“My parents paid off their home 15+ years ago. As far as they were concerned then, they thought they would be ok: $100,000+ in RRSP’s, a paid off home. My mother quit her job cause they no longer need the income etc…. Who wouldn’t – in fine shape with a paid off home???? Well my dad didn’t put away more in RRSP’s (I guess he thought what was the point with a paid off home?) and at 65 was told he didn’t have enough to retire. So he worked two 2 years more of physically draining work 8-10 hours a day, cause he wanted to travel some, go back to visit relatives etc… Then he had a stroke so he’s essentially retired.
They now have a paid off home and approx. $300,000 in retirement savings. Even with $300,000+ it’s gonna be a tight budget to make that money last 20 years or so. They’re hoping for $1000 a month from their RRSP’s on top of approx $1800 a month in OAS and CPP. I’ve run the numbers and its not pretty.
That will probably mean no travel to see relatives, maybe no car in the future, cable may have to go.
I’ve never seen that many seniors out there say, “I own my home so I’m the happiest person there is”, what I do see is alot of cranky seniors who COMPLAIN about the cost of EVERYTHING. If you knew how much it cost to run a home, shouldn’t you have saved money for those costs in retirement?
Its easy to think that owning a home is FANTASTIC when your retired, but its a bitch when just maintaining a roof over your head eats a big chunk of your lowly income.”
- Arshes at VREAA 12 Sep 2012 at 3:57pm and 4:10pm
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- Alexcanuck on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- Alexcanuck on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- Real Estate Tsunami on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- YVR Housing Analyst (@YVRHousing) on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- YVR Housing Analyst (@YVRHousing) on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- bubbly on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- ling on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- Toby on “The bank encouraged her to take the equity in her home to purchase another home. She bought a 2nd home at the peak.”
- Nemesis on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- Raspberry ketone on Commit Crime To Buy A House
- Nemesis on “The bank encouraged her to take the equity in her home to purchase another home. She bought a 2nd home at the peak.”
- You're sore, not hurt. on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
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- ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- “The bank encouraged her to take the equity in her home to purchase another home. She bought a 2nd home at the peak.”
- “Let’s remember how we got here” – Looser and Looser CMHC Limits
- Don’t Worry, I’m Sure Somebody Will Sort This All Out – “Policymakers now know better and will be a lot more proactive in preventing a collapse.”
- “Things have changed, we are not doing that type of mortgage. We are not interested at all.”
- “We are noticing our target type of housing in price decline, albeit slow, as our money increases in value, slowly as well but outpacing housing.”
- Renter Buys In West Van – “For a few hundred more per month, you could own the place. Which is what I will be doing as my offer for a place down the street has been accepted. There is some value in staying in one place.”
- A Bed in the Bathroom, Why Not? [Let Us Count The Reasons...]
- “My husband and kids are pretty happy in our rental house within cycling distance of work that we could never have afforded otherwise. We’re doin’ pretty dang well, thank you, for median income earners in this expensive city.”
- “I Wish Them Bad Luck.” – Jim Flaherty, on those who wish to profit from Canadian RE price drops
- “We asked why he doesn’t just rent the whole house. He said he can’t, it wouldn’t cover his mortgage – he’ll get more to rent it out as two suites. These new landlords are hilarious, thinking that rent will cover their mortgage!”
- “My neighbours, in their late 60s, just put their house on the market. They had said they would die in that house, but now they are worried that with the housing market going south they may be losing a lot of equity and they better sell now before it gets worse.”
- Chat Thread
- Taking A Break
- “My best guess: this property is now an ‘investment hold’ and will be built ‘when prices recover’. Good luck on that!”
- Man Loses $745,000 Vancouver Condo Deposit
- Graphic – Degrees of Housing Overvaluation in Canada
- The Rare Individual With A Negative Ownership Premium
- Advice Regarding Renting In Vancouver, Please – “Unfortunately, the Vancouver rental stock is absolutely atrocious. It just seems like every landlord is looking for someone to pay 100% of their mortgage on a crappy place through rental income.”
- “I just visited Manhattan for a week, and happened to snap some real estate ads on both the Upper West and Upper East sides of the island. Compare to Vancouver. It simply doesn’t compute.”
- Ben Rabidoux In Vancouver Next Week
- “The mortgage company told me they were calling in my 40-year, 0-down mortgage. I have paid nearly sixty thousand dollars towards it, but, nearly five years in, I have yet to touch the principal.”
- ‘Vancouver City Hall: Housing Report Card 2012′; Plus Revised Version
- “My folks find themselves at 65 still owing half the value of their home and recreation property to the bank. After almost 30 years of ownership in the BPOE and a number of boom markets, they have very little to show for it.”
- “Rent for $2,200 a month or buy and have a mortgage of $4,310 per month. Why would anyone buy?”
- “They were talking about two couples they knew who had recently bought a lot and planned to each build a house on it and live as neighbours.”
- Greater Vancouver Home Builders’ Association Annual First-Time Buyer Seminar Attendance Plummets
- Mom and Pop Get It Wrong In All Markets, Time And Again
- The average British Columbian homeowner is not going to pay off their mortgage by the time they retire.
- “He’s sold all his properties except his current one, which is now for sale. He explained that the market’s currently in crash mode, worst that he’s ever seen.”
- “One of my old high school buddies finally got her mother to sell the family home in Kitsilano – sold for over $1M, monies realized after debt paid off $185K.”
- “I know someone who just declared bankruptcy because her condo was assessed at $150k and she bought it presale north of $250k in 2005 or 2006.”
- Sturdy, With Views – “Calling Froogle Scott!… Is Dr. Scott ‘In The House’?” [Not In This One, Certainly]
- “She said the market was dead in Victoria and that it would remain so for a very long time. I asked how she knew. Her answer was fascinating and should scare the pants off the real estate crowd.”
- Kits Notes – “I’m pretty sure that this is the first 3+ bedroom property of any type that I’ve seen in the 5 years I’ve lived here that is priced below $700K.”
- “A beautiful Belfast home, in the equivalent of 1st Shaughnessy, bought at their RE peak in 2007 for £3.5 million, has now sold for £800K, almost 80%-off. The market didn’t suffer any significant economic shocks. Rates & unemployment didn’t skyrocket. They didn’t build more land. Sentiment just changed and the prices fell and fell.”
- “Two family members of hers are trapped, underwater, in condos on the East Side.”
- “Interprovincial migration is not saying good things about BC’s economy.”
- Vancouver RE: Not As Expensive Provided You Don’t Think – “It’s clear that our perception of affordability has been coloured by living on a continent where housing is unusually inexpensive.”
- More Undisclosed RE Industry Insiders Publicized As Clients – “In 1995, Allan and Karin Hoegg were mortgage-free. But no more. Today their Vancouver home is a valuable source of income as they plan for full retirement.”
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Operating costs for a paid-off single family house in Metro Vancouver, in the years ahead, will probably be around $1000/month. That’s property tax, house insurance, utilities, and repairs and maintenance. The municipal tax rate, the assessed value of the property, the condition of the house, and how handy someone is, would all factor in to that number, but $1000/month isn’t an unreasonable benchmark for what it will cost Lower Mainland homeowners to continue living in houses they own outright. Many will offset that number with income from a rental suite. Although I’m not sure I’ll want to be a landlord with tenants beneath me when I’m 70.
Thanks for the comment, Froogle.
Those of you who don’t yet know Froogle Scott, see the sidebar for an account of his epic journey through Vancouver homeownerdom.
Also, readers will be thrilled to know that Episode 10 is on the way, an unprecedentedly comprehensive look at the true costs of homeownership.
There’s never a great time to be living atop your tenants, but at least in your 70s, your senses of hearing and smell are likely less acute.
I think $1000/mo NOT including maintenance will be a stretch in the coming years (and this doesn’t even take into account that this is after tax). By saying this, I am assuming your definition of a “single family house” is indeed a conventional detached home. Having said this, I know folks living in one bdrm shoe boxes that already pay way more than this (with their strata fees alone eating up half that). So, basically they’ve got to earn $2000 gross just to keep that “fully paid off” roof over their heads heated and properly maintained while keeping food in their stomachs, their tv’s , computers and vehicles up and running not to mention their brains somewhat stimulated with whatever loose change may be left over.
(NOTE: Luxury SUV’s, 5-star vacations, cruises, wine and golf tours, fine dining, new clothing, prescription drugs not included in promotional price and are available upon request. Please contact your account executive for more details.)
Retirement – A Quaint Old-Fashioned Notion
http://www.alanmacdonald.ca/newsletter/2007/04/retirement-a-quaint-old-fashioned-notion/
“I’ve never seen that many seniors out there say, “I own my home so I’m the happiest person there is””
I’ve never heard that from anyone, senior or not.
Hate to say it Arshes, but it seems like your parents are not particularly good at financial planning – unfortunately, a common trait amongst Canadians young and old. No matter what your living situation is, you need something to actually generate income in your retirement.
Unless of course, your parents were assuming they would sell the home when they retired?
“you need something to actually generate income in your retirement”
The issue these days is that future income has been brought forward by way of rising income-generating asset prices (low yields). An unfortunate situation — now they must eat through capital to fund current outlays or risk-up.
Welcome to the 2010s.
No i’ve never heard my parents mention selling the home, except once, when my dad said what was the point with the high cost of condos today.
And i know no one says, “I own my home so I’m the happiest person there is” but the assumptions is that with a paid off home, you’ll go far in retirement, but I know that isnt the case.
“the assumptions is that with a paid off home, you’ll go far in retirement”
The assumption is good, except it’s missing a key part – the saving of the money that you would have otherwise spent on your mortgage. A paid off house that you’re going to live in is of little use in retirement when income is required.
I think you know that, its a shame your parents did not. They’ll have some tough years ahead. The good news is that 300K should be able to provide 12K a year in gross income, with a 4% return (leaving the capital intact). It will require some moderate risk to get that return, but its doable.
Speaking of ‘tight budgets’… One Saudi Sheik dabbling in London RealEstate was so ‘strapped’… he couldn’t insure his Ferrari.
Or perhaps he just forgot. Either way – the OldBill found it in their hearts to forive him, though. [NoteToEd: it may well have had something to do with his condo conversion plan for the last of the 'ol Nicks in UltraPrime boroughs.]… And now for your Quote ‘O The Day!…
“My Ferrari got seized in London, then they found out who I was and gave it back. Arab money talks!” – Sheikh Rashid, Heir to the Emir of Ajman
[UK Independent] – ‘Arab money talks’: Son of billionaire Saudi sheikh claims police confiscated his uninsured £200,000 Ferrari then handed back it back when they found out who he was
…”Sheikh Rashid is the youngest son of the Emir of Ajman Sheikh Humaid bin Rashid Al Nuaimi. His father is known locally as RRR, short for Rich in Real estate Resources. He owns a fleet of supercars in the orange and black company colours of R Holding, his property and leisure conglomerate. He has cars flown to London by private jet for him to drive here when he visits.”…
http://tinyurl.com/8b9vop9
Oh, Nem. You should post these things with a “blood pressure” warning.
So what’s the house worth? Unless you’re very handy and always around, your parents are going to reach the stage where they’re either falling off ladders or falling down stairs, every third knock at the door is going to be a salesman or a tradesman who was in the neighbourhood and noticed a problem with their house that needs addressing right away (my favourite was a guy who wanted to repoint the chimney, didn’t have a business card, said the mortar was already mixed for another job they were working on “nearby” and it would be a shame to let it go to waste ($6 a bag, don’t you know!)). The furnace inspector, the carpet and duct cleaning man, the gardener who’ll still raise his rates a bit every year, but will start slacking off on the parts he knows you can’t see out the windows…
They’ll get older and sorer, and well meaning friends will recommend herbal teas, pills, powders, metal bracelets, beds and shoes with magnets in them or even psychics. Once they’re on one or two of those lists, their mailing details will get passed around and pretty soon there will be a torrent of miracle-cure junk mail every day, along with many other mail order catalogues. If they give to charity at all, those too will pass around their lists, and the phone will ring a few times a day along with more junk mail. Ordering one or two things from a catalogue or TV might be nice. They’ll get sold a bit of accident insurance, a credit card identity theft monitoring service, credit card balance protection, a membership here and another one there, a couple of newspapers and a few magazines, all automatically renewed on the credit card of course. The nice lady from the bank will convince them that another dollar a month for charity can be withdrawn from their accounts.
This, too, is part of the cost of staying in your house until you’re old and infirm. Ask me how I know. A seniors’ apartment might be a lot cheaper than a simple comparison would suggest.
Sounds like my parents.
This is exactly what happened to my grandmother. At least she was smart enough to call us and ask “Ist das Quatsch?” about most things.
Truer words were never spoken, Ralph.
I was ineluctably obliged to return to these shores for that very reason… Ok. I was also growing weary of people trying to kill me and, frankly, getting rather too old for that sort of sillly s***e.*
[NoteToEd: *at times it was impossible to tell who was trying harder... 'TheOpposition' or TheManagement. Regardless, when the institutional invitation to PO with a Bag 'O Swag and residuals came... I ran. Screaming for joy!]
As opposed to what Ralph? A condo where the strata will do exactly the same thing on your behalf? The strata council isn’t going to be out there hanging off the 30th floor to wash the windows. Come to think of it, I’d say about half of my condo owning aquaintances have put more money into their “units” than I have into my prewar house over the last 14 years.
I agree. You’ll probably do just fine as long as you have your wits, judgement and mobility about you, assuming you know enough about home maintenance in the first place. But every slip in judgement is going to cost you big, either in one time costs or automatically renewed ongoing ones. And there’s a whole segment of society dedicated to basically defrauding independent seniors, via the TV, phone, mail or door to door.
Not a problem. Their will be plenty of empty condos for them to move into when they decide to downsize ( at the bottom of the market ).
Scary thoughts…..all I know is while I have a paid off family house (sharing with my family), if I were to be responsible for all the maintenance costs for it right now (assume I now have sole possession and use), it would be fairly tight for my budget, even though I make a good, by Vancouver, above average wage. When I’m retired?? Don’t even want to think about it…..
Oh yeah, I’m not counting on OAS, GIS, etc be there for us when I retire in 30+ years in its current form and purchasing power.
$300,000 over 20 years? Pssht… some hardship. My parents manage to live on less than $15,000 per year, and they have a lot of fun doing so (season’s skiing passes, monthly RV trips to carving and art conventions, etc.). The key thing is to do yourself everything that you can. That means no eating out, growing most of your own fruit & vegetables, packing your own lunches, fixing whatever breaks down, etc..
Plus, invest that $300k in blue-chip dividend producing stock, and you can live purely off of the dividends… and if the average return is more than 5% above inflation (5% of $300k = $15k/yr), you can always maintain your after-inflation balance by re-investing the % of the returns that mirror the inflation rate.
The trick is to be frugal. And no, my parents are already in their 70s, and will probably be spry and ambulatory well into their 90s.