Photo: Jeremy Page/Flickr
After surveying 2,373 Canadians, Manulife Financial and the Bank of Canada found nearly one in five homeowners were expecting to use their home equity to help boost their retirement income.
“The fact that one in five is proactively planning to use this strategy suggests they may be struggling to balance retirement saving with debt repayment,” said Rick Lunny, President and CEO, Manulife Bank of Canada.
About 10 per cent said they were expecting to continue living in their homes and borrow against the equity, while another eight per cent said they would downsize and live off the excess equity.
According to the survey, nearly 50 per cent expect to still be in debt once they enter their golden years. And while getting out of the red was listed as a top financial goal for 81 per cent of respondents, just over half were confident they’d achieve that target once reaching the end of their working years.
When asked how they planned on getting out of debt, slightly less than half said they’d keep working – either full-time or part-time – until they were in the black. Of those that would retire with debt the same time as planned, 26 per cent said they’d scale back their lifestyle, 10 per cent would sell off other assets to pay off the debt and another 10 per cent said that the debt wouldn’t affect their way of life.
But the way Canadians feel about retirement and tackling debt is a bit of a mixed bag. After all, one-quarter of those surveyed didn’t even consider their mortgage or vehicle loans as part of their debt.