We’re often told to do everything we can to retire debt-free – that hanging onto a mortgage or car loan in retirement is a recipe for disaster. But like most blanket financial advice, context matters. And for many Canadians heading into retirement, especially those with defined benefit pensions and guaranteed government income, carrying a modest amount of strategic debt can actually make a lot of sense.

Let’s reframe the discussion and explore why being pension-rich but savings-poor might warrant a different approach to debt in retirement.

1. The Mortgage Balance: Don’t Drain Savings to Kill Debt

Imagine you’re 57 and set to retire in the next three years. You’ve got a DB pension that will cover your monthly expenses, but you still owe $120,000 on your mortgage. The temptation might be to throw every available dollar at that balance before you stop working.

But if that means neglecting your TFSA contributions, or leaving yourself with no accessible savings, you could be setting yourself up for a retirement liquidity trap.

Let’s say you have the ability to save an extra $18,000 per year in your final three working years. Throwing that entire amount at your mortgage will cut your amount owing in half by the time you retire, but you’ll still have a mortgage balance at retirement.

Worse, if you hit retirement with no savings outside your pension, you’ll struggle to handle larger one-time expenses – a new roof, a dental emergency, or helping out adult kids – and may be forced into suboptimal withdrawals or borrowing (dipping right back into your home equity with a higher interest rate line of credit).

Don’t forget that retiring at 60 also means you’re squarely in the retirement risk zone (the period between retirement and your government benefits kicking-in). Building up a margin of safety in savings is arguably much more important than being mortgage-free.

Better approach: Maintain your regular mortgage payments even if it means extending the pay-off date a few years into retirement. Direct your extra cash flow to your TFSA to build up liquid, tax-efficient savings.

2. Financing a Vehicle Beats Raiding Your Nest Egg

Another trap I see retirees fall into is the urge to pay cash for a new car, even if it means drawing down a large portion of their RRSP or modest TFSA balance.

Sure, debt-free sounds nice – but again, context matters. If you have steady, predictable monthly income from CPP, OAS, and a DB pension, you’re in a good position to handle a reasonable car payment.

And let’s not forget that pulling $40,000 from an RRSP could mean losing 30+% of that to taxes, especially if it pushes you into a higher marginal tax bracket. Suddenly that “debt-free” car looks a lot more expensive.

Then there’s Murphy’s Law, which states that as soon as you drain your savings for the vehicle purchase then your furnace dies or your dog needs an expensive surgery.

Better approach: Finance the vehicle at a reasonable interest rate, maintain your long-term investments, and keep your tax exposure low. Pension income gives you the monthly cash flow to support this without compromising your long-term security.

3. Set Up a HELOC *Before* You Need It

Once you retire, getting approved for new credit can be a challenge – even if you have excellent pension income. Banks love T4s and hate unpredictability, and post-retirement income often doesn’t fit their preferred lending model.

That’s why it’s smart to set up a Home Equity Line of Credit (HELOC) before you leave the workforce. You don’t have to use it – just think of it as another tool in your retirement toolbox.

A HELOC can be a safety valve for large, unexpected expenses: a surprise roof replacement, an uninsured medical procedure, or temporary support for a family member. Used wisely, it buys you time and flexibility, especially if your investments are temporarily down and you want to avoid selling at a loss.

Better approach: Apply for a HELOC while you’re still employed. In retirement, treat it like a standby tool — not a first line of defense, but a valuable option when needed.

Important Caveat

Before we wrap up, a quick but important caveat:

This is not me giving you permission to upgrade your house at 55 and carry a multi-six-figure mortgage until age 80. It’s not carte blanche for retirees with modest pension income to finance their retired life through debt.

I’m speaking very specifically to retirees or soon-to-be-retirees with one or maybe two strong, full-time, 30-year career pensions and little to no TFSA or non-registered savings. In these cases, modest, well-managed debt can act as a bridge – not a crutch – to maintain flexibility and peace of mind in retirement.

Final Thoughts: Debt Isn’t Always the Villain

This isn’t a blanket endorsement of carrying debt into retirement. But for those with stable pension income and limited savings, a rigid “debt-free or bust” mindset can be counterproductive.

Smart retirees think in terms of cash flow, liquidity, and flexibility – not just interest rates and balances.

As always, the key is intentional planning: understand your sources of income, your spending needs, and where debt – if any – fits into that picture without jeopardizing your future.

Sometimes, the best retirement strategy is less about eliminating all debt  and more about retaining access to smart, low-cost financial tools that keep your options open.

I like to think of myself as an emotionless robot when it comes to investing. Buy a single, low-cost, globally diversified, and risk-appropriate asset allocation ETF – contribute to it regularly, and move on with your life.

It’s the same mindset I encourage my clients to adopt. Focus on what you can control, make evidence-based decisions, and avoid emotions like fear and greed that can derail long-term plans.

The late Daniel Kahneman, Nobel laureate and author of Thinking, Fast and Slow, argued that algorithms consistently outperform humans in “noisy” environments – situations full of uncertainty, where our judgment is clouded by biases, overconfidence, and emotion.

Investing is exactly that kind of environment.

So it’s fair to ask: if algorithms are better, and AI tools like ChatGPT can explain everything from RRIFs to capital gains tax, do we really need financial planners anymore?

A reader recently asked me this very question: Is advice-only planning a wise career choice when robo-advisors, AI, and all-in-one ETFs exist and are becoming so good, so fast?

It’s a valid concern. But here’s what I think:

Will AI replace financial planners?

Short answer: Not entirely.

Here’s why.

What large language models (LLMs) and chatbots like ChatGPT can do well:

• Crunch numbers fast and accurately (retirement projections, tax comparisons, withdrawal simulations).
• Translate complexity into plain language (like explaining pensions, RRIF withdrawals, or TFSA rules).
• Offer 24/7 access to general financial guidance.
• Spot gaps or opportunities – assuming it’s given clear and complete context.

For DIY investors or people with fairly straightforward financial situations, AI tools like this might reduce the need for a planner – or at least complement one. And that’s a good thing.

But…

What it can’t do (and where real planners thrive):

1.) Emotional intelligence and behavioural coaching

Investing is simple. Staying invested is hard.

Markets drop, headlines scream, fear creeps in. A spreadsheet can’t calm nerves. A chatbot can’t reassure you that your plan is still on track.

Helping clients spend without guilt in retirement, stay disciplined during downturns, or let go of money with confidence?

That’s not math. That’s trust, coaching, and empathy.

2.) Understanding personal nuance

Every client’s situation is different – not just in terms of numbers, but in values, family dynamics, health concerns, and priorities.

Blended families. Complex estates. Business succession. Interpersonal drama.

That doesn’t fit into tidy prompts.

Good planners don’t just hear what clients say – they pick up on what’s not being said. That’s the real work.

3.) Building trust over time

Clients don’t just want financial clarity. They want someone in their corner during transitions: retirement, downsizing, selling a business, losing a partner, kids leaving the nest.

They want a real relationship. You can’t automate that.

4.) Custom interpretation of advice

ChatGPT can give you technically correct answers. But sometimes, what’s optimal on paper doesn’t align with someone’s comfort level or goals.

A real planner helps clients weigh trade-offs, navigate grey areas, and make decisions that are right for them, not just right according to the textbook.

I send my clients a comprehensive report filled with numbers and graphs and charts. But I act as the interpreter of that information to tease out (in plain language) the answers to their burning questions, point out any red flags or opportunities to consider, and answer the underlying question – are they going to be okay?

I explain the magic of pairing low-cost investing in index funds with on-demand financial planning advice at key life stages. That’s a recipe for great financial outcomes.

So, where is this all going?

The bottom line

The future isn’t human vs. machine. It’s human + machine.

Planners who embrace AI tools to work more efficiently, serve more people, and communicate more clearly will thrive.

Those who try to compete with AI (or dismiss it) on technical knowledge alone? They’ll struggle.

Just like index funds didn’t eliminate advisors – they changed the role. From stock-pickers to planners. From product-pushers to problem-solvers. AI will push this evolution even further.

There will always be a place for human connection in financial planning – especially when it comes to the big, messy, emotional life decisions.

AI can give you a map. But most people still want a guide.

But wait…

How AI Replaced Financial Advisors (And What We Didn’t See Coming)

If all of that sounded a little too naive (coming from a financial planner, after all) let’s imagine a scenario in which AI does replace advisors at some point in the not too distant future. What went right for AI? What went wrong for human advisors?

By 2037, the last CFP quietly closed shop in Saskatoon.

He didn’t retire, exactly. He just stopped getting calls.

Let’s rewind a bit.

For years, financial planners warned: “AI can do the math, but it can’t understand people.”

We said things like:

“Clients want a relationship.”
“Money is emotional.”
“We do more than build spreadsheets.”

And that was all true – until it wasn’t.

What Went Right for AI

1. Just-in-time financial literacy

Forget dusty high school personal finance curriculums. By the 2030s, AI became your real-world tutor:

• Open a bank account? AI walked you through it.
• File your first tax return? It did it for you – accurately, for free.
• Buy a house? It compared rates, pre-filled your mortgage app, and reminded you not to drain your TFSA for the down payment.

No lectures, no PDFs. Just the right advice at the right time.

And that changed the game. Because most people don’t need a financial planner on retainer – they just need help when things happen.

2. Accessibility and affordability

AI made planning frictionless:

• You didn’t book a meeting – you just asked a question.
• You didn’t wait two weeks for a financial planning projection or Monte Carlo simulation – you got one in 10 seconds.
• You didn’t pay $3,000 – you paid $10/month bundled into your bank app.

This wasn’t just a win for tech-savvy investors. It was a win for everyone who used to fall through the cracks:

• Newcomers to Canada
• Young adults with no assets
• Retirees afraid to spend

AI didn’t replace elite planning. It replaced no planning.

3. Behavioral nudges that actually worked

We thought clients wanted hand-holding. Turns out, they just wanted a nudge that felt like magic:

• “Your grocery bill was $240 higher this month – still want to hit your travel goal?”
• “RRSP deadline is in 3 days. You said you’d contribute $6,000. Should I move the funds now?”
• “Your asset mix drifted to 77/23. Want to rebalance?”

Turns out the advice clients needed wasn’t emotional support – it was gentle accountability, at scale.

What Went Wrong for Advisors

1. Undifferentiated service

The truth? Many planners offered the same cookie-cutter advice:

• Invest in index funds
• Save 20% of your income
• Defer CPP
• Take your RRIF minimums

AI could do that in its sleep. And if your “value” was a basic plan in a PDF with a nice cover page, your days were numbered.

2. Inflexible pricing

When AI was offering dynamic, always-on planning for $10/month, the “$3,000 for a plan” model started to feel like asking someone to pay for a map in Google Maps world.

The advisors who thrived?

They offered a niche. Or coaching. Or complexity. Or empathy with context.

The ones who didn’t? Their clients quietly wandered off. Some never said goodbye.

3. Financial literacy wasn’t a moat

For years we shouted, “They ought to teach this in school!”

But financial literacy isn’t something you memorize – it’s something you need when life throws you a money curveball.

And AI did that better than any planner with a whiteboard.

What We Lost

We lost Sunday-night emails from worried clients asking, “Can I really afford to retire?” We lost conversations about legacy, about guilt, about spending money on yourself when you’ve always been the saver.

AI could optimize the withdrawal schedule. But it couldn’t look someone in the eye and say, “Yes, you can afford to take your grandkids to Disneyland.”

The Takeaway

AI didn’t destroy financial planning. It just made it… optional.

For most people, most of the time, automated advice was good enough. Cheap. Fast. Personalized. Instant.

But for those inflection points – retirement, the sale of a business, a divorce, the death of a parent – there was still a seat at the table for human advice.

It was just a smaller table.

What to Do About It (Before It’s Too Late)

That future? It’s not inevitable.

We’re not there yet. You’re still reading this in a world where AI is just starting to flex its financial muscles, and human advisors still play a meaningful, trusted role.

But the writing is on the wall – and depending on who you are, here’s how to prepare:

If you’re a reader/client

You don’t have to wait until AI takes over to get better financial advice. Start now by:

• Asking better questions: Whether it’s a planner or ChatGPT, the quality of advice depends on the quality of your input.
• Getting organized: Track your spending, know where your accounts are, and keep your goals front and centre.
• Using AI as your co-pilot: Don’t be afraid of the tech. Use it to run projections, compare TFSA vs. RRSP, model CPP at 65 vs. 70. Then decide if you want a human to review your plan – or your mindset.

If you’ve ever said, “They ought to teach this stuff in school,” good news: AI might finally be the teacher we needed. One that’s available when you need it – not years before or decades too late.

If you’re a financial planner

AI won’t replace you… unless you let it. Future-proof your practice by:

• Going deep, not broad: Specialize. Find a niche. Get incredibly good at solving specific problems AI can’t generalize away.
• Becoming the translator, not the calculator: Don’t just deliver numbers. Help clients make sense of them – and act on them.
• Layering in empathy: Your value isn’t the plan. It’s the permission you give clients to enjoy their money, support loved ones, and sleep at night.

And maybe most importantly:

Partner with AI, don’t fight it. Let it do the grunt work. Let it find the gaps. Let it save you time – so you can spend more of it being human.

Final Thoughts

Financial planning is changing fast. And while it’s tempting to dismiss the rise of AI as hype or overreach, the better question is: What if it actually works?

Because if it does – if it really can deliver just-in-time literacy, real-time decision support, and affordable access at scale – then planners and clients alike need to rethink what great advice looks like in the late 2020s and beyond.

Not the death of planning.

Just the end of business as usual.

Some personal finance topics spark polite debate. Others? They ignite full-blown identity crises.

In his latest video, Ben Felix dives into three of the most emotionally charged subjects in personal finance: renting vs. owning, dividend investing, and FIRE (Financial Independence, Retire Early).

He explains why these topics go well beyond spreadsheets – they challenge our beliefs, identities, and cultural values. And once your identity is on the line, even basic math becomes hard to swallow.

This resonated with me.

Take housing. I’ve been a homeowner since I was 19. That’s a personal choice, and it’s mostly worked well for me. But I fully recognize that renting can make a lot more sense in high cost of living cities, or even in retirement. I often remind my retired clients that “you can’t eat your cupboards.” Selling or downsizing can unlock equity and improve your retirement lifestyle – that’s just smart financial planning.

Related: What’s your home equity release strategy?

Dividend investing is another hot-button issue. I used to be a dividend investor myself (check the archives!), until I “saw the light” in 2015 and switched to index funds.

I get the appeal – dividends feel like free money. But as Ben points out, they’re not. The stock price drops by the equivalent amount of the dividend paid, meaning nothing is magically created. Dividends are not inherently safer, either – just ask any BCE shareholder watching the share price plummet and the dividend get slashed.

Ben’s take is clear: when dividends are reinvested, they contribute significantly to total return, but they’re not a shortcut to wealth or downside protection. They’re just one way to access your investment gains – and often a less tax-efficient one.

Then there’s FIRE. I’ve always had mixed feelings here. On the one hand, I applaud anyone who’s intentional with their money – living below their means, saving aggressively, and aligning their spending with their values. That’s the heart of good financial planning.

But the extreme version of FIRE – the one that demands 50%+ savings rates, tolerating jobs you hate, and assumes static preferences and flawless investment returns for 60+ years – has always seemed too rigid, too optimistic, and frankly, too unrealistic. Life doesn’t move in a straight line. And as Ben notes, happiness research shows that work, meaning, and relationships all contribute to a fulfilling life – not just freedom from a paycheque.

What’s also bothered me is the number of self-proclaimed “retired early” bloggers who continue earning income from ads, courses, books, or media appearances, all while selling the dream of early retirement. There’s nothing wrong with entrepreneurship or earning money – but let’s be honest about it.

That said, I do like how FIRE has evolved. There’s fat FIRE, lean FIRE, coast FIRE, barista FIRE – all reflecting different goals, values, and timelines. FIRE means different things to different people, and that’s a good thing. If it helps people build financial flexibility and live on their own terms, I’m all for it.

Personal finance is personal – but that doesn’t mean every belief should go unchallenged. Sometimes, we need to rethink what we “know” about money. Ben’s video is a great place to start.

One controversial topic I would’ve added to the list is the decision to take CPP at 60 versus 70 (or anywhere in between). Some of my most widely shared and commented on posts are about this CPP decision. It gets people fired up!

I’m firmly in the camp of delaying CPP to 70 as long as you have other assets (RRSP/LIRA) to draw from while you wait for that sweet, enhanced benefit to kick-in.

Readers, are there any other personal finance topics that are emotionally charged as these ones? Let me know in the comments.

This Week’s Recap:

Last weekend I shared a personal health scare that had me reflecting on my health and wealth. Thanks for your comments, emails, and well wishes – they really meant a lot!

Later in the week I showed how my two-fund solution is a smarter way to spend without stress in retirement.

From the archives: Do you need a financial navigator?

Now onto the Weekend Reading links…

Weekend Reading:

Retirement researcher David Blanchett shows how spending drops in retirement but life satisfaction does not.

Financial planner Russell Sawatsky walks through a strategic approach to estate planning for couples.

Here’s Fred Vettese on why the algorithm approach beats the 4% rule at estimating your retirement income.

Erica Alini writes that Canadians still can’t access information about TFSA accounts in latest CRA website glitch (G&M subs).

The Wealthy Barber David Chilton tells parents not to feel guilty if they can’t afford to help their kids buy a home:

Travel and credit card expert Barry Choi explains how cancelling a credit card affects your credit score.

Finally, advice-only planner Andrea Thompson on what the proposed “big, beautiful bill” could mean for Canadians.

Have a great weekend, everyone!