Retired air traffic controller William Jesse looking over his restored 1949 Chevrolet pickup truck at his home in Victoria, B.C., on Nov. 4.CHAD HIPOLITO/The Globe and Mail
Content from The Globe’s weekly Retirement newsletter. To subscribe click here.
William Jesse, 77, officially retired in 1994 at the age of 49, after a career in the aviation industry.
“I had a chance to leave with a good pension, so I did. Being a shift worker, I had plenty of time off, so I knew that when I retired I would easily adapt,” he says in the Globe’s latest Tales from the Golden Age feature. He and his wife then moved from Montreal to Victoria.
Mr. Jesse has had a few interesting jobs since then, including working on vintage planes, working in a magic store and being an extra in a dozen films. “My pension was adequate, so working postretirement was not for financial gain. I did it for enjoyment,” he says.
One of his most memorable gigs was working as an assistant at a funeral home. “It was one of the most rewarding jobs I had, helping to support grieving families,” Mr. Jesse says.
Read more about Mr. Jesse’s retirement here.
Holster your HELOC, borrowers. Rising rates make them too expensive
Home equity lines of credit are the sharpest tool in the shed, writes Globe personal finance columnist Rob Carrick.
“There’s no smarter way to borrow for short periods of time than a home equity line of credit because the rate is the lowest most people can hope for,” he writes.
“Today, that’s not saying much. The Bank of Canada’s campaign to pound down inflation using interest rate hikes raises the cost of using the HELOCs and everything else in the borrowing toolshed. The heyday of the HELOC is done for now – they’re too expensive to be our handy way to borrow for fun and profit any time soon.”
Read Mr. Carrick’s full article here.
Bad news, retirees: The current wave of inflation is far from over
Inflation is one of the greatest threats to a comfortable retirement. We have seen two other waves of high inflation in the past century, one caused by the Second World War, the other by oil price shocks. In each case, high inflation persisted for at least four years, which suggests the current wave is far from over.
Check out the chart provided by Frederick Vettese, former chief actuary of Morneau Shepell and author of Retirement Income for Life.
From groceries to auto loans, here’s how much more it costs to live right now
The financial double bite is everywhere. A stick of margarine costs 50 per cent more than it did two years ago. Advertised rents are, on average, about $100 a month above where they were in 2019, already an extraordinarily expensive year to be a new tenant. And, even with fixed mortgage rates, homeowners will likely see their monthly payments rise by hundreds of dollars if they’re up for first-time renewals in the next few months.
In Canada – as in the U.S., Europe and many other parts of the world – people’s budgets are being devoured from two directions at once. On one side of the bite are higher interest rates, which increase borrowing costs throughout the economy. On the other side is inflation, which has been running at multi-decade highs.
Central banks are pushing interest rates higher to force consumers and businesses to rein in spending and borrowing, which would in turn cool the economy and slow down the pace of price increases. But achieving that end result will take time.
Can this couple in their 50s both retire in three years and still help their teenage children pay for university?
Like many folks in their 50s who are financially comfortable, Jake and Bonnie are looking forward to retiring from work as soon as possible. He is 57 and will be leaving behind a sales job paying $225,000 (variable), while she is 52 and earning $125,000 a year in education. Ideally, they’d like to hang up their hats in three years.
Bonnie has a defined benefit pension plan that will pay her $66,000 a year starting at age 55. Jake has no company pension but he does have a good-sized registered retirement savings plan.
Aware that they have both likely achieved peak earnings, their goal is to “take advantage of their highest earning years to maximize savings and investments,” Jake writes in an e-mail. They also want to help their two children, 13 and 16, pay for university.
Longer term, they want to spend “the worst of winter in warmer climates,” Jake adds. Their retirement spending goal is $100,000 a year after tax. “Can we retire at 60 and 55 and enjoy the lifestyle we want while providing undergraduate education for our kids?” Jake asks. They have a mortgage remaining of about $100,000 at 3 per cent.
In the latest Financial Facelift, Ian Calvert, vice-president and principal at HighView Financial Group in Toronto, looks Jake and Bonnie’s situation.
In case you missed it
A retiree revelling in the RV lifestyle
Mary Anne Robbins, 66, retired in 2018, at age 62, after working for 25 years as a librarian. Her husband, who was in sales, retired at the same time, at age 64. For the past year and a half they’ve been travelling with their two rescue dogs in a 26-foot RV after selling their home in South Carolina.
“We decided to try the RV lifestyle for a year, but we’ve enjoyed it so much that we’ve kept going,” she says in the latest Tales from the Golden Age feature.
Ms. Robbins, originally from Brampton, Ont. talks about how “cozy” RV life is and her plans to eventually move to the Maritimes.
Read the full story here.
Retirement Q&A
Question: Further to your articles (here and here) regarding the 2022 quirk with (Canada Pension Plan) CPP deferrals, is the same true for Old Age Security (OAS) deferrals? I am 66 and have deferred my OAS for the time being, on the advice of my financial adviser. I’m wondering, given the economic trends, if I would be wiser to begin receiving OAS payments sooner. My birthday is in March. Thank you for answering my question.
We asked Frederick Vettese, former chief actuary of Morneau Shepell (LifeWorks) and author of Retirement Income for Life, to answer this one:
I agree with your financial adviser (with the limited facts I have about your situation). It is usually best to defer starting CPP until age 70 or close to it. 2022 is unusual in that the increase in Consumer Price Index (CPI) is significantly larger than the increase in wages. It means that for this one year only, anyone who is close to 70 and has not started their CPP is probably better off starting it on Dec. 1, 2022, rather than waiting until 2023 when they turn 70. If you’re 66, this does not apply.
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.