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Travel consultant Marcia Proctor is suddenly getting a lot of calls from families looking to book intergenerational vacations. For example, she recently organized a February getaway to the Dominican Republic for three families travelling together – each including grandparents, parents and kids.
“It’s a multi-family reunion,” she says.
After more than a year and a half with very few bookings due to the pandemic, Ms. Proctor, of Travel Agent Next Door Inc. in Toronto, is seeing many grandparents looking to travel with their adult children and grandchildren. Many want a respite from the isolation and loneliness from the past 19 months of pandemic restrictions and feel a need to reconnect with grandchildren they’ve watched grow up on Zoom calls.
According to Kiran Pure, a registered child psychologist from Dartmouth, N.S, multigenerational trips can be psychologically healing for seniors. “Travelling with grandkids is valuable to build connection and continuity in the relationship through shared quality time together,” Dr. Pure tells Anna Sharratt in this article.
Where are the retirees? Older Canadians are hanging on to their jobs – for now
Faced with a deadly pandemic and flush with cash, millions more Americans than usual have opted to retire. Canadians haven’t followed their lead, Matt Lundy reports.
Fewer Canadians have voluntarily left their jobs to retire throughout much of the COVID-19 crisis compared with typical levels before the pandemic, according to monthly data released by Statistics Canada, the most recent of which came out on Friday. The median age of retirement in 2020 was 64.6 years, the highest since 1986, and part of a long-standing trend of Canadians working later in life.
It’s fairly common for older people to remain in the work force in a recession, having seen their finances battered. But the pandemic downturn was hardly normal, accompanied by a surge in asset values that left the average household in much better financial shape. The pandemic also poses a greater health risk to older age brackets, adding another incentive to ditch the workplace.
Still, that was not enough to lure Canadians into early retirement. Labour participation rates are higher today than two years ago for those aged 55 to 64. They are lower for the 65-plus crowd, but just barely.
Can this couple in their early 60s retire soon and winter overseas?
Owen and Emily – freelancers in their early 60s – amassed $1.7-million in financial assets the old-fashioned way. No inheritance or real estate windfall helped them. They raised two children, now 22 and 29, and their house in small-town Ontario is fully paid for. They each draw a salary of $36,000 a year from their corporation, which bills about $130,000 a year.
“The lower cost of living here might have played a small role, but we always spent less than we earned,” Owen writes in an e-mail to the Globe. “We paid for our house after eight years and we have invested our savings in passive investments, mostly exchange-traded funds, on a buy and hold basis,” he writes.
Emily and Owen are hoping to hang up their hats next year and travel, spending Canadian winters overseas. They wonder whether they can contribute $25,000 a year for a few years for their younger child’s overseas studies. Their retirement spending goal is $70,000 a year, much more than they are spending now. “What is our best strategy to withdraw our investment money to support our lifestyle?” Owen asks.
In the Globe’s latest Financial Facelift column, Matthew Ardrey, a vice-president, portfolio manager and financial planner at TriDelta Financial in Toronto, looks at their situation.
After the COVID-19 crisis is over, Canada will still have an aging crisis
The aging crisis is upon us. We weren’t ready before the pandemic, and we are even less ready now. The cost will be high, and the young will pay, writes the Globe’s John Ibbitson.
He cites a report this week from the Canadian Institute of Health Information (CIHI) revealed that health care spending in 2020 increased by almost 13 per cent, mostly due to COVID-19.
But the CIHI report also stated that spending was increasing by four per cent annually, well above the rate of inflation, in the years before the pandemic, Mr. Ibbitson notes.
A decade ago, seniors accounted for 14 per cent of the population. Today, that figure is 18 per cent. By 2030, it will be around 23 per cent. By then, all the baby boom generation (those born between 1946 and 1965) will be 65 or older.
“As the population continues to age, decision-makers face the challenge of determining the level of care...for older Canadians that balances access to...care with the cost of care,” the report states.
Optimists point to the years after the Second World War to show how a society can grow its way out of debt. The federal government borrowed heavily to fight the war, but quickly brought the books back into balance afterward, thanks to strong economic growth and low interest rates.
But Canada was a young nation then; now we are old. The mean age in 1950 was 27.7 years. In 2020, it was 41.1 years.
In case you missed it
How to say no to adult children who ask for money
It’s always hard to say ‘no’ to your kids, from when they’re little and want one more bedtime story to when they’re adults looking for help to pay the rent, buy a car or purchase their first home.
With less job stability, the rising cost of living and skyrocketing rent and housing prices, it’s no wonder so many millennials and Gen Z adults are turning to the ‘bank of mom and dad’ for financial support.
A recent CIBC survey shows parents are giving their kids larger financial gifts to buy the first home, or an average of about $82,000 in 2020, up from $52,500 in 2015. Also, about 30 per cent of first-time buyers got help from parents last year, up from around 20 per cent five years earlier, the survey shows.
“People have a hard time saying ‘no’ to their kids,” especially as they point out the challenges they’re facing today, says Julia Chung, a senior financial planner with Spring Planning in Vancouver.
It’s not an issue, Ms. Chung says, unless it puts parents’ retirement and financial security at risk.
Ms. Chung has had clients who gave money to their adult kids and then ran into financial trouble in their retirement, despite her best efforts to show them the risks of doling out the cash.
“There’s only so much anybody can do,” Ms. Chung says. Gillian Livingston reports.
Why your retirement years are the best time to get fit
Kathy Glazer-Chow likes her workouts to be challenging. So, the 71-year-old often ends her three-times-a-week training sessions with several sets of bicep curls using 20-pound weights or some 35-pound kettlebell lifts. “I always tell my trainer I want to be the senior GI Jane,” says Ms. Glazer-Chow with a chuckle, referring to the iconic movie starring Demi Moore as an astoundingly ripped female U.S. Navy Seal recruit.
The Toronto retiree was a mid-life convert to the benefits of physical fitness, getting active as a 48-year-old mother with a six- and eight-year-old. She’s since completed the 200-kilometre Ride to Conquer Cancer eight times and walks daily, but it is in recent years that she’s started to appreciate the real impact of her choices. “It makes me feel better. It makes me feel strong. It gives [me] self-confidence,” Ms. Glazer-Chow says.
Studies are unequivocal: fitness activity has immeasurable physical and mental benefits for aging well and the Canadian Physical Activity Guidelines recommend adults 65 years or older get at least 150 minutes of moderate-to-vigorous physical activity every week, like brisk walking, cycling, swimming or any activity that makes you breathe harder and increases the heart rate. Dene Moore reports
What else we’re reading
Canadian snowbirds gear up for reopening of U.S. land borders
Ian and Heather Stewart are savouring the idea of leaving behind this winter’s sub-zero temperatures now that the United States has reopened its borders to non-essential land travel and they launch a long-delayed drive to their seasonal home in Fort Myers, Fla.
Restrictions imposed by both countries during the coronavirus pandemic and their own concerns kept the retired couple and millions of other Canadians from driving south to warmer climes like Florida, Arizona and Mexico during last year’s freezing winter months, reports the Associated Press.
Now, the Biden administration’s decision to allow vaccinated people to enter the United States by land for any reason starting Nov. 8 has many Canadians packing up their campers and making reservations at their favourite vacation condos and mobile home parks.
Some are already in the United States, arriving on flights that never stopped and have required just a negative COVID-19 test. The Canadian government also announced recently that it was expanding the number of airports allowed to receive international flights.
... and a take from Florida on the state’s lax COVID-19 rules
Canadians travelling to the Sunshine State, now that cross-border air travel is open and ground travel opens on Monday, should get ready to adjust their expectations – and, if they choose, their behaviour, Gus Carlson writes for the Globe.
They won’t need masks in restaurants, bars, grocery stores, shops or gyms – and it is highly unlikely anyone will ask them for proof of vaccination, he says. Many Florida businesses ask employees to wear masks, and those who aren’t vaccinated to undergo regular testing, but customers are free to do as they please.
Florida Governor Ron DeSantis, a Republican, has drawn heavy fire from detractors, particularly some news media, for staunchly refusing to impose mask or vaccination mandates. He has opted instead to put what he says are the rights and freedoms of his constituents ahead of such control mechanisms, which he argues have yet to show consistent effectiveness in combatting the virus.
Now, before shaking your head in disapproval and telling your favourite Florida Man joke, consider this: Last week, Florida recorded the lowest COVID-19 case rate in the entire U.S., including states like California and New York that have been relentless with mask and vaccination mandates.
Why this 75-year-old family doctor keeps postponing retirement
He’s been talking about retirement for years, but now one of the oldest practising family doctors in Nova Scotia says he’s more worried about staffing at his community’s hospital than himself, CBC reports.
“Yes, retirement is very much on the mind, but I want to feel good when I leave,” said Dr. Ken Murray, now one of 31 family doctors over the age of 75, according to Doctors Nova Scotia. That number has increased by 10 in the last three years.
Murray initially signed up for a two-year stint in Neils Harbour, a village in northern Cape Breton. But he became so charmed by the area, he’s been there for 49 years.
Over the past two years, the community was successful in recruiting two young doctors who bought homes and have committed to staying for the long haul. Murray said it would take one more doctor before he could be assured that Neils Harbour will have the help it needs.
Ask Sixty Five
I read the question about reverse mortgages in your most recent retirement newsletter and it prompted me to ask this question:
My wife and I are in our late 60s and in good health. We own our house in Toronto outright and its current market value would be roughly $1.3-million. We have two children. Our younger child has a young family and is currently renting a home. While this child has some money saved, a house in Toronto without a crippling mortgage is out of the question. My wife and I have enough in our retirement savings to carry us for many years so we don’t really need the equity that’s in our house to cover our costs. Yes, we are very fortunate.
Our estate was always going to be split equally between our children. I have wondered if taking out a reverse mortgage on our home and giving that money to our younger child as an “advance” on that child’s inheritance is a crazy idea or something worth exploring?
Thanks in advance for any help you can give me.
We asked Jason Heath, a fee-only certified financial planner at Objective Financial Partners Inc. in Markham, Ont., who answered the original question, to answer this one, too:
There is something to be said about helping your children when they need it, during your life, as opposed to when they are older, leaving them an inheritance upon your death. One risk is that your expenses in your 60s may not be representative of your expenses in your 70s or 80s. Your retirement savings may seem sufficient now, but long-term care costs can be expensive. So, just be careful you do not overpromise when you are still a relatively young retiree.
If you are considering helping your kids with a home purchase, a reverse mortgage may be an option, but probably should not be your starting point. A line of credit or conventional mortgage will probably be at a lower interest rate than a reverse mortgage but may be harder to secure if you are retired.
Given you have investments that you could use to make the gift to your kids, you should also consider using those instead of borrowing.
If you have a conservative investment risk tolerance, your expected investment return may not be significantly higher than the interest rate you would pay to borrow the money. If you have an aggressive investment risk tolerance, even if you could earn a higher return on your investments than the interest rate you would pay, is it worth the complexity and incurring debt in retirement?
Interest rates will rise eventually, and the October Bank of Canada rate announcement seemed to suggest we will see higher rates sooner in 2022 than expected. If you have no non-registered or TFSA investments, and your savings are all tax deferred RRSPs, that may make the borrowing option more appealing.
There are risks to giving money to a child who is married. If they get divorced, the gift may end up being divided with half going to your son or daughter-in-law. You may be able to mitigate this by loaning the money to them. This may also provide some protection in the case you need the money yourself in the future even if you may not expect that you will.
Given you have two kids, I would also be mindful of documenting the gift as a loan for estate planning purposes to ensure it reduces their eventual inheritance if it is still outstanding upon your death. Also, you should be mindful of the perception of your other child if their sibling receives a gift like this and they do not.
There is lots to consider here. Good luck.
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 firstname.lastname@example.org and we will find experts and answer your questions in future newsletters.