Don’t rush into sale of home at retirement

Even after 10 years of retirement, Peter and Kathleen Hadley are still waiting to decide whether to move from the Oakville, Ont., home they’ve lived in for 35 years.

“We thought we would downsize when I retired,” says Peter. “But then we agreed not to make any drastic changes and see what our lifestyle would be like.”

They realized they were already in a convenient location surrounded by friends and within driving distance of their children and grandchildren.

“We decided to stay where we were. Besides, I had a pretty good pension and we didn’t really need the equity out of our home.”

Many of their friends, however, have gone the downsizing route.

“For some, getting equity out of their homes was a big issue. For others, it was simply a lifestyle or health-related decision,” says Peter.

While there are many options available, decisions around home ownership need to be approached with caution in the retirement years, says Andrew Pyle, senior wealth adviser with ScotiaMcLeod in Peterborough, Ont.

“The house is the last retirement asset you should access to get the lifestyle you want. For some it’s very risky to do it too soon.”

In many cases, it might be better to borrow against the home to fund your retirement, Pyle says.

“Sit down with someone and work out what you need, where the shortfalls are and why you need to go to your house to fill those gaps. But look to your lifestyle first and see what you can modify before making such a huge decision.”

That being said, if you are in a strong selling market, it might be a good time to sell and downsize.

A BMO Retirement Institute report says the home represents the biggest financial asset for 47 per cent of Canadians, representing 51 per cent of their total net worth.

“Boomers have derived tremendous benefits from the rise in the value of homes over the last few decades,” says Chris Buttigieg, senior manager, wealth planning strategy, for BMO Financial Group in Toronto and author of the report.

There are several options to consider when the time comes to draw upon that sizable asset, he says.

“A reverse mortgage is one way you can continue to live in the home because it gives you a percentage of the equity you have built up as cash that you can invest.”

Another route that is especially appealing in a low interest rate environment is a homeowner’s line of credit, he adds.