(Mortgage Broker News)A sizeable contingent of Canadians consider residential property as an evergreen investment, but there are new and growing signs of housing failing as a retirement plan has become apparent.
“More and more Canadians are retiring with a mortgage, which 30 years ago would have been unheard of. People are retiring with debt, with a mortgage, simply because they just didn’t plan well,” Carte Wealth Management’s Jacqueline Porter told the Toronto Star.
“I have conversations with clients all the time. Freedom 55 is out the window.”
A fallacy that many employees and professionals commit is the assumption that economic and housing growth will be permanent, Porter added.
“You can’t look at the last 40 years and think that’s what’s going to happen the next 40 years, especially as people continue to use their home as a piggy bank.”
A 2017 study by the Ontario Securities Commission revealed that as much as four in five millennials are saving up, but only about half of them were investing their savings. Aside from living expenses, other millennial priorities were travel and home ownership, which is particularly damaging in a market environment characterized by elevated housing costs.
“Most people in general don’t consider their future selves multiple decades in advance. They’re more concerned about current priorities — getting ahead, staying ahead, buying a home, going through school, daycare, kids’ education,” according to Michael Nicin, executive director of the National Institute on Aging.
Earlier this year, the Bank of Montreal revealed that Canadian millennials had $28,821 in RRSPs on average, compared to $15,377 in 2016. Sadly, the accumulated amounts are nowhere near enough to serve as retirement savings, Nicin stated.
“If we want to solve the retirement conundrum — because it is frightening with the aging population — it’s not just about individual households. There’s a social factor to consider when it comes to public support programs for seniors. Are they going to be sustainable with the aging population that hasn’t saved for itself?”