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Six months ago, retired B.C. couple David Lang and Cathy Brusegard booked a cruise from Los Angeles to Vancouver that sets sail in April, 2022. It will be the latest in a long list of ocean voyages they’ve taken to different parts of the world, including in the Caribbean, Cuba, Mexico, Alaska and the Panama Canal, but the first since the COVID-19 pandemic left most passenger ships onshore. The couple has missed life on the sea. “We love the idea of the ship being your moving hotel; you wake up each day in a new place,” Mr. Lang says. While they’re looking forward to the trip, and are fully vaccinated, they’re having some second thoughts as the number of COVID-19 cases is rising again in the U.S. and around the world. They have until the end of January to cancel, which would cost them their $260 deposit. As Dene Moore reports, the couple is among thousands of Canadians who love to cruise and are anxious to get back to it. Statistics show that, per capita, Canadians are among the most ardent fans of sea voyages in the world.
Can this couple retire at age 55?
Hard work, diligent saving and plain good luck have Nick, 47, and Naomi, 46, hoping financial independence will be within their reach soon. She earns about $163,000, plus substantial annual and long-term bonuses, working in sales. He earns about $86,000 plus bonus in information technology. Nick has a defined benefit pension plan that will pay about $35,000 a year at age 65. They have two children, ages 12 and 10. They paid off their mortgage in 2014 with no plans to move and have been saving and investing ever since, and dreaming of financial freedom. “I’d love to know if we are on track to be able to retire at 55 or even earlier,” Naomi writes. “We would both like to be in a position where work is optional.” They have a retirement spending target of $95,000 after tax. In the latest Financial Facelift column, Stephanie Douglas, partner, portfolio manager and financial planner at Harris Douglas Asset Management in Toronto, looks at Nick and Naomi’s situation.
In case you missed it
A guide for seniors trying cannabis for the first time
It’s been nearly three years since Ottawa legalized the recreational use of cannabis and one of the big surprises has been just how many seniors are utilizing pot products for health reasons – or just plain fun. Statistics Canada found that while cannabis use is still less among seniors than other age groups, it is growing among the 65-plus group faster than any other age cohort, from about 40,000 recent users in 2012 to 400,000 in 2019. Those numbers have likely grown since. For older Canadians who are thinking about using cannabis, either for their health or recreational use, the good news-bad news is that there is a bewildering array of options at the local (legal) cannabis store; from “flower” (dried cannabis that can be smoked or vaped as well as pre-rolled joints), oil concentrates, edibles, creams and other topicals and beverages. Given the overwhelming variety of pot products available, older Canadians might want to seek out some advice from trusted friends, cannabis store vendors and last but not least, medical professionals. Paul Brent sought out some advice for first time cannabis users.
What to think about if you’re getting a ‘grey divorce’
Call them what you want – diamond divorcees, silver splitters or grey divorcees – but data show that older Canadians are ending their long-standing marriages in greater numbers than ever before. According to Statistics Canada, the number of divorced Canadians over age 65 grew by nearly 80 per cent from 2010 to 2020, soaring from 352,000 to 630,000. That’s partly due to the overall greying of the Canadian population, but not entirely (the population of married individuals over 65 grew by only 45 per cent in the same period). “I would say about every one in three people contacting me is a retiree,” Holly Brady, a certified divorce financial analyst in Calgary, tells Matthew Halliday in this article.
What else we’re reading
Why you may want to add more grains to your diet as you age
If you don’t eat whole grain foods on a daily basis, consider rethinking your menu. According to researchers from Tufts University in Boston, doing so can help you manage your waist size, blood sugar (glucose) and blood pressure as you age, dietician Leslie Beck writes in The Globe. And it doesn’t take a lot, she adds. The sweet spot, it seems, is three whole grain servings each day. Repeated studies have linked higher whole grain intakes to protection against heart disease, stroke, type 2 diabetes and obesity. The latest findings, published earlier this month in the Journal of Nutrition, suggest that whole grains guard against chronic disease by reducing increases in risk factors that occur over time.
Could inflation eat into your retirement lifestyle?
For retirees and near-retirees, at least five dire possibilities can threaten a long and fruitful retirement: taxes, investment fees, crumbling stock markets, soaring interest rates and inflation, MoneySense magazine reports. The article focuses on inflation, which anyone who has bought groceries recently or eaten in a restaurant knows is a threat. Author Jonathan Chevreau talks to portfolio managers and other finance experts about how investors can try to prevent inflation from eating into their retirement savings.
Ask Sixty Five
Question: My husband and I are ages 63 and 64. We own two properties that have a mortgage on them. We are in the process of renovating the condo in the city so that we can sell it and expect to generate a profit. Our dilemma is that we are wondering if it is better to pay off the mortgage on the house in the country by the lake, or pay a portion and do some needed renovations on the house and continue to have a mortgage. We both only have our CPP and OAS and possibly the guaranteed income supplement. The mortgage on the house is $900 a month including property taxes. I don’t want to be carrying that into retirement, as I feel with the minimal amount of income once we hit 65, a mortgage payment will be a stress we don’t need.
We asked Warren MacKenzie, head of financial planning at Optimize Wealth Management in Toronto, for some general advice:
Your question would require some financial planning to figure out if your estate will be larger or smaller if you do the renovation and pay interest on the mortgage.
The interest on the mortgage will reduce the size of your estate, but the renovation should increase the value of your home, which will increase the value of your estate. Also, with high inflation looming, it’s possible that the value of a renovated home will increase faster than an unrenovated home and the increase will more than offset the cost of the interest you’ll pay on the mortgage, which will continue to exist if you do the renovation.
If your financial plan shows the renovation will provide a larger estate, it’s a no-brainer; you should do the renovation and enjoy a nicer home, even if it means using a line of credit or a reverse mortgage. (This assumes that, with two homes, it’s possible to get a line of credit or a reverse mortgage.)
If the financial plan shows that by making the renovation your estate will be smaller, then you have to decide which is more important; to leave a slightly larger estate or to enjoy a more comfortable home for the next 20 or 30 years?
Have a question about money or lifestyle topics for seniors, or want to suggest a story idea for the Sixty Five series? Please e-mail us at firstname.lastname@example.org and we will find experts and answer your questions in future newsletters.