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Posted November 11, 2020
Are you one of the approximately 1 in 7 Canadian workers who are self-employed ? Self-employed workers are a diverse group, one that includes everyone from tech entrepreneurs to mobile yoga instructors, gig-economy drivers to freelance consultants, crafters and creators.
Working for yourself can be as rewarding as it is challenging. One of the ways to set your small business up for success is to create an office HQ that is appropriate for the scale of your work – and ambition. If you’re still using your kitchen table to run your business from, stop. Now is the time to carve out your own dedicated office space. Here’s why… with an added tip on how to access renovation financing.
Having a dedicated work space entitles you to Canada Revenue Agency tax deductions including a portion of your utilities, maintenance, property tax and mortgage interest. But under CRA rules, this is only the case if the home office is your primary work space, and/or it’s the primary location where you meet clients and customers.
All this to say: your kitchen table won’t qualify! But consider repurposing your guest bedroom into a home office, renovating your garage into a workshop or finishing your basement into a studio. A work-from-home reno is one home improvement that you’ll be glad you did, come tax time.
Another benefit of having a dedicated work space in your home is the ability to stay organized and focused on your tasks. Trying to stay organized and focused on specific tasks in a shared, mixed-use space can be a daily challenge.
To use the kitchen table example again: imagine trying to work on a specific project using multiple files, spreading out across the table, only to have to pack up in mid-day because someone needs to make a meal. Or misplacing important papers because another household member stacked them incorrectly when they used the table. Or finding food stains on client paperwork because… well, it’s a busy kitchen.
A dedicated home office provides room to spread out without intruding into shared family space, and to set up organization systems that keep files safe and secure. And when you close the door at the end of the work day, you can re-set your frame of mind to home time – which can be a challenge if you see a stack of projects waiting on the kitchen counter.
Recent events such as the COVID-19 pandemic have pushed even more Canadians into work-from-home arrangements . Videoconferencing has gone mainstream and many workers are familiar with the routine of trying to set up enough distractions to ensure their children don’t wander into camera view. Or, furiously tidying up so their colleagues don’t see a messy backdrop!
A dedicated home office space ensures you’ve always got a professional-calibre backdrop for those video calls, not to mention minimal background noise, and easy access to any files you may need.
When you’re ready to create a more efficient work-from-home space that works harder for you, reach out to 8Twelve Mortgage. Our team of mortgage brokers can access renovation financing solutions to make your home office, workshop or studio dreams a reality. Our Mortgage Strategists are specialists in mortgage refinancing, reverse mortgages, renovation loan products and the lowest HELOC rates.
Posted November 11, 2020
Many Canadians think of retirement as a time filled with vacations, getaways to the cottage and spending more time on hobbies and interests. However, there are many other factors to consider when thinking about retirement savings. More and more Canadians are forgetting about some key obstacles that may change their perspective on what they actually need to save in order to retire comfortably.
Canadians are underestimating their life expectancy. Along with many of societal advancements, healthcare technology has been one of the most improved in recent years. As a result, people are more aware of their health conditions, taking better care of themselves and thus, seniors are living longer.
According to Statistics Canada, Canadian males have an average life expectancy of 79 and females an average of 83. In 2000, the average life expectancy for males was 77 and females 82. On average, there is an increase of about 2-3 years on the average life expectancy of Canadian male and female every decade.
Knowing this, seniors now have to save more for their retirement than their predecessors. Four in ten Canadians age 55+ say there is a serious risk that they will outlive their retirement savings. While an additional 40 percent will still be in debt after the age of 65.
The Rise of Long-Term Care Cost
According to benefitscanada.com , Baby Boomers currently account for 33 percent of the population and 14 percent of Canadians are over the age of 65. Based on today’s demographics and trend, by the year 2036, 25 percent of the population will be over the age of 65. And according to Statistics Canada, in 2036, one in ten Canadians will require long-term care by the age of 55, three in ten Canadians by the age of 65 and five in ten by the age of 75. More seniors will require long-term care in the next couple of decades, and with that, the cost of long-term care will also be on a steady climb. Based on inflation for health care services reported by Statistics Canada, the inflation rate of long-term care costs per year since 2010 is an average of 3 percent per annum.
Young Adults living in the Parental Home
Is your 20-29 year old still living at home? According to the 2011 Census Report, 42.3 percent of over 4 million young adults between the ages of 20-29 either never left the parental home or they returned home after living elsewhere. More and more young adults are still living with their parents as a source of emotional or financial support. Some of the reasons include cultural preferences, cost of housing, aspirations for higher education or the struggles of unemployment.
Other key findings include:
– Among those aged 55 to 64 with no accrued employer pension benefits, roughly half have savings that represent less than one year’s worth of the resources they need to supplement OAS/GIS and CPP/QPP.
– Among this group, 32 percent have less than $1,000 in retirement savings. About 23 percent have more than $1,000 but less than one year’s savings. Fifteen percent have enough for one– 2.5 years, 13 percent have enough for 2.5 – 5 years and only 18 percent have more than five years worth of savings.
– Only a small minority (roughly 15 to 20 per cent) of middle-income Canadians retiring without an employer pension plan have saved anywhere near enough for retirement and the vast majority of these families with annual incomes of $50,000 or more will be hard pressed to save enough in their remaining period to retirement (less than 10 years) to avoid a significant fall in income.
– Among single persons over 65 without pension income, the median income is under $20,000.
– The seniors’ poverty gap is $2.5 billion in aggregate annually due to the 719,000 poor seniors, including 469,000 singles and 250,000 living in an economic family. A simulation using Statistics Canada’s Social Policy Simulation Database and Model found if the government acts on a campaign commitment to increase GIS by 10 percent for single seniors, this would cost $700 million and would remove about 85,000 single seniors from the poverty rolls – leaving 634,000 seniors living in poverty.
These and many other factors can help you determine how much you need to save in order to live a comfortable retirement life. It is also important to understand your options when it comes to financial security. Seniors who are at least 55 years of age, who own a home are eligible for a reverse mortgage . With a reverse mortgage, you can access up to 55 percent of the value of your home, while maintaining the ownership, never having to move or sell. There are no payments required and you can receive your tax-free cash in monthly instalments, in a lump sum or a combination of both. The best part is, the loan from the reverse mortgage does not have to be repaid until the borrower passes away or moves/sells their home. As you plan and save for your retirement, know that this is an option for you. If you want to find out now what you can access from your most secure investment, your home, get in touch at any time.
The vast majority of Canadians intend to stay at home during retirement
As Canadians, we understand just how important your homes are to you in retirement.
Reverse mortgages are no longer a loan of last resort for retirees. Instead, they’re a smart, safe way for you to access some of your home equity so you can stay in your home and live retirement your way.
An overwhelming number of that aged 65-plus want to retire in their home, according to a recent Ipsos study. In fact, 93% of Canadians just like you want to stay in their current home throughout their retirement.
When asked for the reasons why staying at home in retirement is so important, maintaining independence came at the top of the list. A full 69% said it was the number one reason for doing so. Staying close to family, friends and community, as well as a strong emotional attachment to home are the main reasons for wanting to stay put.
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