I just came across an article on MACLEANS.ca that discusses the risks of assuming that your home will fund your retirement.
A growing number of Canadians view their home as their ticket to retirement comfort. This article asks, is that wise?
The article states that there are huge risks that come with this approach, mainly:
-What if house prices crash as the baby boomers start to downsize?
-The growing view that our housing market is “bubbly”
-Many new home buyers may not even have their homes paid off by the time retirement age arrives. Have you ever heard of a “mortgage burning party”? This elusive party celebrates a person’s newfound freedom after paying their mortgage down to $0. I can remember my parents mentioning these parties back in the ‘80’s. I don’t think I’ve heard of a single one in my adult years! If they exist anymore, they must be few and far between.
Our world has definitely changed in a short period of time. While funding one’s retirement through home ownership certainly has its risks, I must point out that everything comes with some level of risk. If you leave your money in a bank account you will accrue very little interest income (but will have very low risk), if you invest in the stock market you have the opportunity for big gains (and losses) depending on how your invest, and, if you purchase a home you do run the risk that the house will not increase in value the way you had hoped. When planning your retirement strategy I think it’s really important to speak with a knowledgeable financial advisor to determine your best course of action and how you can diversify your assets and savings to lower your overall risk!
Click on the link below to read the full MACLEANS article!