According to Statistics Canada, divorce among people age 50 and older – known as 'grey divorce' – rose by 26 per cent from 1991 to 2006 (from 4.2 to 5.3 per 1,000 people).YURI ARCURS PRODUCTIONS/iStockPhoto / Getty Images
Content from The Globe’s weekly Retirement newsletter. To subscribe click here.
When it comes to retirement, most couples plan for the places they’ll go and the people they’ll see, but don’t spend enough time thinking about how they’ll pass the rest of the time with their spouse. “People have conversations about things like, ‘where are we going to travel’ [but] they don’t really get into the day-to-day of life,” says Amy D’Aprix, founder and chief executive of Toronto-based consulting firm Life Transitions by Dr. Amy. Failing to communicate how to handle a major life transition like retirement can test even the most solid relationships, especially if each person’s vision of how to spend their days is different. “Even a positive change like retirement puts stress on a relationship,” says Saunia Ahmad, director and clinical psychologist at the Toronto Psychology Clinic. Kathy Kerr reports.
OAS pension payments have permanently risen for the first time since 1973. Here’s why retirees should defer them
The Canadian government has just made good on its 2021 budget promise, Bonnie-Jeanne MacDonald and Doug Chandler wrote in a recent Globe article.
Ottawa permanently increased Old Age Security (OAS) payments by 10 per cent for seniors age 75 and older, marking the first permanent increase to the OAS pension since 1973. Retiring Canadians can maximize this boost by delaying uptake of their OAS benefits, either by working longer or by using their savings to fund the delay.
However, in this article, which struck a chord with many readers, pension experts Ms. MacDonald and Mr. Chandler argue retirees should delay the benefit if they can.
“With the recent experience of high inflation, financial market losses and the vulnerabilities of older seniors highlighted by the pandemic, there are a lot of reasons why delaying OAS is particularly attractive today. When you’re 20 years into retirement, you may have forgotten why you decided to do it – but you’ll almost certainly be happy that you did.”
How insurance can create tax-free income in retirement
Insurance advisers often get a bad rap because they tend to be so persistent, writes Tim Cestnick for the Globe. But he’s always believed that insurance can be an effective tool.
In this recent article, Mr. Cestnick shares an idea involving insurance that can provide a tax-free source of cash flow in retirement.
Why annuities have become a lot more attractive
Demand for annuities and other guaranteed investment products has been rising since the start of this year, but the second quarter is when the market really took off.
The latest data from LIMRA shows annuity sales in the U.S. hit historic new highs in the second quarter ended June 30. Total sales of US$77.5-billion are almost US$9-billion higher than the previous record set in the fourth quarter of 2008, at the peak of the global financial crisis.
While the latest data for Canadian annuities sales have yet to be released, Peter Wouters, director of tax, retirement and estate planning services at Empire Life Insurance Co., is expecting a similarly impressive surge. He spoke with Globe Advisor about his outlook for the market. Read the full article here
Is this 50-something couple saving enough to retire in a decade?
At age 52, Barry and Beth are enjoying their peak earning years, bringing in a combined salary of more than $450,000 a year. He works in education; she is a senior executive at an investment firm. They have two children in university. Beth and Barry have a $2-million house in Toronto with about $150,000 in mortgages against it, plus a line of credit for $115,000.
Short term, their goals are to continue to fund their children’s education, build their retirement savings and take a “significant trip,” Beth writes in an e-mail. Barry has a defined benefit pension plan partly indexed to inflation, while Beth has a defined contribution plan. She also stands to get substantial bonuses, depending on her firm’s performance, but she has asked that these not be included in the financial forecast because they are not guaranteed.
Longer term, they hope to help their children with down payments on their first homes. Their goal is to retire from work at age 62 with a budget of $12,000 a month, or $144,000 a year. “Are we saving enough for retirement?” Beth asks. “If yes, are we in a position to retire before age 65?”
In the latest Financial Facelift article, Matthew Sears, a certified financial planner at T.E. Wealth in Toronto, looks at Beth and Barry’s situation.
‘I have everything a cool teenager could want,’ says this retiree
In the Globe’s latest Tales from the Golden Age feature, Philip Yates, 59, of Fenelon Falls, Ont., talks about fulfilling his retirement dream of cycling across (most of) Canada. “The trip was very freeing. It was also a great time to think and be retrospective about what I wanted to do with the rest of my life,” he tells Brenda Bouw.
Retirement has had some challenges, including a marriage separation, but Mr. Yates is dating again and recently bought a motorcycle, is taking Spanish lessons and has been experimenting a lot more with his cooking.
“I describe myself as a ‘seenager.’ The word “senior” doesn’t do it for me,” he says, “but now I have everything a cool teenager could want. I enjoy being busy, but the difference now compared to when I was working is that I’m doing things for myself versus doing them for a salary.”
Read the full article here.
In case you missed it
Why retirement is ‘like winning the lottery’ for some despite economic concerns
It’s not an easy time to be a retiree. Many of them spent years saving for travel and social plans, only to have the COVID-19 pandemic erase both. Now surging inflation and the market meltdown are eroding retirees’ portfolios and spending power.
But it’s not all bad news. Many seniors are making the most of their freedom from work and taking advantage of the long summer days to travel again and pursue passions they never had time for in their working years.
Globe Investor spoke to five retirees across Canada about how they’re spending the summer and making the most of their golden years – economic threats be damned. Brenda Bouw reports.
What to consider before moving back to Canada to retire
The desire to live closer to family, lifestyle reasons, or worries about future health care costs have led many expat professionals who have built their careers in other countries to choose to return to Canada for their retirement years.
But for returning retirees who have accumulated assets elsewhere, the move back home can come with complexities, advisors say. They can benefit from advanced, customized planning around investments, taxes and cost of living considerations.
Jason Heath, managing director at Objective Financial Partners Inc. in Markham, Ont., works with several clients employed abroad temporarily, including senior executives with multinational firms and teachers. Due to a demographic shift, inquiries have been steady from overseas professionals entering the retirement phase, he says.
“It’s important for everybody to plan ahead for their retirement, but this is much more so when people are moving back to Canada,” Mr. Heath says. “They need to crunch the numbers, do the math, understand the implications and be ready and prepared for a return.”
For returning retirees, a potential misstep can be miscalculating the cost of living in Canada after living elsewhere for years, he says. Helen Burnett-Nichols reports for Globe Advisor.
Ask Sixty Five
Question: As teachers with a pension, when is it optimal to start receiving our CPP and OAS? 65 or 70?
We asked Jason Heath, managing director at Objective Financial Partners Inc. in Markham, Ont., to answer this one:
A lot of the same considerations that apply for anyone else around Canada Pension Plan (CPP) and Old Age Security (OAS) would apply to a teacher with a pension. For example, someone in good health with a long life expectancy who expects to live well into their 80s may benefit from deferring their pensions as late as age 70. A conservative investor earning a low rate of return may be better off drawing down their investments earlier and deferring their CPP and OAS to increase the payments as well.
However, a teacher with a large, indexed pension plan may already have good longevity protection – “insurance,” if you will, against the risk of living too long – through their teacher’s pension. Someone whose retirement income is primarily coming from their investments may benefit more from CPP and OAS deferral to help provide retirement income if they live to 110.
There could even be a benefit to starting one pension early and deferring the other. OAS is a means-tested pension, so if a recipient’s income exceeds a certain threshold, their pension is subject to a special recovery tax. A long-time teacher with a high defined benefit pension plan may be that much more likely to have a clawback of their OAS, especially if they also have an RRSP that will be converted to a RRIF by age 71 and generate more income. Taking OAS early and deferring CPP may help someone in that situation keep more of their OAS pension in the early years of retirement.
CPP increases by 8.4 per cent each year of deferral after age 65 and OAS is only 7.2 per cent, so CPP is a more lucrative pension to defer. CPP also has a survivor benefit that is payable to a spouse or common law partner, unlike OAS, so that mitigates some of the risk for a couple when one or both defer CPP.
Have a question about money or lifestyle topics for seniors? Please e-mail us your question at sixtyfive@globeandmail.com and we’ll try to find an expert to answer it in a future newsletter. We can’t answer every question, but we’ll do our best. Note: questions may be edited for length and clarity.