What to consider when moving is part of your plan
What to consider if moving is part of your retirement plan
You can’t argue with the timing of 58-year-old Laurie Beverley’s retirement.
She and her husband Gareth, also 58, sold their Calgary home and nearby recreational property in August 2014 — almost at the peak of the market — to move to a gated community called Arbutus Ridge in Cobble Hill, about 25 kilometres from Victoria.
The retired senior health-care leader prefers not to discuss specific prices, but there is little doubt of the economic advantages of moving somewhere like Vancouver Island, where half a million will translate into 120 feet of ocean frontage.
“We didn’t retire because of house prices but our interest to come here was the value you could get for your money,” Beverley says. “It was just a better deal than we could get in Calgary. We came here because of lifestyle too. You can get out and walk every day. The weather is amazing. It’s a very healthy environment.”
Moving to another city, or even another country, to take advantage of the less expensive jurisdiction can make financial sense in retirement, but it comes with other considerations that cannot be ignored.
“I can’t say I don’t miss Calgary at all. We miss our friends because our life was there,” Beverley says. “But once we saw what we could get, we went back to Calgary and packed up to sell.”
Elton Ash, executive vice-president of Re/Max of Western Canada, said the run-up in pricing has encouraged some people to consider selling their home to move forward their retirement.
“You get some people who have been in a home for 30 years and the average price in their neighbourhood is $1.5 million,” he says, adding that some people feel pressured to move because of the rising cost of taxes on their principal residence. “They look at the equity they can get and then look at moving out to a place like the Fraser Valley where the equity is cheaper, or they go onto Vancouver Island.”
Ash says it comes down to a personal choice for many people, and whether they can handle a major move.
“It’s not that easy to establish new social circles,” he says, adding that downsizing to a cheaper market only works for a couple of cities. “If you live in Kelowna, where do you go? Rural Saskatchewan?”
Peter Merrick, a Toronto-based certified financial planner, sees people go farther afield to take advantage of a cheaper economy, but he cautions it’s important to maintain your residency in Canada or tax considerations can kick in.
“Sometimes, for tax reasons, it can be better to be somewhere else,” Merrick says, adding there has been a real crackdown in G20 countries against people moving their money to jurisdictions with little or no taxes.
He says a key consideration if you move out of the country is health care, although he’s seen people go abroad and return to Canada for 90 days so they can reactivate their coverage.
“I’ve seen that again and again. People leave Canada, get sick and they come back because it’s too expensive where they are,” Merrick says. But that type of strategy could leave you in a financial hole for an emergency situation, especially if you don’t have proper health coverage.
One of most popular retirement destinations for Canadians, apart from the United States, is Belize because the official language is English, Merrick says.
“It’s the only country that speaks the same language in Central America and it’s cheaper,” he says.
Merrick cautions that what he often sees in his practice is that people go on vacation somewhere and fall in love with the location, making the decision to relocate and retire. “Then they realize, it’s so small I want to come back after a year,” he says.
The idea of returning to your original homeland can be flawed too, if you’ve been gone for years, Merrick adds.
“I find people (who) immigrated to Canada, lived here many years and (go) back, they’ve found out they didn’t fit anymore,” he says. “They’re Canadian and people (in their original homeland) didn’t see
There isn’t the same emotional attachment to the home. They want an active retirement. If that means moving to a place with a lower cost of living and less stress, that’s appealing. CINDY CREAN, Sun Life Global Investments We didn’t retire because of house prices but our interest to come here was the value you could get for your money. It was just a better deal than we could get in Calgary. We came here because of lifestyle, too. LAURIE BEVERLEY, 5 8 , sold her Calgary home in August 2014 and moved to a small community near Victoria
them anymore as Indians, Jamaicans because they had left.”
If you do decide you want to pick up and leave, he says tax treaties need to be examined closely.
“You’ve got to look at residency issues and whether you are considered a resident or visitor,” he says.
Cindy Crean, managing director of private clients for Sun Life Global Investments, says much of the net worth of Canadians is being driven by the value of their principal residence, and that affects retirement decisions.
“If they need to augment their retirement income, they almost have to consider taking some equity out to help,” says Crean, adding that people can sometimes become “immune” to the high cost of living in their existing city.
“We have a place outside Toronto and if we moved there I think our cost of living may go down by twothirds and I’d be sitting on the equity from our home,” she says.
Crean says people are increasingly re-examining the family home and the idea of moving to make their retirement work.
“There isn’t the same emotional attachment to the home,” she says. “They want an active retirement. If that means moving to a place with a lower cost of living and less stress, that’s appealing. But you have to be physically and mentally able to make that change.”