Advertisement
Canada markets closed
  • S&P/TSX

    21,837.18
    -11.97 (-0.05%)
     
  • S&P 500

    5,149.42
    +32.33 (+0.63%)
     
  • DOW

    38,790.43
    +75.66 (+0.20%)
     
  • CAD/USD

    0.7386
    -0.0003 (-0.04%)
     
  • CRUDE OIL

    82.67
    -0.05 (-0.06%)
     
  • Bitcoin CAD

    89,790.92
    -1,597.81 (-1.75%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • GOLD FUTURES

    2,165.20
    +0.90 (+0.04%)
     
  • RUSSELL 2000

    2,024.74
    -14.59 (-0.72%)
     
  • 10-Yr Bond

    4.3400
    +0.0360 (+0.84%)
     
  • NASDAQ futures

    18,188.75
    -42.75 (-0.23%)
     
  • VOLATILITY

    14.33
    -0.08 (-0.56%)
     
  • FTSE

    7,722.55
    -4.87 (-0.06%)
     
  • NIKKEI 225

    39,498.35
    -242.09 (-0.61%)
     
  • CAD/EUR

    0.6791
    -0.0001 (-0.01%)
     

What’s the most expensive province to retire in?

What’s the most expensive province to retire in?

Canadians know that retirement preparedness hinges on every little penny put away earlier in life, yet many still wonder if they have enough to get by in post-work life.

A recent survey by the Canadian Payroll Association found that 76 per cent of Canadians only have 25 per cent or less of what they think they’ll need in retirement. Another poll, this one by RBC, found only 39 per cent tucked away some funds towards retirement savings in 2014 and 30 per cent haven’t even started saving. Around half of retired Canadians (48 per cent) told Angus Reid pollsters they were worried about outliving their savings.

But what these polls fail to assess is that some provinces are better than others when it comes to retiring. We take a look at how the provinces stack up from taxes to the cost of living and retirement housing to health care.

Your friendly local taxman

The biggest variance from province to province is taxes, explains Brian Wruk founder of Transition Financial Advisors Group – which helps both Americans and Canadian navigate cross-border finances and retirement.

ADVERTISEMENT

“Financially, the maritime provinces [are least attractive] because of the tax rates,” says Wruk.

New Brunswick is the highest with its 2015 top marginal tax rate sitting at 54.75 per cent and Nova Scotia at 50 per cent.

“Retirees generally live off of retirement income like pensions, RRSP withdrawals, CPP and Old Age Security,” he says. “The problem is this is all considered “ordinary income” by CRA and taxed the most punitively.”

But provinces like Quebec and Ontario aren’t far behind, adds Wruk, with the former using a top marginal tax rate of 49.97 per cent and the latter sitting at 49.53 per cent.

It’s a sliding scale from there with Prince Edward Island at 47.37 per cent, Manitoba at 46.40 per cent, British Columbia at 45.80 per cent, Yukon and Saskatchewan at 44.00 per cent, Newfoundland and Labrador at 43.30 per cent, Northwest Territories at 43.05 per cent, Nunavut at 40.50 per cent and Alberta at the bottom with a top marginal tax rate of 40.25 per cent.

Cost of the easy life

But high tax rates aren’t always a deterrent. Cost of living also factors in says Chris Buttigieg, senior manager of wealth planning strategy at BMO.

“There was a survey we had done this past year looking at how much Canadians were spending in retirement and when we looked at it from a national perspective, the average amount spent was about $2,400 per month,” he says.

In direct contrast to Atlantic Canada’s top shelf tax rates, the region actually proved to be the least expensive for retirees according to the survey with retirees spending, on average, $1,975 a month.

B.C. came in close second at $2,073, while Quebec and Ontario followed at $2,214 and $2,534. Alberta proved to be the highest at $2,648.

“The main monthly expense that was consistent throughout was housing and that’s a huge issue with the value of real estate and the affordability in the major urban centres and of course with the low interest rate environment, there’s this risk that are we taking on too much debt perhaps,” says Buttigieg. “Especially for retirees, carrying debt into retirement is a major expenditure especially when it’s a mortgage – when the income tap is turned off, there are only so many sources of income that one will have.”

Home sweet home

Not all retired Canadians can stay at home, some will take up in seniors housing where care is closer by. But retirement homes come with their own hefty price tags, according to the Canadian Mortgage and Housing Corporation’s 2015 Seniors Housing report.

Provincially, P.E.I. leads the pack at $2,782 a month for the benchmark bachelor unit or private room where meals are included in rent. Ontario follows close by at $2,776, then Nova Scotia at $2,707, Saskatchewan at $2,536, New Brunswick at $2,395, Alberta at $2,329 a month, Newfoundland at $2,105, B.C. at $2,021, Manitoba at $1,815 and finally, Quebec at $1,497 a month.

Healthy chunk of change

Another one of the biggest variances between provinces is health care, says Susan Eng, executive vice president of CARP – a non-profit and advocacy organization focused on the interests, rights and quality of life for Canadians as they age.

“These are the things that really eat into a person’s budget,” laments Eng. “If you can’t get publicly funded or you can’t get into a nursing home, you have to pay for it.”

One of the issues with drugs is that in addition to the fact that there is different coverage plans across the country, drugs have become very expensive.

“Not just for what they call the orphan diseases where only one in 2,000 get this condition,” explains Eng. “These are drugs for arthritis for example, and they are hitting $2,000 a month – this becomes a serious problem when you don’t get any public coverage for it.”

Although Statscan doesn’t have senior-specific data on out-of-pocket health care expenditure, the agency’s survey of 2013 household spending in this realm paints part of the picture. B.C. and Quebec are the most expensive in this regard with the average household spending $2,790 and $2,771 respectively. The next closest is P.E.I. with households paying around $2,546 out of pocket on health expenses. Alberta follows at $2,406, then New Brunswick at $2,382, Nova Scotia at $2,211, Ontario at $2,127, Newfoundland and Labrador at $2,125 Manitoba at $2,017 and Saskatchewan the most inexpensive at $1,945.

So where to?

By our four metrics – taxes, cost of living in retirement, seniors home rent and average out of pocket for healthcare – the Atlantic provinces are the most expensive to retire in with P.E.I. leading the pack followed by New Brunswick and Nova Scotia. Surprisingly, Newfoundland is the least expensive.

But cost, says Buttidieg, is a relative thing.

“There’s always a trade-off between what a retiree might be willing to forego if it means being closer to their family or in the location they want to live,” he says.