If you are an individual aged 55+, it may surprise you that you currently represent 33.09% of the total Canadian population. What may not surprise you, is that Canadians 55+ know what they want in order to live a fulfilling life as they enter retirement. However, they do not always have the financial means or are unaware of the financial options available to them to support their lifestyles into retirement.
Here are some of the financial options available to Canadians in retirement:
1. Credit Cards: Credit cards may be the perfect financial option for you if you are a retired individual with an income source and short-term financial needs. They give you easy access to credit that you can use to meet your short-term financial needs. However, keep in mind that credit cards require a monthly payment. So, if you do not wish to take on high interest debt, it is best to always have a concrete plan to pay off the borrowed amount before the deadline.
2. Private Loans: Private loans are another option for retired individuals with an income source and short-term financial needs. Like credit cards, they give you easy access to credit but have required monthly payments. Furthermore, having a reasonable repayment plan is important as they charge very high interest and repayment terms are very rigid.
3. Home Equity Line of Credit (HELOC): If you are a retired homeowner that has an income source and need a large sum of money immediately or over a period then, it may be worthwhile to explore HELOC as a financial option. HELOC allows you to borrow a large sum of money for your financial needs. However, it is also important to consider that HELOCs require monthly payments, the qualification for the loan can change based on changes to your income or home value, and you may be asked to repay the loan at any time if it is called.
4. Downsizing: Downsizing is a popular financial option and may be great for you if you are a homeowner in an urban area willing to transition into a smaller home located in a rural area. Downsizing allows you to access the value of your home’s equity to meet your financing needs in retirement. However, it is crucial to note the land transfer fees, commissions, moving costs associated with downsizing, and having to say goodbye to the home and community you have grown accustomed to.
Now, before revealing the fifth financial option for Canadians in retirement, you may find it interesting that a study from the National Institute of Ageing showed that 91% of all Canadians want to remain in their own homes for as long as possible after retirement. Furthermore, 95% of Canadians 45+ say that being able to retire in their own homes would give them the independence, comfort, and dignity they need as they age. However, due to costs associated with in-home care, many individuals cannotto remain in their homes. If you are among these Canadians, then the fifth financial option provided below may be the most suitable for you.
5. CHIP Reverse Mortgage: If you are a retired Canadian homeowner who wishes to remain in your dwelling while maintaining your current lifestyle, you have to look no further than the CHIP Reverse Mortgage. This finance option allows you to access up to 55% of your home’s equity value to meet your short- and long-term financial needs. With the CHIP Reverse Mortgage, you can choose to receive your money in a tax-free lump sum or tax-free monthly payments. Furthermore, you are not required to make any monthly mortgage payments but instead pay back the loan through the value of your home when you sell it or move out.
As the Canadian population ages, these are just some of the financing options that Canadians can utilize to enjoy retired life.
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