Finding the ideal place to live in retirement

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Planning for retirement is rife with big questions — not just how you want to spend your golden years, but where? For some, retirement offers the opportunity to spend more time with family; for others, it’s the chance to venture into a different climate.

According to a recent survey by the Canadian Association of Retired Persons (CARP), between 85% and 95% of older Canadians would prefer to stay in their own homes as long as possible.1 At the same time, approximately 25% of Canadians over age 75 report at least one unmet need in their current living arrangements,2 suggesting that, for many retirees, relocation to a home where those needs can be met may be just what the doctor ordered.

Whether you’re planning to stay put or change locales, where you choose to live after retirement can have a big impact on both your finances and your quality of life. Here’s a look at some important considerations.

Should I downsize?

The nest may feel empty once the kids have moved out. Even if you’re inclined to stay close to your community, downsizing clutter and moving to a smaller home that can increase accessibility and comfort while reducing upkeep and expenses may be an attractive option, especially if the new place is close to family, friends, and recreation.

Some cities offer active adult communities for Canadians over age 55, providing amenities, services, and opportunities to socialize with new friends, build community and increase quality of life. Especially for retirees who may be aging alone, such communities can help reduce isolation and expand your circle of friends.  

What about expenses?

After retirement, advisors suggest that Canadian retirees will spend between 70% and 80% of their pre-retirement income each year,3 so if you are considering a move, the overall cost of living should be a key factor in your consideration. Look at the economy of the place you want to go to determine if it is within your budget to buy or rent property and if the overall cost of living is sustainable. Generally speaking, housing costs should comprise no more than 30% of income for people of any age.

You’ll want to consider the tax impact as well. Most retirement income is taxable in Canada, including Canada Pension Plan, Old Age Security, annuity payments, and company pension payments. Taxation rates vary between provinces. Quebec, for example, has a significantly higher tax rate than most of the rest of Canada.

If you’re feeling adventurous, you may also consider retiring to a different country, perhaps one with a lower cost of living or a more attractive climate.

What about healthcare?

While Canadian health plans do provide essential services for its citizens, they don’t cover everything — some two-thirds of Canadians also maintain some sort of private insurance,4 at an average cost of $4,000 each year per family.5

Even if you’re in relatively good health, when making the plan for where you’ll live in retirement, you’ll want to factor in access to hospitals and healthcare providers that can serve your particular needs.

Factoring in quality of life

At the end of the day, one of the key goals of retirement is an enjoyable quality of life.

List your goals to determine what amenities different locations provide. If your goals include soaking up the culture, a vibrant, urbane arts community might suit you; outdoors types might opt for a community with access to golf courses and walking trails. And, of course, the ability to easily get together with friends and family is often a critical factor in overall happiness.

With all these factors in mind, consult your financial advisor who can help you survey your options and model scenarios based on taxes and cost of living. That way you can make an informed decision about the financial impact of a potential move and adjust your plans as necessary. 

 

1. CARP, “Aging at Home.” https://www.carp.ca/2022/09/26/aging-at-home/#:~:text=According%20to%20a%20CARP%20survey,long%2Dterm%20institutional%20care%20facilities.

2. National Institute of Aging, “Almost 100 per cent of Older Canadians Surveyed Plan to Live Independently in their Own Homes, But Is This Even Possible?” 2022. https://www.nia-ryerson.ca/commentary-posts/2020/9/22/almost-100-per-cent-of-older-canadians-surveyed-plan-to-live-independently-in-their-own-homes-but-is-this-even-possible

3. Canada Life, “How much money do I need to retire?” 2022. https://www.canadalife.com/investing-saving/retirement/preparing-for-retirement/how-much-money-do-i-need-for-retirement-.html

4. The Commonwealth Fund, “International Health Care System Profiles, 2020. https://www.commonwealthfund.org/international-health-policy-center/countries/canada

5. Arrive, “Cost of insurance in Canada: What you should know as a newcomer,” 2021
https://arrivein.com/finance/cost-of-insurance-in-canada-what-you-should-know-as-a-newcomer/

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