Two factors are behind the trend of mature Ontarians making the move from their city dwellings to the peace and tranquility of a lakefront property. One is simply a demographic reality and the other is the explosion in urban property prices, especially around Toronto and Hamilton. For some that have not yet retired there is an opportunity to tap into their increased home equity and to borrow for a place in cottage country. Yet, the majority of individuals looking at making this transition are those that have decided to use retirement as the springboard to country happiness.
There are definitely health, lifestyle and social considerations in making this decision, but individuals and couples also have to be aware of the financial issues. First and foremost, is this new lifestyle affordable? How do property taxes, utility expenses and property upkeep costs compare to what you were used to in your primary home? For those looking to just add a cottage property to their lifestyle assets, there is a doubling up of costs. And don’t forget to start keeping your receipts and invoices for any major work done to your cottage as these will be important down the road when it comes time to sell or gift the cottage.
Day to day financial calculations are indeed important, but some will tend to get carried away after transitioning from an expensive home to a less expensive waterfront property. Before spending the surplus left in the bank, do some careful future cash flow planning. Take stock of what your retirement nest egg now looks like and how many years you can feasibly finance the retirement lifestyle you have now chosen. If there are expected shortfalls down the road and you are still able to generate income, consider finding a job in the area you are moving to or look for home-based employment solutions. Remember, moving from the city to the country is a lifestyle decision, aimed at improving your quality of life. Don’t let financial worries creep in to steal that quality away.
By Andrew Pyle, Senior Wealth Advisor and Portfolio Manager