This is a guest post by Martin, who is preparing for retirement within the next 5 years; no later than his 40th birthday. He is married, has 2 young children and lives and works in rural Alberta as a regional finance manager for a large energy company.
My family and I have lived in small town rural Alberta for the past 5 years after spending 5 years in Calgary. To provide some context, our town has a population of about 3,500. The nearest small city to us is about 150 KM away and the nearest major city is about 250 KM away (definitely not a bedroom community). We plan to stay here and raise our family during our retirement and beyond that once the kids move on. In examining the details of our retirement planning, we’ve found that living in a small town has significantly contributed to our ability to retire early for a number of reasons.
Capitalizing on House Price Differences
Generally, small town housing pricing is considerably cheaper than in cities. In our case, we sold out of the big city and adequately replaced our house in terms of quality and size for considerably less than our city home’s sale proceeds. In terms of our net worth, we effectively converted idle equity (I’ve never considered my primary residence in net worth and retirement calculations) into active financial investments, pushing us closer to our net worth retirement target.
Reduced Opportunities to Spend Money
The businesses that serve my community are utilitarian; not offering much beyond the basics. Spending money on anything else requires a trip to the city or purchasing online. This necessitates patience and planning which are the natural enemies of needless spending. As for services such as dining, there is too little variety to get excited about eating out. As a result, our dining out is less than a third of what it was when we lived in the city and had easy access to great restaurants.
Lower Cost of Living
There are several living expenses that have decreased by the simple nature of our community. Fuel consumption goes down as everything is so close together. Property taxes are generally less given the reduced municipal services. Local pricing on services (mechanics, movie theatres, home contractors, etc.) are also less than in the city.
Cheaper Environment in which to Raise Children
We haven’t had the chance to prove this yet (our children are too young), but we feel that a small town will help us better control the cost of raising children. Peer pressure regarding brands should be less (goes back to the lack of local availability). Extracurricular activity options are limited. Keeping up with the Joneses should not be as difficult in a small town given the lower average household income (although it only takes one over-spender to mess this up).
On the surface, it may seem that any financial benefits from relocating to a small town come at great sacrifice to quality of life. It is true that there are sacrifices involved and there is plenty that I miss about the city (great ethnic restaurants, cultural opportunities, sporting events). However, there are many intrinsic benefits that come from leaving the city that do not show up in a financial calculation (closer proximity to nature, less traffic, cleaner air, more time, greater sense of community, very little crime). For us, these benefits more than make up for any sacrifices we made when we left the city.
Are you considering moving to a small town as part of a early retirement strategy? Would you?