Get started on your Estate Planning

Get started on your Estate Planning

 

By Henley Financial and Wealth Management

As we journey through the various stages of life, we spend considerable time building relationships and accumulating assets. Passing on a legacy to family and friends and avoiding unnecessary taxes and administrative delays takes good planning. Your estate plan is as individual as you are, and taking the time to complete your arrangements now will give you control over how you provide for those closest to you.

We would like to send you a free booklet on Estate Planning including a step by step checklist.  Please contact us at info@henleyfinancial.ca for your copy.

Estate planning

Estate planning is about life – in the present and in the future. Most importantly, estate planning is about the life of your family and loved ones – and the peace of mind you get from helping to preserve their financial security. By its very nature, estate planning is a difficult subject to discuss – even more so to plan for because it forces us to come to terms with our own mortality. Yet it’s something you need to talk about openly with your loved ones today because you can’t do so after you’re gone – or after they’re gone.

Each person will approach estate planning differently, with personal motivations and expectations. No estate plan will be exactly like another. Estate planning should be reflection of your personal priorities and choices.

Estate planning is generally guided by three rational motivations

  1. Provide adequately for family members and/or other loved ones
  2. Ensure that your estate is distributed in the timeliest manner possible after your death
  3. Minimize taxes – during your lifetime and, equally important, for the beneficiaries of your estate

…and three emotional motivations

  1. Gain comfort from knowing your loved ones are well looked after
  2. Feel secure knowing that settling your affairs will not add more stress to those grieving for you
  3. Rest assured that your estate will be distributed the way you wish

Why you need an estate plan and the Benefits of estate planning

  • Distributes your assets as you intended; provides funds to cover funeral expenses, as well as immediate and/or long-term family living costs
  • Keeps more of your money in the hands of your heirs
  • Minimizes income tax and probate fees (no probate fees in Quebec); designates charitable gifts; declares your personal care preferences, including terminal medical treatment and organ donation intentions
  • Provides for the tax advantages of income splitting
  • Ensures business continuity for business owners
  • Identifies the people chosen to carry out your last wishes and care for your children

Taking action now 

Too often, advisors and estate planning professionals hear, “I wish I’d known about this sooner” from distressed family members. Whatever your status – male, female, married, widowed, divorced, single, young, old, middle class or wealthy – everyone can benefit from estate planning. Unfortunately, too few people follow this advice. Planning your estate and communicating your wishes as appropriate can protect your estate and, as importantly, allow your heirs the opportunity to prepare themselves for their changed circumstances. The “do nothing” option is not in the best interests of your family, your business or other relationships. As the world we live in becomes increasingly characterized by legal action and government intervention, estate planning is something everyone should do.

Creating your estate plan – step by step 

Step 1: Consult and retain appropriate professionals. The complexity of your situation will determine the assistance you will require from professionals to create your estate plan. Your team should include an advisor, lawyer and tax planner

Step 2: Draw up a household balance sheet. A household balance sheet is a summary of your financial situation that ultimately determines your overall net worth. Your net worth is the value of your assets (what you own) minus your liabilities (what you owe). If you don’t already have one, work with your advisor to develop your household balance sheet.

Step 3: Understand your life insurance needs. It’s important to work with your advisor or insurance expert to match your long-term financial objectives with your insurance needs.

Step 4: Draw up your Will.

Contact us at Henley Financial and Wealth Management  if you would like us to provide you with a Will Kit.

Step 5: Establish power of attorney for property. At some point in the future you may be unable to make your own financial or personal care decisions. But you can prearrange for someone to make these decisions according to your wishes by having a lawyer draft a separate power of attorney for property and personal care.

Step 6: Establish power of personal care. Medical and lifestyle decisions must often be made quickly when someone is seriously ill; hence, one or more family members are often granted this power of attorney to make decisions for you.

Step 7: Minimize taxes and administration fees. Your estate may encounter certain obligations for income tax and probate taxes on your death, which may reduce the proceeds intended for the beneficiaries of your estate. If any part of your estate must go through probate to validate the Will before transferring ownership of assets, the entire estate value may be subject to probate taxes.

Step 8: Keep track of accounts and important information. One of the most difficult roles for an executor and family members is gathering the information required to settle the estate. Eliminate this concern by centralizing all household information from birth certificates, passports and other legal documents, to bank accounts and insurance policy numbers, to phone company and hydro account details. Once you have documented your important information, store a copy in a safe place and let someone close to you know where it is.

Step 9: Let someone know.  After you have gone through all the steps of developing an estate plan, the final piece of the puzzle is communication. It’s really important to communicate your plans to a family member or close friend whom you can trust, and who is capable of working with your advisor to execute your estate plan. There’s nothing more disturbing than for someone to have to deal with incomplete information or requests. As such, not only is it important to share your plans with someone, but it can also be very helpful to document your plans to help eliminate any potential misunderstandings. As difficult as it may be, making sure that those affected by your plans know what is expected of them and where critical information is kept is essential to the smooth execution of your estate plan.

Step 10: Review and update regularly. Review and, if necessary, update all information at least once a year. By updating your estate plan, you’ll get a snap shot of where you are on an annual basis.

 

 

 

 

 

 

 

 

 

What types of insurance are available?

What types of insurance are available?

Life insurance in the beginning was the benefit which was realized at the death of the policy holder. It was really “death insurance” which in today’s world would be a hard idea to sell. Today, the world of insurance has expanded to different types of insurance where you don’t have to die to win. While also providing benefits to the policy holders who are alive – a living benefit. Living benefit plans are insurance policies that provide financial benefits to survivors who face issues due to aging, illness, accidents and dependency.

Disability insurance

Disability insurance (sometimes referred to as DI) is an insurance policy that pays out a stream of monthly income in case you get disabled and cannot work. The injury or disability does not have to have happened at work but it must severe enough to prevent you from working and earning an income. Many people have both short-term disability and long-term disability coverage through work but you can buy personal disability policies if there is not coverage like in the case of some self-employed individuals.

 Health and dental coverage

Health and dental plans are often covered through group benefits. These plans are designed to help with the unexpected cost of healthcare needs when you need it. There is a growing concern that governments will have significant cut backs in the health care industry and as a result, the financial burden of prescription drugs, visits to the dentist, eye exams, and paramedical services may increase in the future. Individual Health and Dental insurance policies can also be purchased through insurance companies.

Travel insurance

Travel insurance is something you can buy when you travel outside of Canada in case you get sick or have an accident while you are away. Travel insurance can cover the cost of your medical emergencies. Travel insurance may or may not include trip cancellation coverage. Most travel agencies will offer travel insurance coverage. However, you can also choose to purchase from a third party. If you’re planning your trip online or on your own, you’ll have to research which insurance companies are best for your needs.

Critical illness insurance

Critical illness insurance is a type of insurance that helps you if you become critically ill. There are many different conditions that might be covered under a critical illness policy but the most common are heart attacks, strokes, and cancer. Typically, critical illness insurance provides a lump sum payment when a specific condition is diagnosed. The money can then be used for any purpose. Some examples include finding alternative medical treatments anywhere in the world, hiring a caregiver, paying debts, covering expenses that are not covered under government health care, paying for private nursing homes, or providing income support.

 Long term care insurance

Long-term care insurance is another coverage that is rapidly growing in popularity. It pays a daily or monthly benefit for medical or custodial care received in a nursing facility, in a hospital, or at home if you are unable to carry out some of the common activities of daily living (ADLs). Some examples include:
· Bathing
· Dressing and undressing
· Eating
· Transferring from bed to chair, and back
· Voluntarily controlling urinary and fecal discharge
· Using the toilet
· Walking (not bedridden)

Few people plan to get injured or ill. Getting insurance of any kind is a form of risk management . . . preparing for unfortunate circumstances in life. Be sure to include a review of living benefits when you review other types of insurance.

 

 

How do you reduce your personal Income Tax Rate when filing your tax return?

How do you reduce your personal Income Tax Rate when filing your tax return?

Henley Financial & Wealth Management posted on our blog information regarding 2020 new Tax Rates and New Limits. But what does one do with that information?  As Canadian taxpayers you have until April 30th 2020, to file your personal 2019 tax return. However, as the calendar turns over on to a new year many of our clients want to know how best to maximize their tax refund or minimize what they owe the government.

So, we thought we would share the two main ways to reduce taxes owing. It is always important to seek professional advice from your accountant regarding personal taxes. We are not the tax experts we are just simply stating the rules around taxes as they exist today.

What are tax deductions or a tax credit? Which on there own are the answers to reducing one’s taxable position for the average person in Canada.

Tax Deductions:

A tax deduction reduces your taxable income. The value of a deduction depends on your marginal tax rate. So, if your income is more than $210,371, you’d be taxed at the federal rate of 33 percent and a $1,000 tax deduction would save you $330 in federal tax. On the other hand, if you earn less than $47,630, you’d be taxed at the federal rate of only 15 percent and a $1,000 tax deduction would only save you $150 in federal tax.

Two of the most valuable tax deductions are:

RRSP contributions

Your RRSP contribution is an example of a tax deduction, and is likely the best tax saving strategy available to the majority of Canadian taxpayers. The contribution reduces your net income, which in turn reduces your taxes owing. An added bonus for families who contribute to RRSPs is that the resulting lower net income will likely increase their Canada Child Benefit.

You have until 60 days of the current year to make a contribution to your RRSP and apply the deduction towards last year’s taxes. One tip for those who know in advance how much they’ll be contributing to their RRSP is to fill out the form T1213 – Request to Reduce Tax Deductions at Source.

You can contribute 18 percent of your income, up to a limit of $26,500 (2019). Watch out for RRSP over contributions – there’s a built-in safeguard where you can over contribute by $2,000. Excess contributions are taxed at 1 percent per month.

Child-care expenses

Day care is likely one of the largest expenses for young families today. Child-care expenses can be used as an eligible tax deduction on your tax return.

Typically, child-care expenses must be claimed by the lower income spouse. One exception is if the lower income spouse is enrolled in school and cannot provide child-care, the higher income spouse can claim the child-care costs.

 

The basic limit for child-care expenses are $8,000 for children born in 2012 or later, $11,000 for children born in 2018 or earlier, and $5,000 for children born between 2002 and 2011.

Note that most overnight camps and summer day camps are also eligible for the child-care deduction.

Tax Deductions checklist:

  • RRSP contributions
  • Union or professional dues
  • Child-care expenses
  • Moving expenses
  • Support payments
  • Employment expenses (w/ T2200)
  • Carrying charges or interest expense to earn business or investment income

Tax Credits:

There are two types of tax credits – refundable and non-refundable. A non-refundable tax credit is applied directly against your tax payable. So, if you have tax owing of $500 and get a tax credit of $100, you now owe just $400. If you don’t owe any tax, non-refundable credits are of no benefit.

For refundable tax credits such as the GST/HST credit, you will receive the credit even if you have no tax owing.

Three of the most valuable tax credits are:

Basic Personal Amount

The best example of a non-refundable tax credit is the basic personal amount, which every Canadian resident is entitled to claim on his or her tax return. The basic personal amount for 2019 is $12,069.

Instead of paying taxes on your entire income, you only pay taxes on the remaining income once the basic personal amount has been applied.

Spousal Amount

You can claim all or a portion of the spousal amount ($12,069) if you support your spouse or common-law partner, as long as his or her net income is less than $12,069. The amount is reduced by any net income earned by the spouse, and it can only be claimed by one person for their spouse or common-law partner.

Age Amount

The Age Amount tax credit is available to Canadians aged 65 or older (at the end of the tax year). The federal age amount for 2019 is $7,494. This amount is reduced by 15 percent of income exceeding a threshold amount of $37,790, and is eliminated when income exceeds $87,750.

The Age Amount tax credit is calculated using the lowest tax rate (15 percent federally), so the maximum federal tax credit is $1,124 for 2019 ($7,494 x 0.15).

Note that the age amount can be transferred to the spouse if the individual claiming this credit cannot utilize the entire amount before reducing his or her taxes to zero.

Tax Credits checklist:

  • Volunteer firefighter or Search & Rescue details
  • Adoption expenses
  • Interest paid on student loans
  • Tuition and education amounts
  • (T2202, TL11A), and exam fees
  • Medical expenses (including details of insurance reimbursements)
  • Donations or political contributions

The Verdict on Tax Deductions and Tax Credits:

Tax deductions are straightforward – if you earned $60,000 and made a $5,000 RRSP contribution your taxable income will be reduced to $55,000. Deductions typically result in bigger tax savings than credits as long as your marginal tax rate is higher than 15 percent.

A non-refundable tax credit, on the other hand, must be applied to any taxes owing and is first multiplied by 15 percent. That means a $5,000 non-refundable tax credit would only result in about $750 in tax savings.

 

The most overlooked tax credits and tax deductions (the ones most likely to go unclaimed) are medical expenses, union dues, moving expenses, student loan interest, childcare expenses, and employment expenses.

That’s why it’s important that Canadian tax filers make a checklist of every tax deduction and tax credit available to them at tax-time and take advantage of all that apply to their situation.

 

The First RRSP

The First RRSP

The first RRSP — then called a registered retirement annuity — was created by the federal government in 1957. Back then, Canadians could contribute up to 10 per cent of their income to a maximum of $2,500. RRSPs still remain one of the cornerstones of retirement planning for Canadians. In fact, as employer pension plans become increasingly rare, the ability to save inside an RRSP over the course of a career can often make or break your retirement.

The deadline to make RRSP contributions for the 2018 tax year is March 1st, 2019.

If you need help or advice with you tax planning or investments we are always available to help @henleyfinancial.ca

Anyone living in Canada who has earned income has to file a tax return which will create RRSP contribution room. Canadian taxpayers can contribute to their RRSP until December 31st of the year he or she turns 71.

Contribution room is based on 18 percent of your earned income from the previous year, up to a maximum contribution limit of $26,230 for the 2018 tax year. Don’t worry if you’re not able to use up your entire RRSP contribution room in a given year – unused contribution room can be carried-forward indefinitely.

Keep an eye on over-contributions, however, as the taxman levies a stiff 1 percent penalty per month for contributions that exceed your deduction limit. The good news is that the government built-in a safeguard against possible errors and so you can over-contribute a cumulative lifetime total of $2,000 to your RRSP without incurring a penalty tax.

Find out your RRSP deduction limit on your latest notice of assessment clearly stated.

You can claim a tax deduction for the amount you contribute to your RRSP each year, which reduces your taxable income. However, just because you made an RRSP contribution doesn’t mean you have to claim the deduction in that tax year. It might make sense to wait until you are in a higher tax bracket to claim the deduction.

When should you contribute to an RRSP?

When your employer offers a matching program: Some companies offer to match their employees’ RRSP contributions, often adding between 25 cents and $1.50 for every dollar put into the plan. Take advantage of this “free” gift from your employers.

When your income is higher now than it’s expected to be in retirement: RRSPs are meant to work as a tax-deferral strategy, meaning you get a tax-deduction on your contributions today and your investments grow tax-free until it’s time to withdraw the funds in retirement, a time when you’ll hopefully be taxed at a lower rate. So contributing to your RRSP makes more sense during your high-income working years rather than when you’re just starting out in an entry-level position.

A good rule of thumb: Consider what is going to benefit you the most from a tax perspective.

When you want to take advantage of the Home Buyers’ Plan: First-time homebuyers can withdraw up to $25,000 from their RRSP tax-free to put towards a down payment on a home. Would-be buyers can also team up with their spouse or partner to each withdraw $25,000 when they purchase a home together. The withdrawals must be paid back over a period of 15 years – if you do not pay one fifteenth of the borrowed money, the amount owed in that calendar year it will be added to your taxable income for that year.

Unless it’s an emergency then it’s generally a bad idea to withdraw from your RRSP before you retire. You would have to report the amount you take out as income on your tax return. You won’t get back the contribution room that you originally used.

Also, your bank will hold back taxes – 10 percent on withdrawals under $5,000, 20 percent on withdrawals between $5,000 and $15,000, and 30 percent on withdrawals greater than $15,000 – and pay it directly to the government on your behalf. That means if you take out $20,000 from your RRSP, you will end up with $14,000 but you’ll have to add $20,000 to your taxable income at tax time. This is done to insure that you pay enough tax upfront for the withdrawal at the source so that you are not hit with an additional tax bill (assessment) when you file your tax return.

What kind of investments can you hold inside your RRSP?

A common misconception is that you “buy RRSPs” when in fact RRSPs are simply a type of account with some tax-saving attributes. It acts as a container in which to hold all types of instruments, such as a savings account, GICs, stocks, bonds, REITs, and gold, to name a few. You can even hold your mortgage inside your RRSP.

If you hold investments such as cash, bonds, and GICs then it makes sense to keep them sheltered inside an RRSP because interest income is taxed at a higher rate than capital gains and dividends.

For more information regarding investments and RRSP’s contact us at Henley Financial and Wealth Management

 

 

2018 Financial Planning Guide: The numbers you need to know

2018 Financial Planning Guide: The numbers you need to know

A new year means new limits and data.  Here’s a list of new financial planning data for 2018 (In case you want to compare this to past years, I’ve included old data as well).

If you need any help with your rrsp deposits or clarification on other retirement issues please do not hesitate to contact Henley Financial and Wealth Management, we are here to ensure your financial success.

Pension and RRSP contribution limits

  • The new limit for RRSPs for 2018 is 18% of the previous year’s earned income or $26,230 whichever is lower less the Pension Adjustment (PA).
  • The limit for Deferred Profit Sharing Plans is $13,250
  • The limit for Defined Contribution Pensions is $26,500

Remember that contributions made in January and February of 2018 can be used as a tax deduction for the 2017 tax year.

Financial Planning CalculationMore articles on RRSPs

TFSA limits

  • The TFSA limit for 2018 is $5,500.
  • The cumulative limit since 2009 is $57,500

TFSA Limits for past years

More articles on the TFSA

Canada Pension Plan (CPP)

Lots of changes are happening with CPP but here’s some of the most important planning data.

  • Yearly Maximum Pensionable Earning (YMPE) – $55,900
  • Maximum CPP Retirement Benefit – $1134.17 per month
  • Maximum CPP Disability benefit –  $1335.83 per month
  • Maximum CPP Survivors Benefit
    • Under age 65 – $614.62
    • Over age 65 – $680.50

Reduction of CPP for early benefit – 0.6% for every month prior to age 65.  At age 60, the reduction is 36%.

CPP rates for past years:

For more information on CPP

Old Age Security (OAS)

  • Maximum OAS – $586.66 per month
  • The OAS Clawback (recovery) starts at $74,788 of income.  At $121,720 of income OAS will be fully clawed back.

OAS rates for past years:

Year Maximum Monthly Benefit Maximum Annual Benefit
2018 $586.66 $7,039.92
2017 $578.53 $6,942.36
2016 $570.52 $6,846.24
2015 $563.74 $6,764.88
2014 $551.54 $6,618.48
2013 $546.07 $6,552.84
2012 $540.12 $6,481.44
2011 $524.23 $6,290.76

For more information on OAS Clawback:

New Federal Tax Brackets

For 2018, the tax rates have changed.

 

Welcome to Mortgage Insurance – Protect yourself not the lender!

Welcome to Mortgage Insurance – Protect yourself not the lender!

Your home is one of the most important purchases you’ll make and protecting it is crucial. Mortgage protection plans offered by your lender are policies that insure your mortgage against the death of the title holder and pays the outstanding balance to the lender to cover the lenders potential loss. When you need protection and security after a death, the lender seem more concerned about their bottom line than your families well-being.

The problem with the lenders (bank, credit union) plans is that you, the homeowner, do not own the actual Insurance Policy. Mortgage insurance from your lender is held by the lender and only paid out to lender, and not to your family, which leaves loved ones with little to no income replacement and no financial security.

An Individual Life Insurance Policy can be up to 40% less than the lenders offerings (depending on age and health) because the lender are the go between to the insurance company. The increased cost is added to the price of the insurance to cover the non licensed brokers fees. So not only is it costly to insure through the lender the actual coverage is not benefiting those who matter most. Individual mortgage insurance keeps your home in your family’s hands and protects the families interests, because your family deserves Financial Security upon death – not your lender. For a comparison of Individual plans versus lender plans and understanding the value of individual mortgage insurance policies versus your lender’s policies, means looking at what each policy can offer you. Please see the table below to see why a lender’s mortgage insurance plan doesn’t offer the freedom and security of insuring yourself individually.

Contact Henley Financial & Wealth Management if you have any questions or need help insuring your home for your families financial security. We are happy to help save you money while creating a positive financial future.

If you are in need of a mortgage please contact  Bayfield Mortgage Professionals a trusted professional and mortgage broker.

Individual Plans Versus Your Lender

 Questions? Individual Insurance Policies Mortgage Loan Insurance from your Lender
Do I own my insurance policy? Yes No, The owner is your lender.
Who can be the beneficiary of the policy? Anyone you choose. Only the lender can receive the benefits from the policy.
When does coverage end? It depends on the term that YOU choose. Coverage ends when the mortgage is paid.
Do I have the same coverage for the life of the policy? Your coverage stays the same throughout the term of the policy. The coverage decreases relative to the value of the remaining loan.
What can your coverage be used for? Any purpose. The benefits are paid as a sum to your beneficiary to be used how they wish. The coverage may only be used to cover the balance on the loan.
Can I get lower rates if I’m a non-smoker/in excellent health? Yes. You usually pay as much as 50% less on your insurance premiums. No, premiums are determined under one rate system.
If I sell my home am I still protected? Yes. Since you are the owner of the policy. No, you will need to obtain a new policy.
Can I convert or renew my policy to change the terms or coverage? Some policies may be renewed or converted to another policy. No, you may not convert nor renew coverage. You may not transfer this coverage into a new policy.

 

 

Sorry to burst your bubble, but owning a home won’t fund your retirement

Sorry to burst your bubble, but owning a home won’t fund your retirement

As I was looking through past articles I saw this and was intrigued. There are many who will do well when they “downsize” their family home as the article states. But with the cost of housing even for a smaller home or condo on the rise the nest egg is becoming much smaller for the younger (45 -55) home owner. My thoughts are simple, if you have a Million dollar home that you want to sell and downsize to a $500,000 home. You probably don’t need to worry about your retirement fund, you will have the money you require to live a wonderful life.  Unfortunately everyone does not own a million dollar home, and everyone will not be able to “down size” to a smaller home at half the cost of their present home. Baby Boomers will be able to take advantage of today’s real estate market. But generations X, Y and Z will need a better plan for the future.

Everyone requires a solid financial plan your financial plan can, and should include downsizing the family home. Which economically, physically and mentally, will make sense as you grow older. But again as the article states this is only a piece of the puzzle.

As you read the article, if you have any questions, or require any help with your financial plan please contact us at Henley Financial and Wealth Management .

All the best.

Winston L. Cook

A disturbing number of people are building their retirement plans on a weak foundation – their homes.

Years of strong price gains in some cities have convinced some people that real estate is the best vehicle for building wealth, ahead of stocks, bonds and funds. Perhaps inevitably, there’s now a view that owning a home can also pay for your retirement.


home buying puzzle

Don’t buy into the group-think about home ownership being the key to wealth. Except in a few circumstances, the equity in your home won’t pay for retirement. You will sell your home at some point in retirement and use the proceeds to buy your next residence, be it a condo, townhouse, bungalow or accommodation at a retirement home of some type. There may be money left over after you sell, but not enough to cover your long-term income needs in retirement.
In a recent study commissioned by the Investor Office of the Ontario Securities Commission, retirement-related issues topped the list of financial concerns of Ontario residents who were 45 and older. Three-quarters of the 1,516 people in the survey own their own home. Within this group, 37 per cent said they are counting on increases in the value of their home to provide for their retirement.

The survey results for pre-retirees – people aged 45 to 54 – suggest a strong link between financial vulnerability and a belief in home equity as a way to pay for retirement. Those most likely to rely on their homes had larger mortgages, smaller investment portfolios, lower income and were most often living in the Greater Toronto Area. They were also the least likely to have started saving for retirement or have any sort of plan or strategy for retirement.

The OSC’s Investor Office says the risk in using a home for retirement is that you get caught in a residential real estate market correction that reduces property values. While housing has resisted a sharp, sustained drop in prices, there’s no getting around the fact that financial assets of all types have their up and down cycles.

But even if prices keep chugging higher, you’re limited to these four options if you want your house to largely fund your retirement:

  • Move to a more modest home in your city;
  • Move to a smaller community with a cheaper real estate market, probably located well away from your current location;
  • Sell your home and rent;
  • Take out a reverse mortgage or use a home equity line of credit, which means borrowing against your home equity.

A lot of people want to live large in retirement, which can mean moving to a more urban location and buying something smaller but also nicer. With the boomer generation starting to retire, this type of housing is in strong demand and thus expensive to buy. Prediction: We will see more people who take out mortgages to help them downsize to the kind of home they want for retirement.

Selling your home and renting will put a lot of money in your hands, but you’ll need a good part of it to cover future rental costs. As for borrowing against home equity, it’s not yet something the masses are comfortable doing. Sales of reverse mortgages are on the rise, but they’re still a niche product.

Rising house prices have made a lot of money for long-time owners in some cities, but not enough to cover retirement’s full cost. So strive for a diversified retirement plan – some money left over after you sell your house, your own savings in a tax-free savings account and registered retirement savings plan, and other sources such as a company pension, an annuity, the Canada Pension Plan and Old Age Security.

Pre-retirees planning to rely on their home at least have the comfort of knowing they’ve benefited from years of price gains. Far more vulnerable are the young adults buying into today’s already elevated real estate markets. They’re much less likely to benefit from big price increases than their parents were, and their ability to save may be compromised by the hefty mortgages they’re forced to carry.

Whatever age you are, your house will likely play some role in your retirement planning. But it’s no foundation. You have to build that yourself.

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