Photo illustration by The Globe and Mail. Source images: Getty Images.
The Beneficiary: “Andrew” is a 68-year-old who lives in a Toronto suburb. He grew up in a big Irish Catholic family of nine siblings, all of whom are alive and well. A self-employed sports coach for 20 years before pivoting to teaching for another two decades, Andrew retired two years ago with a medium-sized pension alongside his Canada Pension Plan and Old Age Security. Andrew’s married with one grown daughter and a beloved grandchild.
The Inheritance: Andrew’s mother died a decade ago and his father died five years ago, leaving the family money to be distributed equally among their nine children. In their family, money wasn’t a topic of particular significance. “Growing up, we were, I’d say, not aware of our father’s success or lack thereof,” Andrew said. The children were given room and board (and education funds), but from a young age for most anything else they were all expected to get jobs (newspaper routes, snow shovelling, babysitting, etc.) to pay for things themselves.
Andrew’s father’s stealth-wealth strategy clearly worked: Even in a one-income household with nine children, he accumulated an impressive amount of equity. “Ultimately, each sibling got $150,000,” said Andrew, who’s No. 3 in the family lineup, “and I’m major-league grateful.” Because shares were equal and expectations were realistic, everyone was happy and nobody complained since “there was nothing to complain about.” An inheritance miracle!
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What he did with it: While Andrew’s not privy to every sibling’s particular plan, he says, “there’s no way any of us just spent it on this or that or the other. We weren’t raised like that, so I’m sure we all somehow put it away for the future.” All but him and the youngest two had already retired, so although Andrew loved his job as a school teacher, he decided to use his new money to finally take the plunge and walk away from the work force. “My wife had retired five years earlier and I was more than ready to join her.”
“The first thing I did was top up my TFSA [Tax-Free Savings Account] and I did it for one sole reason: I don’t want to have to create a RRIF [Registered Retirement Income Fund] until I’m 72,” Andrew said. He’d wisely spent the self-employed portion of his career maxing out his TSFA and making significant RRSP contributions. “I put away the maximum amount I possibly could every time I could,” he said. Canadians must convert their RRSPs to RRIFs before the end of the year they turn 71, though many do so long before that (as early as age 55) for any number of reasons or situations – the biggest, of course, that they need the money sooner, likely for retirement.
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Thanks to his parents, Andrew could now afford to retire at 66 but not touch his RRSPs for six more years — provided he lived within his means. “I can buy whatever my heart desires, within reason, but I don’t shop much,” he says. (His last unnecessary splurge? A high-end pressure washer.)
“With my pension, CPP and OAS, my inheritance and a small monthly extraction from my TFSA, I am perfectly but not exorbitantly comfortable,” he said. Andrew’s day-to-day expenditures haven’t changed in the least and the extra $150,000 in his pocket, while greatly appreciated, “actually hasn’t changed my life much at all.” For Andrew, that’s a very good thing.
The revelation: Though Andrew briefly consulted with his usual tax accountant, he didn’t want nor seek any other financial advice – professional or otherwise. “I suspected if I told some friends about this plan they might have viewed it as lazy or opportunistic, though I don’t look at it that way at all.” As such, he’s kept his prudent strategy mostly to himself and his wife (and, now, to Globe readers).
“I just thought this was a comfortable plan and, most importantly, for me, monstrously low risk,” said Andrew, who logically realizes he won’t live forever. He wants to live the best he can for as long as he can, which includes not worrying about money. For him, $150,000 was best used to purchase some peace of mind: “I like to think I used my inheritance to make my comfort zone just a little bit more comfortable,” he says.
Some details may be changed to protect the privacy of the person profiled. We want to thank them for sharing their story. Have you recently received an inheritance and would like to participate in Inherited? Send us an e-mail.
