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retirement and rrsps

A condo development in the Liberty Village area in Toronto.KEVIN VAN PAASSEN/The Globe and Mail

In our Living in Retirement blog, a recent retiree chronicles the ups and downs of her real-life retirement journey.

I'm the sort of person who frets over my mistakes, and I''ve made two big ones in recent years. The first was hiring a broker who managed to lose money in the stock market in 2013. While the S&P 500 rose 25.89 per cent, my broker bet on Barrick Gold, which tumbled roughly 47 per cent last year.

My second was buying a condo before it had been built, moving into it and waiting to see what happened.

I purchased my two-bedroom, 895 square foot condo in 2006 from a glamorous storefront showcase. It wasn't move-in ready until June 2011. What happened during those years is that two high rises were erected outside my balcony. The first one blocked the view of Lake Ontario before I even moved in. The second one, that is still not complete, blocks the view of Toronto's cityscape.

The value of the condo hasn't risen in two years. More than 60 per cent of the building is occupied by renters, who by nature, do not have a vested interested in maintaining the integrity of the building. Why should they? Repairs take months and usually after repeated nagging. Some days, it's difficult to enjoy a long hot shower since the water runs cool. The condo fees have risen twice, once before I moved in and once after.

Adding this up, I've joined the group of Canadians suffering from condo remorse.

This is what I thought would happen when I downsized from my sprawling suburban home to a downtown condo:

1. I would save money.
2. I would make money in the Toronto condo market when I eventually sold the unit. In 2006, didn't the pundits agree that the price would double in 10 years?
3. I would adjust to living in a shoebox.
4. I would enjoy not having to maintain a garden or to shovel snow.
5. I would take full advantage of the theatre, film and the other myriad of cultural delights blocks from my doorstep.
6. I would discover like-minded folks in my building.
7. I would regularly use the exercise room.
8. I would walk everywhere or take public transit and leave my car in the underground garage.
9. I would publish a novel and have a book launch in a trendy downtown location.
10. I would meet a wonderful man and settle down together.

This is what actually happened since I've been living in my downtown condo:

1. I have saved money. There is no mortgage on the unit and there's no question that keeping up a 2500 square foot house costs more than maintaining an 895 square foot condo. The Toronto Hydro bill is an average of $60 per month while other utility and external maintenance costs are covered by condo fees of just under $600.
2. I would likely make a profit on the sale of my condo if I put it up for sale; not the 100 per cent increase in 10 years predicted by the real estate pundits, but about 25 per cent in eight years.
3. I do enjoy not having to shovel the snow.
4. I did publish my first novel and the book launch was held at a swish café in downtown Toronto.
5. I did meet Mr. Wonderful and we are considering a new home in which to live together.

As for the remainder of my assumptions, I was fooling myself, or more importantly, I hadn't done the research required to make the downsizing decision. The person who has done the painstaking research is Dan Barnabic.

In his new book, The Condo Bible for Canadians: Everything you Must Know Before and After Buying a Condo, Mr. Barnabic advises potential buyers to check for power lines, busy roadways or railway tracks close to their condo. "Any of these conditions will make it harder for you to sell your unit later," he writes, adding "check with the municipality whether there are any other buildings slated for erection in the proximity of the complex and whether they will obstruct the view from the unit of you're interested in buying."

Had I done any of these things, I would not have purchased the condo I live in today. In fact, I'm not certain I would have downsized. With mortgages at record lows, my $600 in condo fees would cover two-thirds of a mortgage of $200,000. At today's rate of 3.04 per cent amortized at 25 years, the payment would be $915 per month. That's locked in for five years, while condo fees are certain to rise over the next five years.

What would you do if you were me with a budget of about $400,000 from the intended sale of my condo and another $200,000 from a pre-approved mortgage? Take into account that I'm semi-retired, have a daughter who is still in university and a partner who has returned to college for a second career – and that I was a single mother for more than 10 years before moving to my downtown condo.

Would you:
a. buy a big house in a small town or in the country
b. buy a townhouse in the suburbs
c. stay in my downtown condo
d. rent

In my next blog, I'll examine the pros and cons of moving to a large house in a small town or in the country – and compare that to my current situation of living in a smallish condo right in downtown Toronto.

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