Content from The Globe’s weekly Retirement newsletter. To subscribe click here.
Are you thinking about disinheriting your kids?
Experts say that deciding to cut off a child or children in your will comes with financial, emotional, and practical considerations. It’s your right to not pass your assets on to an independent adult child or children, but it’s important to get good advice, document your reasons, certify your state of mind and communicate your wishes to those you are disinheriting.
“It shouldn’t come as a surprise,” says Rachel Blumenfeld, a partner in the tax, trusts and estates group at Aird & Berlis in Toronto and deputy chair of the Society of Trust and Estate Practitioners (STEP) Canada.
She says the reasons parents disinherit kids can range from disagreements over lifestyle choices or political views to feelings of estrangement, concerns that their heirs don’t need money and fears that their offspring lack the judgement or the financial wherewithal to handle the funds. Mary Gooderham reports
Inflation seems to be driving retirees back into the work force
Retirement with low inflation is one thing, but retirement when grocery and gas prices are soaring is something else, writes Linda Nazareth.
“Given that reality, a Canadian inflation rate at its highest level in decades may have some older workers putting off retirement or perhaps even re-entering the work force as a way to cope with rising prices,” she writes. “That may be good for the economy in some ways, but is hardly going to be met with applause by all.” Read her full story here
Should retirees struggling with soaring inflation still delay CPP until age 70?
Retirees are particularly vulnerable to the ravages of inflation, especially if they have to rely on their savings for income rather than on defined benefit pensions, writes expert Frederick Vettese.
“This problem had lain dormant for several decades but now appears to have returned with a vengeance,” writer Mr. Vettese, the former actuary of Lifeworks and the author of Retirement Income for Life.
Assuming that higher inflation will be with us for a while, how should Canadians with savings but no defined-benefit pension adjust their retirement planning? Read his recent Globe article to find out more.
Can this 60-something couple retire and spend more time travelling?
A year from now, when her contract ends, Genevieve, 62, plans to leave her $85,000-a-year consulting job so she and her husband Sam, 64, who’s winding down his business and is collecting Canada Pension Plan benefits, can spend more time travelling.
Genevieve took early retirement from her career in financial services a couple of years ago and is getting a pension of $42,000 a year. She also gets about $12,000 a year in net rental income. In addition to substantial savings, they have a condo in Ontario and a chalet in Quebec. Together, they have five grown children.
“We would appreciate a review of our finances so that we can efficiently manage our taxes and have a sound plan going forward,” Genevieve writes in an e-mail. “Will our funds last until we reach 100 years of age (hopefully)? We are a healthy and active couple.” They also wonder whether they should buy disability and critical illness insurance. Their spending target is $78,000 a year after tax, indexed to inflation.
In the latest Financial Facelift column, Ian Calvert, a vice-president and principal at HighView Financial Group in Toronto, looks at the couple’s situation.
After 30 years at the CBC, Bill Richardson is stocking shelves at Whole Foods – and loving it
Bill Richardson is happy – really. He doesn’t miss being on radio. He has just published a children’s book. And he finds the job he does now extremely satisfying in ways he says he could not have predicted.
“I don’t know what anybody else who’s publishing a book this spring is doing at five in the morning, but what I’m often doing is emptying a 50-pound bag of buckwheat groats into a gravity bin,” he says. “I’m 66. And I can do that. It never occurred to me that I could or would or should.”
There are times when he misses what he had before, “but not that much,” he says. “The career stuff – had it. Had a good life, it ended, and then there was space to fill.” Marsha Lederman reports
Retirement means time to work on her memoir for this former financial supervisor
In the latest Tales from the Golden Age feature, Barbra Fischer, 66, talks about the tough decision she made to retire from a successful financial services career earlier this year.
After working from home during the pandemic, she realized how much she enjoyed being around the house. She also wanted to leave work at the top of her game, and to fully retire and not do part-time work or contracts. “Surprisingly, retirement is better than I expected,” she says.
In case you missed it
Tips for becoming a green thumb in your senior years
Gardening is one of the most versatile retirement activities, ranging from growing a few flowers on the balcony to designing ambitious full-yard plant landscapes.
A survey by Dalhousie University researchers found 31 per cent of people who started food gardening in 2020 were between 54 and 72. Enthusiasts cite benefits including being active outdoors, fostering creativity and – particularly during the pandemic and amid rising grocery prices – having affordable and healthy homegrown food.
Gardeners throw themselves into the hobby for varying reasons and are always ready to offer tips. In this article, Kathy Kerr talks to four Canadian green thumbs who offer advice for seniors on how to dig in.
Why you may need to change your executor as you get older
Most Canadians eventually get around to estate planning and putting their financial affairs in order – even if that often occurs later in life than it should. But creating a last will and testament really needs to involve more than a quick visit to a lawyer’s office for a document signing.
For those nearing or entering retirement, it is critical not only to ensure your will is up to date, but also that you have chosen an executor(s) up to the challenge of carrying out your final wishes.
Given that your executor acts as your voice after you die, Canadians need to put a lot more thought into who they select for the role, says Darren Coleman, senior portfolio manager, private client group, with Coleman Wealth at Raymond James Ltd. In Toronto.
“People need to change this misconception or idea that it is an honour to choose someone as your executor,” he says. “It is a sign of tremendous trust and confidence in someone else, but at the same time, you’re also handing someone a remarkably difficult burden.” Paul Brent reports
Ask Sixty Five
Your coverage of Canada Pension Plan (CPP) and Old Age Security (OAS) deferrals has been great. I have always thought delaying to 70 would be the way to go, but as I get closer to 60 and have some health issues, I wonder if taking CPP at 60 makes more sense? My concern is more for my wife. If I am to die, she only gets 60 per cent, but my confusion lies in what is the maximum?
My concern is more for her: If she dies first, I can deal with the loss of income as I would sell the house, move to the cottage, and become a lot better at fishing. But if I die first, I want her cash flow to be maximized. After all, without me snoring, she will live a lot longer. So, if my thinking is correct, I should take mine at 60, and she defers to 70?
We asked Mike Preto, an advisor at Hillside Wealth Management in Vancouver, to answer this one:
It’s a complex to answer, so bear with me.
If your wife isn’t already collecting her CPP when you die, her survivor’s pension will be calculated differently, depending on whether she is over or under age 65. If she is under 65 and not receiving CPP, her survivor’s pension will be calculated by applying a flat rate of $204.69 per month plus 37.5 per cent of your CPP had you started receiving it at age 65.
For example, let’s assume you’re eligible for a CPP benefit of $1,000 per month at age 65, which is roughly 80 per cent of the maximum, then your wife would be eligible to receive a total of $579.69 per month in survivor’s pension: (37.5 per cent x $1,000) + $204.69 = $579.69.
If she is over 65 and not yet receiving her CPP, her survivor’s pension would be 60 per cent of your CPP had you taken it at 65. In this case, your wife would receive $600 per month (60 per cent x $1,000).
The amount your wife will receive will change when she receives her CPP. Let’s assume your wife was 62 and was not receiving her CPP when you died: We know from above that she would receive $579.69 a month in survivor’s benefits. We’ll assume your wife was eligible for about 70 per cent of the maximum CPP and decided to take her CPP at 65; this puts her CPP at about $877 per month.
Combining her CPP and survivor’s pensions is where things get a little complicated (and unfortunately, there’s not enough space here to provide specifics). The simple answer is the maximum amount she could receive is the highest CPP available for the age at which the pensions are combined. If she takes her CPP early, the maximum combined pensions are lower. If she decides to delay her CPP, the cap rises.
Bottom line: If you know there’s a good chance your life expectancy is shortened, take the CPP early. If there’s no reason to question your wife’s life expectancy, taking the CPP whenever needed will keep her on the right path.
Here’s to hoping that life brings you many more snoring-filled nights and days of living the good life waiting for your next bite out on the water.
Have a question about money or lifestyle topics for seniors, or want to suggest a story idea for the Sixty Five series? Please email us at email@example.com and we will find experts and answer your questions in future newsletters.