Retire abroad

For many years, as she toiled away as a legal assistant, Anne Heynen looked forward to spending a few weeks in Mexico each winter. While the chill winds blasted her Okotoks, Alta., home, she and her husband, Herman, walked the long, sandy beaches and swam in the azure seas of Mazatlán and Puerto Vallarta. "Occasionally, we'd go for three weeks, but four weeks was just too expensive," she says.

The Heynens dreamed of someday whiling away their golden years on their own little tract of tropical paradise, but they didn't think it was within reach on their combined retirement earnings from Canada Pension Plan and a modest investment portfolio. (See: Help, I forgot to save for retirement!) Then, about 10 years ago, they discovered the city of Mazatlán's El Centro area, with its pretty houses, open-air marketplace, cafés and restaurants. The biggest bonus: It was cheap.

In 2002, the Heynens bought a two-bedroom, fully furnished home in Mazatlán for about $50,000 and now spend six months of the year livin' la vida local. While in Mexico, the couple, now in their early seventies, eat out regularly, go to the theatre and socialize at Canucks, their local bar. "We can exist on the money we have coming in monthly in Canada," explains Heynen. "You can live very well in Mexico for less than $2,000 a month."

A growing number of Canadians yearn to follow in the Heynens' footsteps. According to a 2008 TD Waterhouse survey, when we retire, 45 per cent of us hope to live elsewhere for at least part of the year. Our brutal winters are the primary reason, but in today's economy financial considerations increasingly play a role. Women, in particular, may long for the ability to live the good life at a discount. The low-income rate among senior Canadian women (8.4 per cent) remains more than double that among senior men (3.2 per cent). And, in 2005, more than 20 per cent of unattached women age 65-plus had low incomes when measured by Statistics Canada's after-tax Low-Income Cut-Off.

Looks can be deceiving

That said, packing up and moving to a new location, particularly one with an unfamiliar culture, foreign currency and different tax laws, is not a decision to be taken lightly, warns Patricia Lovett-Reid, the 51-year-old senior vice-president of TD Waterhouse Canada. She cautions against buying property abroad on a whim. "Real estate can be a very emotional purchase," she says. "People get carried away because they love a place and they love the lifestyle. You can't forget that a home is an asset, and it can appreciate or depreciate in value, so make an informed decision."

Read on for a few key factors you'll want to consider before retiring for all or part of the year outside of Canada.