Pauline Scott on the patio of her apartment in Burnaby, B.C., on Nov. 22.Jennifer Gauthier/The Globe and Mail
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“I retired in 2015 at age 63 after a 35-year career at Parks Canada,” says Pauline Scott, 72 of Burnaby, B.C. “I worked in various remote locations including Dawson City, Yukon, Selkirk and Churchill, Man., and Haida Gwaii, B.C., before spending the final 14 years of my career in Iqaluit.”
Scott planned to retire at age 65, but a few factors forced her to stop working sooner. First, her brother-in-law was dying of lung cancer and her sister wanted Scott to move back to the Lower Mainland in British Columbia, where they grew up, to support them. “I had also started to feel sluggish at work and no longer seemed to have the stamina for my very demanding job (my co-workers used to call me the ‘Energizer Bunny.’)” As it turned out, Scott had uterine cancer, and between the pain and fatigue, she felt it was time to stop working. Thankfully, she had worked long enough at Parks Canada to be able to retire with a full government pension.
“Throughout my career, I thought I would retire in my early 60s, but in my early 50s, I was diagnosed with macular degeneration and was losing my vision,” she says. “In 2005, I decided to take a year off work to travel. I figured that if I truly wanted to see the world, it was now or never. It wasn’t the smartest financial move – I maxed out five credit cards on that trip and paid them off using most of my registered retirement savings plans.” It took Scott three years to pay it all back, which also meant she needed to work longer before retiring.
“I’ve never regretted that trip and still think about it daily,” Scott says. “I’ve also travelled a lot since, including a retirement trip in the summer of 2015 to Iceland, Faroe Islands and Greenland.” She also travels once a year to visit her son, who lives in Ontario with his dad.
Scott still has some of her eyesight, although she’s not able to drive, which makes returning to the Lower Mainland a wise move, she adds, given the proximity to several amenities, including excellent health care services.
“Retirement has taken some adjusting, especially moving back to the city after living in remote communities for more than 40 years.”
Read the full article here.
Are you a Canadian retiree interested in discussing what life is like now that you’ve stopped working? The Globe is looking for people to participate in its Tales from the Golden Age feature, which examines the personal and financial realities of retirement. If you’re interested in being interviewed for this feature and agree to use your full name and have a photo taken, please e-mail us at: goldenageglobe@gmail.com Please include a few details about how you saved and invested for retirement and what your life is like now.
Can Lionel and Paula help their child buy a house and still afford to travel?
Comfortably retired with savings and a mortgage-free Toronto house, Lionel and Paula wonder whether helping their younger child with a condo down payment might jeopardize their travel budget.
Lionel is 68 and earns $500 a month freelancing. Paula is 65 and has a defined benefit pension plan that pays about $3,000 a month indexed to inflation. Their government benefits lift their total income to about $76,500 a year before tax, or $68,500 net.
They have two children, ages 35 and 21. The younger one lives at home and is in his last year of university.
Even though Lionel and Paula are comfortable financially, they’re worried about big lump-sum expenditures. “Is it realistic to change our car in the next six months with a budget of $40,000 to $60,000?” Paula asks in an e-mail. If they give their son $100,000 for a down payment, is their $12,000 annual travel budget still realistic?
“I would like to know that Lionel and I will be fine financially,” Paula writes. “The final plan is to leave the house, the summer cottage and some money to the two children.”
In this Financial Facelift, Ian Calvert, a certified financial planner and principal of HighView Financial Group, takes a look at Lionel and Paula’s situation.
Do government limits in income withdrawals from pension plans make any sense?
In this Charting Retirement article, Fred Vettese, former chief actuary at Morneau Shepell and author of Retirement Income for Life, looks at how government pension regulations could impact retirement income security, here.
In case you missed it
Attention older, affluent homeowners: Let’s put our housing wealth to work
Class dynamics have been transformed in Canada, writes Paul Kershaw in this personal finance article. Income, he adds, now matters less. Home equity matters more, especially for those who bought decades ago.
Older Canadians worked and lived in an era when blue-collar jobs could pay enough to purchase a home. With the wealth they have since acquired from rising home values, many have ascended to the ranks of the affluent.
The financial industry recognizes this. Public opinion does too. It’s time for governments to catch up, says Kershaw, by revisiting social-spending priorities and revenue plans to pay for the investments that citizens want.
“When your house is rich, you are too,” says Equitable Bank in a commercial depicting a retiree who hugs her suburban home because it lets her eat caviar for brunch. All she needed was a home equity line of credit to unlock wealth she gained from surging home prices.
This commercial, notes Kershaw, reveals the dramatic change in the class status of many Canadian retirees.
Consider a single woman with $22,000 in retirement income – around the threshold to qualify for Canada’s guaranteed income for seniors. If she is a renter, she is likely poor. If she owns her home outright in Fredericton or Saskatoon, few would describe her as affluent.
But if she has a house in a city such as Hamilton, Victoria, Kelowna, B.C., the GTA or Metro Vancouver, her home will often be worth seven figures.
Read the full article here.
If you ever had thoughts of buying an annuity, now is the time
Annuities are not for all retirees, and neither are they suitable for all your retirement savings.
But, writes personal finance columnist Rob Carrick, if you like the idea of using some of your retirement savings to buy a lifelong stream of monthly income, annuities are worth a look. Don’t spend too long considering the idea of an annuity, though. Annuity payouts are influenced in part by what’s happening in the bond market, where interest rates are falling.
Annuity payouts are slipping as well, he notes. The declines are not a deal-breaker, but they do signal that a generational opportunity to buy annuities is beginning to fade.
But how fast? Carrick went to insurance adviser Rino Racanelli, who you may know through his articles for Canadian MoneySaver, to get some recent annuity quotes that illustrate the recent decline in payouts here.
Retirement Q & A
Q: I’ve had a few dog investments in my RRIF this year and I read something recently about transferring loser or declining investments to other accounts rather than selling them outright. Is that possible, and can I reinvest when the market starts gaining again?
We asked Dami Gittens, wealth advisor at Nicola Wealth Management Ltd. in Vancouver, to answer this one.
It is possible to transfer declining investments in kind from a RRIF. An in-kind withdrawal can be made, which provides a lot of flexibility. This means you do not have to sell your investments at a loss and can instead sell them at a later date when they have hopefully recovered. In-kind RRIF withdrawals are paid into a Non-Registered account and the ACB (Adjusted Cost Base) for the securities transferred is the market value at the time of the withdrawal. When the investment is eventually sold, any increase in value is considered a taxable capital gain and any decline in value is considered a capital loss for tax purposes.
The market value of the assets withdrawn from the RRIF will be taxable to you and reported on a T4RIF slip. While a RRIF withdrawal can be made at any time, any withdrawals over the minimum amount will be subject to withholding tax. An in-kind withdrawal from your RRIF is suitable if you do not need the cash from your RRIF to cover your cash flow needs and do not want or need to sell any securities.
Once the securities are in your non-registered account, you can buy or sell shares of the securities as you wish. If you wish to reinvest in the same securities in your RRIF, you can do so by using the existing cash in your RRIF.
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.
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