A recent survey of Canadians between the ages of 30 and 65 has shown that 27 percent of Canadians believe they will have to work full-time when they are 66, a year after the traditional retirement age. 29 percent believed they would have to work at least part-time.
Only a third of the respondents who thought they would have to keep working said that they would be doing so because they wanted to continue working; the other two thirds stated that they would need the money. On average, the respondents stated that 66 was their target retirement age.
Many older Canadians have been forced out of long-term jobs due to corporate downsizing and downward trends in industries such as manufacturing. When they take a new job, they may have to settle for a decreased salary. Jobless periods and pay cuts can put saving retirement on hold and decrease the amount of money they’re putting away.
Younger Canadians are faced with higher real estate prices, requiring larger savings to get into a new home and larger ongoing mortgage payments than their parents faced. This also cuts into funds available for retirement savings.
18 percent of the respondents plan to use equity in their home for retirement. One third of those respondents stated that home equity, either in the form of selling the home or a reverse mortgage, will be responsible for over 50 percent of their retirement savings. This is a huge change from the traditional model of saving personal funds for retirement and it means that many more Canadians will be looking into reverse mortgages for their retirement planning.
Selling your home and downsizing to live in retirement may be a good move if you want to move closer to family or move to a warmer climate. But if you want to stay in your home, a reverse mortgage is a sound financial move that will allow you to tap a significant amount of equity without having to make ongoing monthly payments, as you would with a HELOC or other form of loan. There is zero obligation to pay until you sell the home. Even when you sell the home, you’re only allowed to borrow up to 50% of your home’s value, so there will still be funds left over for you and your family after the sale of the home.
If you want to see how a reverse mortgage can be a solid cornerstone of your retirement planning, contact Horizon Equity today.