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Elizabeth Forsythe plans to travel to Florida in May.Chris Donovan/THE GLOBE AND MAIL

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Elizabeth Forsythe wasted no time booking a trip to Florida after travel restrictions were lifted on the Canada-U.S. border.

The 69-year-old from Sussex, N.B., will be heading to Orlando with a group of girlfriends for some shopping and fun in the sun in mid-May.

“We have rented a car and a house and plan to do a lot of shopping, eating, sitting around the pool and take some day excursions,” says Ms. Forsythe. She is used to going south at least once a year to visit her brother in South Carolina and enjoy a sun-destination getaway, plus some quick jaunts across the border.

“We are [close] to the border and I go shopping with friends in Bangor several times a year. With the pandemic, this all came to a screaming halt.”

Like many Canadians who plan to take advantage of their retirement years by travelling, Ms. Forsythe is very pleased restrictions have ended. Dene Moore reports.

Why the CRA wants a closer look at investments held in RRSPs

Buried in the more than 300 pages of Canada’s latest federal budget are three short paragraphs that caught many financial advisors by surprise.

Starting in the 2023 taxation year, banks will be required to report the total fair market value of property held in the registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs) they administer. The purpose behind increasing disclosure requirements to the same level as tax-free savings accounts (TFSAs) is to “assist the Canada Revenue Agency (CRA) in its risk-assessment activities regarding qualified investments held by RRSPs and RRIFs,” the document said.

Ottawa hasn’t given a lot of detail in terms of what it’s looking for or trying to avoid by adding this requirement, says Wilmot George, vice president of tax, retirement and estate planning at CI Investments Inc. in Toronto.

“But we do have enough information to know that they have some concerns,” he says. Jameson Berkow reports.

Decision to retire early easy for 57-year-old entrepreneur, but follow-through proved difficult

Shayne Smith, 57, made the decision to retire on the night of his 52nd birthday – a birthday he shares with his wife of almost 33 years.

“We were both attending the CBC’s live broadcast of The Tragically Hip’s last concert at a gathering of Canadians in Los Angeles. The realization that life is too short came as the tears streamed down my face listening to Gord Downie sing Fiddler’s Green. I retired six months later,” Mr. Smith says in the Globe’s latest Tales from the Golden Age feature.

Can this 40-something couple maintain their current level of spending and still retire at 60?

At age 40, Leon and Lydia “enjoy a good life – dinners out, good-quality groceries, a wine collection, travel, a personal trainer,” Lydia writes in an e-mail. A couple of years ago, they bought a century house in southeastern Ontario. “We have no debt other than our mortgage and can always pay the bills,” she adds.

They both enjoy professional careers in education, bringing in a combined $245,000 a year. They both contribute to defined-benefit pension plans, partly indexed to inflation, as well as to registered retirement savings plans and tax-free savings accounts. “We would love to know if there are extra things we should be doing to set ourselves up for a successful retirement in 15 to 20 years,” Lydia writes. “Is our spending reasonable given this scenario, or should we try to cut back on some luxuries?”

In the Globe’s latest Financial Facelift column, Stephanie Douglas, partner and portfolio manager at Harris Douglas Asset Management in Toronto, looks at their situation.

In case you missed it

How to cut your kids out of your will

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 judgment or the financial wherewithal to handle the funds. Mary Gooderham reports.

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.

Ask Sixty Five

Question: I am a 66-year-old dual U.S.-Canadian citizen in a public sector job with a salary of close to $250,000. I also earn about $60,000 consulting as a sole proprietor. I am single with no debt or dependants (I have helped my grown children buy their first homes and they’re now having families of their own). I plan to retire in three years from my public sector job but continue consulting and earn about the same income of $60,000 annually.

I’m paying a lot of tax on top of withholding, more than ever before, because my travel and other business-related expenses have been much lower during the pandemic. Also, until last year, I owned a two-bedroom condo that I rented out at a loss, which reduced my taxes.

What are my options to reduce taxes payable on my consulting income this year and the next few years after I retire? Should I consider increasing my charitable contributions? Does benefaction make sense? Or are there other tax-efficient ways to contribute to charitable causes or my family’s ultimate well-being that I should know about? Maybe a trust or life insurance? What are my options considering that I am a dual citizen?

I realize that I am very fortunate to have a good salary from a job I enjoy and the capacity to consult alongside. Still, I feel as though I am missing some important strategies. Thanks for any advice you can provide.

We asked Ryan Connolly, a senior financial planner with Coleman Wealth at Raymond James Ltd. in Toronto, to answer this one:

First, it’s important to distinguish the ultimate objective; reduce yearly taxes or increase net worth? ‘Don’t let the tax tail wag the dog’ is a saying that still holds true. Consider that:

  • $60,000 of income, less $30,000 of expenses, less $16,059 of taxes = $13,941
  • $60,000 of income, less $0 expenses, less $32,118 of taxes = $27,882

Being a dual citizen adds complexity and increased costs to ensure strategies are compliant on both sides of the border. Generally, the most effective way to reduce an ongoing tax liability without sacrificing net worth is to maximize applicable retirement investment vehicles. Having a good cross-border team, including an accountant, lawyer and financial adviser, will certainly help.

Increasing charitable donations can be a valid way of reducing your ongoing tax liability. It’s important to note that this is not a dollar-for-dollar benefit. You donate a dollar to reduce taxes by a percentage of that dollar through the charitable donation tax credit.

A living inheritance may be worth exploring, after completing a stress-tested financial projection for your retirement. There is also talk about the reversion of the U.S. estate and gift tax exemption at the end of 2025. In consultation with your cross-border accountant/lawyer, it may be prudent to utilize some of your exemptions available before 2026.

Life insurance, specifically whole life or universal life, can be a tool to use with other investment vehicles. Funding the policy annually may reduce ongoing taxation from investment income, assuming a redirection of capital into the policy every year. However, does the life insurance policy qualify under the Canadian and U.S. tax laws? The laws and accompanying tests aren’t the same. It may be useful to employ the use of an actuary knowledgeable in such matters.

Implementing an alter-ego trust as a will substitute starts to look enticing when analyzed against the cost of probate and the time it takes for the assets to be distributed. An estate lawyer can provide a memorandum illustrating the set-up and benefits of utilizing such a structure. It’s imperative that you deal with a cross-border law firm, as the penalties from mishandling the set-up may outweigh any projected benefit. We have to be mindful of estate and tax laws in both countries for the multiple generations that may be involved in the structure.

Have a question about money or lifestyle topics for seniors, or want to suggest a story idea for the Sixty Five series? Please e-mail us at sixtyfive@globeandmail.com and we will find experts and answer your questions in future newsletters.