By Rubina Ahmed-Haq
An overwhelming number of Canadians over the age of 65 want to stay in their family home. A recent survey, commissioned by Home Equity Bank and conducted by Ipsos, revealed that 93 per cent wanted to stay in their current home throughout their retirement.
While this may be the preferred choice for many in the active adult demographic, smaller retirement nest eggs, as well as rising health care costs and maintenance on a larger property, often make it impossible.
Do the math
When you have several people living in a house during the child-rearing years, you expect expenses to be higher. As the children move out, those higher costs don't add up — especially if you're using only a portion of the house. If you still have a mortgage, add that to what it costs to maintain the property, as well as utilities, repairs and property taxes. If, when totalled, that number represents the same portion of your retirement income as a mortgage did when you were working, then it might be a sign that you need to move. Retirement income is often lower, so it doesn't make financial sense to pay the same costs as when you were working.
It's a wonderful idea to preserve the family home for when children and grandkids come to visit. But, in reality, how many times do they actually spend the night? If you moved, would an extra bedroom be sufficient? Or, maybe, there's a guest suite in your condo building. There are lots of options for visitors.
Location, location, location
Where you live may have been partly determined by where you worked. When you retire, that all changes and you have more freedom to live where you want. If you're helping with grandchildren, or find that much of your social life is outside the area in which you live, it might make sense to move closer. If you're a traveller, having a smaller living space, such as a condo, makes economic sense — and it's a great no-worry option when you're away.
Make staying more affordable
If after weighing all the pros and cons, you decide to stay in your home, there are still ways to save money. Consider renting an extra bedroom to a student or someone who's on a temporary contract in your area. Another great option is offer short-term rentals through AirBnB. Or, go a step further and create an income suite in your basement for long-term tenants.
It may be possible to refinance your home. In this case, it means that you will have to make mortgage payments, and when the home is passed onto your beneficiaries, that loan must be settled first by your estate. There is also the option of a reverse mortgage, which enables you to borrow against the equity you hold in your home. But if you go this route, make sure you read the fine print carefully, as the rates on such loans are often much higher than regular mortgage rates.
More from HuffPost Canada:
Selling the family home and downsizing can be an emotionally difficult time. But by looking at it from a financial perspective, it could prove to be a responsible decision, so that you have the money to do what you want to do during your retirement.
This post originally appeared on MyHomePage.ca
Rubina Ahmed-Haq is a journalist, personal finance expert and Homes Publishing's finance editor. She appears on CBC TV and radio, CTV Your Morning,Global Toronto, and writes for ratesupermarket.ca. Follow her @alwayssavemoney. AlwaysSaveMoney.ca
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