Retirement
 
 
 

January 22, 2022

 
How to know when it’s time for seniors to stop driving, why the pandemic is leading Canadians to delay retirement and a question on mandatory RRIF withdrawals
Tony Marshall
 
80-year-old Halifax resident Tony Marshall enters his recently leased vehicle. The Globe and Mail / Carolina Andrade The Globe and Mail
 
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Tony Marshall knows he won’t be driving forever.
 
The 80-year-old Halifax resident often drives to attend a local singing group and likes to meet up with friends. But he’s also aware of his family history of dementia and has noticed that he’s lost some of his sense of direction over the past two years and has become a bit absent-minded.
 
He can’t just jump in the car and go any more. “I have to plan how to get there,” Mr. Marshall says.
 
He uses his Toyota Corolla’s GPS to map out each route and prevent missing a turn. He says if cognitive issues creep in, he’ll get his wife to drive him or take a cab. “I will probably keep driving for two or three more years,” Mr. Marshall says. “I know what to expect. But I can live with it.”
 
Driving is a lifeline for many retirees – a fundamental part of their lifestyle that allows them to maintain friendships, visit family, remain independent and participate in community activities. Anna Sharratt reports
 

This soon-to-retire couple scored big in the stock market – is it time to sell and lock in profits?

The most important thing investors need to know about stocks right now is how exceptional returns have been since the March 2020 crash, writes the Globe’s personal finance columnist Rob Carrick in this article.
 
You may not see a rally like this again in your lifetime, Mr. Carrick adds. He notes the S&P 500 index is up roughly 100 per cent from the market low, and the S&P/TSX Composite Index is up about 80 per cent. Looking at these returns, a reader who is headed into retirement in the next 12 months wonders whether it’s time to sell some of his stocks.
 
“Our returns are substantial and we never thought we would be in this position,” he wrote. “We have been thinking of selling off most of our holdings except top holdings (Canadian and U.S. banks, insurance companies, etc.) and locking in our profits. We would keep the cash in our RRSPs until the next downturn and buy only top blue chip holdings. Any advice is greatly appreciated.”
 
 
 
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It sounds like an exercise in market-timing, which Mr. Carrick says is tricky to get right.
 

How this 55-year-old can retire comfortably in six years

Like most people, Sarah has had some hits and misses over the years when it comes to investments. Now, at age 55, she is wondering when she can afford to retire from her $89,000-a-year media job, spend time travelling and “never have to worry about money.”
 
Years ago, Sarah inherited about $100,000. She bought a house jointly with other family members in Vancouver, which they eventually sold for a tidy profit. Her mistake was that she didn’t buy back into the Vancouver real estate market, Sarah writes in an e-mail. “Eventually, I decided to go ahead and buy in Victoria instead.” She rents the house out at a profit. In time, Sarah borrowed against the equity in her Victoria property to buy a co-op apartment in Vancouver, where she lives now.
 
Sarah has a defined-benefit pension plan at work that will pay her about $1,550 a month at age 60 and $2,375 at age 65. She estimates her Canada Pension Plan benefits at about $1,440 a month if she takes it at age 65. She has substantial registered savings and a fair amount of debt as well.
 
If she retires as early as age 61, Sarah asks, how much can she spend? She’s concerned about having to pay capital gains tax if she sells her rental property. “Should I go and live in the rental property for a year and make that my principal residence before I sell?”
 
In the latest Financial Facelift column, Janine Guenther, president of Dixon Mitchell Investment Counsel of Vancouver, to look at Sarah’s situation.
 

In case you missed it

Why prescription overload is a serious health risk for seniors

It was while working in acute care at McGill University Health Centre that the epidemic of overmedication in older Canadians became clear to physician Emily McDonald.
 
“We were seeing older people coming in with fall fractures, hip fractures, delirium, confusion,” Dr. McDonald says. “And a lot of it could be pretty easily traced back to medications or combinations of medications that they were taking.”
 
Going over the list of prescription medications they were taking, it was clear many were not appropriate, she says. The diagnosis was prescription overload.
 
“It’s a massive problem,” says Dr. McDonald, an associate professor of medicine and director of the clinical practice assessment unit in general internal medicine at McGill University Health Centre.
 
“More than half of people over the age of 65 are taking more than five medications and when you look in long-term care – the most vulnerable people – they’re taking at least 10 medications a day. Dene Moore reports
 

Why friendships are even more important in retirement

Retirement is a time for picking up old hobbies, trying new activities and travelling the world (when there’s no pandemic to worry about). But amid all of these life changes, maintaining one key constant makes the difference: relationships with friends.
 
Retirees without close connections with friends and family are at greater risk of physical and social isolation, a recent Edward Jones survey notes. It cites a Statistics Canada report showing that one in four adults over the age of 65 is socially isolated, with too little contact and interaction with others. The pandemic has prompted more Canadians to pause and think about what matters most to them in life, the Edward Jones report says, and relationships with friends and family are at the top of the list.
 
Retirement is “a sacred time for friendship” – and was long before the pandemic came along, says psychologist and friendship expert Marisa Franco. Not only is there more time to spend with other people, but friendships tend to be more fulfilling during a person’s retirement years. Josie Kao reports
 

What else we’re reading

How the pandemic is leading Canadians to delay retirement

Trixie Rowein, portfolio manager and founder with the PAX Portfolio Advisory at Raymond James Ltd. in Edmonton, recently contacted a 70-year-old client for his annual review. She had one pressing question for him: Why was he still working?
 
It turned out that although the client had enough savings to step down from his career, he just wasn’t interested – at least not while the pandemic was still putting a damper on exotic travel plans.
 
“At his age and stage [of his career], he gets 12 weeks’ worth of holidays anyway,” she says, adding that he had spent the past summer whale-watching near Vancouver Island and in Churchill, Man., to get a glimpse of the area’s polar bears. But bigger dream vacations weren’t happening.
 
“Some clients have decided to postpone [retirement] because they’re saying, ‘Why am I going to stop working now when I can’t do anything? I might as well keep working,’” she says.
 
While every Canadian’s retirement plan is different, the COVID-19 pandemic is having a large impact on when exactly those golden years start. Kira Vermond reports
 

A beginner’s guide to meditation

Meditation dates back centuries but has become increasingly popular today as more people look for ways to cope with stress and busy lives, not to mention the pandemic.
 
For many, meditation sounds like a good idea, but learning the new skill can be a bit daunting. Still, even in retirement it’s never too late to start, according to advice in this MarthaStewart.com article.
 
“Anyone can meditate regardless of age, schooling, or income,” says life coach Susie Levan, adding that “there are many myths and misconceptions that keep people from meditating.”
 
The good news is, according to Ms. Levan, is that you can’t do anything wrong, and you certainly can’t fail.
 

Ask Sixty Five

Question: I am 72 years old and my mandatory registered retirement income fund (RRIF) withdrawals begin this year. I am retired and receiving both Canada Pension Plan (CPP) benefits and a pension as a federal superannuant. I am currently also receiving full Old Age Security (OAS) with no clawback.
 
My question is: Is there a way to determine how much I should withdraw from my RRIF each year (keeping in mind the minimum withdrawal required) until the funds are all withdrawn in order to minimize total taxes over the life of the RRIF and to also minimize the OAS clawback? At this point, all RRIF withdrawals are being reinvested. I am able to live on what I receive monthly from the three sources of income I mentioned earlier. Any information on how to address this problem would be most welcome.
 
We asked Jamie Golombek, managing director of tax and estate planning for CIBC Private Wealth Management in Toronto, to respond to this one:
 
This is a very common question, with no easy answer. In fact, the best way to analyze this question is to prepare a full financial plan, tailored to your specific circumstances and financial goals during lifetime and for your estate. When analyzing whether taking early withdrawals from a RRIF may be beneficial, some factors that may impact the analysis include:
 
  • Your tax rate on annual RRIF withdrawals during your lifetime versus the tax rate on death. This will be based on the size of the RRIF itself, along with the amount of annual withdrawals.
  • Whether you can pension split (e.g. pension, RRIF withdrawals, CPP) with a spouse or partner, which can lower your tax rate on RRIF withdrawals
  • Your life expectancy – since most people can’t predict when they’ll die, the length of time for RRIF drawdowns can have a significant impact on any decision.
 
Only once you sit down and consider the above factors, can you prepare a financial plan that attempts to minimize tax on your RRIF withdrawals. A qualified financial adviser should be able to assist you in doing this!
 
Have a question about money or lifestyle topics for seniors, or want to suggest a story idea for the Sixty Five series? Please email us at sixtyfive@globeandmail.com and we will find experts and answer your questions in future newsletters.
 
 
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Why Jim Leech took a retirement detour to help create a new income-for-life mutual fund
 

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Why Jim Leech took a retirement detour to help create a new income-for-life mutual fund
 
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