How is real estate affecting retirement strategies?

Hot housing markets are providing new options for Canada’s boomers to handsomely pad their retirement nest eggs

How is real estate affecting retirement strategies?
Monica J. Weissmann
Financial advisor
Manulife Securities

“Booming real estate values should be reason for joy for savvy retirees – selling into the high-value market may provide good chunks of cash, which, if correctly invested, will ensure income in retirement.

However, the belief in the continuation of the ‘good years’ for many more years is extremely detrimental and dangerous for retirees. Not selling when a correct retirement plan suggests because ‘maybe we will get some more growth, and we can sell anytime’ is really dangerous.

Real estate is not a very liquid asset, and an eventual downturn may dramatically affect those who are asset-rich and cash-poor.”

Victor Godinho
Managing partner
Pangea Global Wealth Group

“Toronto is attracting capital from global players, increasing real estate prices. Our Investment Policy Statement that we establish with clients addresses their risk levels, their personal target rate of return and their requirements for either capital appreciation or cash flow. This then guides our retirement discussions.

With a few of our clients who are looking to establish retirement income and may not have the required capital on hand to generate it, we have presented plans where they liquidate their primary residence tax-free using the primary residence exemption and invest the capital to generate retirement income.”

Linda Spletzer
Financial advisor
Raymond James

“Clients who have owned their homes for many years leading up to retirement are in a great position. Many of them are currently downsizing and using the balance of their profits to help fund their retirement. Even clients in their 40s and 50s are optimistically counting on their growing home values to help fund their retirement plans within the next 15 to 20 years.

It’s the younger clients who are really concerned, and for good reason. Faced with student debt and high rent costs, many struggle to cover their monthly living expenses, let alone find extra funds to save for their own retirement.”