Max and Erica want to travel more as a family and eventually give each of their children a property.Christopher Katsarov/The Globe and Mail
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Max is a corporate executive earning $205,000 a year. Erica has her own management consulting company that nets about $150,000 a year after expenses. He is 54 and she is 42. They have two young children, 4 and 8, and a mortgage-free house in the Greater Toronto Area. They also have an investment property.
The couple are looking to the day maybe five years from now when they can leave behind their high-stress, full-time jobs and work part-time.
In the meantime, they want to buy a roomier house, which would entail borrowing, buy a second investment property, and provide for their children’s higher education. They also want to travel more as a family and eventually give each of their children a property.
How much income would they need to maintain their standard of living if they decide to work part-time? Max asks in an e-mail. Their semi-retirement spending goal is $120,000 a year after tax. “It’s a puzzle,” he adds. “We’d like to see how realistic all of it is, or if we need to adjust/make sacrifices on any of these.”
In this Financial Facelift, Shay Steacy, a certified financial planner at Modern Cents, an advice-only financial planning firm based in Mississauga, looks at Max and Erica’s situation.
Why widows face a significant income drop and fewer tax advantages
When a retired client’s spouse dies, they’re faced not just with grief but a potential drop in income, writes Globe Advisor reporter Deanne Gage in this Investing article.
Justine Kelly, a financial planner at Modern Cents in St. Thomas, Ont., says it’s common for one spouse to have a defined-benefit pension plan but the other not to have a pension at all. That leaves a significant gap if the spouse with the pension dies first.
Couples often take advantage of pension income-splitting to lower their overall net incomes, but that opportunity disappears when a client becomes single, often resulting in higher taxes. Survivor benefits from workplace pensions are considerably lower, and Canada Pension Plan (CPP) and Old Age Security (OAS), in most cases, do not pass on to the surviving spouse at all.
Around 20 per cent of Canadians over the age of 65 are widowed, according to Statistics Canada, with women the more likely survivors.
Evan Parubets, head of advisory services at Steadyhand Investment Funds Inc. in Toronto, says the tax changes widows experience are often a huge shock.
“Their income taxes have gone up but their cash flow often goes down,” he says.
Read the full story here.
A smart solution for people who refuse to delay CPP to get more money
In the eyes of people planning their retirement, the Canada Pension Plan has a fairness problem, says personal finance columnist Rob Carrick in this Opinion article.
The CPP offers fatter payouts if you delay the start of your retirement benefits past age 65, but there is little take-up of this offer because people worry about dying prematurely. In that case, money put into the CPP while working is seen as being lost.
Addressing this perceived unfairness is the focus of a recent research paper that aims to improve decision-making by CPP recipients. The solution the team behind this research came up with is brilliantly simple. Just give people who die prematurely the money they lost out on because they delayed the start of CPP.
The concept is called the Pension-back Death Benefit. Some rewiring of the CPP would be required to bring it to life, but nothing major. The only cost felt by CPP recipients would be a slightly lesser financial incentive to delay the start of benefits.
The traditional thinking on why people choose not to delay has been that they put greater emphasis on having money in hand right away. Also, that they’re concerned about dying prematurely and losing out on CPP benefits they paid for. “It’s just a feeling of what’s fair,” said actuary Bonnie-Jeanne MacDonald, lead author of the paper and director of financial security research at Toronto Metropolitan University’s National Institute on Ageing.
Read the full article here.
Should you start collecting CPP at age 65 or earlier? Our calculator compares the benefits
In case you missed it
‘Where’s the glue?’: The challenge of staying connected to colleagues after retiring
Since retiring from her financial services career a couple of years ago, Karen Sawyer has made a concerted effort to keep in touch with some of her former colleagues, writes reporter Brenda Bouw in this Careers article. Maintaining those workplace friendships was a key part of her retirement plan, alongside travel and volunteering.
“I was prepared to leave work. I wasn’t prepared to leave friendships,” says Ms. Sawyer, who retired in May, 2022 at 59, after more than 20 years working in customer loyalty at one of Canada’s big banks.
In a recent KPMG survey, 81 per cent of respondents said workplace friendships are “highly important” to them and 78 per cent said they provide positive mental health benefits.
The challenge some retirees have is staying connected to colleagues after they leave the workplace. Many retirees want to stay in touch but worry about having less in common with their former colleagues or aren’t sure if their workplace pals want to remain friends.
Read the full article here.
CPP payment increases slow in 2025 as retirees feel the pinch
Canada Pension Plan payments increased just 2.6 per cent for 2025 – a big drop from the 4.4-per-cent hike last year – putting a squeeze on retirees still grappling with lingering effects of inflation.
Starting this month, writes retirement reporter Meera Raman in this Personal Finance article, the maximum monthly CPP payment for those starting their pension at age 65 will be $1,433, up $68.40 from last year. The smaller increase is because of cooling inflation, which is what CPP adjustments are tied to.
Although prices are not rising as fast any more, costs for key essentials, such as groceries and gas, still remain much higher than prepandemic levels, with many saying the latest CPP increase falls short of what retirees actually need. This could mean retirees will burn through their savings faster than expected, causing them to rethink their retirement plans.
“The cost of things has skyrocketed all over the place,” said Dianne More, a 74-year-old retired teacher living in Markham, Ont. “As a retiree, it feels like we don’t have any control over it.”
While the rate of inflation is falling, prices are still about 12 per cent higher than three years ago. Laura Tamblyn Watts, chief executive of the advocacy group CanAge, says the latest CPP increase isn’t enough to help retirees keep up.
Read the full article here.
Retirement Q & A
Q: How can I best transfer my TFSA to my loved ones? I want to start divesting assets while I’m still around to see them benefit from it, and hopefully save any inheritance taxes.
We asked Janet Gray, an advice-only certified financial planner (CFP®) and wealth coach at Money Coaches Canada, to answer this one.
A: It’s a very thoughtful idea to gift to your loved ones during your lifetime when they need it and you can see the benefit of the gift.
First, a review of the Tax-Free Savings Account (TFSA): It allows you to contribute either an amount set annually or lump sums within your accumulated contribution room. If you were 18 when TFSAs started in 2009, you would have accumulated $103,500 of contribution room as of 2025. (You can confirm your TFSA contribution room on your CRA online account.)
The TFSA allows your investments within the TFSA to grow in value tax-free and without being taxed at withdrawal. You can designate beneficiaries for your TFSA account who would receive their portion at your death – also tax free. If a minor child is a beneficiary of your TFSA, check the guardianship rules for your province. Most provinces do not allow a minor child to receive funds directly.
TFSA rules do not allow a person to directly deposit funds or transfer to another person’s TFSA. But you are able to withdraw from your TFSA and gift the funds to the other person(s) to deposit to their own TFSA (up to their own eligible TFSA room limit).
After your withdrawal from your TFSA, you do not lose the TFSA contribution room. You can re-contribute that amount the same year (if you still have sufficient TFSA room) or fully re-contribute the amount in the following calendar year. You may have to pay a penalty if you have over-contributed.
There are no inheritance taxes in Canada. Each province/territory has varying probate fees on the estate value. In Ontario (with the highest probate fees in Canada), there is no probate fee on the first $50,000 of the estate value. For estates valued over $50,000, the fee is 1.5 per cent ($15 for every $1,000) of the estate’s value. Probate fees are paid by the estate via the executor.
After probate fees are paid, the estate’s assets are disbursed as per the instructions of the Will.
If there are direct beneficiaries on the TFSA, it does not form part of the estate and there are no probate fees owing on the TFSA. The investment firm holding the TFSA would disburse according to the beneficiary instructions you have given them.
Have a question about money or lifestyle topics for seniors? E-mail us at sixtyfive@globeandmail.com and we will find experts and answer your questions in future newsletters. Interested in more stories about retirement? Sixty Five aims to inspire Canadians to live their best lives, confidently and securely. Sign up for our weekly Retirement newsletter.
