Hope Is a Risky Retirement Strategy

Are you counting on your home’s value rising to fund your retirement?

By Lola Augustine Brown

If you plan to use your home to pay for your retirement, you’re not alone—and you’re playing with fire, especially if you have no other investments.

According to recently published survey results, almost half (45%) of pre-retired Ontario homeowners 45 or older say they’re counting on their home’s value rising to provide the money for their retirement. The results are contained in Investing As We Age, a report from the Investor Office of the Ontario Securities Commission and were derived from an online survey of 1,516 Ontarians aged 45-plus.

The report states that 73% of Ontario pre-retirees aged 45-plus are homeowners, but the survey found that 38% of pre-retired homeowners have no investment savings at all—and that the less people had saved (that is, the less prepared they were for retirement), the more likely they were to be counting on their homes’ value rising.

According to the report, a perhaps surprising 37% of homeowners have no mortgage to worry about, but 38% are still making mortgage payments. The survey found that the higher their mortgage, the more likely people were to be hoping for rising property values. People were most likely to be counting on their home if they were more than 10 years away from retirement.

As a retirement-planning strategy, hoping for a hot property market “can be sustainable so long as residential properties maintain or increase in value,” the report states, but it cautions that it’s risky, given the possibility of what the report calls a “downward correction” in the housing market.

The survey also probed the general financial concerns of Ontarians 45-plus and found that 25% say that retirement, whether planning for it or having enough money for it, is their top financial concern. Women surveyed reported feeling less knowledgeable about retirement investing and more stressed out about retirement savings than men in their age groups.

Photo: iStock/denphumi.