News

Being a snowbird can have its challenges, pitfalls

(Special) – Each year, an estimated one million plus Canadians 55 and older head south of the border to escape the frigid winter temperatures up north. These snowbirds spend at least a month in popular U.S. destinations such as Florida, Arizona, California and Texas, with a large number staying from three to six months. In Florida alone it is estimated that more than half a million Canadians own property.

While becoming a snowbird may be the dream of millions of Canadians, life in the sunny south can present its own challenges and have some pitfalls that many people may not fully know about and underestimate.

“The fact of the matter is that spending a lot of time in the south can create concerns about politics, finances and liabilities,” says Brad Pashby, a financial adviser with Sun Life in Vancouver. “There are a lot of potential pitfalls that snowbirds should be aware of.”

One of the first things newly-retired snowbirds may underestimate is their income needs in retirement.

“The more time off you have the more time you have to spend money, no matter where you are, on leisure activities like travel, eating out and golf memberships,” says Pashby. “These things all are very nice but many people underestimate the cost of enjoying yourself.”

The cost of living and leisure activities in the south is exacerbated by the current exchange difference of around 25 per cent between the Canadian and U.S. dollars, a fact that many snowbird newbies may forget to factor in when planning their trips.

Many Canadian snowbirds may not know they can run the risk of losing their provincial health insurance coverage if they spend too long outside of Canada.

Each province and territory has residency rules which have to be followed to remain eligible for government health insurance coverage. You should check to see the rules for your province, but Pashby says 180 days away from home is a good rule of thumb.

Snowbirds who spend extended periods in the south at some point will probably have to address the issue of whether they should to rent or buy their accommodation.

Purchasing property raises a whole series of issues. “This is a big decision,” Pashby says. “For one thing it ties up a lot of capital, and if you decide to rent your property while you are not there it creates income in the U.S. which creates U.S. tax issues. It really makes sense to consult with a financial adviser who can explain what’s involved so you can be sure this is right for you.”

Travel health insurance is another major issue. Your provincial or territorial health plans unlikely will cover medical bills if you get sick or injured while you are away, so you may need to purchase additional coverage. This can be expensive but it would pall very quickly compared to the out-of-pocket cost of a few uninsured days in hospital in the United States.

Being away for an extended period also results in some added responsibilities to keep things going at home.

Let your home insurer know you’ll be away and they should provide you with a list of what needs to be done to ensure your home coverage stays in effect.

Turn down your heat, but don’t turn it off, install timers on indoor and outdoor lights, hire someone to clear the snow and get someone to collect mail, flyers or local newspapers that land at your door. And make sure your will and powers of attorney are all up to date in the event that the unexpected happens.

There are a lot of things to take care of when you go away for an extended period, so careful planning and knowing the issues can go a long way to ensuring you have a safe, secure and happy time away from home.

Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.

Talbot Boggs , The Canadian Press