To move or not to move? That is the question... in retirement

January 4, 2016

When deciding where to live in retirement, consider the financial and personal implications.

When we think about retirement, we often think of the early years, when we are more likely to be in relatively good health. We may not want to think about the later retirement years, when we may experience more health complications or not be able to live independently. Thinking about your housing situation and what changes may occur throughout your retirement is an important part of your retirement plan.

Some questions to ask yourself when planning your retirement include:

  • Will you continue to live in your current home?
  • Do you plan to downsize? Or rent?
  • Will you look for additional income through a tenant or a roommate?
  • Will you need to renovate to accommodate mobility restrictions or house a caregiver?
  • Is it possible to move in with your family?
  • Will you need to move to an assisted living facility?

A report by Canada Mortgage and Housing Corporation (CMHC)1 says that a majority of older Canadians are financially secure with stable incomes and mortgage-free homes. And approximately 85% of older Canadians would prefer to stay in their homes as they get older. However, the report suggests that as Canadians age, they’ll most likely require renovations to their homes, need to move to a pedestrian-friendly urban area or to a low-rise apartment, or move in with a family member or to some form of assisted living facility.

The plain truth is, the longer you live, the less likely you’ll spend your entire retirement in a mortgage-free home. Housing may, in fact, become the largest expense you have in retirement.

For those Canadian retirees who own their home, it is likely one of their most valuable assets. Here are a few options home owners can take advantage of to boost their retirement income:

  • Reverse mortgage. This option allows homeowners who are 55 and older to borrow against the equity in their home. If you are considering a reverse mortgage, be sure to talk with your financial advisor in order to fully understand the implications.
  • Downsizing. Selling one’s home and purchasing a smaller one can provide an additional, and often sizable, source of retirement income. Here are some considerations for those thinking about downsizing:
    • Fees and costs associated with buying and selling a home. Be sure to talk to your advisor to fully understand the financial impact of selling your house.
    • The non-financial impact of selling your home. While the bottom line is always an important consideration, it’s important to consider the emotional and lifestyle impact as well.

Canadians must proactively look at all the realities of retirement and discuss the issues with their financial advisors and their families, well before the issues become a concern.

For more information on establishing a retirement plan that will meet your changing needs, talk to your financial advisor or visit AGF.com/RRSP.

1 Source: “Housing for Older Canadians – The Definitive Guide to the Over 55 Market. Volume 1, Understanding the Market.” Canada Mortgage and Housing Corporation, 2012.

The contents of this Web site are provided for informational and educational purposes, and are not intended to provide specific individual advice including, without limitation, investment, financial, legal, accounting or tax. Please consult with your own professional advisor on your particular circumstances.

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