In 1981, the average savings rate among Canadians was 19.9%. As of 2018 and for the past decade, the savings rate has dropped to under 5%.
The price of real estate as well as our behaviour towards consumption, are the two main factors that have led to such a drastic drop in wealth accumulation since the 1980’s.
Our need for instant gratification and consumption has lead us to one of the most indebted nations in the world. Today, we owe on average $1.70 for every dollar earned. This is up 70% from just 20 years ago.
There are further concerns that we could see more declines in retirement savings and even higher debt to income ratios. Canadians are valuing more flexible work conditions in the form of self-employment, contract work, and temporary assignments.
This is great, however, it puts more responsibility on us to save for our own future. Self-employment and contract work don’t offer RRSP contribution matching or company pension plans.
The average annual expense for Canadians age 65+ is $60,000 but their average income is less than $40,000. And with the average life expectancy now at 82 years, it’s evident that many of us have not saved enough to live comfortably in retirement.
This is where a Certified Financial Planner and Reverse Mortgage Specialist can work together on your behalf to create a custom strategy to help fund your golden years.
Sometimes, it makes sense to access your home equity to help pay for living expenses and preserve your investments that are earning a healthy yield. A Financial Planner will be able to calculate a cost-benefit analysis and after-tax benefits as it will be different for everyone.
For questions related to financial planning, visit www.tatefinancial.ca
With a Reverse Mortgage, the funds you receive are completely tax-free and do not impact your existing benefits in any way. Plus, you are not required to make any monthly mortgage payments. The loan is repaid when you decide to sell or are no longer living in the home.
If you or someone you know could benefit from a custom retirement plan, please contact us for a free telephone consultation. We will be happy to let you know if a Reverse Mortgage is a right fit for you.