My Home Is My Retirement

In an article from The Globe and Mail, there has been a vast number of people who expect to fund their retirement based on owning a home. Although housing bubbles in Vancouver have steadily increased over the years, there is no guarantee that owning the home will be enough for retirement. If the entire foundation is built upon owning a home, people are challenged with many future risks. This includes the Time Value of Money. The present value of the home does not entirely equate to the future value of the home. Even after selling it, home owners will only have a few choices: move to a smaller community and own a modest home, or sell it to rent, or take a reverse mortgage.

Moreover, this type of retirement plan is as if home owners are asking to swim in debt. Although Vancouver housing has become a popular place for investment growth, it still possesses huge risks of inflation and market crashes. Citizens should strive for a diversified plan —one that does not solely rely on the value of their home. There are expenses that home owners will have to consider after retirement. Where will they live? Where will they go? There is enough speculation that selling a home will provide enough money for buying a nicer, smaller place to live in. However, a retiree should also consider putting money away into other sources like saving accounts, registered retirement plans, and even Canada’s pension plan. Moreover, the bank is a far more safer investment than building the foundation only in one area; a home. This provides better security for retirees in the long run and leaves a lot more space for retirees to spend more on other aspects of their lives, not just the necessities of owning a place to live.

Ultimately, the housing in Vancouver is not a completely reliable market and if an individual does decide to put their retirement fund entirely in their home, they should be prepared to deal with the other expenses in their lives. Furthermore, although home equity can increase over the years, retirees are faced with risks that could subsequently lead them to financial vulnerability. In conclusion, it is highly recommended to put our money in a safe keep, especially through a registered retirement plan. Overall, this will better prepare us for our own futures towards retirement; provided with both security and wealth.

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References:

Carrick, Rob. 2017, September 26. Sorry to burst your bubble, but owning a home won’t fund your retirement. Retrieved from https://beta.theglobeandmail.com/globe-investor/personal-finance/household-finances/sorry-to-burst-your-bubble-but-owning-a-home-wont-fund-your-retirement/article36396255/

Jan, I. 2011-2013. Time Value of Money. Retrieved from http://accountingexplained.com/capital/tvm/