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Old Age Security (OAS) pensions are something that nearly all Canadians count on for their retirement, writes Frederick Vettese, former chief actuary of Morneau Shepell and author of Retirement Income for Life.
The maximum monthly payout at age 65 is currently $685.50 and this will increase every quarter in line with increases in the consumer price index (CPI) for Canada, he says.
But there are things Canadians may not know about when it comes to the OAS pension.
Read the rest of his article here.
‘You can’t play golf 365 days a year,’ says a 73-year-old helping seniors live better at home
Jean-François Pinsonnault, 73, retired at the end of 2011, at age 62, from a career as an organizational development practitioner.
“One of the first things I did in retirement was take a one-month trip to Mexico. It was the longest vacation I had ever taken until that point in my life,” he says in the latest Tales from the Golden Age feature. He also spent a lot more time working in his two-acre garden in Maxville, Ont.
In the early days of retirement, Mr. Pinsonnault thought a lot about how he would reinvent himself. Read what he came up with, including a crusade to help seniors age comfortably at home, and the rest of his story here.
Calling all retirees: Are you a retiree interested in discussing what life is like now that you’ve stopped working? What are the highs and lows of leaving the so-called rat race? How has retirement evolved for you? How are higher inflation and volatile markets affecting your retirement? Globe Investor looking for people to participate in its Tales from the Golden Age feature, which looks at the realities of retirement living. We’ll also ask you to offer some advice for others in retirement, or those considering it. 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 a few details about your retirement life so far at: firstname.lastname@example.org.
How can Hayley, 64, live off her investments in a tax-efficient manner?
At age 64, Hayley is on her own again, starting a new consulting business from scratch and drawing on her lump-sum settlement, the result of a separation agreement with her former spouse and business partner.
“With the separation, my income from the company ended,” Hayley writes in an e-mail. With the success of her new venture uncertain, she wants a solid plan in place “on how to live solely off my investments.”
She is drawing $6,000 a month, or $72,000 a year, from savings – roughly 4 per cent of her portfolio – and hopes to continue doing so without running down her $2-million or so in capital. Her short term goals are to minimize investment losses owing to fees and market slumps, Hayley writes, and to not sacrifice her lifestyle because of poor money management. She lives in British Columbia and rents rather than owns her home.
Hayley is also concerned about drawing down her savings in the most tax-efficient manner possible.
“Given that I am waiting until age 70 to access Canada Pension Plan and Old Age Security, should I be converting some of my RRSP and locked-in retirement account (LIRA) to a registered retirement income fund now to decrease lifetime taxes paid?” Hayley asks. She asks, too, whether she should use $150,000 she has in a high-interest savings account to reinvest in the stock market or buy more guaranteed investment certificates.
In the latest Financial Facelift, Andrew Dobson, a certified financial planner at Objective Financial Partners Inc. of Markham, Ont., looks at Hayley’s situation.
In case you missed it
Why a B.C. retiree found working in a funeral home rewarding
William Jesse, 77, officially retired in 1994 at the age of 49, after a career in the aviation industry.
“I had a chance to leave with a good pension, so I did. Being a shift worker, I had plenty of time off, so I knew that when I retired I would easily adapt,” he says in the Globe’s latest Tales from the Golden Age feature. He and his wife then moved from Montreal to Victoria.
Mr. Jesse has had a few interesting jobs since then, including working on vintage planes, working in a magic store and being an extra in a dozen films. “My pension was adequate, so working postretirement was not for financial gain. I did it for enjoyment,” he says.
One of his most memorable gigs was working as an assistant at a funeral home. “It was one of the most rewarding jobs I had, helping to support grieving families,” Mr. Jesse says.
Read more about Mr. Jesse’s retirement here.
Holster your HELOC, borrowers. Rising rates make them too expensive
Home equity lines of credit are the sharpest tool in the shed, writes Globe personal finance columnist Rob Carrick.
“There’s no smarter way to borrow for short periods of time than a home equity line of credit because the rate is the lowest most people can hope for,” he writes.
“Today, that’s not saying much. The Bank of Canada’s campaign to pound down inflation using interest rate hikes raises the cost of using the HELOCs and everything else in the borrowing tool shed. The heyday of the HELOC is done for now – they’re too expensive to be our handy way to borrow for fun and profit any time soon.”
Read Mr. Carrick’s full article here.
How rising interest rates are affecting retirement plans for those with mortgages
For Canadians retiring with mortgage debt, the likelihood of having to manage higher payments in the near future is a growing concern. With interest rates on the rise, many retirees are working with their advisors to get a sense of the impact of larger housing costs on their cash flow and consider their options – even if renewal is a few years away.
Faced with elevated real estate prices and high inflation, Chris Merrick, a fee-only certified financial planner (CFP) with Merrick Financial Inc. in Toronto, says he’s seeing more clients in the Greater Toronto Area carrying mortgage debt into retirement.
“The prices have gone up so much, it isn’t always so easy for them to sell and get another [home] in the same area, even if it’s a bit cheaper,” he says. “So, often clients like to hold onto the house longer with the mortgage just to stay in the current area.” Helen Burnett-Nichols reports.
Question: I was born in 1927 and retired in 1992. I am a recipient of both the Canadian and Quebec pensions but I am not sure that I get the full pensions. I wonder how I can check to see if I’m receiving everything to which I’m entitled.
We asked Jamie Golombek, managing director of tax and estate planning at CIBC Private Wealth in Toronto, to answer this one.
There are a number of government benefits that are available for retirees. The most popular ones are:
- Canada (Quebec) Pension Plan retirement pension, which depends on contributions made to the plan while working. The maximum monthly pension in 2022 is $1,253.59, but the average Canadian pensioner received $727.61 monthly in July 2022.
- Old Age Security pension, which depends on the number of years of residence in Canada. The maximum monthly pension is $685.50 from October through December 2022. A recovery tax reduces this pension at a rate of 15 per cent with net world income exceeding $81,761 in 2022.
- Guaranteed Income Supplement, which is available to recipients of the OAS pension. The maximum monthly pension for a single recipient is $1,023.88 from October through December 2022. The amount is phased out with other income up to $20,784 in 2022.
- GST/HST Tax Credit, which was increased to a maximum of $700.50 for a single individual with no children in 2022.
You can get detailed information about your personal QPP entitlements by accessing Quebec’s My Account services: https://www.retraitequebec.gouv.qc.ca/en/services-en-ligne-outils/Pages/releve-de-participation.aspx. Readers outside of Quebec can see the specific details of their own CPP (and OAS) calculations and payments at My Service Canada Account (MSCA).
The federal government also has an online tool, the Government of Canada Benefits Finder at https://www.canada.ca/en/services/benefits/finder.html, which has a variety of potential benefits for which you may be entitled.
Have a question about money or lifestyle topics for seniors? E-mail us at email@example.com and we will find experts and answer your questions in future newsletters.