Phyllis Webster, 81, stays busy travelling, visiting family and volunteering. 'I can’t imagine anyone being bored in retirement,' she says. 'There’s so much you can do for yourself and your community.'Chad Hipolito/The Globe and Mail
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“I retired in 2008 at age 65 after a very interesting 28-year teaching career, starting in Cape Town in 1965 at the height of Apartheid, followed by years in Australia and England and 21 years in Winnipeg,” says Phyllis Webster, 81, in this Tales from the Golden Age article. “I loved my career, but it was time to let some of the younger part-time teachers be able to work full-time. Also, my husband had retired a couple of years earlier and was waiting for me to stop working so that we could travel more.”
The couple’s first post-retirement trip was to Australia, she says. “We were snorkelling with a group of people on the Great Barrier Reef and I got talking to a young man from Germany,” That particular day would have been Webster’s first day back at school in Canada. “He asked me how I felt and I burst into tears. I was sad not to be going back to school. I still am a little sad every September.”
Travel is a big part of Webster’s retirement. “Other places my husband and I have visited include South Africa (for our 50th wedding anniversary), Europe, South America, Vietnam and Cambodia.” They also travelled extensively across British Columbia after moving to Victoria in 2010.
She’s volunteered for many organizations. “My main focus today is the Grandmothers Advocacy Network. It has been a wonderful experience working with women across Canada to help the government understand the necessity of supporting grandmothers and youth in Africa.”
The couple is fortunate not to have financial problems because they have good pensions and have been careful with spending and investments, she adds. “I’m also very conscious of what I invest in, including no guns, tobacco or oil companies. I believe ethical investments aren’t only the right thing to do for your soul and heart, but they can also grow and help you fuel your retirement.”
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 Carlos and Paula still afford a cottage if they give their kids proceeds from the sale of their home?
Carlos and Paula ask if they can afford to sell their family home in Montreal, give each of their children $300,000, move into a city rental apartment and buy a cottage in the country.
Carlos is 69 years old and Paula is 62. Their two children are 29 and 30.
They both have defined benefit pensions. Their pension income and Carlos’s government benefits add up to $107,900 a year before tax. Their house is valued at $1.2-million.
“We want to sell the house to our son and his partner, but they are unable to take this on right now,” Carlos writes in an e-mail. The plan is to sell to their son at a price below market – $900,000 – in about three years. “We would give an equivalent amount to our daughter.”
Would the $600,000 the couple would have left be enough to buy a cottage in the country and rent an apartment in the city? Carlos also asks: “Are there other scenarios you can propose?”
In this Financial Facelift, Anna Golan-Reznick, a certified financial planner at Objective Financial Partners Inc. of Markham, Ont., looks at Carlos and Paula’s situation. Objective is an advice-only financial planning firm.
What withdrawal rate is safe for retirees? Lessons from after the internet bubble
“I don’t envy those on the cusp of retirement today because they’re starting out in an era when the U.S. stock market is at lofty levels and the nation is beset with political uncertainty,” writes Norman Rothery in this Investing article.
The problem, he says, is investors who encounter a big downturn shortly after retiring have an increased risk of running out of money prematurely. On the other hand, those who enjoy a strong market in the decade after retirement are lucky and could wind up with much more than expected.
To explore the issue, Rothery has been following an unlucky group of investors who retired at the top of the market just before the internet bubble burst in the summer of 2000. (The idea was sparked by Norbert Schlenker, the president of Libra Investment Management, who’s been tracking the same unfortunates at the Financial Wisdom Forum using different market measures.)
Read the full article here.
Norman Rothery, PhD, CFA, is the founder of StingyInvestor.com.
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In case you missed it
Why withdrawing from an RRSP early is more tax-efficient for some clients
Canadians spend most of their working lives stuffing money into a registered retirement savings plan (RRSP) to live off later in life. Yet, writes Globe Advisor reporter Brenda Bouw, advisors say not enough effort goes into figuring out the most tax-efficient way to withdraw those funds.
For some Canadians, the best strategy is to start taking money out of an RRSP sooner than needed to smooth out retirement income, spread out taxes and potentially increase government benefits.
“While it may seem intuitive to keep money in an RRSP and delay the taxes for as long as possible, delaying taxes isn’t always in your favour,” says Morgan Ulmer, a certified financial planner at Caring for Clients in Calgary.
Ms. Ulmer says the strategy, sometimes called an “RRSP meltdown” (not the kind that involves taking out a loan), often works best when individuals are in a lower tax bracket post-retirement, allowing them to pay fewer taxes later.
The strategy can also help people postpone their Canada Pension Plan (CPP) and Old Age Security (OAS) benefits (and receive higher payments), avoid an OAS clawback and provide some liquidity when combined with a tax-free savings account.
“It’s really about taking a broader view of taxes instead of focusing on minimizing taxes year to year,” Ms. Ulmer says. “You’re looking at your lifetime tax burden, including taxes on your estate, and so it can sometimes make sense to pay more taxes sooner versus later.”
Owen Winkelmolen, an advice-only financial planner and founder of PlanEasy.ca and Adviice.ca in London, Ont., says most Canadians approaching retirement should explore making early withdrawals from their RRSPs.
“It’s a big part of decumulation planning,” Mr. Winkelmolen says.
Read the full article here.
Hard numbers on the cost of probate and corporate executors
A lot of effort in personal finance is expended on urging people to get a will, a vital detail for all parents and people with assets that will survive them, writes personal finance columnist Rob Carrick in his latest for Carrick on Money. But, he adds, having a will is just the first step. You also need to choose someone to execute the will for you after you die.
Picking an executor is a bigger ask than many people realize because of the workload and decision-making required. Plus, there are people who don’t have children to act as executors, or feel their kids aren’t up the job. Corporate executors are a potential solution, but the cost of using them is a black box to many people.
Here’s a Q&A on corporate executor and probate costs that I did with Barbara Amsden, a financial industry veteran and author of How to Laugh at Death and Taxes: What Willmakers, Executors, Heirs, and Beneficiaries Need to Know. You may remember Ms. Amsden fromor an earlier Q&A on whether to have joint accounts with adult kids, or give them power of attorney.
Sign up for the Carrick on Money newsletter here.
Retirement Q & A
Q: I made a mistake when I turned 60 by starting my CPP, as I was told to do so as soon as possible. In hindsight, I didn’t really need the money and just paid it back to the government in taxes! Now, I will be turning 65 in May, 2025. Should I defer this or start taking it, especially since a small government pension I have will be clawed back when I turn 65? Is there any benefit to prolonging the OAS start date?
We asked Steve Bridge, CFP®, advice-only financial planner, Money Coaches Canada, to answer this one.
A: Good on you for recognizing your mistake in taking the Canada Pension Plan (CPP) early. You’re not alone, and I hope you don’t mind me using your story as a PSA. Taking CPP before 65 comes with a lifelong penalty – a reduced monthly payment (36% if taken at 60). Over a lifetime, this could mean leaving tens or even hundreds of thousands of dollars on the table.
For other readers: unless you really need the money or have a shortened life expectancy, I strongly advise against taking CPP before 65. In many cases, waiting until 70 is best. If you’re still working, it’s a no-brainer not to take it – it’s taxed as income at your highest rate, meaning losing a big chunk of your CPP to taxes.
Now, on to Old Age Security (OAS) and taking it at 65. Like all personal finance decisions, the answer is: “It depends.” While I don’t have enough details to give you a perfect answer, here are some key points to consider:
- Every month you delay OAS, you get 0.6% more per month for life. If you wait until 70, that’s 36% more, indexed to inflation. Unlike CPP, OAS has no survivor benefit.
- If you’re still working and don’t need the money, delaying is a smart move. For 2025, OAS clawback starts at $93,454, meaning you lose 15 cents of every dollar over that amount and receive no OAS once you hit $151,668.
- If you have serious health concerns and may not live long, taking OAS at 65 makes sense.
- If you have significant RRSP savings and are no longer working, the next few years may be a great time to withdraw from your RRSP (or better yet, convert part or all to a Registered Retirement Income Fund – RRIF) while in a lower tax bracket (i.e. before OAS starts). Withdrawing from an RRSP or RRIF doesn’t mean spending the money – you can move it to a TFSA (if you have room) or a non-registered account, where it will be taxed more favourably.
Delaying OAS will provide more guaranteed income for life, as well as possibly reducing your tax burden. These are key points to consider, but do your own research and/or speak with a financial professional.
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.
