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A TTC streetcar is photographed in downtown Toronto on Oct 9 2012. (Fred Lum/Fred Lum/The Globe and Mail)
A TTC streetcar is photographed in downtown Toronto on Oct 9 2012. (Fred Lum/Fred Lum/The Globe and Mail)

Retirement

Living in retirement: Where can we afford to live? Add to ...

Welcome to our new Living in Retirement blog, where a couple is writing about their real-life retirement journey. Read their first post here.

Once we realized that being able to retire in three years hinged on us leaving the costly big city, we started to talk about what we wanted in a retirement community. For the past 12 years we had enjoyed our East Toronto neighbourhood, which was just a 15-minute walk to the beach and various shops. This small town atmosphere was something we wanted to duplicate, except in a small town.

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We each decided to make a list of priorities. Retiring in Canada and leaving the big city were on both our lists. Affordable housing as well as living near water, an arts community and a golf course were also priorities.

Even though we have family and friends in Ontario and Quebec, we did not discount Vancouver Island or the Maritimes as potential locations, although they were lower on our priority list. Proximity to family was clearly important, but we had to keep reminding ourselves that we were retiring, not our family.

Given our retirement income and investments, we knew that we had to be realistic about where we could afford to live. We conservatively estimated that over the next two or so years, our Toronto house would appreciate and our mortgage would shrink. That gave us an indication of how much we had to spend on our retirement home.

We knew that there was no one-size fits-all approach to retirement. The two things that helped us decide were 1) calculating our potential income and 2) determining our expenses (which included our hobbies – golf and art).

Now that we knew what we were looking for and how much we could afford, we started to explore different communities near friends and family. We turned to the Internet and looked at various town websites to see what each community had to offer. We used www.realtor.ca to see what average home prices were in the potential locations. The number of homes we looked at in our living room would have cost us thousands of dollars in gas if we had to eliminate them by physically visiting them.

We travelled to towns a couple of hours north of Toronto, because we have close friends there and like the intimate rural feel. They drove us around and we looked at open houses in different neighbourhoods. We decided to focus on in-town properties that did not need anything other than a coat of paint or wallpaper removal to move in. We wanted to be able to walk to town and remain a one-car family, which would be positive for both the environment and our finances.

Gravenhurst, Bracebridge and Huntsville all have so much to offer but turned out to be not for us. After looking we realized that most of the homes in the areas that we liked were slightly above the upper range of our anticipated budget.

Our family in the Ottawa area urged us to look at towns near them. If we chose to retire there we would also be close to family in Montreal, as well as family and friends in Toronto, which would be a big plus. We identified a number of promising communities south and west of Ottawa. One sunny autumn weekend we visited lovely rural towns such as Kemptville, Carelton Place, Westport and Perth.

Some houses that we liked were too far from town for us to remain a one car family. Other places were not appealing and in some cases the houses were too expensive. Remember that we were striving to stay mortgage-free in our retirement.

Despite our resolve to retire without debt, we decided to investigate what a small mortgage might cost us and the impact it would have on our cash flow and standard of living. We used the TD Canada Trust mortgage calculator to figure out what our monthly mortgage payment would be if we bought a house at the upper end of our budget. We made calculations using five, seven and ten-year fixed mortgages using the current interest rates .

We thought we would fix for 10 years as we believed that interest rates would rise in the next five years. We plugged in the monthly payment numbers and found that, even though we didn’t like it, we could afford a small mortgage. This brought some houses back into play but we were not ready to stop looking just yet.

After all of our virtual and physical investigations we did find towns that had some of the things we wanted. But there was always something missing. They didn’t have three important things on our list – proximity to a golf course, walking distance to town and lake access to a public beach.

Finally, affordability kept popping up as a deciding factor. When we ultimately found what we were looking for, it took us in an entirely different direction.

In our next blog post, we narrow our search for a new retirement home.

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