuable source of security and optional liquidity. Consider whether selling now aligns with your desire to travel and your comfort with ongoing housing responsibilities. Explore borrowing against your condo—HELOC, mortgage or reverse mortgage—as a way to bridge income shortfalls without an immediate sale. Also, revisit the timing of OAS and your CPP details in the context of your overall income, life expectancy expectations, and potential eligibility for GIS.

Your priorities—travel, preserving autonomy, and ensuring a reliable income—should guide decisions. A financial planner can help model scenarios that include selling versus renting, borrowing options, and different CPP/OAS start dates so you can make a choice that fits both your finances and the life you want to lead.

Read more from Ask a Planner:

• What to do when you get laid off
• Why late-career savers need to be careful with RRSPs
• Taxes halved their inheritance. Could anything be done?
• What is the Canada Pension Plan death benefit?