Homing in on your retirement residence.

With your retirement years inching closer, your thoughts may be ‘homing in' on the size and type of residence that will best suit your new lifestyle and financial situation. Many retirees opt to downsize their home – after all, the kids are grown and building their own lives elsewhere, so why do you need all that expensive, high-maintenance space why not cash in on your home's enhanced equity and look for a smaller and more maintenance-friendly residence? But before you jump on the downsizing wagon, there are a number of important questions you should answer – because downsizing is not a ‘one-size-fits-all' solution. What you want to do is ensure your retirement residence is ‘right-sized' for your personal retirement vision.

Here are some of the lifestyle and financial questions you should consider.

Homing-in on your housing options

• Keep your current home? Your family may have strong emotional attachments to it and the neighbourhood is familiar turf.
  
• Move to where your children are? But are you prepared to uproot every few years as they change jobs and locations?
  
• Choose a smaller home? It will likely be easier to maintain, with lower utility costs and taxes – but maybe the capital you will put into it would be better employed in investments that increase your income flow and enhance your estate.
  
• Buy a condo? No maintenance, of course – but you'll be required to pay condo fees and share any major repair costs with the other owners. You'll also have to deal with the ‘personalities' on your condo board.
  
• Rent an apartment? The owner will take care of repairs and you can choose from a wide range of rental options such as adult-only apartments or assisted living complexes with extra facilities like tennis courts and swimming pools. But fees can be steep and you'll also lose some of the independence of living in your own home.

Addressing your ‘personal' situation

• Will your projected retirement income be sufficient to maintain your current home? If not, you may be forced to sell. Alternatively, a ‘reverse mortgage' can be used to provide an income stream. The loan is paid out of your estate based on the proceeds of your home. You should also be aware that the interest rate charged in a reverse mortgage may be higher than on a conventional mortgage. This is because, under a reverse mortgage, the borrower is not obligated to make interest payments on the mortgage, and the borrower cannot be forced to sell the home during the borrower's lifetime.
  
• Do you already own a vacation property in Canada or the United States ? That can complicate things from a taxation and estate planning perspective.
  
• Do you have health issues? If so, maintaining any home may not be practical and a condo or assisted living facility may be right for you.

A professional advisor can help you make the lifestyle and investment choices that ensure your retirement is ‘right-sized' for you.
For more information contact Kevin J. Zakus @ (250) 768-4546 or email.

This column, written and published by Investors Group Financial Services Inc., is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice.