Laid off, stayed off.

[Nobulife]

As I walked across the office parking lot to my car for the last time(Feb 2011) I was still reeling from the shock of being unexpectedly laid off when a strange thing happened. I felt a huge weight lifting from my shoulders and when I drove away it was not with anger or fear but with relief and an overwhelming feeling of freedom. It was not a vague feeling but a specific realization that I was finally free from all the BS that the most industrious shoveling could not keep at bay....I was finally free to live a nobul life.
So far it has been a life of angst, uncertainty, self doubt and frustration but all of those combined are preferable to what I had in the workplace.
Within days of the layoff I was at the credit union with a spreadsheet of projected expenses and current and future assets and pension incomes. The planner said retirement was feasible and I am certainly going to make it work.
My husband still works at a non -pensioned, low paying job that he no longer likes but he is hesitant to make the break.
Our plan is to sell our lovely condo and downsize to a small house or mobile home in a small community elsewhere in British Columbia. We had it on the market for 3 months almost sold but when we got that close panicked a little as we had not resolved the where are we going question. The sale fell through which was probably a good thing but now we are off the market and I am starting to get frustrated. It makes sense to stay here until husbands government pensions kick in next year but we could get by on my company pension from my lifelong job that I was forced to take an erp from 4 years ago plus my good unemployment pay that will last until April 2012. Plus I can start one of my government pensions in December after I turn 60. So what is holding us up? Fear I think. Fear that we have to get our next home right as we don't have the finances to afford a mistake.
The planner's idea was that we sell, buy a much cheaper place and invest a chunk that will pay out a monthly amount when I turn 65. But finding a cheap place is quite difficult so my question to any of you who have stuck with me thus far is are we better to invest more money in a better home (and have a lot less money left over)and forgo the added income with the thought that our next and final move would be to sell the house and move into government subsidized care? Or should we stick to the first plan?
By the way the reason we want to move somewhere else is so that we can be near a lake and go fishing without having to spend megabucks on gas.

 

[JBmadera]

I know exactly how you feel, best of luck and welcome!

our plan is to sell our place and move to a much less expensive state (we are in California) and into a much less expensive/smaller home and take the difference and add it to our nest egg.

 

[BigNick]

So what is holding us up? Fear I think. Fear that we have to get our next home right as we don't have the finances to afford a mistake.

Have you considered renting, at least for a year or two ? It may use a smaller percentage of your capital than you think, and it will give you a base to take a long, hard look at the next purchase.

The possibility of renting is "obvious", but when we moved into town in 2006 and waited 18+ months to sell our house outside town which we had bought in 1993, it wasn't at all. It took us several evenings of discussion for the light to click on, because hey, we're comfortably-off middle class people, owning your home is what you do. And with the time it took to sell our house, it was a life-saver.

Five years on, we're still in our rented place, paying about 3.6% of its market value in annual rent. Meanwhile, the paid-off capital of the house is invested, which up to a week or so ago I would have told you is a big win (and is now just a break-even; and of course, we could have put it all in something 100% safe, like AAA Canadian government bonds. )

 

[REWahoo]

Have you considered renting, at least for a year or two ? It may use a smaller percentage of your capital than you think, and it will give you a base to take a long, hard look at the next purchase.

+1

Renting - and the almost inevitable second move that will follow - could be very cost effective insurance for your concerns about making a purchase mistake you cannot afford.

 

[Alan]

+1

Renting - and the almost inevitable second move that will follow - could be very cost effective insurance for your concerns about making a purchase mistake you cannot afford.

+2

We needed to downsize in 2004 and decided to rent first.

Being out of the housing market these days is not going to mean you have to contend with rapidly rising house prices. It is worth taking time to try and make the best decision before buying again.

In our case, 6 months after renting a job opportunity in another State came up and the move from rented place to rented place was very easy. We have moded twice move since then and have still not decided where to "hang our hat"

We just stuck the money into our Wellesley fund and even after this last week's price updates it has an IRR of 6.1% since then, so the money is still available to buy another house at some point.

 

[Milton]

Have you considered renting, at least for a year or two ? It may use a smaller percentage of your capital than you think, and it will give you a base to take a long, hard look at the next purchase.

Definitely worth considering. This June 27, 2011 article may help: Why renting can be the right choice for aging boomers - The Globe and Mail.

 

[Nobulife]

Thanks for the input. I checked out the rental situation in a couple of places where I might settle and the rents are pretty high - not much difference between big city and small town rates, it seems. Seemed to be a lot of wanted to rent ads so maybe one way to go would be to buy a bigger place with a legal suite and rent it out for an income stream instead of buying small and investing the balance. Opinions please.

 

[TromboneAl]

Were you a writer in the advertising or news industries?

 

[Sarah in SC]

Nobul, some of those advertised rates might be negotiable, if there is a glut of them in a given area. I'd think about renting in your situation rather than contemplating being a landlord, at least for now.

 

[WM]

Congrats on your retirement!

My husband and I aren't retired yet, but from what I've read of others' experiences there is often a period of adjustment to go through, especially when the retirement was sudden and unexpected as it was for you. On the one hand, you sound relieved that you're not going to work any more, but on the other hand you express a lot of anxiety about what to do next. From what you've posted, it doesn't sound like there's any rush to do anything. Your husband isn't ready to retire yet, and he's got only one more year until he can get a pension, is that right? Maybe think of this as a transitional time that you can take to decide what you both really want to do. It doesn't sound like one more year of gas money for fishing will break the bank.

 

[packrat44]

Seemed to be a lot of wanted to rent ads so maybe one way to go would be to buy a bigger place with a legal suite and rent it out for an income stream instead of buying small and investing the balance. Opinions please.

IMHO if there is an over supply of places to rent, competing with all the other landlords is not what I would want at this stage in life. This would be a fairly big commitment and would restrict you from other decisions well into the future. Cool down, this is not the time to jump into something you will regret later. Others suggestions of renting (after selling your present house) gives you time to settle into your retired life style. After your DH retires you can try different areas of Canada, urban/suburban/country, travel south to the states for the winter (we see a lot of Canadians in southern Arizona in the winter)' etc. So many possibilities. Time to enjoy and have some fun.

 

[travelover]

By the way the reason we want to move somewhere else is so that we can be near a lake and go fishing without having to spend megabucks on gas.

Have you actually calculated the cost difference? My anecdotal observation is that people that love to fish when working do not do it in retirement nearly as much as anticipated.

 

[Brat]

A few years ago DH and I were on Vancouver Island and noticed that Comax is very popular with CN retirees. The Elderhostel program we attended was titled "I fish and therefore I live."

 

[Chuckanut]

Vancouver BC is certainly and expensive city in terms of housing. It is hard to imagine that the smaller towns are not cheaper, but I will take your word for it. I know that in the states, the difference between a big city such as Portland OR, and a small town like Baker is significant in terms of dollars.

 

[Nobulife]

Were you a writer in the advertising or news industries?

No, I wasn't a writer..just a lowly clerical worker.

 

[DblDoc]

A few years ago DH and I were on Vancouver Island and noticed that Comax is very popular with CN retirees. The Elderhostel program we attended was titled "I fish and therefore I live."

I think you meant Comox. Anything on the east side of Vancouver Island is popular given the (relatively) warm climate. That also tends to keep prices up but they vary greatly depending on the economy.

DD

 

[Ed_The_Gypsy]

Just musing here.

Having lived and worked in Canada for a while, it appears to me that there is a housing bubble up there, especially in the Vancouver area, that has to pop some time. It is expensive everywhere up there. But it is like earthquakes; you know they will happen, but not when.

White Rock is a very desirable area. If you can afford the taxes and fees, you may be happiest staying put. You like your condo, after all. When you really need to sell it, you should have no problem. If you find that you really do have to work, things may pick up later and the most opportunities are in the bigger cities. If you have already established a modest amount of financial independence, you have much more flexibility. It changes your outlook, too.

If you do find another, cheaper place to live, you might consider renting out your condo through a property management company. That way you have cash flow and are still have a foot in the market. If you do this, be very careful how you choose the property manager. We have done it by reputation and references. Also, you cannot just come and go. You have to let it go, in a sense.

Best of luck!

 

[Ed_The_Gypsy]

Considering your situation, I think you should conserve your capital and limit spending. 'Investing in a better home', presumably anticipating future capital gains, does not sound like a good idea to me. It is time to make your money work for you, to return regular dividends to you.

Be wary of planners. If they also sell financial products, they are dangerous to your money.

There is a pretty good magazine up there, Money Sense, that would be a good place to start educating yourselves about how to make your own investment decisions. They have to print a lot of crap because they have to come up with new articles every issue, but they do publicize Canadian versions of the Couch Potato investment concept. Go to the library and read back issues.

You might want to read Scott Burns' articles here: Scott Burns' Articles - AssetBuilder Inc. - Registered Investment Advisor Scott invented the Couch Potato Portfolio and writes a lot about people in our age group.

Then there is the Financial Webring, which is like this forum for Canadians.

And Derek Foster Welcome to the Stop Working Website
once had some good ideas. Worth reading.

Cheers!
http://www.stopworking.ca/

 

[Nobulife]

Considering your situation, I think you should conserve your capital and limit spending. 'Investing in a better home', presumably anticipating future capital gains, does not sound like a good idea to me. It is time to make your money work for you, to return regular dividends to you.

Be wary of planners. If they also sell financial products, they are dangerous to your money.

There is a pretty good magazine up there, Money Sense, that would be a good place to start educating yourselves about how to make your own investment decisions. They have to print a lot of crap because they have to come up with new articles every issue, but they do publicize Canadian versions of the Couch Potato investment concept. Go to the library and read back issues.

You might want to read Scott Burns' articles here: Scott Burns' Articles - AssetBuilder Inc. - Registered Investment Advisor Scott invented the Couch Potato Portfolio and writes a lot about people in our age group.

Then there is the Financial Webring, which is like this forum for Canadians.

And Derek Foster Welcome to the Stop Working Website
once had some good ideas. Worth reading.

Cheers!

Thanks for your thoughtful and informative reply. Only one problem...I have no money to invest. All our "wealth" is in our mortgage free condo. Being in White Rock it is quite valuable and if I killed one tree it would be worth 150,000 more as my peek a boo sea view would become panoramic. But with my luck the damn tree would fall on my building!!!
Seriously though, the plan was/is that we sell and buy something cheaper so we can invest around 100k-150k in a Manulife income plus plan that would pay us a monthly amount once I turn 65.

 

[Ed_The_Gypsy]

Nobulife, I do not think you can cut down a tree in White Rock, even if it is on your own property. In San Francisco, however, some property owners have committed 'arborcide' (coined by eco-activists) by arranging for the tree in the way of their view to die. Impossible to prove, in most cases.

What do you think your condo would rent for? Make your own annuity. Be very careful about annuities. Do a lot of research before you commit.

 

[Nobulife]

Nobulife, I do not think you can cut down a tree in White Rock, even if it is on your own property. In San Francisco, however, some property owners have committed 'arborcide' (coined by eco-activists) by arranging for the tree in the way of their view to die. Impossible to prove, in most cases.

What do you think your condo would rent for? Make your own annuity. Be very careful about annuities. Do a lot of research before you commit.

Not about to commit any act that ends in "cide"!!!! We have a no rental by law for our strata building so it is stay or sell.

As for investing, I am inclined to see less risk in putting it in a sock under the mattress than playing the market. In Canada we have RRSPs and I wonder if that would be a better way to go with some of it, DH and I would both have a lot of unused capacity in that area. I am leery of being sold a product though I do trust the people at the credit union over the banks.

 

[Meadbh]

As for investing, I am inclined to see less risk in putting it in a sock under the mattress than playing the market. In Canada we have RRSPs and I wonder if that would be a better way to go with some of it, DH and I would both have a lot of unused capacity in that area. I am leery of being sold a product though I do trust the people at the credit union over the banks.

Welcome Nobulife. I am concerned that you are describing RRSPs as if they are the opposite of "playing the market". RRSPs can contain practically any type of securities. They work best when you invest within them early in your career and get the early tax benefits. Don't forget that the income tax has to be paid when you take the money out. In your case, you would have a relatively short period of time before you need to withdraw, and therefore little opportunity to grow the investments in your RRSPs. TFSAs might be another vehicle to consider. You don't get any immediate tax breaks, but you never pay taxes on the earnings.

Your initial idea about selling the high priced condo in White Rock and buying a trailer makes financial sense, but it seems like you two are not emotionally ready to do it, nor do you have a detailed plan. Selling and renting may be a good option. In any case, I think you need to do a more detailed analysis of your finances and options before you make any irrevocable decisions. How much pension will you both have? What are your expenses now? What will they be in retirement? How much will you need to draw down on your savings to supplement the pensions? Is that withdrawal rate sustainable? How much cushion do you need to cover contingencies?

I second the recommendation to check out the Financial Webring Forum, which has some very sophisticated Canadian expertise. Another site to check out is the Canadian Money Forum Canadian Money Forum - Powered by vBulletin. Also take a look at Jim Otar's book and retirement calculator at otar retirement calculator. You owe it to yourselves to be as informed as possible. Use financial insitutions but don't rely on their advice alone.

 

[Ed_The_Gypsy]

We have a no rental by law for our strata building so it is stay or sell.

Bummer. That limits your options. You are wise to look before you leap.

Meadbh is right about RRSPs. They are just an account, not an investment product.

Meadbh is also right about the Tax-free Savings Accounts. They are a gift from God! By all means, use them fully. They are like our Roth IRAs, except that if you do not use all your entitlement one year, you can carry it over! If we do not use our entitlement for this year, we lose it. You are very fortunate!

You may be thinking of GICs--Guaranteed Investment Contracts, I think they are. Like Certificates of Deposit, except issued by insurance companies. When you buy such a product, always diversify. Buy from several companies, not just one. You should be fine, but not much protection against inflation.

Would you consider living on a boat? It might be cost-effective in BC.

I do not understand why property is so expensive in Canada. With 1/10th of the population of the US and about the same about of area, why should that be? Somebody wants it to be expensive, I think.

I believe that property was down in parts of Abbottsford. Might be worth a look.

Beware of property on aboriginal lands, by the way. But if you read the papers, you know about that.

 

[DblDoc]

I do not understand why property is so expensive in Canada. With 1/10th of the population of the US and about the same about of area, why should that be? Somebody wants it to be expensive, I think.

This may help explain why - the vast majority live in the very southern part of the country :



DD

 

[Meadbh]

....and in BC (which stands for Bring Cash), there are many Chinese expats who want a home here. There are also people like me who move here for the climate and the scenery. Heck, it's a great place to live.