With housing prices on the rise in most Canadian cities, nearly a quarter of Canadians plan to use their homes as their primary source of income after they leave the workforce, according to the 2014 Sun Life Canadian Unretirement Index. This survey also revealed 17 per cent do not know if their investment in their home will serve as their primary source of income during retirement.
At the same time, 28 per cent of Canadians expect to be retired at 66. Twice that many (56 per cent) are expecting to work past the traditional retirement age, with 65 per cent citing that they will need to.
The average expected retirement age is 66. But among Canadians closest to retirement, those aged 55-65, the average expected retirement age is 67.
“The average expected retirement age in Canada has hit its lowest level in four years – it’s 66 this year down from a high of age 69 in 2011,” says Kevin Dougherty, president, Sun Life Financial Canada. “With people living longer and more Canadians expecting to retire sooner, it’s important to look at what savings you will need to be fully prepared and how having a financial plan can help protect against risks that can be magnified in retirement such as market shocks and health events.”
Canadians on average expect approximately 10 per cent of their retirement income to come from home equity. They expect: 30 per cent to come from government plans; 27 per cent to come from personal savings; 23 per cent to come from employer plans; 5 per cent to come from inheritance; and 6 per cent to come from other sources.
Some market experts predict that Canadian expectations about not relying on home equity may change due to economic factors.
“Real estate will likely endure some difficulty with a slowing Canadian economy and a weak demand for the dollar,” says Sadiq S. Adatia, chief investment officer, Sun Life Global Investments. “With an already overheated market, there may be additional pressures from upcoming retirees who feel they lack enough savings for their retirement. As a result, they may feel the need to downsize their homes for additional income due to these economic conditions.”