With another rainy, snowy and chilly Canadian winter looming, the thought of migrating to a southern Sunbelt becomes more and more attractive for many retirees. Each year more than 500,000 Canadians spend significant periods of time in the United States as so-called snowbirds, and that number is expected to climb north as more snowbirds decide to fly south.
But with the lower Loonie, now more than ever, those thinking of joining the flock need to plan financially before making the decision. A great place to start is to do some research and talk with friends and family with snowbirding experience to uncover what to expect. While gathering information and evaluating whether snowbirding is right for you, ask and answer these 4 questions:
Should I rent or buy?
There are many different views on the pros and cons of renting or buying your vacation property, and the decision to go either way can be made for a variety of reasons. Some are more comfortable taking the plunge right away while others are more cautious and prefer to test out a variety of destinations before deciding to purchase in one location. To figure out where you stand, try answering these questions:
- Are you willing to hire people to perform maintenance while you’re not there?
- Can you afford to own two homes financially and emotionally?
- Is part of the fun getting to vacation in a new place every year?
- Have you considered the cross-border tax implications associated with owning?
If you are a recent retiree or just starting to plan, renting may be the better option. It gives the flexibility of changing your destination each year, and helps you avoid some additional costs and responsibilities such as; property management and maintenance. However, as more and more Canadians hit retirement age, finding a rental home that fits your wants and needs can become increasingly difficult.
How much will I need to live the lifestyle I want?
A snowbird lifestyle is different from going on a short vacation while still working. Get in the “we live here” mindset and think about the kinds of things you will want to do, see and buy. Will you be comfortable in a modest, older place with few amenities? Or will you want a modern, well-furnished condo on the water with a swimming pool and lush spacious grounds? There are ways to economize and still be happy. Create a budget and be realistic for the kind of experience you can afford and yet still enjoy.
Is my health care covered?
While it’s not something you want to think about, health emergencies can and do happen while travelling and they are more expensive than you’d think. Out-of-pocket costs for U.S. healthcare typically run in the tens of thousands of dollars (and up), and can put a major dent in your winter budget if you haven’t properly accounted for them. Check with your health care provider to find out at what rate you’ll be reimbursed for emergency care and shop around with travel insurance providers to find the best price for your needs.
How will you feel being away from friends and family?
That warm sunshine and clear blue sky can make it seem like all your worries and unhappiness will float away. The reality is it can be harder than expected to be away from your loved ones for extended periods of time, and can make you feel emotionally low. With advances in technology a quick phone call or video chat are easier than ever, but you should ask yourself if this will be enough to fulfill your needs. If you are happiest being near home in case of major events, such as the grand kids’ first steps, Sunday night family dinners, or a casual lunch with your closest friends, make sure you’re honest with yourself in deciding if extended time away is right for you.
The Bottom Line
Now that you’ve thought about some of the factors that can influence your decision to snowbird, you may have a better idea whether or not an extended trip south is the right move for you. Talk with your financial advisor for guidance to ensure your finances are in before making a final decision. Speaking with a cross-border expert is another good idea to help clarify tax or immigration questions.
The bottom line is that your snowbirding success depends a lot on what you do before you go and a lot less on what you do after. Planning is the best way to guarantee your annual migration is enjoyable, relaxing and worth every penny.