“A lot of our clients are either not planning to downsize, or if they originally planned on it, they don’t end up doing it,” says Chris Ferris, certified financial planner (CFP) at Ryan Lamontagne Inc. in Ottawa. “Many wait until it’s necessary for health care reasons.’
Some clients are stymied by the process of buying and selling property, moving, land transfer fees and of course, downsizing furniture and other household items.
A recent report from the Canadian Foundation for Financial Planning found that people who have a strong emotional attachment to their house are more likely to want to remain in that house during their retirement years. Only 26 per cent agreed or strongly agreed with the idea of using their house to partially fund retirement.
He notes that older seniors may want to age in place, a stance that became more pronounced during the pandemic as some long-term care facilities came under scrutiny for less-than-stellar conditions.
“They’re reluctant to give up their house and independence,” he says. “There’s that fear of what happens if we have another pandemic?”
Some also consider the basic economics. For years, homeowners, especially those in major urban centres, counted on selling their house at top dollar and downsizing to a cheaper location, using the proceeds for retirement or other ventures. But with real estate sales slowing and high interest rates and inflation affecting the buyer pool, those days of easy money are over, says Mr. Ferris. Sellers may come ahead with a slight profit but not as much as before.
“Once they looked at the numbers, they’re not coming out as far ahead as they might have thought,” he says. “Selling at a large gain is nice, but they’re turning around and buying or renting in a more expensive market, too. That dissuades a lot of people.”
The Globe and Mail - Deanne Gage - November 1, 2023
