Yesterday marked the one too many times when I heard someone’s retirement plan being their principal residence. I understand the Greater Vancouver Area (GVA) can be expensive in terms of housing cost. You can all see my mortgage and principal residence value in my Net Worth. I also understand that looking at what you may need in the future when you retire can be daunting. However, relying on your principal residence value should not be your only plan, it should be your back up plan in case plan A fails.
There is still hope!
It’s not like I hear this from people near their 60’s. Most of them aren’t 40 yet. There are still ways to plan for retirement and save money. You need to have a saving plan.
- Pay yourself first.
- Reduce spending.
- Seek advice.
- Leverage and understand compound growth.
- Learn about different investing strategies; dividends, index and so forth.
- Seek advice.
- Keep it cool and avoid get rich quick schemes. They’ll usually set you back.
Why it’s dangerous
Here are some reasons that makes it dangerous to rely on your principal residence:
- Lots of emotions will be tied to that residence. You may change your mind, or the addition of grand-kids may change your mind.
- The value of the property is not guaranteed along with all the other costs associated with selling and getting a new place.
- The cost of the next property or location is undefined … and unknown and that cannot guarantee what’s left for retirement when you sell you principal residence.