According to TD Bank Group, the answer is no. “Even if selling your home is a great way to increase your retirement income, and unless you want to adopt a much simpler lifestyle, it probably won’t generate enough money for your entire retirement. It’s important to have access to savings funds and additional investments, such as an RRSP, a TFSA, pension benefits or shares,” states a press release where, in conjunction with a questionnaire, the institution unveils the results of a survey on beliefs about retirement in Quebec.
It’s true that the net worth of a home represents a significant amount. Until recently a house could provide the owner with a comfortable cushion, but that no longer holds true today.
Popular belief: “I probably won’t live to age 90, so it’s not necessary to save for such a longer period of time.” TD Bank Group’s answer to that is “False! In fact, Canadians are living longer than ever and many live longer than 90 years. You therefore have to make sure that you have enough savings so you don’t deplete them during your lifetime.”
The TD Bank Group warns us: “Even though expenses can decrease at retirement, recent studies among retired Quebecers reveal that their daily expenses are higher than expected. Maybe they didn’t take into account current expenses like dental and medical care, or unexpected expenses due to an accident or home maintenance,” Ms. Filion explains. “We recommend that you consult a professional to calculate your expenses at retirement and establish a plan to make sure you have enough money to pay for your expenses for your entire retirement.”
In short, relying solely on the value of your property to ensure a peaceful retirement can become more and more misleading. It seems that financial planning becomes more complicated as life expectancy increases.
However, a popular belief confirmed by TD is the fact that you need 75% of your employment income to meet your needs at retirement.
“Depending on what you plan to do at retirement and your level of debt, you will certainly need about 60% to 80% of your employment income to maintain the same standard of living as before retirement,” emphasizes TD.
Source: Groupe CNW