Free as a Snowbird

                With winter around the corner, many Canadians are starting to consider heading south for the season. If you are contemplating the snowbird lifestyle, we’ve outlined some often overlooked items that could have an impact on how you decide to spend your winters south of the border.

 

Lifestyle Choices

                Occasionally, a client or prospective client will approach us and ask, “Can I afford to live somewhere warmer for part of the year?” In many cases, this is less a question regarding financial means, and more a question regarding priorities. Crunching the numbers on affordability might answer the surface level questions regarding what kind of snowbird lifestyle you can afford, however, a client is usually inquiring because they have a nagging feeling that there will be more to consider than just the finances. We like to call these instances “lifestyle choices.”  We ask our clients: What kind of lifestyle are you pursuing? Would you prefer to have a dedicated southern home or the freedom to travel anywhere? Do you feel you would be sacrificing anything by spending a few months away from home?

                Generally, these questions help guide the conversation towards the hidden worries that aren’t addressed by assessing the affordability issue. Whether it is becoming a snowbird, owning a summer cottage, or taking extended vacations, there is often a hidden cost that sticks in the back of our minds even if we can’t put our finger on it. You might be concerned that spending the time away from home means less time with your friends and family, or you might feel that you can’t achieve both your estate goals and your lifestyle goals in tandem. When clients approach us with these questions or concerns, we can help them decide what is more important to them. Achieving the lifestyle you want to live is no simple feat. We feel it is important to council our clients and remind them that before they make a decision, they should consider the tradeoff between lifestyle desires. On the one hand, having the money in investments might make one feel more secure, but on the other hand, having a snowbird home would make every winter that much more enjoyable.

 

A word on renting versus owning

 

               If you are seriously considering spending part of or all your winters as a snowbird, you should consider what your ultimate goal is. Some people choose to own a property in a warmer climate because they like to have it available for their whole family to enjoy. Kids and grandkids can come south to visit for the holidays or over spring break, making great memories down south. This does come with a slight trade off in that owning a property in a foreign country can make your life more complex. It means an additional tax return will be necessary and maintenance costs can become excessive. In the event you pass away suddenly, an additional property can make your estate harder to administer.

                Alternatively, some people prefer to rent somewhere new every year. This gives them the freedom to move around and try different things, however it might make it more difficult to spend time with family or share in the experience with other snowbirds. Without a dedicated home base, you might not find a community to enjoy while living away from home. You do get to avoid the complications of ownership, but you give up the familiarity and simplicity of going to the same place every year. No matter what you decide, make sure you have considered all the potential implications including ongoing tax filing costs and stresses, additional legal fees for cross border wills and estate settlement, and potential vacant property taxes payable depending on where you might own your winter home.

 

Your health matters

 

                One item often overlooked when dreaming of a winter escape is the reality of healthcare in foreign countries. With the cost of healthcare skyrocketing, it is better to be safe than sorry. When considering travel medical insurance, be sure to explore all your options, keeping in mind that every policy is different. Read the fine print and be clear on any conditions or incidents that won’t be covered. Since the pandemic, many providers have revamped how they supply travel medical insurance, specifically to retirees. Also, consider that your health will change overtime. You might have no problems one year, but then a serious medical event could change your ability to afford the snowbird lifestyle. Depending on your health, your travel medical insurance could be one of your largest expenses when considering spending your winters in a warmer climate.                

                In the end, the choice is yours. Assuming you can afford the lifestyle you want the question you need to ask yourself is “what do I want my calendar to look like each year?” We encourage our clients to consider all angles before they proceed so that they can enter their new snowbird lifestyle with their eyes wide open. If you would like to discuss your plans for retirement, feel free to give our team a call at 403-260-0568 or visit our website and request an appointment : www.kozakfinancialgroup.ca