Age in Place while Funding Retirement with a Home Equity Sharing Agreement
“Aging in Place” Is Reshaping Retirement
Retirement in Canada is changing. For many, it’s no longer just about stopping work. It’s about navigating shifting realities while trying to maintain a comfortable lifestyle. Canadians now believe that they need $1.7 million saved to retire comfortably and three-quarters of them were already worried that rising prices will cause them to run out of money in retirement.1
Today, it’s clear that homeowners know what they want, with 91% of Ontario seniors expressing that they aspire to stay in their own homes for as long as possible.2 This desire is backed by data. The Canada Mortgage and Housing Corporation (CMHC) has noted a steady decline in home sales among people aged 75+ since the early 1990s. Over the last three decades, the selling rate for this group has dropped by about 6 percentage points.3 This desire to ‘age in place’ underscores that the home is not just an asset, but a place of stability and memories.
In HOOPP’s 2025 Canadian retirement survey, it was reported that 44% of unretired homeowners plan to sell their home to set themselves up for retirement.4 The pressure is compounded by family obligations: 83% of homeowners say they will help their adult children financially, even if it negatively impacts their own retirement.5 Canadians need a solution that allows them to support their families and secure their future.
Canadians now have the flexibility to fund their retirement on their own terms. Clay Financial’s Home Equity Sharing Agreement allows them to unlock their home’s equity without having to sell or take on a new loan.
The Challenges Facing Canadian Retirees’ Budgets
Many homeowners are increasingly worried they will outlive their savings. Roughly two-thirds (67%) believe it is now more difficult to save for retirement than it was for their parents’ generation.6 Consequently, only 40% of Canadian homeowners believe they can afford to retire at their desired time.7
This pessimism is rooted in a stark structural shift. According to Christine Van Cauwenberghe, Head of Financial Planning at IG Wealth Management, “The decline of defined benefit and [defined] contribution pension plans has fundamentally shifted the burden of retirement planning on to individuals in recent years.”
Today, less than half (48%) of non-retired Canadians have access to any form of workplace pension.8 This absence of guaranteed employer income, combined with a higher cost of living, has created a “pension gap” that personal savings must now bridge. The stakes are high: it is projected that 55% of near-retiree households will have to make significant lifestyle compromises just to avoid outliving their money.9
In addition to staying in their homes longer, homeowners face several other challenges in retirement, which can be categorized into a few key areas:
Inflation Costs Strain New Retirees’ Fixed Incomes
Canada experienced a surge in retirements throughout the COVID pandemic, with many retiring before the age of 65. The Canadian Centre for Policy Alternatives found that 73,000 more people retired in the 12 months ending August 2022, a 32% increase from the prior period.
While some chose this path, for many, “retirement” was a pragmatic response to pandemic-related layoffs or wage restrictions. Facing the prospect of starting over late in their careers, many workers, particularly in Ontario’s education sector and those under 65, found themselves transitioning into retirement earlier than they had anticipated.10
This is important because a greater number of Canadians found themselves subject to a number of inflation shocks that they hadn’t planned for. This left new retirees worse off as the rate of consumer inflation continued to rise, ultimately reaching 8.1% year over year in June 2022. The increase was the largest yearly change since January 1983.11
Relative to during the pandemic, inflation has cooled. However, the cost of living remains high. The projected escalation in retirement expenses looms large on the horizon. The 12-month change from February 2024-25 saw the Consumer Price Index in Canada rise 2.6% overall.12 Additionally, a growing number of retirees are burdened with debt as they enter retirement. As of 2019, merely 28% of senior households in Canada were debt-free, marking an 11% decline from 1999, placing further strain on their financial resources.13 Escalating living expenses and mounting debt have collectively eroded some individuals’ confidence in their hard-earned retirement savings.
The Hurdles of Accessing Your Home Equity
For many people, their most substantial savings are not held within RRSPs or the market, but rather tied up in their homes. Because real estate cannot be converted to cash instantly, accessing this wealth requires careful planning. While traditional debt products like HELOCs, reverse mortgages and home equity loans are available, they come with significant trade-offs.
For retirees, qualifying for traditional debt products is often difficult because standard loan approvals rely heavily on active employment income (including the strict federal mortgage stress test). When that income drops in retirement, individuals frequently find themselves with significantly fewer options than they had during their working years. These financial realities mean that even homeowners with substantial equity may no longer fit the ideal profile for conventional lending products.
The Burden of Monthly Payments on Retiree Budgets
Even if a senior qualifies for a traditional home equity product, it comes with a significant challenge: mandatory monthly payments. For those on a fixed income, allocating funds for new, and often substantial, loan or interest payments can strain an already tight budget, jeopardizing their financial security.
The Risk of Rising Interest Rates
When interest rates rise, seniors living on fixed incomes can quickly find their budgets stretched too thin. As borrowing costs climb, the minimum monthly payments on variable-rate products like home equity lines of credit (HELOCs) can spike, consuming a larger portion of a budget that is already stretched.
Consequently, when borrowing becomes more expensive, we often see a sharp increase in missed payments and loan delinquencies among homeowners. In Canada, HELOC delinquency rates have risen by over a half in the last four years.14 This situation clearly illustrates just how vulnerable households are to the unpredictability of interest rate changes, especially when carrying high levels of debt.
The Power of Your Home Equity
Based on analysis that we conducted in 2024, home equity represents between half and two-thirds of the median Canadian homeowner’s net worth. In most cases, it is their most significant financial asset by a wide margin. The truth is that many near-retirees and seniors are concerned about their ability to afford retirement, given their limited liquid assets and that the majority of their wealth is tied up in real estate.
A Modern Way to Unlock Equity
Meeting this challenge requires new tools. That’s why Clay Financial launched the first Home Equity Sharing Agreement (HESA) in Canada. This new solution empowers Canadians to unlock their hard-earned equity and convert it into cash, thus making retirement more financially accessible.
Think of Clay as an investor in your home alongside you. We provide a lump-sum cash payment at the start of the HESA and, in exchange, you share a portion of your home’s future appreciation with us. Our HESA has a flexible term of up to 25 years, ending earlier if you sell or transfer your home or choose to buy out the HESA without selling your home. Unlike a loan or HELOC, there are no monthly payments. And unlike a reverse mortgage, there are no age restrictions and no risk of eroding your existing equity with compounding interest. You make a single payment to us at the end of the HESA based on the amount of equity you accessed initially and our share of your home’s change in value since the start of the contract.
Protect Your Wealth and Your Lifestyle
This structure acts as a natural hedge for your wealth. If the real estate market is flat or down, the cost of the HESA is lower, protecting your equity. If the market rises significantly, you pay more, but you are also benefiting from the increased value of the rest of your home. If you have enough equity, a HESA can be combined with existing debt products like a mortgage and HELOC. This preserves your monthly cash flow for living expenses, rather than servicing new debt.
Retirement in Canada is changing, and traditional loans don’t always fit the modern retiree’s needs. If your wealth is locked in your home, a HESA offers a way to access flexible, payment-free funding without adding debt or having to sell your home.
By unlocking your equity today, you can confidently cover expenses and protect your lifestyle while aging in place. Ready to see how a HESA could help you in retirement? Get a free, no-obligation estimate from Clay Financial today to explore your options.
- Based on data from BMO’s Annual Retirement Survey, which found that Canadians estimate they will need $1.7 million to retire comfortably (2026) and, in the year prior, 76% were worried that they will not be able to save enough because of rising prices (2025). ↩︎
- Based on analysis by Deloitte in its Future of Aging in Canada Report (2024). ↩︎
- Based on analysis by CMHC in its Senior Homeownership Trends Report (November 2023). ↩︎
- HOOPP’s 2025 retirement survey revealed that nearly half of all unretired Canadians plan on selling their home to fund retirement (April 2025). ↩︎
- Based on BMO’s 16th Annual Retirement Survey (2026). ↩︎
- See footnote 5. ↩︎
- Based on the NIA’s Ageing in Canada survey (2025). ↩︎
- Based on IG Wealth Management annual retirement study (2026). ↩︎
- Based on analysis by Deloitte in a 2025 report on private retirement pillars in Canada. ↩︎
- Based on analysis by the Canadian Centre for Policy Alternatives (CCPA) in its Understanding Labour Market Trends Report (September 2022). ↩︎
- Based on data from Statistics Canada regarding the Consumer Price Index (CPI). ↩︎
- Based on analysis of the Consumer Price Index (CPI) by Statistics Canada in its Monthly Inflation Report (2025). ↩︎
- Based on data from Statistics Canada, more Canadians are entering retirement with debt in 2019 compared to 1999. ↩︎
- Based on the CMHC’s Mortgage and Consumer Credit Trends Data provided by Equifax, Canadian HELOC delinquency rates have risen from a recent low of 0.10% in Q2 of 2021 to 0.16% in Q4 of 2025. ↩︎
