According to recently released statistics from the Canadian Association of Retired Persons (CARP), two-thirds of the Canadian workforce do not have company pension plans. In addition, RRSPs and other forms of retirement savings are not being used as much as they should be. In short, we face a crisis of a lack of financial security in retirement because Canadians are having a hard time saving for retirement and, for the most part, do not have pensions.
In a recent press release the VP of National Sales for HomEquity Bank, Jeff Spencer, explained: “Canadian seniors want to remain in their homes as they age. However, there are many that could lose their homes because they haven’t saved enough for retirement, some will be forced out due to a lack of information on options and many of them have the answer in front of them and don’t know it.”
The solution is a reverse mortgage
Reverse mortgages can give seniors with negative or small cash flow a much-needed relief valve if they have entered retirement with few savings. With the rise in Canadian property values almost universally across the country, more seniors will have equity in their homes that they can tap into in order to provide for themselves in retirement if traditional retirement savings aren’t there.
HomEquity Bank offered an example of a real-world situation where a reverse mortgage improved a client’s life. Canadian senior Jim Burton, 73, is a Chartered Accountant who seriously considered selling the family home, where he and his wife lived for 42 years, before deciding on a CHIP reverse mortgage. A real estate deal fell through due to the death of a partner “which significantly hurt my retirement plans. This was a big part of my pension plan process – I was going to be short about a million dollars without this project.” The CHIP reverse mortgage helped Jim and his wife remain in the family home and “it was one of the simplest financial transactions I’ve ever done.”
You don’t have to sell your house to retire
Canadians staring down a retirement without savings often sell their homes and downsize in order to provide for their retirement. With a reverse mortgage, you don’t need to sell your home, even though you are borrowing against its equity. You can stay in your home and then pay off the loan when the home is sold, rather than having to suffer through a move and a change in your quality of life.
Horizon Equity has been administering CHIP Home Income loans for years for Canadians from all walks of life. While some of them have taken out reverse mortgages to make up for insufficient retirement funds, others use a reverse mortgage as a financial instrument to avoid cashing out investments and more. Contact us today to find out how a reverse mortgage can fit into your retirement plans.