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Judy Omelusik has some shocking stories to tell from her nearly eight decades on this Earth. It started in her 20s when she discovered her adoptive mother was, in fact, her grandmother and the girl she knew as her sister growing up was really her birth mother. She has also survived different types of abuse over many decades.
Now a widow, the 79-year-old spends several hours a day, five days a week, writing her memoir. She wants her own two children, her family and friends to know her story and what her journey has meant to her. If it ever finds a larger audience, that’s just a bonus. “It’s been a very cathartic journey,” she says. “I don’t think things like this should be kept a secret because I lived with secrets for so many years, and it’s just very healthy to unload.”
Ms. Omelusik started her memoir in earnest in February, writing in long hand and sending the pages to her sister-in-law to type up. Her goal is to finish the manuscript soon. She is one of many seniors writing their memoirs, without a worry if they will ever be published. Dene Moore reports
Is life getting too expensive for retirement saving?
Retirement saving is the obvious cut for households struggling to stay centred financially while interest rates rise and inflation keeps burning up more income. The 2022 Canadian Retirement Survey by the Healthcare of Ontario Pension Plan (HOOPP) highlights the precariousness of retirement saving right now. Almost four in 10 working people did not put away money for retirement in the past year and 72 per cent said saving for retirement is prohibitively expensive.
Chatter about Canada being on the verge of a retirement saving crisis has been around for decades. Between rising rates and inflation, are we finally there? Is life getting too expensive for retirement saving? The Globe’s personal finance columnist, Rob Carrick, discusses in this article
Why home ownership is not the key to a comfortable retirement
They had looked for two years, but Justin Valente and his partner still hadn’t found an affordable home in Vancouver that would fit the family they soon plan to start. So, like many other young people frustrated by Metro Vancouver’s hot housing market, the pair widened their scope to include Vancouver Island. They eventually found a roomy, olive-green house in Ucluelet, B.C., a woody, seaside town on the island’s west coast, after Mr. Valente’s partner, Natalie, found a job there.
On May 18, they got married. Ten days later, they moved into their new home. They wanted a place they could call their own. But they also, crucially, saw home ownership as the primary path to a comfortable retirement. “In Canada, it’s definitely been ingrained in us that home ownership is the way there,” said Mr. Valente, a 31-year-old in the tech industry who’s able to work remotely. “You just buy a place, and you make money off of it.” Ben Mussett reports
CPP Investments braced for prolonged downturn as inflation soars
As inflation soars and stock markets swoon, the head of the country’s largest pension plan has a reassuring message for 21 million citizens who look to the Canada Pension Plan for a portion of their retirement funds: Don’t worry, we got this.
In a speech last week, Canada Pension Plan Investment Board (CPPIB) chief executive officer John Graham predicted the global economy will face a “prolonged period of uncertainty” that could last up to two years, with persistent inflation and geopolitical tensions such as Russia’s war in Ukraine weighing on investment performance. Mr. Graham told a lunch audience at the Canadian Club: “This grim picture might seem overwhelming, but in many ways, CPP Investments was built for markets like this.”
“To be clear, this also means we might have a tough year, or two,” Mr. Graham said. However, he added that the $539-billion CPPIB fund has the scale, expertise and long-term approach needed to weather downturns. In an interview, Mr. Graham said: “If I had one message for Canadians, it’s that the fund is sound, and will be there for them.”
While CPPIB reviewed its approach to risk management in light of world events such as the Ukraine war, Mr. Graham said the fund’s investment strategy remains consistent. Over the last 10 years, the CPPIB returned 10.8 per cent annually. Andrew Willis reports
Can this 60-something couple afford to retire, travel and still help their children financially?
Jeff, 64, is retiring from his $145,000-a-year executive job soon and his wife, Vera, 63, who earns $93,000 a year in health care, plans to follow in December. They have defined benefit pension plans, indexed to inflation, that will pay them more than $100,000 a year combined.
“We have three children and all of them are university graduates,” Jeff writes in an e-mail. “We paid for their degrees and accommodations so they essentially have no debt.” This has affected their retirement savings, Jeff adds. Apart from their pensions and their real estate, their savings consist of their registered retirement savings plans.
Vera and Jeff have a mortgage-free house in small-town Ontario and a cottage on a nearby lake. “We have set up tax-free savings accounts but to date we have not used them,” Jeff writes. They have four questions. “Can we afford to retire? We like to travel. How do we structure withdrawals from our RRSPs keeping in mind taxes? How do we use our TFSAs? When do we start Canada Pension Plan and Old Age Security, taking into consideration taxes?”
They also want to help their children financially. Their retirement spending goal is $80,000 a year after tax. In the latest Financial Facelift column, Ian Calvert, a vice-president and principal of HighView Financial Group in Toronto, looks at Jeff and Vera’s situation.
Why this former manager retired at age 55
In the latest Tales from the Golden Age feature, Jean-Marc Filiatrault, 59, of Laval, Que. talks about retire at age 55, based on advice from his father. “My dad, an engineer who retired at age 50, told me a long time ago that making money can’t be the only goal in life. Instead, he said, ‘Figure out what you need and once you have it, stop there.’ I’ve never forgotten that. My sister, a doctor, retired at age 50, after receiving similar advice. At some point, you have to decide: When do I have enough money? When is it time to do something else?”
In case you missed it
How to sell the family cottage without upsetting the kids
Amid rising values for recreational properties, not to mention annual costs such as taxes and upkeep, the unhappy challenge for many older Canadians is how to sell the cherished family cottage without upsetting their children. For some, the decision to sell might be financial, as the attendant costs of property ownership only go higher. For others, it could be health reasons, the death of a spouse or the reality that for all the wonderful memories the property created, the kids and grandkids don’t use it enough to justify keeping it.
Regardless of the underlying reasoning behind any sale, letting go can be a lot more difficult than selecting an agent and listing the property. “The biggest difference I find between urban real estate and recreation real estate is the emotional attachment people have to their recreational properties,” says Rob Serediuk, an agent with Sotheby’s International Realty Canada who specializes in cottage properties in Ontario’s Haliburton and Muskoka regions.
He notes that prices for vacation properties soared during the pandemic when people began working remotely. Now, with urban property prices retreating with higher interest rates, he expects more recreational property to come on the market. “There are a lot of people that are on the fence on whether or not they want to sell,” he says. Paul Brent reports
Ask Sixty Five
Question: For someone who has paid in the maximum to Canada Pension Plan (CPP) by age 65, but who continues working and receiving a high level of self-employed income past age 65 until say age 70, I understand that there will be a requirement to continue to pay CPP premiums in the full maximum amount unless you start drawing CPP at age 65. In that circumstance, does the financial benefit achieved by deferring drawing CPP until age 70 still make deferral the best choice to maximize the overall CPP benefits realized (assuming sufficient longevity)? Does the continued requirement to pay CPP premiums during the deferral period from age 65 to 70 while continuing to work, result in any benefit that offsets the cost of the continued CPP premium payments for five years?
We asked Chris Warner, a wealth adviser at Nicola Wealth, to answer this one:
I really like this question as it starts to dig into the granular comparison of multiple scenarios, which is where we as financial planners hopefully provide the most value. As described, there are two options being weighed:
- Work from ages 65-69 while drawing benefits from CPP to avoid paying new premiums, or
- Work from ages 65-69 while paying into CPP and deferring CPP benefits until age 70.
Let’s assume we’re looking at someone likely to live to age 90 and that inflation will be consistent amongst both calculations, then compare the results.
In scenario 1, the individual has apparently already paid the maximum CPP contributions (40 years) so will have capped out on the benefit they can receive from 65 on. In 2022 that’s $15,043.08 per year.
In scenario 2, the self-employed individual needs to keep paying CPP premiums for five years which is $6,999.60 per year or a cumulative total of $34,998. In exchange for that, they get a 42 per cent higher CPP pay out from age 70 on which means lifetime payments of $21,361.17 per year.
When I run a model of cumulative costs in each scenario, it takes scenario 2 until age 87 before they have caught up. If the individual lives beyond age 87, then they benefit from increasingly more cumulative income over their retirement. That’s a bit of a risk in my mind. If I look at the U.S. Social Security actuarial tables to predict probable mortality for a 65 year-old male or female, this suggests the highest probability ages of deaths are 83.09 and 85.07 respectively.
Thus, speaking purely from probabilities, I would likely recommend that the individual take CPP income at age 65 to avoid paying further CPP premiums. There could be other factors to consider like family genetics and longevity, overall net worth, or other income sources but generally the math points towards scenario 1.
There is actually a third option, which may be better than both! Since we said this individual is self-employed, they should be able to change their compensation from salary to entirely dividends. If they compensate themselves via dividends, then they will have no CPP-eligible earnings which will mean they don’t have to pay CPP contributions. They can thus defer their CPP benefits to 70, enjoying the higher annual income in retirement, all without the $34,999 contribution drag from scenario 2.