Mortgage-free retirement? Not so for 29% of soon-to-be retirees
A third of Canadians approaching retirement in the next two years expect to keep paying their mortgages after they have stopped working, a new report by Royal LePage shows.
A survey of 1,626 Canadians conducted by real estate firm Royal LePage in May found that two per cent of Canadians expect to retire in 2025 and three per cent in 2026. Of these, around one-third (29 per cent) say they will continue to pay down their mortgage into their retirement years.
Less than half (45 per cent) of people retiring soon have already paid their mortgages off and only six per cent said they will be able to pay off their mortgages before retirement.
Another 18 per cent said they do not own their primary residence, and the rest said they either don't know if they'll pay off their mortgage before retirement or don't know.
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'This generation is far more likely to have carried mortgage balances that would have been unimaginable to their parents or grandparents,' said Phil Soper, CEO of Royal LePage.
Soper said while the 'bank of mom and dad' has helped younger Canadians, it is taking a toll on some getting closer to retirement.
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'Our research confirms they are also much more likely to have provided financial assistance to their children to assist in their home ownership dreams,' he said.
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House hunting amid economic uncertainty
However, this will not be as much of a strain on some Canadians, Soper said.
'While previous generations may have viewed mortgage-free retirement as the only option, today's retirees tend to be more open-minded. Traditional employment income may have dried up, but many are still comfortably managing their expenses and servicing mortgage payments, with income from investments, part-time work, or a working spouse,' he said.
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Of those approaching retirement (five per cent of respondents) or those who have already retired (28 per cent of respondents), there was a roughly even split between those who plan to downsize and those who don't.
'Downsizing in retirement is far from a given. For many homeowners, the decision to stay put or move to a smaller property is influenced by a combination of economic realities, lifestyle needs, and personal attachments,' said Soper.
According to the report, 47 per cent said they don't plan to downsize withing two years of retiring, while 44 per cent said they do. The rest were not sure.
The most popular downsized dwelling was a standard condominium, with 43 per cent saying they would prefer to downsize to a condo and a quarter (25 per cent) preferring to downsize to an senior living community.
Only 16 per cent said they would live in a detached home and 11 per cent said they would prefer live in an attached home. The rest were undecided.
Condominium prices have been dropping rapidly in some of Canada's hottest housing markets. According to one report, condo prices will have dropped by 15-20 per cent in the Greater Toronto Area by the end of the year, compared to a 2023 high.
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