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Tijana Martin/Globe and Mail
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Both Lucas and Shelby are teachers and together earn $210,750 a year. They have a benefit pension plan that will pay them a combined $125,000 when they both retire next year, Lucas, who is 54, and Shelby, who is 53. They have two college-aged children.
When she retires from work, Shelby and Lucas plan to purchase a campervan ($200,000) and “travel across North America,” Lucas wrote in an email. Lucas is set to retire this summer and Shelby next spring, and neither have their pensions reduced.
In addition to their Southern Ontario home, they own three rental properties, all with mortgages. The property is cash flow neutral. We plan to sell about one unit per year.
In the long term, they want to travel abroad, help their children buy their first home, and take the family on an annual ski trip.
“I want to give each of my children $100,000 to help them buy their first home,” Lucas wrote.
They also want suggestions for minimizing income taxes when you retire. “We have always managed our own finances and investments,” adds Lucas. “Would you recommend getting ongoing advice from a professional to manage your money after you retire?”
In the latest Financial Facelift, Andrew Dobson, a certified financial planner at Objective Financial Partners Inc. in Markham, Ontario, examines Lucas and Shelby’s situation.
Want a free financial makeover? e-mail finfacelift@gmail.com.
What are the odds that a Canadian woman will live a long, healthy life to age 100?
In a recent article in Charting Retirement, former chief actuary of Morneau Shepell, lifetime retirement allowancehere examines the possibility of women aging healthily to 100 years old.
A Beginner’s Guide to a Lean Kitchen
Spring is the season of new growth. A green sprout pushes itself out of the earth into the world and begins its journey to our table. Of course, many do not succeed. Environment and Climate Change Canada estimates that 20% (11 million tons) of all food produced in Canada each year bypasses our plates and ends up in landfills or compost. Second Harvest, the country’s largest food rescue organization, puts the number at 58%. So, although statistics vary, it’s clear that much of our food is inedible.
But in recent years, as the COVID-19 era has added economic stress, made it more difficult to get to the grocery store, and sporadically impacted distribution channels, we’ve been asking ourselves what to throw instead of eating. With skyrocketing food prices, a growing desire for self-sufficiency, and a greater understanding of the environmental impact of food sourcing, growth, processing, transportation and, of course, disposal, A general shift towards using what we have is being promoted. We’re digging deep into the freezer, upcycling stale bread, and using the ends of pasta bags instead of rushing to refill.
Read the full article here.
For those who missed
Tax matters: 6 tips for properly filing your tax returns
“I once knew a guy who said he wasn’t going to file a tax return,” writes tax expert Tim Sestonick. “You could go to jail for that,” I told him.
This conversation reminded me of something comedian Jimmy Kimmel once said. You keep what it would have cost me to jail.
Assuming you plan to file your tax returns this year, here are 6 tips for successfully completing the task.
Read the full article here.
When does it make sense to take OAS early?
Similar to CPP, you can start your OAS annuity at 70 instead of 65 to receive more monthly payments. But is this a good idea? This analysis is similar to deciding whether to defer a CPP pension, but with some key differences.
The first difference is the size of the pension increase if you wait until age 70. For the Canada Pension Plan, starting at age 70 pays approximately 42% more than at age 65. The maximum CPP annuity will continue to increase at the pace of wage inflation, not price inflation, until the annuity starts. Some years his CPP rose over 50% and some years it fell below 40%.
For OAS annuities, the adjustment is always exactly 36%. Clearly, this means he’s less generous than what the CPP offers, and given that few people choose to defer their CPP pension beyond 65, he might consider the reasons for deferring the OAS rather weak. I can’t. And while it’s a little weaker, it still makes sense for many people.
Read the full article here.
Retirement Q&A
Q: I withdrew $42,000 from RRSP last year and was thinking of sharing it with my wife. I am over her 65 years old. But the CRA wouldn’t allow it. why?
We asked Jamie Golombek, Managing Director and Head of Tax and Real Estate Planning at CIBC Private Wealth in Toronto, to answer.
Pension splitting with a spouse or partner is generally not possible through the RRSP. You have to convert it to her RRIF first. Most people don’t convert her RRSP to her RRIF until the end of the year when she turns 71, but there are some advantages to converting some or all of her RRSP to her RRIF early. I have.
First, RRIF withdrawals over the age of 65 are eligible for a federal non-refundable pension income deduction of 15% on the first $2,000, as well as state/territory deductions.
Additionally, if you are 65 or older, you can split up to 50% of your RRIF income with your spouse/partner. By doing this, you can lower your household’s overall tax bill, retain tax credits such as income-tested age deductions, and avoid potential OAS recovery taxes for her. Also, if your spouse/partner does not have a pension income of their own, you can double her pension income credit.
Do you have questions about seniors’ money and lifestyle?contact us by email sixtyfive@globeandmail.com We will also find experts to answer your questions in future newsletters.
