Why it’s not always the best move?
Downsizing is one of the most common topics that comes up with Canadian retirees and near-retirees.
But while it’s often framed as an obvious solution of sell the family home, buy something smaller, and free up equity to fund retirement, in practice, the decision is far more complex.
The first question I always ask clients is why they want to downsize. In many cases, the goal is to unlock equity and increase income, but what we often find is that the extra cash clients expect doesn’t fully materialize.
Between helping children get into the housing market, replacing vehicles, funding travel, or covering large one-time expenses, much of that equity gets absorbed quickly.
In reality, clients are often surprised to learn that they may only walk away with 40–50% of what they thought they would after everything is said and done. In some situations, they’re not really freeing up equity at all, they’re simply moving it into another property.
Condos, a common downsizing choice, bring additional considerations, especially as maintenance fees, reserve fund health, and the potential for rising costs are often overlooked. On top of that, moving from a single detached home into a weaker condo market can expose clients to growth risks they didn’t anticipate.
For those focused primarily on income, downsizing isn’t always the best answer at all.
Many clients ask about reverse mortgages, but we’re often hesitant to recommend them due to their inflexibility. Instead, we frequently discuss using a home equity line of credit, allowing clients to access their equity when they actually need it, whether for lump-sum expenses or periodic withdrawals, without being locked into rigid terms.
For clients who still want to travel or avoid being tied to one location, owning another property can be more limiting than freeing. In some cases, renting in a retirement or lifestyle-focused community makes more sense than taking on the responsibilities of ownership, especially if future moves are likely.
Downsizing can absolutely be the right decision, but it shouldn’t be automatic.
Like every major financial choice, it needs to be evaluated in the context of the client’s overall plan, the realities of the housing market, and the lifestyle they want to maintain. The right answer isn’t the same for everyone, and that’s why careful planning matters.
Carlo Cansino is a Senior Financial Advisor with CI Assante Wealth Management Ltd. The opinions expressed are those of the author and not necessarily those of CI Assante Wealth Management Ltd. Please contact him at (905) 771 - 5200 or visit https://tmfg.ca/ to discuss your circumstances prior to acting on the information above. CI Assante Wealth Management Ltd. is a Member of the Canadian Investor Protection Fund and the Canadian. Investment Regulatory Organization.
