Personal trainer Rachel Siemens looks on as retired litigator and competitive weightlifter Laurie Armstrong, 75, works on his clean and jerk at CrossFit Vic City in Victoria, B.C.CHAD HIPOLITO/THE GLOBE AND MAIL
We’ll be pausing this newsletter for the holidays. See you in the New Year!
Laurie Armstrong, 75, of Victoria retired at age 67 after a career as a litigator.
“I had my own law firm in Victoria. I wasn’t trying to escape; I loved my work, but I didn’t have a succession plan for the business, so I decided to close the doors,” he says in the latest Tales from the Golden Age feature. “It wasn’t traumatic. It was a new phase I was happily heading into.”
Mr. Armstrong had several interests to keep him busy in retirement, including building wooden boats. When he turned 70, he took up Olympic-style weightlifting.
“I think the key to a successful retirement is taking on something that’s really hard, which for me was weightlifting. I believe it’s important to be strong. I had strong legs from cycling to work – 30 kilometres round trip for several years – but my upper body needed work,” he says.
Read the full article here.
Calling all retirees: Are you a retiree interested in discussing what life is like now that you’ve stopped working? Globe Investor is looking for people to participate in its Tales from the Golden Age feature, which discusses the realities of retirement living. 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: goldenageglobe@gmail.com
Can Dean and Astrid achieve their spending goal of $120,000 a year?
Dean and Astrid are in an enviable position, recently retired with more money than they know what to do with – hard-earned savings amassed by modest living and stable careers. He is age 64, she is 59. They have no children.
During their working years, they both enjoyed professional careers, with Dean earning substantially more than Astrid. Astrid, who took early retirement a year or so ago, has a defined benefit pension partly indexed to inflation, of $3,100 a month. She chose to retire early because of their age difference, Dean adds. “We planned to travel during our first years of retirement and will probably start that in earnest next year.”
Their Alberta house is mortgage-free and they have substantial savings and investments. They also have an interest in a rental property.
Dean seems to have a pretty good idea of how to arrange their financial affairs but he is seeking more clarity. When should they take Canada Pension Plan and Old Age Security benefits? What is their maximum sustainable income? And “how to minimize the Canada Revenue Agency cut of our retirement income?” Their retirement spending goal is $120,000 after tax.
In the latest Financial Facelift, Jeff Ryall, a financial planner and associate portfolio manager at Cardinal Capital Management in Winnipeg, look at Dean and Astrid’s situation.
How does the normal retirement age in Canada compare with other countries?
In the latest Charting Retirement article, Fred Vettese, former chief actuary of Morneau Shepell and author of Retirement Income for Life, looks at how countries have raised the normal retirement age to reflect longer life spans. See where Canada ranks by reading the article here
In case you missed it
Playing the saxophone and teaching fitness classes are part of a fulfilling retirement for an Ontario man
Morris Tait, 79, retired 25 years ago at age 54 after a career in education, first as an elementary school teacher and later as a school vice-principal and principal.
“It was a wonderful career, but after 32 years I was ready to retire,” he says in the latest Tales from the Golden Age feature.
“For many people, retirement can be frightening, especially if they haven’t prepared for it,” adds the Cobourg, Ont. resident. “I used to do retirement workshops for teachers to warn them about being unprepared. Studies show that it can be an unhappy adjustment and experience, which can result in a loss of self-esteem. It can affect your well-being.”
Mr. Tait believes it’s important to be busy in retirement and to do different things. He owns some rental properties, teaches senior fitness and learned to play the saxophone three years ago at age 76.
Read the full article here.
Why Colombia is on this Canadian’s retirement radar
“As I begin research on my future life as a snowbird – though, for now, I prefer the younger-sounding “digital nomad” – my checklist steadily grows: safety, balmy weather, reliable internet, gay-friendliness, decent health care, a stimulating café society, proper gastronomy and, of course, good value,” Doug Wallace writes in the Globe.
While he’s still a few years away from retirement, Mr. Wallace is starting to consider warmer climates where he can escape Toronto for the winter months. “Boring old Arizona? Somewhere more exotic like Vietnam? The world is brimming with possibilities, but Colombia wasn’t even on my radar until I took a vacation there this past September,” he writes.
Read the full article here.
Retirement Q&A
I retired earlier this year and am in receipt of a defined benefit pension from my Canadian employer. I lived and worked for several years in the U.K. and have a deferred pension which I am considering taking within the next 12 months. One of the options is to receive a portion of the pension value as a lump sum in addition to a reduced monthly pension. In the U.K. this is called a Pension Commencement Lump Sum (PCLS), often referred to as a tax-free cash sum. Notwithstanding that this is tax-free in the U.K., I understand that it would be fully taxable in Canada. I have been advised however that it would be possible to pay the PCLS into a Canadian RRSP to defer tax without needing RRSP contribution room. Can you confirm this is indeed the case as the lump sum significantly exceeds my available RRSP contribution room and there are considerable tax implications if this is not the case? Many thanks.
We asked Peter Megoudis, executive director of private client services at KPMG in Canada, to answer this one:
Thank you for your inquiry regarding your U.K. plan, which raises some technical tax considerations under Canada’s Income Tax Act.
The Canada Revenue Agency (CRA) has stated that residents of Canada are taxable in Canada on worldwide income. Generally, the tax implications of receiving distributions from a U.K. pension plan will depend on how the CRA characterizes the plan. It should be noted that what is treated as a pension in the U.K. is not necessarily treated as a pension in Canada.
If the U.K. plan received direct contributions from the employer, then it would be characterized as a pension by the CRA and treated as a pension in Canada. In this case, any amounts received from a U.K. plan would be included as income. However, while Canada would tax a U.K. pension (including the portion that would be tax-free in the U.K. as a Pension Commencement Lump Sum), it could be offset by a deduction for the portion of the U.K. pension that is transferred to an RRSP, regardless of the taxpayer’s RRSP room. For example, if $100,000 is withdrawn from the plan and the taxpayer contributes $20,000 to their RRSP, then the Canadian taxable income would be $80,000.
If the plan is considered a personal pension scheme in the U.K., then the CRA would not treat it as a pension but rather as a personal trust. The good news is that distributions from personal trusts are not taxed in Canada per se. As a result, there is no need to transfer to an RRSP. However, it’s also important to be aware that income or capital gains earned within a personal trust after the taxpayer became a Canadian resident would be taxable.
A final word for anyone with a U.K. company pension plan who is a Canadian resident. While a transfer to a U.K. personal pension plan is tax-free in the U.K., it is taxable in Canada for Canadian residents. As such, if this transfer occurs before an individual becomes a resident in Canada or returns to Canada, they can avoid this Canadian tax consequence.
Have a question about money or lifestyle topics for seniors? E-mail us at sixtyfive@globeandmail.com 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. Read more here and sign up for our weekly Retirement newsletter.