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A senior couple taking a closer look at their budget in the comfort of their home.BERNARD BODO/iStockPhoto / Getty Images

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The deficits announced in Ottawa’s fall economic statement remind us that previous governments never worked out how to pay for the healthy retirement of baby boomers, writes columnist Paul Kershaw in this personal finance article.

Now the Trudeau government is left holding the bag, which is very heavy. The economic update reports $150-billion in new spending on retirees between now and 2028, with many billions more to follow.

The Liberals seem content to pass these costs on to the children and grandkids of boomers: both as deficits and as limited spending on the challenges facing younger Canadians, such as housing. The personal finances of younger Canadians are collateral damage.

Grandparents can help fix this by telling politicians, “I don’t want my legacy to be one that damages my kids’ and grandchildren’s generations.”

Here’s the challenge. The “Outlook for Expenses” in the update shows that spending on Old Age Security (OAS) will increase by $115-billion between now and 2028.

The economic statement also adds $70-billion in new spending on medical care – half of which will be used by Canadians who are 65 or older, according to data from the Canadian Institute for Health Information.

Read the full article here.

Letting go of her work identity was the key to a happier retirement for this former nurse

“I retired in 2019 at the age of 61 after working for more than 40 years as a nurse in different capacities,” says Lea Elfassy of Montreal in this Tales from the Golden Age. “I had planned to retire at age 60, but I was going through a divorce and felt like there was enough change happening in my life at the time. I thought I would work for another year, but then decided to stop after three months. I still work occasionally at vaccination clinics – but at my own pace.

“I loved the transition to retirement. A lot of people warned me that I might have a tough time or become depressed once I stopped working full-time, but that didn’t happen. Instead, I felt a sudden freedom to do whatever I wanted, whenever I wanted. There are some days when I don’t have anything to do, which is great too. I’m not the type of person who needs to be busy all the time.

“To really embrace retirement, I believe you need to let go of your work identity and focus on other interests. For me, that’s reading, travelling and immersing myself in different cultures. I’m also a very experienced backpacker. I recently returned from a hiking trip in Newfoundland and Labrador. I also hiked Mount Kilimanjaro at age 55 with my son and hiked by myself to base camp at Mount Everest just before I retired.”

Read the full article here.

How important is it to globally diversify your equity holdings?

In the latest Charting Retirement article, Fred Vettese, former chief actuary at Morneau Shepell and author of Retirement Income for Life, takes a look at the advantages of mixing your retirement portfolio with Canadian and foreign equities here.

In case you missed it

Six stocks to benefit from the aging baby boomer trend

Baby boomers represent about 25 per cent of Canada’s population, and baby boomer households hold an average of $1.2-million in net worth, accounting for about 50 per cent of the country’s wealth, according to Statistics Canada.

So, writes Globe Advisor reporter Brenda Bouw, while millennial spending habits often make headlines, investors might be better off paying attention to the needs and wants of the aging boomer population.

A recent Bank of America Corp. report suggested investors “long boomer stocks” and “short millennial stocks,” noting that boomers are wealthier and have less debt than younger generations. It also notes that boomers aren’t feeling the impact of higher interest rates as much as millennials – and may even be benefiting if they have enough savings and little or no debt. The report also highlights U.S. stocks in certain sectors expected to benefit from boomer wealth, including – not surprisingly – elder care, senior housing and death care.

Globe Advisor recently asked three money managers to provide baby boomer-based investing ideas in Canada. Here’s what they said, including a few less obvious options.

Read the full article here.

For more from Globe Advisor, visit our homepage.

Why using donor-advised funds in estate planning can have the greatest impact for charitable giving

Many people desire to leave money to charity upon their death through donations in their wills, writes Jessica Felman Chittley in this opinion column. Sometimes, this giving is through the creation of an endowment fund, but it’s often through a single, one-time donation of cash or securities to one or more charities.

Charitable giving on death has the benefit of leaving a legacy, but it also has a significant tax benefit.

In general, unless the whole of one’s estate is passed to a surviving spouse, when a Canadian taxpayer dies, their assets are deemed to have been disposed of at fair market value, and the inherent capital gain of those assets is reported in the taxpayer’s tax return for the year of death. The result is usually a substantial tax burden.

This tax burden can be offset by charitable giving on death because the charitable tax credits resulting from the donations can be used to reduce the tax payable by the taxpayer’s estate, and in the year of death, up to 100 per cent of the taxpayer’s net income.

A donor-advised fund (DAF) is a great way to blend the objectives of leaving a lasting legacy and offsetting the tax burden. It’s a formally structured vehicle for charitable giving administered by a foundation or a registered charity.

A DAF has the characteristics of a private foundation without the administrative burden, considerable set-up costs, and the requirement for setting aside a significant amount at the outset.

Read the full article here.

Retirement Q&A

Q: I understand that tax advantages of donating shares (especially with capital gains) will be reduced for next tax year? Should I look at both donor-advised funds as well as direct donations before the year ends?

We asked Jeremy Donath, portfolio manager and investment adviser at The Donath & DiSabatino Wealth Management Group, BMO Private Wealth, in Markham, Ont., to answer this one.

The imminent changes in tax legislation surrounding the advantages of donating shares, especially those with capital gains, signal a pivotal moment for strategic philanthropy. The impending reduction in these tax benefits makes the current period an opportune time to leverage one’s generosity for maximum impact across various crucial sectors, such as food banks, arts and culture, medical services and research.

Considering the evolving landscape, exploring avenues such as donor-advised funds (DAFs) and direct donations becomes imperative. Both offer distinct advantages and can be astutely utilized to align charitable intentions with financial planning. Direct donations suit those seeking immediate impact and simplicity, while DAFs cater to those desiring strategic, long-term giving with potential tax benefits but involve more planning and administrative considerations. Direct donations and DAFs each offer unique advantages and have their own set of considerations.

With direct donations, the advantages include immediate impact – direct donations provide immediate support to chosen causes without intermediaries; simplicity – they’re straightforward, involving fewer administrative steps and less ongoing management; and clarity of intent – donors have direct control over where and how their contributions are utilized. The disadvantages include limited flexibility – once donated, the funds are committed and cannot be redirected; potential privacy concerns – some donors prefer anonymity, which can be challenging with direct donations; and tax efficiency – while direct donations are tax-deductible, the benefits might not be as optimized compared with more strategic giving options like DAFs.

With DAFs, the advantages include strategic philanthropy – DAFs allow donors to plan and strategize giving over time, spreading donations across multiple charities; tax efficiency – contributions to DAFs offer immediate tax benefits, allowing donors to potentially maximize deductions in high-income years; and flexibility – donors have the flexibility to advise on grants to charities over time, allowing for ongoing involvement and a structured approach to giving. The disadvantages include complexity and fees – some DAFs may have administrative fees, investment fees, or minimum contribution requirements, affecting the overall amount available for charitable giving; loss of direct control – while donors provide advice on grant recommendations, they relinquish direct control over the assets once contributed to the fund; and investment risks – DAFs often involve investment options, subjecting the donated assets to market risks that might impact the available funds for charitable grants.

With the year drawing to a close, a proactive approach to exploring these avenues becomes prudent. Engaging with financial advisers or philanthropic experts can provide invaluable insights and guidance tailored to individual circumstances, ensuring a harmonious blend of philanthropy and financial prudence before the tax landscape shifts.

Have a question about money or lifestyle topics for seniors? E-mail us at and we will find experts and answer your questions in future newsletters. Interested in more stories about retirement? Sixty Five aims to inspire Canadians to live their best lives, confidently and securely. Sign up for our weekly Retirement Newsletter.

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Interested in more stories about retirement? Sixty Five aims to inspire Canadians to live their best lives, confidently and securely.The Globe and Mail

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