There comes a time when many older Canadians realize that their home is too much of a burden and it makes sense to downsize into something more manageable. For some retired people, that means looking into retirement living communities – also known as an active adult or adult lifestyle communities – with amenities and services and a chance to be among other seniors who share their outlook and interests.
Selecting the right retirement residence can be one of the most difficult decisions for seniors to make, with many of the same questions first-time home buyers have such as: ‘What can I afford?’ ‘What are the amenities and services available?’ And ‘What are the neighbours like?’
Writer Paul Brent talks to some seniors who have moved to independent-living facilities and are loving it: “I didn’t want to be in a big high-rise or interact with neighbours that were younger than I was or rowdier than I was,” says Donna Weddell, 74, who lives in an adult lifestyle community building in Burnaby, B.C. “This seemed like a very good fit: I would get the socialization. I meet new people in like circumstances, and everything is provided for me.”
Can this millennial couple retire at age 60?
Bill and Ava, both age 39, have retirement on their minds. He earns about $96,600 a year in education, while Ava makes $69,700 working for a government agency. They also have rental income from their basement apartment. Both have defined benefit pension plans.
They have two children, ages 3 and 7, a house in B.C. with a mortgage, and a condo they bought recently to rent out on Airbnb, which is operating at a loss (thanks to the pandemic). Their retirement goals are understandably sketchy. They want to have more disposable income than they have now for travel and leisure, and think perhaps $120,000 a year before tax might be a reasonable spending goal. They plan to retire at age 60, but they have future expenses to consider, too.
In the Globe’s latest Financial Facelift column, Janet Gray, a fee-only and advice-only financial planner at Money Coaches Canada in Ottawa, looks at the couple’s situation
In case you missed it
Why so many of your fashion icons are seniors
The Instagram model is posing in a powdery blue skirt set and chunky pink orthotic sneakers with a matching backpack hanging off her small shoulders. She’s demonstrating t’ai chi, a sport she does competitively, on a colourful street in Vancouver’s Chinatown.
The model, Mrs. Ma, isn’t your typical Instagram star but has become somewhat famous after being featured in a project-turned-book, Chinatown Pretty, by photographer Andria Lo and writer Valerie Luu.
During dim sum dates in Chinatown, the creative duo noticed that seniors in the neighbourhood had a very distinct style: “Lots of colour, pattern, Supreme hats mixed with velvet, quilted, two-piece sets that they got from Hong Kong,” Ms. Luu says. “And there were so many unexpected, colourful, beautiful, touching details – maybe they were wearing a hand-knit sweater their sister-in-law made or a shirt made from leftover scraps from a sewing factory where they worked.”
The scenes made Ms. Lo and Ms. Luu want to know more about the poh pohs (grandmas) and gung gungs (grandpas) that were rocking these unique looks. And when they started posting their miniprofiles on Instagram, they realized other people did, too. Stacy Lee Kong reports.
What else we’re reading
Why future stock market returns will be lower as our population ages
There is no question that stocks have richly rewarded long-term investors, Fred Vettese writes in this recent Globe opinion piece. However, the history of great returns over the past decade or so isn’t expected to continue, argues Mr. Vettese, former chief actuary of Morneau Shepell (now LifeWorks) and author of the upcoming book The Rule of 30: A Better Way to Save for Retirement. He explains why retirees should be fine, as long as their investment return expectations are modest, and anyone saving for retirement should start saving a little more.
Five lessons from yoga that can help you build wealth
And for something more uplifting, in this article, a yogi talks about lessons learned from her yoga practice that can be applied to our financial lives. There’s no chanting or headstands involved, but for anyone who has tried to find balance – physically or mentally – on the yoga mat, these insights may be relatable.
Ask Sixty Five
Question: I recently turned 65 and have been receiving the Canada Pension Plan (CPP) for the last five years. My retirement income is $150,000, which includes real estate rental income and dividends from a stock portfolio. The majority is held in my corporation and most of it is flowed through to me as the sole shareholder. With this level of income, any Old Age Security (OAS) I receive will be clawed back. Is there any advantage to applying for the OAS and they paying it back each year? Or should I wait until I am 70? Or should I just not focus on OAS until such time my income goes down, if it ever does? Thank you in advance for your opinion.
We asked Jamie Golombek, managing director of tax and estate planning for CIBC Private Wealth Management in Toronto, to respond to this one:
For 2021, the Old Age Security is subject 15 per cent OAS recovery tax (“claw back”), which applies to the extent income exceeds $79,845; so the OAS pension of $7,487 is fully eliminated with income of $129,757. Since your 2021 income is over this amount, there would be no benefit to applying and losing all of your OAS this year, unless you can get your income down to below the $129,757 level, in which case you could keep some of the OAS.
This may indeed be possible in your case, since the majority of your stock portfolio is held in your corporation, which means that you can control the level of distributions you receive in any given year. If you receive capital dividends or repayments of loans you made to the corporation, these are not taxable and don’t result in OAS recovery. If you receive eligible or noneligible dividends from your corporation, the dividend income may trigger OAS recovery tax if you’re in the recovery range; however, your corporation may be able to get a dividend refund of refundable taxes previously paid.
You may also be able to reduce your income below the $129,757 level by drawing strategically on noncorporate (i.e. personal) assets. You might withdraw from a tax-free savings account or take capital from nonregistered accounts, both of which are tax-free. You might also want to realize on some nonregistered investments that have accrued capital gains, since they are only 50-per-cent taxable.
That being said, if you currently need to realize more than $129,757 of income (from corporate distributions or personal earnings) annually to support your retirement lifestyle, then you might consider deferring OAS to a later year when your income is lower. You can apply to delay the start of your OAS pension for up to 60 months (5 years) after you are 65. Your OAS pension will be permanently increased by 0.6 per cent for each month of deferral, up to a maximum increase of 36 per cent if payments begin at age 70.
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 email@example.com and we will find experts and answer your questions in future newsletters.
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