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Oakville Beaver | Thursday, January 19, 2023 | 22 ES 8 i insid wu = 2 Q = z a PLANNING TO CASH IN ON YOUR HOME TO HELP FUND RETIREMENT? 3 HERE’ S$ HOW TO DO °TT RIGHT CLARRIE FEINSTEIN clarriefeinstein@torstar.ca It's a common question financial advisers get asked: Should I cash inmy property to help support my financial needs in re- tirement Experts say it all e pends on how much spend and how much you have saved. "It's a very common question. and one I'm see- ing daily in my practice," said Ian Calvert, vice- president and principal of wealth planning, at ee View Financial Grot It's a question "that's been percolating in the minds of Elizabeth, 58, and Charles, 60, wang are looking to years time. Wer 're just us- ing first names so they can provide detailed financial information. , The couple have lived in Toronto for more than 30 three-| ‘bedroom, tached home in the Davis- ville area in 2005 for $620,000. Now, similar homes in their neighbourhood are selling for up to $1.3 mil- lion. "We think we're sitting on a good vehicle to ease into retirement," Charles said. Charles isn't wrong, be- value can be a significant financial asset for retire ment cash flow, Calvert oN elling shouldn't be viewed as a negative event," he added. ‘or many Canadians, a home is their biggest asset and it can yield "unbeliev- able returns over the long run," and the transaction (when selling) is tax-free, if it's their principal resi- dence, Calvert noted. "It's a big tax-free asset that can help people in re- tirement, especially if it's invested in a well-man- rifolio. Charles and Elizabeth don’ ‘tneed to sell the property right away. ‘hey have more than $800,000 in their registered retirement savings plan (RRSP), plus $232,000 in additional savings from tax-free savings accounts and investments. The cou- ple does not have a private pension plan but will have access to the Canadian Pension Plan and Old Age Gocurity when they turn one couple spends on average $3,500 a month in house maintenance, food, entertainment ho! bills, and Mtitities But they also want tc tobeable to ment an peeaibly spend eteraed Le} 2B $ a a 2 g Be » a when planning for your re- tirement years is figuring out what lifestyle you want," said Elke Rubach, CEO of Rubach wealth a financial plannii ser- vice. "The last thing you want is to need a job at the tender age Because Chatles and Elizabeth want to travel and spend longer periods of time overseas, the asso- ciated expenses add up, when Calculating for ac- tic meals, en- fertainment ‘and air fare. "You could easily spend $10,000 on (a) trip, so that needs to be factored in," Rubach said. Renting would also add another $3,000 to $4,000 a month, and to find more affordable rent would take the couple further out of the city. Ifit's important to stay in Toronto, or thé same neighbourhood, i will contribute to highs expenses, Rubach said. Renting out the p1 acd the rent on a downsized Ramon Ferreira photo illustration Selling your main residence has benefits, but downsizing may require moving out of the city away from the life you have built. rental for the couple is a possibility and offers more cash-flow in retire- ment, she added. It's important for the couple to be discerning in the type of rental they choose to downsize to, be- cause a condo rental comes with exorbitant fees, said Janet Gray, fi- nancial planner at Money Coaches Canada. “A purpose-built rental (such as a unit ina lowrise or townhouse) is a better option, and you'll get more bang for your buck outside of the city." she said. are costs associ- ated with selling a home, such as the real estate commission and legal fees, as well as moving costs and utility fees for first-time use, which can result in thousands of dol- lars being spent, Gray at she firmly believes that those looking to retire and sell their home sho try adifferent lifestyle and neighbourhood.’ "It doesn't mean you have to rent for- it, you can always buy a smaller apartment down the line. If “Biz abeth and Charles decide to sell their ome, it will provide the couple with enough mon- ey to downsize and buy a small unit if they decide omaine isn't for them, Gray said. Because the couple loves to travel, home ownership could be- cially for older homes. abeth said home needs repair work and, at this point in her life, she is "fed up" with the requirements | of home ownership. tio! , the home is feeling too spac! "The ‘couple is in a de- ent starting position to live off their savings first, " said HighView Financial's Calvert. Before deciding to sell the home, the couple needs to go to a financial adviser and create a com- prehensive financial plan, which maps out how much the couple intends to spend and if it aligns with their savings. An expense the couple hasn't factored in cost of health-care as Shey age. This needs to be ac- counted for as it could be- come a primary expense later on, he added. “They really need to crunch the numbers and ask, 'How much will I need” and 'What's the lon- gevity of my savings?’ From there decide if it's best to sell the home and downsize," Calvert said.