Since retiring last year, Helene Michaud and her husband have spent the summers on their sailboat. 'We’ve been sailing since we were kids, so this was a big part of our retirement plan,' she says.SUPPLIED
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Helene Michaud, 60, of Toronto, retired in May, 2023, at the age of 59 from a career in the financial services industry. “I enjoyed working and could have continued,” says Michaud, in this Tales from the Golden Age article, but her husband retired a few years earlier, and they had a list of things they wanted to do while they were still healthy and active.
“I was surprised at how easy the transition to retirement was for me, which tells me that the time was right,” she says. “Just before I retired, I spent 14 days walking the Camino de Santiago from Porto in Portugal to Santiago de Compostela in Spain with a friend. Michaud disconnected from her phone and gave herself time to think about how she wanted to live once she stopped working.
Once retired, Michaud and her husband spent most of last summer and this one on their sailboat, which was a big part of their retirement plan. “I’ve also started a passion project called “Merci la Vie!” in which I recycle used sails and ropes to design and produce one-of-a-kind bags,” she adds. “It fills my need to be productive while using my creativity and recycling at the same time.”
They also spend a lot of time in Quebec, where Michaud is from and where her parents still live, doing a lot of outdoor activities such as snowshoeing and skiing.
“I also believe in continuing to learn and challenge myself in retirement,” she says. “I started swimming again for the first time in decades and enrolled in a course to re-qualify as a lifeguard – along with a group of teenagers. I also recently took a course on how to operate a VHF radio to increase my proficiency as a radio operator for safety at sea.” Michaud is looking into volunteering for a non-profit health organization.
“My husband and I understood the importance of financial preparedness, especially in retirement,” she says. “We worked with an advisor to ensure we were ready to retire. Knowing where you stand financially is key to a happy and fulfilling retirement.” Not having a regular paycheque was an adjustment at first, she adds, as was the shift from saving to spending years.
“Financial planning is important, but I believe people should also plan what they will do in retirement,” she says. “It can help you make the best use of your time.”
Read the full article here.
Are you a Canadian retiree interested in discussing what life is like now that you’ve stopped working? The Globe is looking for people to participate in its Tales from the Golden Age feature, which examines the personal and financial realities of retirement. If you’re interested in being interviewed for this feature and agree to use your full name and have a photo taken, please e-mail us at: goldenageglobe@gmail.com. Please include a few details about how you saved and invested for retirement and what your life is like now.
Can Moira, 51 and a teacher, retire within seven years?
Moira, 51, is a teacher who earns $117,450 a year plus another $5,000 annually tutoring during the summer. She has “no debts except for my remaining mortgage,” Moira writes in an e-mail. Her house in the Greater Toronto Area is valued at $1.4-million.
She has an 18 year-old daughter starting university this fall. Moira plans to rent out her spare room to an acquaintance for $700 a month for the next year or so.
“How can I realistically build wealth in the last seven to 10 years of my career while paying off the remainder of my mortgage?” Moira asks. The outstanding mortgage principal is about $175,000. Her goals include saving as much money as possible, helping to pay her daughter’s university tuition and taking a family vacation each year.
As a teacher, Moira has a defined benefit pension plan, indexed, that will pay $63,000 a year from age 58 to 65 and $55,000 a year thereafter. “Will I be able to retire comfortably, or do I need to work past 2031, when I will be 58?” she asks.
Moira is unsure how much she will need to live on after she leaves the work force, but she hopes to maintain her standard of living.
In this Financial Facelift, Steve Bridge, an advice-only certified financial planner with Money Coaches Canada, takes a look at Moira’s situation.
What the ‘most strategic advisors’ are doing to facilitate wealth transfers
We’ve all heard the saying about how children become their parents. Unfortunately, that may not be a good thing when it comes to estate planning.
Thomas William Deans, author of The Happy Inheritor: How Successful Families Prepare Heirs and Transfer Wealth in Toronto, has found that many baby boomers have followed their parents’ lead by staying silent about financial matters.
He notes some sobering data about the lack of wills drafted by Canadian adults. Eighteen years ago, when Mr. Deans wrote his first family wealth book, 12 million Canadians didn’t have a will. Today, that number has increased to 15 million.
Mr. Deans spoke recently with Globe Advisor about this issue. Read the interview here.
For more from Globe Advisor, visit our homepage.
In case you missed it
Why financial planning is critical for Canadians who want to age at home
Aging at home is what most Canadians prefer to do, writes Daina Lawrence in this Investing article and, she adds, the federal government is being asked to provide an age-at-home benefit as part of 20 recommendations from the National Seniors Council. But with people living longer, financial planning and saving are required to make aging at home a viable option for most.
“We certainly have clients who are very interested in discussing what would be necessary to age at home,” says Christine Van Cauwenberghe, head of financial planning at IG Wealth Management in Winnipeg.
“The one thing I would say, though, is unfortunately a lot of those conversations don’t come up soon enough in the financial planning process.”
The federal government’s expert panel recommended a new age-at-home benefit that would be based on income and an assessment by a qualified practitioner and could cover services such as health care, personal care and domestic tasks.
For most Canadians, living at home in their later years is what they want. A 2020 survey from the National Institute on Ageing and Canadian Medical Association showed that as many as 96 per cent of Canadians aged 65 and older reported they would do everything they could to avoid going into a long-term care facility.
Aging is one of those subjects that can be uncomfortable for people to bring up, but if clients want to be financially secure in those later years it’s a necessity.
Read the full article here.
Naming a guardian in your will is key to a child’s well-being
“Carolyn and I were revising our wills when our kids were younger,” writes Tim Cestnick in this Tax Matters column. “I’ve shared before how difficult it was for us to name a guardian in our wills. At that time, Carolyn insisted that we name someone who is loving and of high moral character.” Cestnick pondered that comment: “Carolyn, if we knew someone like that, why wouldn’t we just give the kids away today?” She vetoed that idea faster than a sprinter out of the blocks, he adds. “So, we kept the kids.”
Today, Cestnick’s children are grown up and the question of who should be their guardian is no longer an issue. “As I think back, we delayed having our wills revised because we didn’t know who to name as a guardian. That wasn’t the right decision.”
Cestnick shares four key issues to consider around guardianship, including advice from Karen La Caprara, a lawyer at the firm Fasken LLP, here.
Looking to learn more about wills? Read more about how to create a legal will in Canada here.
Retirement Q & A
Q: I am planning to retire in early 2025; I will be 49 then. I don’t plan to take CPP until I’m 70, but I’m curious to know what is the impact of not contributing to CPP once I retire. Between 49 to 64 I will be drawing income from investments and savings, then a small defined benefit pension will kick in at 65, along with OAS.
We asked Howard Kabot, vice-president, financial planning, RBC Wealth Management, to answer this one.
A: To fully answer this, we’re going to have to make a few assumptions: (1) you started working at age 18; (2) you worked uninterrupted till age 49 in the year 2025.
This would mean you worked and contributed to the Canada Pension Plan for 32 years. We’re also going to assume that you maxed out your CPP contributions each year, i.e. equal to or greater than that year’s YMPE or Year’s Maximum Pensionable Earnings. This amount is set by the federal government each year. To be entitled to the maximum monthly CPP payment amount at age 65, you must have contributed to CPP for at least 39 years and have made the maximum (YMPE) contribution towards CPP in each of those years.
To accommodate periods of low or zero earnings, a “general drop-out provision” automatically excludes years when your earnings were lowest, from the base CPP retirement pension calculation. Low or zero earnings periods can occur if you are at school, unemployed or if you leave the workforce to care for a family member. This provision affects 17 per cent of your base CPP contributory period, allowing up to eight years of your lowest earnings to be dropped from the calculation. In your case, given your 32 years of contributions rather than the full 39, you will not be penalized for the seven years of no contributions.
Your CPP will permanently increase by 0.7 per cent for each month (8.4 per cent per year) you delay receiving it, starting the month after your 65th birthday, the standard age to begin receiving a CPP retirement pension. This means if you begin receiving CPP in the month after your 70th birthday, your monthly CPP retirement benefit will be 42 per cent higher than it would have been if you’d begun CPP at age 65. There’s no benefit to delaying receipt of CPP retirement benefit after your 70th birthday.
You can get an estimate of your CPP retirement benefit from your CPP Statement of Contributions. The statement provides a record of your pensionable earnings and your contributions to the plan. It also provides an estimate of what your CPP pension benefit would be if you were eligible to receive it today. You can obtain your Statement of Contributions online by registering for the My Service Canada Account online portal or by mail with Service Canada.
Check out The Globe’s Retirement Tools and Calculators, including the CPP Estimator.
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.
