It sounds like a sure thing: buy a house, watch its value rocket up, then downsize when you retire to tap into your valuable real estate for funds. Given that real estate represents 42% of Canadian families’ total assets, it’s no wonder that 28% of those over 50 plan on using the wealth that’s locked up in their homes to help pay for retirement.
Canadian Business, by Jacqueline Nelson, Angelina Chapin
August 2010
The problem is, says Ottawa financial planner Marc Lamontagne, once you’re used to a certain standard of living, it’s harder than you think to trade down. Even when people do sell the family home to downsize to a smaller townhouse or condo, they tend to make up for it by opting for a more upscale property with high condo fees. “The question is whether there are really any cost savings,” Lamontagne says, “and usually the answer is no.”
Full text: Top 10 retirement mistakes
