A significant number of Canadians are relying on their homes as a cornerstone of their retirement strategy, even though this approach comes with several risks, according to a recent survey by the Healthcare of Ontario Pension Plan (HOOPP). The survey revealed that 62% of respondents view homeownership as a key part of their retirement strategy, either as a financial investment or a source of stability. Notably, the reliance on home equity for retirement funding has grown, with 44% of homeowners indicating they plan to sell their property to fund their retirement.
This figure has risen from 42% last year and 38% in 2023. Jennifer Rook, HOOPP’s vice-president of strategy, global intelligence, and advocacy, highlighted the financial dilemma many Canadians face. “When people are younger, they have to save for two key assets in life, one being a house and one being retirement,” said Rook.
“As houses become more expensive, you are kind of forced to choose a little bit more. What we are seeing is people are really still striving for the house and putting more stock in it.”
However, the survey also uncovered significant risks associated with this retirement strategy.
Canadians’ retirement reliance on home equity
For instance, 65% of working homeowners worry that they will still have a mortgage by the time they retire, up from 51% in 2024 and 45% in 2023. Additionally, 48% of homeowners expressed concern about being able to afford their current or future mortgage payments, a slight improvement from 52% last year. The reliance on home equity is more pronounced among younger generations.
The survey found that 55% of those aged 18 to 34 plan to depend on their home for retirement funding, compared to 50% of those aged 35 to 54 and 41% of those aged 55 to 64. This trend could be indicative of the increased cost of housing and the lack of substantial pension plans. Despite these concerns, the concept of homeownership remains deeply ingrained in the Canadian psyche as a reliable form of long-term investment.
Nonetheless, HOOPP suggests that people consider a more balanced approach to retirement planning that does not solely depend on the volatile real estate market. The survey, conducted by Abacus Data, included responses from 2,000 adults across Canada and has a margin of error of 2.19%, 19 times out of 20. It presents a clear picture that while homeownership is an attractive part of financial planning, Canadians must weigh its risks and benefits carefully to ensure a stable retirement.