It's always important to think about retirement as you get older, but do you have a plan just yet? Do you know what your main source of income is going to be once you get to finish that last day of work? Maybe for you it's a large savings account that you've been tucking away for the past few years, but it could also be another investment, like your home. Or maybe you just don't have a plan and are hoping to figure that out soon. Whatever option you're relying on, it's important to really think it through to determine whether or not it will give you enough cash flow throughout your retirement.
Retirement Income Sources
Believe it or not, a lot of Canadians are going to rely on their home as their primary source of retirement income. This is because a lot of people don't have pension plans at work, and their savings accounts aren't big enough to supplement their income entirely. In total, 59% of people surveyed by Sun Life Financial said they plan on relying on their real estate, which is something that a lot of economists didn't expect. But, is it really a good idea to make this your source of income during retirement? Well, home equity is certainly attractive if you don't have that big pension plan or savings account, but that doesn't necessarily mean it's going to supply you with the money you need.
The values of real estate are going to change, so your home may not be a valuable asset as you delve into retirement. Just imagine your home equity disappearing much sooner than you anticipated; what would you do? This is why it's so important to make a retirement plan and thoroughly think it through. You need to be certain that the sources of income you have will be enough, unless you want to go back to work after retirement.
When Will Retirement Come?
According to this survey, 28% of Canadians expect to retire by the time they are 66 years old. But not everyone feels that way, as 27% say that they will still be working full-time by the time the get to age 66. And, out of those that will be working, 65% say that it will be necessary, but 35% say that they will do it because they want to. Where do people expect their retirement income to come from? The average answer was: 27% will come from personal savings, 23% will come from employer plans, 30% will come from government plans, 10% will come from home equity, and the rest will come from other sources, such as inheritance.
Before you settle into your retirement plan; think more about it and how it might change in the future. This is especially true if you plan on using your home as your primary source of retirement, and don't have many other sources of income other than that. Get in touch with a financial planner, and you'll be able to find a strategy that determines what you should do to properly retire by the time you hit your retirement goal.
I am a licensed member of the Real Estate Council of Alberta since 2005 - proudly representing CIR REALTY, Calgary’s largest real estate brokerage. I enjoy keeping my readers up to date with real estate related information that they can easily understand and use for their own benefit. I welcome feedbacks and comments equally from first-time visitors to my blog, past clients and also from my fellow REALTOR® colleagues. Thanks for stopping by!