Home equity as a source of retirement income survey

Toronto, ON, February 25, 2013 – According to a new survey conducted for the Investor Education Fund, Canadians are not saving enough for retirement, and half believe they will run out of their retirement savings in the first 10 years of retirement. Despite the lack of retirement savings, the survey revealed that four out of 10 respondents were not willing to consider capitalizing on home equityEquity Two meanings: 1. The part of investment you have paid for in cash. Example: you may have equity in a home or a business. 2. Investments in the stock market. Example: equity mutual funds.+ read full definition as an option for retirement income.

The study set out to address three key issues:

• To what extent is household wealth locked into the value of a home or other property?
• To what extent and how will people pay off home-related debtDebt Money that you have borrowed. You must repay the loan, with interest, by a set date.+ read full definition during their retirement?
• In what ways are people willing to use their home equity to generate retirement income?

Key findings:

• Survey respondents lack knowledge of how much income they will need in retirement. One-quarter (24 per cent) of Canadian households have no idea how much they will need to draw from their savings/investments every year after retirement, including their company pensions.
• Canadians are not saving enough for retirement. One-third (33 per cent) of Canadian households do not believe they have enough saved for retirement, and one-quarter are not certain.
• Homeowners have not considered home equity as a potential source of retirement income. Half (48 per cent) of the respondents have never thought about selling their home as a way to generate income to live on in retirement.
• Respondents expect to enter retirement with debt, and plan to use savings to pay it off. One-quarter (24 per cent) of homeowners expect to have debt on their principalPrincipal The total amount of money that you invest, or the total amount of money you owe on a debt.+ read full definition residence after they retire, with a median debt of $71,000. Of this group, one-half (49 per cent) expects to pay the debt from their retirement income, and one-quarter (27 per cent) doesn’t know how they will pay it off.

Read the report.

About the survey

The survey was developed in January 2013 by The Brondesbury Group via online interviews conducted with a representative group of 1500 current and former homeowners across Canada. All respondents were at least 50 years old. Half were retired. The marginMargin A way to buy investments by borrowing money from a stockbroker. You must also invest some of your own money first. The extra that you borrow is your margin. Some rules apply about the size of margin that you can have.+ read full definition of error is +/- 2.5%, 19 times out of 20.