It’s no secret that Canadians have a savings problem. We have $27,355 in non-mortgage debt, according to credit rating agency TransUnion, our household debt to income ratio is at an all-time high and report after report says that we don’t sock enough away in our RRSPs.

Of course, having a lack of funds hasn’t stopped people from wanting to retire. A recent Sun Life survey found that most of us plan to hang up our workboots when we turn 66.

If we don’t have enough saved up for our golden years, yet we still plan to retire in our mid-60s, how in the world will we be able to pay for our post-working years? That’s the main question the Sun Life Canadian Unretirement™ Index report, which came out in February, attempted to find out.

The company asked 3,005 Canadians how they expect to fund retirement and one main answer was their home. Nearly a quarter of respondents agreed with the statement “My residential real estate will serve as my primary source of retirement income,” while 17% said they weren’t sure.

Put those two numbers together and about 40% of Canadians are at least giving some thought to using their home’s equity to pay for their retirement needs.

It may not be a shock to find out that people are betting on their homes—after all, housing prices continue to climb—but this presents a problem for financial advisors.

Any client who’s taking comfort in their home’s value going up could be in for a rude awakening. The average Canadian resale home price has not gone up in a straight line—far from it. In the early 1980s, real home prices dropped by about 20% according to TD Economics, and they’ve bounced up and down ever since.

Yes, Canadian home prices have grown by an average 5.4% per year between 1980 and 2012, but as history proves, they could fall at any time—Vancouver’s home prices fell about 12% in 2012, surprising a lot of people who thought the city’s sky-high real estate would never plummet. If your clients are ready to retire and the market drops then they could be out of luck.

On average, the survey found that Canadians expect 10% of their retirement income to be derived from their home. Thirty per cent of income would come from government plans, 27% from personal savings, 23% from employer plans, 5% from inheritance and 6% from other sources.

That fact that more income isn’t coming from personal savings is a wake-up call for advisors and Canadians in general, Sun Life’s president Kevin Dougherty told me in an interview. He says the average person hasn’t yet figured out how to save, and many need help understanding their options. “This is a call to action,” he says.

It’s anyone’s guess as to when or if people will get the message about saving, and as long as home prices keep rising, it’s likely more people will rely on their abodes for income. Hopefully they’ll figure it out before it’s too late.

Bryan Borzykowski is a Toronto-based business journalist. He writes for the New York Times, CNBC, CNNMoney, Canadian Business and the Globe and Mail, among other publications. He’s also written three personal finance books published by John Wiley & Sons. Follow him on Twitter @bborzyko.
Originally published on Advisor.ca