Show Transcript
Stay in the big house or downsize? It’s a common question, especially as people get close to retirement. To ensure you’re asking the right questions before making the big move to somewhere smaller, Georgia Swan, Tax and Estate Planner, TD Wealth, joins Greg Bonnell to talk about some lifestyle considerations that could factor into your decision.
Print Transcript
* Should we sell the big house and downsize? It's a common question many people ask, especially those who are nearing retirement. Now downsizing is a big lifestyle decision, not just a financial one. So what are some of the things you need to be considering from that lifestyle perspective before you make the move? Georgia Swan, Tax and Estate Planner with TD Wealth, joins us now to discuss. Georgia, always great to have you with us.
* Good to see you again, Greg.
* We're going to look at the benefits and perhaps some of the drawbacks of this, but let's start with the potential lifestyle benefits of downsizing.
* So a lot of the clients that I speak to about this, they talk about downsizing for example, to a retirement community. And these people find a new lease on life because all of a sudden, there is community. They have people to play cards with on a random Tuesday or sit around the piano singing the old songs. Some of them describe it to me like going back to college with all of the gossip and all of the drama. And these communities, because they also have events and excursions, it becomes a situation where people realize that when they were in their own home maybe they were a little bit lonely.
- And a lot of these communities are also geared towards increasing care. So if you find yourself needing more care, you can transition to another part of it without actually losing those friendships that you've made. But the most important thing whenever you're going to think about this is the why. Is it financial? Is it physical?
- You now need a little bit more help? Or is it perhaps mental or emotional, because you want to be closer to family for example, or where you are now, you've outgrown it. So those are the three things that you have to first think about before you decide where you're going to end up.
* So there's the upside. You can end up with a community, a new whole sort of social network. At the same time, someone looks at the house says, OK, I need a smaller house. I need a condo. I'm going to reduce my expenses. But then the lifestyle expectations. Things can change. What do you need to be aware of here?
* Oh, there's so many. I mean, first of all, you know, what is the neighborhood that you're moving to? What is the cost of living? Are you moving provinces, because different provinces have different costs of living. And then you have to think about the amenities. You know, do you want to be near a golf course? Do you have other sporting things that you do? Are you a theater person? Do you want to move from the city to the country?
- Do you need-- what's the proximity to grocery stores and other services that you need? Do you need to be close to public transit, or do you drive? There's so many of these. And you have to really examine your life and what's important to you and what you need to have around you during that next stage.
* It could be a rude awakening if you're used the jumping on the subway and then popping up and going to the theater and then like, walking here or there. And big city life doesn't really translate to other areas. Obviously, as people are making this move, they're getting on in life. And at some point, you might need access to health care. You might need even long term care. How important is it to think about those considerations?
* That's one of the biggest. Currently, right now in Canada, one out of five people don't have a primary care physician. That's 6.5 million Canadians. So if you are one of the lucky ones that has a family doctor, you don't want to give that up. And certainly, of course, if you have a medical condition and you need proximity to health services, hospitals, long term care facilities, walk-in clinics, you know, that is so important to make sure that the transition doesn't affect that.
- And of course, don't forget the pets. If you have a vet that you've been very close to, that's also another consideration, because pets are important.
* OK. Let's talk about timing. I mean, people are trying to figure out at what point are you going to give up the house? What point are you going to downsize? How much does timing matter here? Like, sooner rather than later? What's the consideration?
* Timing matters a lot. As hard as it is, you really should be making this transition before you absolutely need to, because we all know long term care facilities have waiting lists. If you don't get on that waiting list-- and then certainly, once you've figured out for example, what your budget is for a new place, the longer time you have to actually look for just the right place, the more chances are that the move is going to be a good one for you. Because if you're forced to do it at a moment's notice, you may end up settling for a place that you're not really fond of or isn't exactly what you would be looking for.
* Now, Georgia, I know through your work, obviously, you hear stories about people who have made this move and perhaps have enjoyed it, but have regretted it as well.
* So I had one client once who didn't really think about how important it was to her to gather the family for those big holiday celebrations. And during the first major holiday, she found herself quite depressed about the fact that she didn't have the room. So in actual fact, she sold the downsized house, bought one a tiny bit bigger, a little bit between the old and the downsized house so that she could have her family around her more often. And then I had another client who she downsized at a time just after her spouse passed away. And with her newfound money, she always wanted to learn to play the electric guitar. And a few years later, I was treated to a really great rendition of a pretty famous guitar solo.
* So she learned to-- I can respect that. You learn to shred with the extra time you got on your hands. Tear up that fretboard. So we've talked about the lifestyle part of this, all the important considerations. But obviously, then there is the financial part. They go hand in hand. This sounds like something you need to speak with someone about.
* Absolutely. So it's not just your financial advisor, but if you're going to be selling your home, you need to speak to the real estate agent. Figure out exactly what you think you're going to get for the home. Realize that sometimes it costs money to sell the house. So get all of that in place, and then work with your financial advisor to get a proper budget in place. Because where you don't do that, you may end up finding that the move end up-- ends up costing you more than when you were in your old place. So this goes absolutely hand in hand, and it means your real estate agent, investment advisor, your accountant, perhaps all of these people that are helping you to crystallize what it is that you want.
[MUSIC PLAYING]
* Good to see you again, Greg.
* We're going to look at the benefits and perhaps some of the drawbacks of this, but let's start with the potential lifestyle benefits of downsizing.
* So a lot of the clients that I speak to about this, they talk about downsizing for example, to a retirement community. And these people find a new lease on life because all of a sudden, there is community. They have people to play cards with on a random Tuesday or sit around the piano singing the old songs. Some of them describe it to me like going back to college with all of the gossip and all of the drama. And these communities, because they also have events and excursions, it becomes a situation where people realize that when they were in their own home maybe they were a little bit lonely.
- And a lot of these communities are also geared towards increasing care. So if you find yourself needing more care, you can transition to another part of it without actually losing those friendships that you've made. But the most important thing whenever you're going to think about this is the why. Is it financial? Is it physical?
- You now need a little bit more help? Or is it perhaps mental or emotional, because you want to be closer to family for example, or where you are now, you've outgrown it. So those are the three things that you have to first think about before you decide where you're going to end up.
* So there's the upside. You can end up with a community, a new whole sort of social network. At the same time, someone looks at the house says, OK, I need a smaller house. I need a condo. I'm going to reduce my expenses. But then the lifestyle expectations. Things can change. What do you need to be aware of here?
* Oh, there's so many. I mean, first of all, you know, what is the neighborhood that you're moving to? What is the cost of living? Are you moving provinces, because different provinces have different costs of living. And then you have to think about the amenities. You know, do you want to be near a golf course? Do you have other sporting things that you do? Are you a theater person? Do you want to move from the city to the country?
- Do you need-- what's the proximity to grocery stores and other services that you need? Do you need to be close to public transit, or do you drive? There's so many of these. And you have to really examine your life and what's important to you and what you need to have around you during that next stage.
* It could be a rude awakening if you're used the jumping on the subway and then popping up and going to the theater and then like, walking here or there. And big city life doesn't really translate to other areas. Obviously, as people are making this move, they're getting on in life. And at some point, you might need access to health care. You might need even long term care. How important is it to think about those considerations?
* That's one of the biggest. Currently, right now in Canada, one out of five people don't have a primary care physician. That's 6.5 million Canadians. So if you are one of the lucky ones that has a family doctor, you don't want to give that up. And certainly, of course, if you have a medical condition and you need proximity to health services, hospitals, long term care facilities, walk-in clinics, you know, that is so important to make sure that the transition doesn't affect that.
- And of course, don't forget the pets. If you have a vet that you've been very close to, that's also another consideration, because pets are important.
* OK. Let's talk about timing. I mean, people are trying to figure out at what point are you going to give up the house? What point are you going to downsize? How much does timing matter here? Like, sooner rather than later? What's the consideration?
* Timing matters a lot. As hard as it is, you really should be making this transition before you absolutely need to, because we all know long term care facilities have waiting lists. If you don't get on that waiting list-- and then certainly, once you've figured out for example, what your budget is for a new place, the longer time you have to actually look for just the right place, the more chances are that the move is going to be a good one for you. Because if you're forced to do it at a moment's notice, you may end up settling for a place that you're not really fond of or isn't exactly what you would be looking for.
* Now, Georgia, I know through your work, obviously, you hear stories about people who have made this move and perhaps have enjoyed it, but have regretted it as well.
* So I had one client once who didn't really think about how important it was to her to gather the family for those big holiday celebrations. And during the first major holiday, she found herself quite depressed about the fact that she didn't have the room. So in actual fact, she sold the downsized house, bought one a tiny bit bigger, a little bit between the old and the downsized house so that she could have her family around her more often. And then I had another client who she downsized at a time just after her spouse passed away. And with her newfound money, she always wanted to learn to play the electric guitar. And a few years later, I was treated to a really great rendition of a pretty famous guitar solo.
* So she learned to-- I can respect that. You learn to shred with the extra time you got on your hands. Tear up that fretboard. So we've talked about the lifestyle part of this, all the important considerations. But obviously, then there is the financial part. They go hand in hand. This sounds like something you need to speak with someone about.
* Absolutely. So it's not just your financial advisor, but if you're going to be selling your home, you need to speak to the real estate agent. Figure out exactly what you think you're going to get for the home. Realize that sometimes it costs money to sell the house. So get all of that in place, and then work with your financial advisor to get a proper budget in place. Because where you don't do that, you may end up finding that the move end up-- ends up costing you more than when you were in your old place. So this goes absolutely hand in hand, and it means your real estate agent, investment advisor, your accountant, perhaps all of these people that are helping you to crystallize what it is that you want.
[MUSIC PLAYING]
