Home insurance, which is more costly and harder to get than ever for foreign and domestic buyers alike as the most significant expense of owning property in Florida is set to get worse with industry projections saying home insurance premiums will rise 40 per cent this year.BLOOMBERG
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Canadians who own or seek to own property in Florida face a gathering storm of financial factors that have made buying and maintaining a place in the sun a lot more expensive, says Gus Carlson, a U.S.-based columnist for The Globe and Mail.
The newest bogeyman is home insurance, he adds, which is more costly and harder to get than ever for foreign and domestic buyers alike, in some cases outpacing mortgages as the most significant expense of owning property in Florida. And it will get worse – industry projections say home insurance premiums will rise 40 per cent this year.
When combined with higher house and condominium prices, more expensive money and a stubbornly weak Canadian dollar, Florida, once a relatively cheap and convenient retreat for many Canadian buyers, is quickly getting out of reach and raising the question: How much is escaping the northern winter really worth?
Whether you consider Florida a sun-drenched slice of paradise or a dark corner of hell, the shift is significant when you look at Canadians’ strong investment profile south of the border. Canadians are by far the largest foreign buyers of property in the Sunshine State – US$2.1-billion last year – and second only to the Chinese as the biggest international buyers of residential property in the United States.
Read the full article here.
Read The Globe’s buyer’s guide to travel insurance here.
Should Tyler and Isabel open a trust for their teenage son?
Tyler and Isabel have no firm plans yet to retire from their well-paying jobs in the health care sector, but they do have some questions about their financial future. Tyler is 57, Isabel is 51. They have one child, age 15, and a mortgage-free house in a desirable part of southern Ontario.
Tyler earns $118,000 a year and is a member of a defined benefit pension plan. Isabel makes $75,000 a year and contributes to a group registered retirement savings plan (RRSP) at work. They’d like an assessment of their retirement readiness by the time Tyler turns 60, the earliest age at which he can get an unreduced pension. He may decide to work longer. Isabel plans to retire at the same time as Tyler.
Do-it-yourself investors, Tyler and Isabel have built a substantial investment portfolio mainly of dividend-paying, blue-chip stocks. After they leave the work force, they would like to use their investment income for their living expenses and ideally never touch the principal.
They ask how to co-ordinate the drawdown of their registered accounts with the collection of government benefits. As well, they wonder what steps could be taken to preserve their estate for their son in the event they pass away while he is still young. They are both in good health.
Their retirement spending goal is $130,000 a year after tax.
In this Financial Facelift, Barbara Knoblach, a certified financial planner at Money Coaches Canada, looks at Tyler and Isabel’s situation.
Want a free financial facelift? E-mail finfacelift@gmail.com.
How Canadians who face sudden retirement should prepare for the transition
For some retirees, leaving the work force isn’t a choice, writes Globe Advisor reporter Brenda Bouw. Some are forced into retirement due to a layoff, illness, or because they have to take care of a loved one – and returning to work isn’t an option.
Being “suddenly retired” brings financial and emotional challenges, says Laurel Marie Hickey, portfolio manager and wealth advisor with National Bank Financial Wealth Management in Calgary.
“Many people are nervous about retirement to begin with, so when it’s sudden, it brings that uncertainty to the forefront,” she says.
Globe Advisor spoke recently with Ms. Hickey about how advisors can help clients navigate an unexpected transition to their non-working years:
How should advisors start a conversation with a suddenly retired client?
The first thing we should do is listen. Let the clients tell their whole story because there are usually important nuggets that will help determine the next steps. Then, get right to the numbers. Clients in this situation want to know where they stand financially. If you don’t speak to the numbers early in the conversation, they’ll keep thinking about it.
Read the rest of Bouw’s interview with Ms. Hickey here.
For more from Globe Advisor, visit our homepage.
In case you missed it
Would-be retirees: Should you start your CPP pension before year-end or wait until 2024?
With the release of the Consumer Price Index figure for October, sixty-somethings will have enough information to decide if they are better off starting their Canada Pension Plan benefits in December of this year rather than waiting until 2024, writes Frederick Vettese, in this personal finance column. The short answer, he says, is to start the pension in December, but read on since there are some exceptions.
If you start taking the pension in December, you will be entitled to an increase in January that reflects inflation. The actual calculation involves taking the average CPI over the 12 months ending October, 2023, and dividing it by the average CPI over the 12 months ending October, 2022. We anticipate that increase will be 4.4 per cent, which is higher than any increase granted since 1992, with the notable exception of last year when benefits went up by 6.5 per cent.
If you wait until January to start the CPP, you won’t receive the 4.4-per-cent inflationary increase. Instead, the pension will be recalculated using a higher earnings base. It turns out the earnings base for 2024 calculations will be 3.6 per cent higher than if you had started the pension in 2023.
Read the full article here.
Here’s how homeowners can age in their own place, even if they are struggling to afford it
If you’ve made it to retirement at the age of 65, congratulations, says contributing mortgage columnist Robert McLister, in this personal finance article. Folks hitting this milestone have another 20.94 years to go, on average, according to Statistics Canada life expectancy data.
In other words, the average 65-year-old will break 85, which happens to be the threshold where most Canadians start selling their homes, new research from Canada Mortgage and Housing Corp. indicates.
That threshold has steadily risen over the years, largely because Canadians want to live in their homes longer as they age. From 1991 to 1996, for example, 41.6 per cent of Canadians 75 and over sold their homes. The latest figures through 2021 show that number dropping to 36 per cent.
If you’re one of the majority who fancies growing old in your homestead, the million-dollar question is, do you have enough money to do it?
Read the full article here.
Retirement Q&A
Q: I have a friend who’s taken on his own investments. He mentioned “timing the markets” to me the other day. What exactly does he mean?
We asked Mick Lord, a Certified Financial Planner® with IG Wealth Management in Ottawa, to answer this one.
When someone tries to “time the markets,” they hold cash until they think the market has hit a “low,” and then they buy the assets. Holding cash rather than a diversified investment portfolio is a form of shorting the market, which is, in a way, a form of betting. The investor is “betting” that the market is about to go into a downward spiral and that they will be able to identify the bottom of the spiral.
We know from historical records that this is nearly impossible to predict, even for experts.
Strategic, disciplined investors are not gamblers. There are many studies that show being out of the market and missing the best days in the market cycle can drop your rate of return dramatically (go ahead, Google “miss the best days stock market” for yourself).
Market timing simply doesn’t work, period. Be a strategic investor – hold a well-diversified portfolio that suits your tolerance for market fluctuation and simply rebalance your portfolio from time to time. And seek the advice of a financial planner if you have any doubts.
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. Sign up for our weekly Retirement Newsletter.
