Approximately one-fifth of investors expect to dip into home equity to supplement their retirement incomes, says a new survey by Manulife Bank of Canada.
For example, 10% of respondents plan to stay in their homes and borrow against home equity, while 8% want to downsize.
Rick Lunny, president and CEO of Manulife Bank of Canada, says the fact that 20% of homeowners are proactively planning to use home equity suggests they’re struggling to balance saving for retirement with paying off debt.
Read: Help clients secure their retirements
Still, most respondents (81%) want to be debt-free when they reach retirement. The problem is confidence about reaching that goal was lowest among people between the ages of 50 and 59, and only 39% of respondents overall are optimistic about meeting retirement goals in general.
Even so, almost half of respondents (46%) say they’ll still retire as scheduled even if they have outstanding debt. In that situation, about a quarter (26%) say they’ll scale back their lifestyles until all debts are paid, while 10% will sell assets.
Interestingly, 25% say they don’t consider mortgage or vehicle loans as debts. So make sure to discuss what it means to be debt-free with clients.
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Pre-retirement clients may need a reality check