Too many Canadians are relying on the value of their homes to help them in retirement and could get a rude awakening if rates rise and house prices fall, according to the CEO of Sun Life.

Dean Connor says the baby boom generation has seen 30 years of declining interest rates and escalating house prices.

That’s really just dumb luck, rather than a savvy investment plan, he said.

'Even folks who are not saving enough still have a home that, in theory, they can sell or rent or do something with' - Sun Life CEO Dean Connor

“It’s worked out so well for us as baby boomers and we’ve never known a period of increasing interest rates and that’s the concern we have to be worried about today,” he said in an interview with CBC’s The Exchange with Amanda Lang.

People should be paying down their household debt, with a goal of eliminating it before they retire, he said.

But many in this generation of seniors and near-seniors are taking on new debt, unlike the generation who grew up in the Depression and paid it down as soon as possible, Connor said.

Forty-three per cent of households led by Canadians age 65 and above held debt in 2012, up from 27 per cent in 1999, he said in a speech Wednesday.

Connor estimates that 20 to 25 per cent of Canadians do not have enough money to retire.

“There are many Canadians who have a home as part of their retirement plan,” he said.

“Even folks who are not saving enough still have a home that, in theory, they can sell or rent or do something with.”

But that is a risky prospect, especially in the current market with an interest rate rise on the horizon, perhaps as soon as 2015. Rising rates often do cause house prices to come down, particularly when they are at record levels, as they are now.

Connor said he is not predicting a house price crash, but there are several Canadian analysts who do believe we’re in for a sharp correction.

He was optimistic about the retirement prospects for most Canadians, saying those without enough money learn to innovate – they delay retirement, cut back on spending, sell their homes or look to family for support.