Retiring in Canada - everything you need to know
You've worked hard, saved some money, and now it's time to enjoy your retirement. If you're looking for a new place to live during your senior years, there are lots of issues to consider. From your pre-retirement income, social security, healthcare and infrastructure through to cost of living and freedom, it's important to do your research and compare locations carefully. It's also different if you're considering early retirement. You want to retire in Canada? Well, whether you already live in Canada or want to make the jump across the border, the Great White North offers fantastic opportunities for people during their retirement years.
Advantages of retiring in Canada?
People look at a range of issues when they choose a place to retire, some of which are difficult to quantify. While you can save lots of money by moving south or buying somewhere in a far-flung developing nation, this path can be difficult and is certainly not for everyone. Along with the price of housing and the cost of living, it's also important to look into all of the lifestyle issues that may impact you during your retirement years. Canada is also very diverse, both culturally and geographically, so there are a lot of places to retire, even if you're looking at early retirement.
Retirement planning can take a while. From healthcare and language through to safety and freedom, you want to feel comfortable when you choose the location of your new home. Canada is a fantastic option for North American retirees, with this beautiful and sophisticated nation offering the perfect balance between savings and lifestyle enhancement. While cheaper than many places in the United States, Canada provides better health care, improved infrastructure, and a better sense of individual freedom than its southern neighbour.
Housing costs and lower cost of living
Housing costs vary widely across Canada, with the heated markets of Toronto and Vancouver much more expensive than the national average. While Canadian real estate is known to be expensive, where you want to live will decide whether or not housing costs are cheaper than the United States.
Despite solid growth over recent years, the market is losing some heat, with housing prices declining or flat in 19 of the 27 census metropolitan areas according to the latest Canada New Housing Price Index. There are many reasons for this, with the introduction of tighter mortgage regulations and higher mortgage rates leading to some great deals for retirees.
The cost of living in Canada is lower than the United States, with Canada being 1.7 percent more affordable on average according to the Deutsche Bank survey of global prices. While Canada is still the fifth-most expensive country in the world in which to live, it's cheaper than the top four nations of Australia, New Zealand, Britain, and the U.S. The decline of the Canadian dollar in the last few years is the main reason why Canada is cheaper relative to the U.S, with Canadian prices 25.4 percent higher than U.S prices in 2012 and 1.7 percent lower today.
Affordable and comprehensive health care
When choosing a place to retire, it's important not to place too much importance on the cost of living. While anyone can move to a third world country and save big, the decline in safety and health care will always be significant. Canada has a great health care system compared to the U.S, with services just as comprehensive and either free or much more affordable.
While the Canadian medical system is not perfect due to significant waiting times for non-essential services, essential medical care is free and covers almost everything. While prescription drugs, glasses, and dental care are not covered in Canada, prescription drugs are easily accessible and most of the time much cheaper than they are in the U.S.
This is a great advantage for retirees, although there is one important caveat. In order to take advantage of Canada's great health care system, you need to be a permanent resident of the country. While you don't have to be a citizen of Canada, you can only apply for permanent residency if you live in the country for most of the year and are capable of supporting yourself without public funds.
Fantastic infrastructure and close proximity to the U.S.
Unlike many other popular retirement destinations, Canada features great infrastructure and public amenities. These things can have a huge impact on your quality of life, so it's important that you don't take them for granted. For example, Canadians enjoy a similar level of cell phone coverage, Internet access, and public library access to Americans, along with fantastic sporting facilities and great funding for national arts bodies.
The close proximity of Canada to the United States is also a huge plus, with people able to visit family and friends easily and with minimum expense. If you plan on returning to the U.S often, you can apply for Global Entry from the United States Government to make it faster and easier to cross the border. With the United States borders getting tougher all the time, this can be a huge advantage.
Safety, personal rights, and individual freedoms
When you're retiring, sometimes it's the least tangible things that make most of the difference in terms of your quality of life. Canada is widely recognized as a safe country with a fantastic record for human rights and individual freedoms. According to the Fraser Institute's Human Freedom Index, Canadian residents enjoy more freedoms than U.S residents, at sixth in the world compared to 23rd.
Location and lifestyle options during retirement
There are lots of location and housing options available to retirees in Canada, with independent living options and retirement communities located across the country. When choosing a location, it's important to look at the surrounding community and lifestyle. When choosing a community, it's important to compare the amenities available and how they are likely to impact your lifestyle. From pools and gyms through to social clubs and classes, every community has different assets that need to be compared.
Great retirement locations
Where you choose to retire is extremely important, with hundreds of retirement communities located across Canada. From large urban cities through to sleepy country towns, the place you choose to retire should have what it takes to meet your current and future needs. For some people, this is likely to be a thriving arts scene and shopping district, for others it may be easy access to walking trails and natural attractions.
According to MoneySense, Victoria is the best place to retire in Canada, followed by Ottawa, Orillia, Nelson, Saanich, Stratford, Burlington, Joilette, Kingston, and Cranbrook. When producing their list, they looked at things like arts and cultural attractions, sense of community, easy access to airports, pleasant weather, easy access to transit hubs, great healthcare, low taxation, and plenty of walking and biking trails.
Amenities and active lifestyle options
Retirement communities come in all shapes and sizes, with some places having more amenities than others. When comparing communities, it's important to look at all the facilities available and how they are likely to meet your future needs. Some of the things to look at include gymnasiums, pools, yoga, social clubs, community centers, dining opportunities, educational classes, and lifestyle and wellness facilities.
There's an increasing focus on wellness within retirement communities, including dedicated classes focused on mindfulness, meditation, and spirituality. From brain gym classes that stimulate the mind through to Tai Chi and yoga classes that simulate the body, learning to stay active is a major part of enjoying your retirement.
Some independent living communities also include access to third-party medical services, hairdressers, and beauticians that help you to age gracefully without needing to leave home. Active and independent living is about feeling comfortable and secure while still enjoying your freedom.
Independent living communities place no restrictions on access at any time, with people able to come and go as they like. Along with this freedom, people can also enjoy the comfort and peace of mind that comes with community living. While the availability of services depends on the facility in question, housekeeping, linen and towel services, and meal delivery services are often available.
Retirement living communities vs conventional condos
Retirement living communities, also known as senior living communities, are not the same as conventional condos. While there are many condo communities that have been designed especially for senior living, it's important to understand the differences before settling on an option. While condos are often marketed as communities, they do not have the same amenities and lifestyle options as dedicated retirement communities.
For example, in a conventional condo, exterior building maintenance is taken care of in exchange for a monthly association fee. In a retirement community, both interior and exterior maintenance is included, which is much less stressful for residents. While a senior living community will typically include a monthly fee that includes a wide range of services, conventional condo fees only include building maintenance and amenities.
The biggest difference, however, is in terms of ownership. In a conventional condo, the resident owns the property outright and is responsible for selling it on in the future. In a retirement community, living in the apartment or house does not require ownership, with the company operating the community keeping ownership of the homes in most situations. While there are some dedicated retirement communities that include home ownership, this arrangement is not as common.
Comparing senior living communities
There are lots of things to consider before buying into a senior community. Above all else, it's important to choose an ownership or lease model that meets your current and future needs. There are three common models of senior living communities currently used in North America:
rental senior communities
equity or ownership senior communities
continuing, long-term care retirement communities
Rental communities are the most common model, with this option requiring a lease and usually some type of security deposit or community fee. Rental senior communities typically offer independent living, with an assisted living facility sometimes included on the same premises. Ownership senior communities operate much like standard real estate deals, with residents also paying a monthly maintenance fee and condominium association dues.
Continuing care, also known as a CCRC, is a type of senior community that offers a full “continuum of care." While independent living options are available, residents will also be able to access assisted living and skilled nursing in the same building or campus. This is important, especially when a person is dealing with a pre-existing medial condition.
When retiring in Canada, seniors have the choice between condo ownership, retirement communities, or CCRC. While the size of apartments will be similar to conventional codos, dedicated retirement condos typically come with a wider range of services and higher monthly fees.
Advantages of condo living for seniors
With the real estate market in Canada at bursting point in some locations, more and more people are choosing to live in condos. It's not just about reducing costs, however, condo living is a great way to reduce your workload and enhance your quality of life. Regardless of whether you own or rent a retirement condo, there are a number of advantages associated with condo living.
For example, senior condo complexes are a great way to meet a variety of people in the same age bracket as you. Imagine, all the baby boomers together. Or, Generation X! This ability to access community activities should not be underestimated, especially in the later years of life. Condo living is also a great way to reduce your workload, with the condo association responsible for exterior maintenance, landscaping, shovelling snow, and dealing with plumbing and electricity services.
Many dedicated retirement condos also include interior maintenance, meaning there are no ongoing jobs to worry about at all. Unlike standard condos, senior condos are also likely to include access to medical staff, meal delivery, and other on-site features designed to look after elderly residents. Whether you're looking for completely independent living with full ownership or a rental arrangement, more and more seniors are falling in love with the condo lifestyle.
Cost of living for seniors
The cost of living for seniors in Canada varies greatly according to the type of residence and location. Before saving for retirement, it's important to compare your options and make a budget that accounts for your individual needs and future requirements. Your housing needs may change during your retirement, so it's important to have a contingency fund that takes this into account.
Saving for retirement
Setting a budget for your retirement is crucial, with people advised to start saving as young as possible. Keeping a financial planner, and starting early can be really important later on. While you may not be thinking about your retirement in your 30s and 40s, putting some money down early can have a huge effect despite growing challenges. While low-interest rates have made it easy to borrow money in Canada, they have also made it frustratingly difficult to grow your savings for retirement.
The first step when calculating your budget is estimating your future expenses during retirement. While there are some useful rules-of-thumb such as saving 10-15 percent of your pre-tax income, only you know how much money you'll need during your retirement. You should multiply your annual retirement expenses by 25 years, subtract any government benefits that you'll be receiving, and calculate the savings rate required to make up the difference.
Monthly rents in senior communities
Average monthly rents for residents in retirement communities across Canada range from $1,678 to $3,526. While costs can spiral much higher for luxury accommodation, most communities will fall into this bracket. Generally speaking, higher costs are associated with more desirable locations, bigger and better accommodation, more amenities, and different types of communities.
According to data in the CMHC Senior Housing Report by rating agency DBRS Ltd, Ontario has an average cost of $3,526 per month, with this province having the widest range, the most affordable communities, and the most expensive rates in Canada. Rental prices are a little more affordable in British Columbia at an average of $3,009 per month, with retirement community rents for seniors in Alberta averaging out at $3,015 per month.
The average monthly rent for a standard space in a retirement community in Quebec is much more affordable at only $1,678 a month, with Saskatchewan at $2,880. According to a worrying DBRS report, the national average for senior home rents could reach $4,000 a month by 2026. The problem is mostly one of supply and demand, with more than 2.4 million Canadians aged 65 and older needing "supportive care” by 2026.
Condo prices in senior communities
if you're considering buying into an independent retirement community, once again, prices vary widely depending on the location, amenities, and accommodation size. In the hot market that is the City of Vancouver, the median price of a condo was up 18.7 percent in 2017 to $775,806.
In the City of Toronto, that figure was up 19.6 percent to $515,578. Other markets across Canada are much more affordable, however, with the Greater Montreal Area up 5.3 percent to $313,156, and the median national condo price up 14.3 percent in 2017 to $420,823.
While condo prices in senior communities largely reflect wider market trends, people may pay more or less for certain communities based on amenities and location. According to data from Statistics Canada, condominiums represent roughly one-third of all new dwellings built in Canada over the last five years.
More people than ever before are living in condos, including 30 percent of households in Vancouver and 21 percent in Toronto. While millennials are more likely to live in a condo than people 30 years older, the percentage of condo-dwellers rises again in retirement age after 65.
Retirement associations in different provinces
Canada is a large country with different rules and regulations operating in different provinces. Whether you live in the center of Toronto or in a small Nova Scotia town, it's important to be familiar with the community support services and associations that can help you. If you have plans to retire in Ontario, you can get assistance from the Ontario Retirement Community Association, Community Care Access Centers, and Ontario Community Support Association.
If you're planning a move to British Columbia, make sure to contact the British Columbia Senior Living Association (BCSLA). In Alberta, the Alberta Senior Citizens Housing Association (ASCHA) is there to help. In Quebec, retirees can contact the Association des Résidences et CHSLD Privés du Québec (ARCPQ). Regardless of where you retire in Canada, there's a number pensionable services and fantastic government and community organizations designed to make your transition as easy as possible.
Pensions, retirement benefits, and RRSP’s
The Canadian government joined the retirement income movement way back in 1927, with every Canadian over 70 promised $20 each and every month. While this plan has changed a lot over time, it basically functions under the same principles.
The modern Canada Pension Plan (CPP, or QPP in Quebec) is available to eligible older workers at age 65, with a reduced rate also available up to five years sooner. Canadian residents pay into the program while they are working, which is intended to replace up to 25 percent of your full-time income upon retirement. This benefit is subject to income tax, however, and can also affect the amount you receive from an Employer Pension.
There's also the Old Age Security (OAS) Pension, which is a monthly benefit available to most Canadians 65 years of age or older who have lived in Canada for at least 10 years. It's important to note, however, that people who have lived or worked in countries with which Canada has an agreement may qualify for OAS after as little as one year.
Other than government benefits, there are also employment pension plans and individual savings plans. If you're not part of an Employer Pension plan, you can take up to 18 percent of the income you earn each year and place it in an RRSP(Registered Retirement Savings Plan).
So if you're planning on retiring in Canada, there are many things to consider. Whether you're approaching retirement, or are looking to retire early, look into tax laws, residence regulations, real estate, your pre-retirement income, social security, etc.