Housing may be your biggest cost after you retire, even if you have paid off your mortgage. One way to make your money go further is to move where it isn’t as costly to live. If you’re worried about making your money last, make sure you consider all your options.
Three ways to lower your housing costs by moving
- Sell and downsize. If you’re living in a larger home, you can reduce your living costs by selling and moving to a smaller home, condo, or apartment. You’ll free up some, or perhaps even all, of the equity in your home.
- Move somewhere else within Canada. Larger cities tend to be costlier places to live. Taxes are higher, and so is the cost of living. For example, homes in Toronto cost a lot more than in North Bay. Income tax also varies across the country. If you are in the top tax bracket in Ontario and you move to Alberta, your income tax will drop more than 10%.
- Move outside Canada. You don’t have to be wealthy to dream of living with warm sea breezes and mild temperatures year-round. Lower living costs in some countries mean you can retire well on modest savings and enjoy a milder climate.
· In Ajijic, Mexico, you can rent a three-bedroom, two-bath hacienda for about $1,000 a month. For $2,000 or more each month, you can enjoy luxuries you’d never be able to afford in Canada.
· In Montevideo, Uruguay, you can buy a three-bedroom, one-bath home for about $50,000 and live in a country that boasts the highest life expectancy in South America.
· In Rouen, France, you can rent a two-bedroom apartment for under $1,000 a month. Note that taxes there are among the highest in the world, so it would actually be very costly to live there full-time.
Of course, retiring far from home is not for everyone. Some people find they miss their friends and family too much and soon return home. Also, there can be significant taxes if you leave the country to become a non-resident of Canada. Make sure you look into these costs before you decide.
Tip: Living year-round in a new place, no matter how nice it is, is not the same as a short holiday visit. So before you decide to move, arrange a trial run. You could rent a home in the location you choose for six months to a year.
Remember: Your property can be a big source of income after you retire
If you sell your home and buy something less costly, you may free up a large lump sum of cash. You can make that money last longer by investing wisely to create a regular income.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.