According to a recent poll conducted by Sun Life Financial Inc., most Canadians are being forced to rethink traditional plans to retire at age 65, with only 30% now thinking they can retire at 65.
Debt is playing a big role in this change, as 61% are worried about the amount of debt they will carry into retirement. Longer life expectancy and lack of planning are also major factors behind this shift towards working beyond the ‘official’ retirement age.
From our perspective, we see many folks trying to pay down/off their mortgages while carrying lines of credit (LOC’s and credit cards. This is completely counter-productive. Most people believe they can pay off LOC’s but for whatever the reasons it does not happen. Curiously most do not see an LOC as real estate related debt when in fact it is. One couple recently told us they had no mortgage but had a $150,000 LOC which they did not think was secured. when it is. Many have substantial equity and approach or enter retirement with minimal income and therefore end up living ‘poor’ instead of enjoying their lives without financial stress. And these are the fortunate ones. Others carry high mortgages as well as other high interest debt and with the prospect of declining income, they will end up renters.
For those of you who have good equity in your homes we suggest that the key is to make your equity work for you to create a second income stream for later years. A couple of options are to purchase an investment property. Another is to invest in private mortgages. We have many clients who have done this and within five to ten years have generated significant income and asset wealth.
In effect, they now have not just one (income) basket but several that will allow them to work less and/or retire sooner than they otherwise would, because they have realized that a house with no mortgage no longer works well in our world, and in fact robs them of a more carefree lifestyle.
Call us today to discuss your future and to determine what better financial options are available to you.