Should you tap into your home equity?В -В Retirement Gordon Powers

By Gordon Powers October 04, 2007 Like many older Canadians, paying off your mortgage during your working life has been a big priority. But now, even though the mortgage may be gone, escalating energy costs and increasing property taxes are eating up much of the cash you’d hoped to use for enjoying the good life. So, should you tap into your home equity? Well, with interest rates still fairly low, it’s certainly tempting.

But most current retirees haven’t been going this route, according to recent research from Boston College’s Center for Retirement Research. Homeownership rates remain stable until about age 80 and, even then, they tend to decline quite slowly.

Jonathan Fisher, the author of the study, reports that today’s retirees are reluctant to dip into their home’s value either because they want to leave their children a legacy, stay in a place that has emotional meaning and memories, or ensure they have sufficient assets near the end of their life to handle health care expenses. Of course, a lot of these folks also enjoy the benefits of a traditional pension plan.

But, since many boomers approaching retirement aren’t covered by a guaranteed plan, more of them may have to consider converting their home equity. If you’re looking to turn your property into cash once you stop working, here are your options. Downsize your home. If your nest is empty, you might consider buying a smaller house. A smaller home usually means lower real estate taxes and smaller bills for heating, cooling, insurance, and maintenance costs.

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