The Liberals won the federal election with an unambitious, play-it-safe platform of personal finance measures that half-heartedly ticked boxes such as tax cuts and help for seniors.

Expect things to be a lot more interesting in the months and years ahead as the new government makes decisions affecting core financial issues such as the cost of an aging population, financial security for seniors and housing affordability. Broader economic decisions will affect interest rates and the stock market.

Here’s a five-point survey of how things might shake out:

Interest rates

The Liberal pitch to voters: we’re the best option for dealing with the trade war and U.S. President Donald Trump. The success of the new government in this area will be measured by what happens in the economy and, in turn, what the Bank of Canada does with interest rates.

We’ve had two rate cuts this year, and there are opportunities for five more in 2025. Ideally, the economy stabilizes and rates either hold steady or dip only modestly from here.

Variable-rate mortgages are priced off the Bank of Canada’s overnight rate and are now comparable to three- and five-year fixed-rate mortgages. Looking ahead, variable-rate mortgages are attractive if you see economic trouble ahead.

Fixed-rate mortgages are influenced by rates in the bond market, which have been volatile this year because of confusion about the path of inflation and economic growth. In fact, fixed-rate mortgages recently increased a bit.

We could see higher fixed-rate mortgages if inflation becomes an issue or if there are worse-than-expected federal government deficits. Canada is seen as a reliable borrower in the bond market, but a ballooning deficit could change that.

Old Age Security costs

Spending on OAS accounted for a hefty 16.5 per cent of total government revenue in the fiscal year ended March 31, 2024, up from 15.5 per cent in fiscal 2023. Look for the federal government to try to contain OAS costs as it pares down everyday spending while pumping more money into defence and economic development. Possible approaches include a lower income threshold for clawing back benefits and adopting a former Conservative government’s policy of increasing the age for starting OAS payments to 67 from 65.

The takeaway for retirees and those looking just ahead to retirement is that OAS income flows could change for the worse. In the future you may need to wait longer to start payments or receive less on a net basis after clawbacks. Note that just 8.3 per cent of OAS recipients were affected by the clawback last year.

RRIFs

The Liberals tossed a crumb to retirees worried about having to withdraw money from their registered retirement income funds at a time when stocks have been volatile. The plan is to lower the minimum RRIF withdrawal by 25 per cent for this year alone.

Previous Liberal governments have shown no interest in broader RRIF reform to reflect longer lifespans and give seniors more flexibility in managing their finances. Measures that would allow seniors to draw from RRIFs later or withdraw less each year may not mesh with the federal government’s need for revenue to meet promises on economic development and defence.

Housing affordability

The Liberal promises to double the rate of new home construction over the next decade to 500,000 a year and waive the GST for first-time buyers of new homes costing $1-million or less are helpful in an incremental way. They do not immediately address the fundamental problem of houses being expensive in comparison with incomes.

Building up the economy could help with income growth, but house prices will only fall meaningfully if there’s a recession or the Liberals decide to partly or fully remove the capital gains tax exemption on principal residences.

A minority government may not want to take the political risk of taxing houses, but it has to at least consider the twin benefits of more affordable houses and tax revenue to spend on economic development.

Investments

Forget trying to project the impact of the Liberal win on stocks. A chart published this week by Scotiabank Global Economics shows no correlation between party and stock market performance in pre- and postelection periods going back to 1979.

Thus far in 2025, the S&P/TSX Composite Index has held up far better than the S&P 500 but lagged the Morgan Stanley Europe Australasia Far East Index, known as EAFE. There is no reason right now to deviate from traditional portfolio mixes, which means having some money in Canadian, U.S. and international markets. One-third for each is a default mix for the portion of your portfolio held in stocks.

Given the Liberal promise to make Canada “the world’s leading energy superpower,” one sector to watch is oil and gas. Energy stocks dramatically underperformed the broader Canadian stock market in the past year.

Are you a young Canadian with money on your mind? To set yourself up for success and steer clear of costly mistakes, listen to our award-winning Stress Test podcast.