A look at the best of the Internet, from an SPP point of view
In BC, they’ll skip travel, entertainment and retirement savings to get into the housing market
Even for those of us who are born savers, we are living in very strange times.
A report in the Vancouver Courier, citing research from Sotheby’s International Realty Canada and the Mustel Group, finds that many people are focusing all their savings efforts on getting into the real estate market.
They are “cutting back on dining out, travelling, and even saving for retirement,” the report notes. Worse, the story states, a surprising 37 per cent of those surveyed are also cutting back “on basic day-to-day living expenses,” which they see as “the primary barrier to building a down payment.”
According to the Huffington Post, there were “4.756 million mortgages on the books of Canada’s 10 largest banks as of the end of October, 2018.” That’s actually a decline of 0.3 per cent over 2017, the publication reports, the first such downturn ever recorded in this country.
The article states that this slowdown is the result of the “stress test” now needed to get a first mortgage.”With Canadians carrying the largest debt burden among G7 countries, slowing down the rate of debt growth was one of the goals of the mortgage stress test. On this point at least, we can call the policy a success,” the article says. The relentless increase in the price of housing – over $600,000, on average, for a home in the top 10 metropolitan centres in Canada, with prices much higher than that in Vancouver and Toronto – is the other factor.
So to get in, people are giving up, the Courier notes. Of those surveyed across Canada, 51 per cent said they were reducing or giving up dining out, 45 per cent eliminated or reduced travel, 45 per cent gave up new clothes and new tech, and 37 per cent cut back on health (fitness) and entertainment.
A very surprising 20 per cent nationally said they would “delay saving for retirement” in order to try and save for a down payment. Other steps people said they were taking included getting a higher-paying job, getting rid of their car, adding some freelance or part-time income, putting off having children or moving home with their parents.
There’s no question that home ownership is a pretty wise thing, and debt needed to secure a home is usually considered “good debt.” Cutting back on expenses to achieve this goal does make some sense. However, if you don’t have a workplace pension plan, cutting out retirement savings altogether is a decision that you may regret when you’re older. Perhaps savings can be reduced in the painful, early phase of the mortgage and dialled back up later. But it’s not a great idea to turn off the tap altogether.
The Saskatchewan Pension Plan provides you with the flexibility you need for retirement savings. You can contribute at any rate you want, up to $6,200 annually, and the plan provides an easy way to turn your savings into a lifetime income stream. Check them out today.
|Written by Martin Biefer
|Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Shelties, Duncan and Phoebe, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22|