Karen Kristjanson plays the violin at home in Surrey, B.C., on Feb. 21.Jennifer Gauthier/The Globe and Mail
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Karen Kristjanson of South Surrey, B.C., retired in 2011, at the age of 60, after working in leadership development and coaching for the Canada Border Services Agency. “I was feeling a bit stale in my job and ready to leave full-time employment,” says the now 72 year old. “I had enough pensionable service years to feel okay about retiring and was looking for more freedom.” The plan, she adds, was to start her own part-time consulting business and spend more time on her hobbies and interests, including writing and singing.
Kristjanson’s transition to retirement didn’t go as smoothly as planned. “About three months before my retirement date, I experienced a severe spinal problem that left me disabled,” she says. “I couldn’t sit for five minutes or walk any distance without severe pain. The only time I was pain-free was when I was lying down. It felt more like sick leave than retirement. After more than a year of that, I finally had surgery, which enabled me to start adjusting slowly to the kind of retirement I had imagined.”
Once Kristjanson recovered, it took a few years to establish some new life rhythms. What helped was writing her book, Co-Parenting from the Inside Out: Voices of Moms and Dads, published in 2017. “Writing gave me something to get up for each day. It provided some structure, which I found comforting.” But once she finished my book, she found it challenging to set goals to keep active and engaged. As a bit of an introvert, Kristjanson felt she needed to push herself to reach out to friends and build and maintain connections in my community.
“I stay connected by singing in a choir and other groups. I always loved to sing and decided to take voice lessons in my 40s,” she says. “Now, I don’t just have a nice voice but a somewhat skillful one. I’m also taking violin lessons, which is very humbling.”
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.
Should Matilda, a 50-year-old physician with three children, retire in five years or 10?
Matilda, a self-employed physician, is 50 years old and on her own again with three children. The youngest is still at school and living at home. The older two attend university, where they live in residence.
Through her professional corporation, Matilda gets income from clinical work, emergency-room shifts and research. She is not a member of an employer-sponsored pension plan and needs to take care of her own retirement planning.
Matilda owns a detached home in a good Toronto neighbourhood on which only a small mortgage remains outstanding.
Matilda’s questions: When can she exit the work force while maintaining an after-tax spending power of $140,000 a year? Is downsizing advisable? How should she draw down her savings?
In this Financial Facelift, Barbara Knoblach, certified financial planner at Money Coaches Canada, looks at Matilda’s situation.
Want a free financial facelift? E-mail finfacelift@gmail.com.
How delaying retirement can significantly boost income for singles
In this Charting Retirement article, Frederick Vetesse, former chief actuary of Morneau Shepell and author of the PERC retirement calculator (perc-pro.ca), calculates the remarkable starting income outcome for a single woman retiring at age 66 versus at age 60 here.
In case you missed it
Why men retire richer than women
A new study has put a number on the wealth gap between men and women – it’s 16 per cent, writes personal finance columnist Rob Carrick in this Carrick on Money article.
The study offers a snapshot of a lingering inequity in the economy and personal finance – women make less on average, and they end up with less wealth. One result, notes Carrick, is more pressure on women to save and invest well over their lifetime.
The study, published by the Retirement and Savings Institute at business school HEC Montréal, compared single men and women aged 45 to 59. “Overall, we estimate that single men have $56,000 more wealth than single women on average, a wealth gap of 16 per cent relative to men’s wealth,” the study says. “The gap is largest at the top of the wealth distribution and has persisted over time, with no evidence that women are catching up.”
Single women are more educated, slightly older, and more likely to be widowed, the study found. At the same time, they have lower employment rates and may have more responsibilities for family care. Another issue is the continuing wage gap between men and women.
Read the full article here.
In Costa Rica’s Blue Zone, people flock to ask a 102-year-old cowboy his secret to a long life
Costa Rican centenarian Ramiro Guadamuz Chavarria rides his horse up the middle of a dusty road while skillfully holding the reins of two horses that trot closely behind him. He leads the horses to a stable behind his home, showers and eats breakfast, all before 9 a.m., writes international affairs reporter Janice Dickson in this health and fitness article.
The 102-year-old cowboy, she adds, is visited by people from around the world who all want to know the same thing: What is the secret to living a long life?
Guadamuz Chavarria has been featured in a number of articles over the years because he is a centenarian living in a so-called Blue Zone, one of five regions in the world where people are reported to live longer than others, says Dickson. He was also included in the Netflix documentary called Live to 100: Secrets of the Blue Zones.
Sitting in the shade behind his family home surrounded by plantain trees, Guadamuz Chavarria holds a guestbook signed by people who have sought him out, including visitors from Hungary, Colombia, a class from the university of Central Arkansas, among others. “It’s the question I’m always asked,” he said.
Ramiro Guadamuz Chavarria is more than 100 years old and still healthy, both physically and mentally.
Academics and the general population are fascinated by longevity, but experts say a recent peak in interest could be driven by demographic shifts, with older adults, particularly baby boomers, taking interest in how to age healthily.
Read the full article here.
Retirement Q & A
This is the latest article in an ongoing series, Planning for the CPP, in which Globe Advisor explores the decisions behind when to take CPP benefits and reviews different aspects of the beloved and often-debated government-sponsored pension plan. As part of the series, we invite readers to ask questions about their Canada Pension Plan (CPP) retirement benefits and find experts to answer them.
Q: Some people say they take CPP sooner versus later so that they don’t have their OAS clawed back when other sources of income are factored in. Is it better to take less CPP for longer and have no OAS clawback, or have more CPP later and risk the clawback? What are the considerations for each scenario?
We asked Rona Birenbaum, a certified financial planner (CFP) and founder of Toronto-based Caring for Clients, to answer this one.
Canadians overestimate the likelihood and amount of their OAS clawback exposure. As of 2020, only 8 per cent of OAS recipients experienced a clawback.
The OAS clawback thresholds are quite high and increase annually. For 2024, clawback begins once an individual’s net taxable income is $90,997 and, depending on age, isn’t fully clawed back until net taxable income is over $142,609 for 2023. The maximum will be higher in 2024 and is even higher for those aged 75 and older.
A full planning scenario analysis is the best way to answer your questions because many factors drive taxable income throughout retirement and impact OAS clawback, not only CPP election timing.
Here are some examples:
- Tax-efficiency of non-registered investments. Many investors prefer owning equity investments that generate dividend income rather than capital gains. Unfortunately, the 38 per cent dividend gross-up required to capture the dividend tax credit inflates one’s clawback-sensitive income, whereas only 50 per cent of capital gains income is taxable. A greater emphasis on capital gains is more tax efficient and provides investors with more control over the tax year when the income is realized. Non-registered prescribed annuities provide high cash flow and low taxable income and on their own can eliminate OAS clawback for some retirees.
- Using tax-free savings account (TFSA) withdrawals strategically can protect OAS income. The withdrawn amount can be returned to the TFSA when RRIF income kicks in and exceeds one’s spending requirements or from an inheritance or equity takeout when downsizing or selling one’s principal residence.
- Selling an investment at a profit? Consider selling before the end of the calendar year you intend to start collecting OAS benefits so that the capital gain income isn’t part of the clawback calculation when you apply. Careful, though; it may be better, overall, to spread the gain over two tax years even if you lose some OAS temporarily.
We’ve had a lot of success reducing exposure to the OAS clawback through strategic drawdown and pension election strategies. Annual monitoring and tweaking of the withdrawal plan is needed to get the best results over time. A professional CFP can test out a variety of scenarios to find a “sweet spot” strategy that makes your money and government benefits go furthest.
Implementing the strategy and adjusting over time is a hands-on activity, whether you manage it on your own or with the help of a dedicated and knowledgeable, planning-oriented investment advisor.
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.
