How Far Will My Money Go in a Retirement Residence? How to Know What You Can Afford
By Kelley Keehn
If you’re considering moving into a retirement residence, you’re likely wondering how far your money will go. It’s a natural question to have—yet not always an easy one to answer on your own.
Assessing Affordability: What the Numbers Say
I spoke with Jason Heath, a fee-only Certified Financial Planner with Objective Financial Partners Inc., to help crunch the numbers.
“Let’s say the retirement residence you’re interested in comes in at a monthly cost of $4,500 per month,” Heath says. “That may seem like a lot of money to someone who hasn’t paid rent or a mortgage for many years. But for someone receiving the maximum Canada Pension Plan (CPP) and Old Age Security (OAS) pensions—about $21,000 per year—they may only need about $200,000 of proceeds from a home sale to fund six years of costs in a retirement residence. This assumes the monthly cost increases by 3% annually, as well as a 3% annual return on the home proceeds.”
What about markets in Canada where home prices have skyrocketed in recent years? “For homeowners in expensive housing markets like Vancouver or Toronto, where the average detached home price is well over $1,000,000, they may be able to use the resulting investment income from a home sale alone to fund the cost of a retirement residence,” explains Heath.
In other words, your home equity may be the key to unlocking a comfortable, secure, and maintenance-free lifestyle in a retirement community.
Considering Higher Levels of Care
For some older adults exploring retirement living, a higher level of daily care may be needed to live well—such as assisted living or memory care services. Heath considers this scenario too:
“If someone’s care costs were higher—say, $6,000 per month—and a person’s home proceeds are $295,000, that might fund six years of assisted living or memory care. This assumes maximum Canada Pension Plan (CPP) and Old Age Security (OAS) entitlement and a 3% return on the home proceeds.”
By evaluating your care needs early, you can plan confidently for the future—and ensure you have the resources to live well with the right level of support.
Work with a Certified Financial Planner
If you’re trying to understand how far your money will go, consider working with a Certified Financial Planner who specializes in income planning projections. These professionals can help you assess your total assets, sources of income, potential investment returns, cost of living, inflation rates, and the impact of tax benefits or federal support programs.
With professional advice, you can make a clear plan that balances your financial security and quality of life.
Finances with Kelley Keehn: How far will my money go?
Compare Residences to Find Your Best Fit
An important part of financial planning is understanding what retirement living actually includes. Visit several retirement communities to compare services, amenities, and costs. Many seniors find that meals, housekeeping, activities, and transportation—all included in one monthly fee—offer better value and convenience than living at home.
Once you’ve gathered this information, your planner can help you determine how to comfortably support your preferred lifestyle today and in the future.
Your Home Equity Can Go Further Than You Think
Many Canadians underestimate how far their home equity can stretch. In fact, many seniors have more than enough to fund several years in a retirement residence and still leave an inheritance for loved ones.
Financial planning helps ensure that where you live, how you live, and how you fund it all align with your goals and peace of mind.
Start Planning Your Next Chapter
Deciding where—and how—you want to live is one of life’s most meaningful choices. With the right planning, you can enjoy a comfortable, secure, and worry-free lifestyle in a Chartwell retirement community.
For more financial advice about retirement living, download Chartwell’s Affordability for Senior Living Guide.
