Finances with Kelley Keehn:  4 strategies for funding retirement living

A topic that’s near and dear to my heart is seniors thriving in their retirement years. We all deserve to feel safe and supported as we age, and I believe retirement living can really empower people to spend their later years in comfort and happiness.

COVID-19 threw a stick of dynamite on the well-being, safety and ease of countless seniors. The reality is, if you or your parents have been putting off retirement living because you question whether you can afford it, I want to put your concerns at ease. It’s likely much reasonable than you think!

Let’s look at four strategies for funding retirement living for yourself or a loved one:

1 - SAFELY INVESTING YOUR HOME PROCEEDS

Have you thought about the fact that when you sell your home, that money doesn’t have to be sitting around idly doing nothing for you, but rather helping you to offset the monthly rent at a retirement residence? You could invest the proceeds in a safe, low-risk basket of investments. Let’s take an example of the average home price in Canada, which is now just over $717,000. Depending on where you live, your home could likely sell for much more. If, for example, you sold your home for $717,000 and invested those funds in a low-risk portfolio of GICs at your bank and some government bonds, and could get a 2% rate of return, that would bring in $1,195 a month! And if you could take on just a little more risk—say 3%—now you’d have $1,929.50 a month.

2 - FUNDING OPTIONS IF YOU’RE NOT READY TO SELL

Depending on where you live and your unique situation, it might not be the right time to sell your home. Either because real estate prices have dropped in your area or perhaps you still have a spouse or an adult child at home. This doesn’t have to hold you back from considering retirement living. There are low-cost options like a line of credit or a reverse mortgage you may consider. You’ll want to read the fine print and understand the costs and repayment plan, but they could provide the short-term, bridge funding you may require if you’re simply not ready to sell.

3 - OTHER FUNDING OPTIONS

When you’re considering the affordability of a retirement community, you’ll want to look at other assets that might be sitting around unused that could go a long way to reducing your costs. For example, do you have a recreational vehicle, car, boat or cottage that you don’t use which could be sold, invested and directed towards reducing your retirement residence costs?

4 - GOVEMENT BENEFITS AND TAX SAVINGS

When we’re looking at affordability, let’s not forget government benefits and tax incentives. In addition to your Canada Pension Plan, Old Age Security or benefits like GIS if you have a lower income, here are some tax credits and programs to explore:

  • Allowance & Allowance for the Survivor
  • Federal Attendant Care Tax Certificate
  • Veteran financial support options
  • Medical Expense Tax Credit

There are also tax benefits to be had each year when you make a retirement residence your home. Taking advantage of the government benefits and tax deductions available to you means paying less each month for retirement living and putting more money in your pocket.

PROFESSIONALS CAN HELP

There’s a lot to consider, and I know for many people it can sound complicated and overwhelming. But you don’t have to figure it all out on your own! There are financial and accounting professionals that can help you crunch the numbers and create a plan that works for your unique situation. You’ll want to shop around for a financial professional and understand the pros and cons of the different types out there. For example, you may wish to speak with your banker, advisor or planner. And when it comes to financial planners, some offer products and service and some charge by the hour or plan. So, it’s important to ask lots of questions and shop around for a second, even third opinion when it comes to your finances.

You can and deserve to have a safe, healthy and enjoyable retirement, and I believe that your opportunity to flourish exists at a retirement residence.

To explore my other financial videos and blogs on affording retirement living, I invite you to visit my page on chartwell.com today.