When it comes to retirement, many older Canadians choose to downsize to a smaller abode to supplement income for their later years.
What they fail to realize, however, is the average cost of downsizing is approximately $40,000, says John Cavan of Mortgage Architects. This figure is based on the sale of a $400,000 home, and includes real estate, legal and moving fees, as well as land transfer taxes.
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“What I tell my senior clients is that if they took half this amount, there’s a good chance they could make modifications to their home and stay there,” he explains.
Most Canadians want to remain in the family home as they age, adds Jeff Spencer, HomEquity Bank VP National Sales, since there’s a financial and emotional cost to downsizing.
However, many haven’t saved enough for retirement. On advisor.ca, Suzanne Sharma reports six ways to help cash-strapped retirees.
1. CREATE A CHART:
Show how the changes will affect the client’s goals. Include assets, accumulated cash flow, total net worth, and how these figures change each year until he’s in the red.
2. SUGGEST WORKING LONGER:
He could recuperate that lost income by working longer. If he’s not fit enough to commute to a job, Alan Wainer, partner at Crowe Soberman LLP, suggests working from home or opening a consulting business.