Pivoting Your Retirement Plan in Alberta: What to Do When Downsizing Costs More Than You Expected
Renee Huse, founder of Spire Mortgage Team in Alberta, has sat across the table from so many clients who thought downsizing would be their golden ticket into retirement — only to find out the math told a different story.
Here’s how it often starts: you’ve paid off your big family home in Calgary, Edmonton, or Red Deer. You’re ready to move into something smaller, more manageable, maybe in Airdrie or Lethbridge. You picture a lower mortgage (or none at all), less upkeep, and a nice lump of cash in the bank to enjoy your retirement.
But when you start looking at homes, reality hits. The “smaller” places you love — single-level bungalows, well-kept condos near amenities — are selling for almost the same price as the home you just sold. Sometimes, they’re even more expensive.
If this sounds familiar, you’re not alone. The good news? You still have options. Let’s walk through what’s going on in the Alberta market, real numbers from a client story, and the strategies that can help you pivot your retirement plan with confidence.
Table of Contents
- Why downsizing can be more expensive
- The emotional side of downsizing
- Alberta cost reality check
- Real Alberta case study
- Three strategy pivots that work
- Checklist before you list
- Glossary
- FAQs
- Talk to the Spire Mortgage Team
Why Downsizing Isn’t Always Cheaper in Alberta
The traditional logic is simple: sell big, buy small, invest the difference. In practice, a few Alberta realities can derail that plan:
- Property-type premiums: Bungalows, villas, and newer, low-maintenance condos — the exact homes many retirees want — carry a premium in Calgary and Edmonton.
- Location upgrades: Moving from a suburban two-storey to a smaller home in walkable inner-city neighbourhoods (e.g., Old Strathcona, Kensington) often means paying more per square foot.
- Accessibility and aging-in-place: Even if the sticker price is lower, converting baths to walk-in showers, adding railings, lighting, and ramps can quickly eat into equity.
- Transaction costs: Realtor commissions, legal, moving, property tax adjustments, and condo reserve contributions (where applicable) often take a larger bite than expected.
The Emotional Side of Downsizing
Downsizing isn’t just a financial move — it’s an emotional one. Many of our clients start the process feeling excited for a fresh start and relieved at the thought of less maintenance. But as the search unfolds, surprise can set in when the “smaller” homes they love come with bigger-than-expected price tags. There’s often a deep sense of nostalgia about leaving a family home filled with memories, and for some, the logistics of selling, buying, and moving all at once can feel overwhelming. These feelings are completely normal. That’s why we slow the process down, get the numbers in front of you early, and explore multiple strategies so your next move feels confident, not rushed.
Alberta Cost Reality Check
Here’s a simple cost map we review with clients before they list. Tweak the numbers to your situation — the structure is what matters.
| Line Item | Typical Range (Alberta) | Example ($) |
|---|---|---|
| Sale price (existing home) | Market driven | 550,000 |
| Realtor & legal on sale | ~4–6% + legals | 16,500–33,000 + 1,200 |
| Purchase price (smaller home) | Often close to sale price | 495,000 |
| Renovations/accessibility | 5,000–30,000+ | 25,000 |
| Purchase legals, title, tax adjust. | 1,800–3,000+ | 2,200 |
| Moving & setup | 1,000–5,000+ | 3,000 |
| Equity left for investing | Often less than expected | ~12,000 (in our case study) |
Real Alberta Case Study: When Downsizing Became an Upsize
The Situation: A couple in their early 60s owned a 2,400 sq. ft. detached home in Red Deer with no mortgage. They planned to sell, move into a newer 1,200 sq. ft. bungalow in Lethbridge, and invest the leftover equity to supplement CPP and RRSP withdrawals.
The Expectation: Sell for $550,000 → Buy for $350,000 → Bank $200,000 for retirement investments.
The Reality: After selling at $550,000, the bungalows they wanted in Lethbridge — close to amenities, under 15 years old, single-level living — were in the $475,000–$525,000 range.
- Purchase price: $495,000
- Renovations for accessibility: $25,000
- Total spent: $520,000
Net Equity Released: $550,000 (sale) − $520,000 (purchase + renos) − $18,000 (selling & moving costs) = $12,000 left over.
Our Pivot Plan:
- Reverse mortgage capacity on the new home at age 65 to access up to ~$200,000 tax-free later, preserving portfolio longevity.
- RRSP withdrawal timing: Increase withdrawals in early 60s to allow CPP deferral to 70 for higher lifetime benefits.
- Rental add-on: Purchase a modest Red Deer condo with a rental mortgage at 4.54% (5-yr fixed) to build an additional cash-flow stream.
Three Strategy Pivots When Downsizing Costs More
1) Consider a Lateral Move with Cash-Flow Tools
Instead of chasing a “smaller is cheaper” myth, consider a similar-priced home that reduces maintenance (bungalow, newer build, condo with strong reserve). Free up flexibility with a HELOC or future reverse mortgage rather than squeezing every last dollar out of the purchase today. When comparing mortgages, review your mortgage prepayment privileges so you keep options to accelerate or pause as income needs change.
2) Use a Small Conventional Mortgage to Protect Investments
At today’s conventional 5-year fixed ~4.34%, a small mortgage may cost less than selling investments in a down market. As a sense check: every $100,000 borrowed over 25 years at 4.34% is roughly $547–$550/month (P&I). For $300,000, expect about $1,640/month.
3) Split Your Equity: Part Home, Part Income Engine
Rather than putting every dollar into the new place, earmark a portion for a conservative, income-focused portfolio or a carefully underwritten rental (Grande Prairie or Airdrie condos can work with the right numbers).
Checklist Before You List
- Get a professional market evaluation on your current home so you know what you can realistically sell for.
- Research your target neighbourhood — what’s the going price for the home style you want?
- Factor in all moving costs — legal fees, realtor commissions, property tax adjustments, and moving expenses.
- Consider renovation or accessibility costs if you’ll need to modify the new place.
- Have a backup financing plan — whether that’s a small conventional mortgage, a HELOC, or a future reverse mortgage.
Glossary (Alberta Mortgage Context)
- Downsizing: Selling a larger property to buy a smaller one, often to reduce upkeep and free up equity.
- Reverse Mortgage: A loan secured against your home with no required monthly payment; repaid when you sell or from the estate.
- HELOC (Home Equity Line of Credit): A revolving credit line secured by your home, used for projects or cash-flow smoothing.
- Equity Release: Converting part of your home’s value into usable cash without selling it outright.
- Prepayment Privileges: Contract options to make extra payments or increase payments without penalty (varies by lender).
- Conventional Mortgage: A mortgage with 20%+ down payment (or equivalent equity) on an owner-occupied home.
- Rental Mortgage: Financing designed for non-owner-occupied properties, underwritten to rental income and reserves.
- Accessibility Renovations: Home modifications (grab bars, walk-in showers, ramps) for safe aging-in-place.
FAQs
Should I still downsize if I can’t free up much equity?
Maybe — if your main goal is lower maintenance or better location, it can still be worth it. We’ll shift the plan to focus on cash flow rather than a lump sum.
Can I get a mortgage in retirement?
Yes. We qualify using pension income, CPP/OAS, RRIF withdrawals, investment income, or asset depletion methods. Reverse mortgages are also an option with no required monthly payment.
Are condos always cheaper than houses in Alberta?
Not always. Popular bungalow villas and well-managed low-rise condos can be just as expensive as detached homes in desirable areas.
How far in advance should I plan the move?
Ideally 24–36 months. That gives time to prepare the home for sale, study target neighbourhoods, and pre-approve financing options.
What interest rate should I plan around?
For planning examples, we generally model: insured ~3.99%, conventional ~4.34%, rental ~4.54%, Alt-A ~5.49%.
Talk to the Spire Mortgage Team
Give us a call or fill out an application at this link: https://spiremortgage.ca/apply-now and our team will get in touch with you to start building a plan that suits you.
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Written by the Spire Mortgage Team, Alberta’s strategic mortgage planning experts.
Learn more: https://spiremortgage.ca
