Have you been thinking of retirement? People over the age of 55 currently represent 33.09% of the total Canadian population. This part of the population knows what they want in order to live a fulfilling life as they enter retirement. However, they do not always have the financial means available to them to support their ideal lifestyles. So what options are available? We’ve listed them below.
Credit cards may be the perfect financial option for you if you are retired and have an income source, with short-term financial needs. They give you easy access to credit but do carry a high-interest debt. It is always best to pay off the borrowed amount before the deadline.
Private loans are another option if you have an income source and short-term financial needs. Like credit cards, they give you easy access to credit but have required monthly payments. Furthermore, having a reasonable repayment plan is important as they charge very high interest and repayment terms are very rigid.
Home Equity Line of Credit (HELOC)
If you are a retired homeowner that has an income source and needs a large sum of money, it may be worth exploring a Home Equity Line of Credit (HELOC). However, it is important to consider the monthly payments. The qualification for the loan can change based on changes to your income or home value, and you may be asked to repay the loan at any time.
Downsizing for Retirement
Another option may be to downsize. It is a popular financial option and may be great for you if you are a homeowner willing to transition into a smaller home. Downsizing allows you to access the value of your home’s equity to meet your financing needs in retirement. It is important to note that there will be fees associated with this such as property transfer taxes, commissions, closing costs, etc.
Now, before revealing the final option for Canadians in retirement, you may find this interesting. A study from the National Institute of Ageing showed that 91% of all Canadians want to remain in their own homes for as long as possible after retirement. Furthermore, 95% of Canadians 45+ say that being able to retire in their own homes would give them the independence, comfort, and dignity they need as they age. However, due to costs associated with in-home care, many individuals cannot afford to remain in their homes. If you are among these Canadians, then this next option may be the most suitable for you.
CHIP Reverse Mortgage
The last option applies to homeowners who wish to remain in their homes while maintaining their current lifestyle. To do this, they should consider the CHIP Reverse Mortgage. This finance option allows you to access up to 55% of your home’s equity value. Then you can choose to receive your money in a tax-free lump sum or tax-free monthly payments. Furthermore, you are not required to make any monthly mortgage payments but instead, pay back the loan through the value of your home when you sell it or move out.
These are just some of the financial options that Canadians can utilize to enjoy retired life. If you’re finding yourself or a parent at this stage of life, contact us to find out how we can help make the best of your retirement!