Downsizing the home not a guaranteed financial windfall in retirement
Three in ten (27%) Canadian boomers who chose to downsize say costs were more than expected; four in ten (39%) who haven't downsized are skeptical of the potential savings
TORONTO, Sept. 19, 2018 /CNW/ - For older Canadians considering selling a home to retire in a smaller living space or a more affordable community, downsizing may sound to some like a financial bargain, but 39 per cent of current homeowners are skeptical that downsizing will actually save them money. According to an Ipsos survey commissioned by HomeEquity Bank, as 27 per cent of downsizers shared, the costs were more than they expected, suggesting that the expenses from downsizing can add up quickly.
While there may be certain advantages for some older adults to downsize their home, almost half of Canadian homeowners aged 55+ (48 per cent) say they have no plans to downsize. In fact, within this group that plans to stay put, 93 per cent say they are happy with their current living arrangements.
The findings are supported by award-winning author Joyce Wayne, who also pens the blog Retirement Matters.
"When I downsized it was a huge mistake for me," explains Wayne. "I was attracted by the lure of improving my cash flow to support my writing career following my retirement, but it didn't really net out that way after factoring in all of the closing costs and moving expenses. I moved further away from my friends too, which was more difficult than I imagined. After a few years, I moved backed into my old neighbourhood. It's a big decision that should not be entered into lightly – know your options and really explore them!"
Many older adults are faced with the downsizing dilemma. According to an earlier Ipsos survey commissioned by HomeEquity Bank in July 2018, half (51 per cent) of those aged 75+ say it's important to stay in their current home because they want to stay close to family, friends or their community, while four in ten (40 per cent) say emotional attachments and memories are what's behind the importance of staying put in their current home during retirement. The other side of this dilemma is the 31 per cent of homeowners in the most recent survey who say they need the equity from their homes in order to live comfortably in retirement.
"That's why I'm so passionate about sharing insights through my blog," adds Wayne. "I want to help retirees and those approaching retirement to think through their options. Before rushing any decisions, they should consult with a financial advisor to consider whether a reverse mortgage is right for them. It may be the best way to stay in their home while enhancing their retirement years."
"There are real costs to downsizing… financial, emotional and personal ones," advises Yvonne Ziomecki, HomeEquity Bank's Executive Vice President, Marketing. "From a financial perspective if you had to move outside your cherished neighbourhood or further away from family and personal support networks, it may mean you'll spend more resources to maintain relationships, to develop reliable new connections and to navigate life in a different setting. That's more stress in life that no one needs! Moving into a smaller house or adjusting to a condo or apartment setting means coping with the harsh reality of selling or giving away some belongings and sacrificing personal comforts when space becomes limited."
Members of the generation of older adults who have tackled the downsizing dilemma say they are pleased with their decision (88 per cent) yet admit it didn't happen without some regret and unknown sacrifices. For example, only 34 per cent of respondents indicated they plan to move to a new city or town when they downsize, when in actuality, half (50 per cent) ended up buying a smaller home outside of their current community and network. That number is even higher for those aged 55-64 at 59 per cent and those aged 65-74 at 57 per cent.
HomeEquity Bank reached out to over 2,500 older adults in Canada (aged 55+), among which 1,870 are homeowners, the week of August 27, 2018, through an omnibus survey, completed by IPSOS.
IPSOS Research Details
Ipsos is one of the world's largest independent market research companies. Its commitment to driving the industry with innovative, best in class research techniques that are meaningful in today's connected society is a primary goal. www.ipsos.com/en-ca. For this survey, a sample of 2500 Canadians aged 55+ was interviewed online, among which 1,870 are homeowners. Weighting was then employed to balance demographics to ensure that the sample's composition reflects that of the age 55+ population according to Census data and to provide results intended to approximate the sample universe.
The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within +/ - 3 percentage points, 19 times out of 20, had all Canadian homeowners age 55+ been polled. The credibility interval will be wider among subsets of the population. For example, +/- 6 per cent for Canadian homeowners who have downsized. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.
About HomeEquity Bank
HomeEquity Bank, a federally-regulated, Schedule 1 Canadian Bank, is the only national provider of the CHIP Reverse Mortgage™ solution. Founded 32 years ago, HomeEquity Bank has been helping Canadian homeowners aged 55+ access the value of the equity they have in their homes, maintaining ownership of their home, until they make the decision to sell. For the past three years, HomeEquity Bank has ranked on the Canadian Business and PROFIT's Growth 500 list, the definitive ranking of Canada's Fastest-Growing Companies. HomeEquity has also been recognized as an Aon Best Employer – Canada 2017.
SOURCE HomeEquity Bank
Yvonne Ziomecki, HomeEquity, Bank, 647-723-6812
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