A survey released last fall found that 91 per cent of Canadians of all ages, and almost 100 per cent of Canadians 65 years of age and older, plan on supporting themselves to live safely and independently in their own home as long as possible.bluecinema/iStockPhoto / Getty Images
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It was after Richard Dutchak hired an occupational therapist to help his elderly mother-in-law stay in her home as long as possible that he started thinking about his own living arrangements later in life.
Recently retired, Mr. Dutchak and his spouse believe their long-term plan is likely to downsize from their beloved custom-built, multi-level home in Winnipeg.
“We’re psyching ourselves up and convincing ourselves,” he says about planning for the eventual time when going up and down stairs could become more of a challenge as they age.
Still, if the couple knew 30 years ago what they have come to realize today, “we would have built a bungalow and included an easy path to make it friendly for aging,” Mr. Dutchak says
They’re far from alone. Most Canadians are considering growing old in their own homes, in particular after watching the disproportionately negative impact the pandemic had on seniors in assisted living and long-term care residences. A survey from the National Institute of Ageing and Telus Health released last fall found that 91 per cent of Canadians of all ages, and almost 100 per cent of Canadians 65 years of age and older, plan on supporting themselves to live safely and independently in their own home as long as possible. Joel Schlesinger reports.
Can this couple with young kids afford to buy into the family cottage?
Sébastien and Sofia are in their late 30s with three children, ages 10, 7 and 5 and no debt. Sébastien works in education, Sofia has gone back to university to get an advanced degree. Their family income is about $200,000 a year. It will rise once Sofia begins full-time work. They want to give their children the option of attending a private high school if they choose. Private schools in Quebec cost about $7,000 a year. They also want to help with their higher education.
An unexpected opportunity has landed amid these well-ordered plans: Sébastien and his brother have been asked whether they’d like to buy the family cottage, a small, three-season place that requires extensive rebuilding that has been in the family for three generations. After the renovation, each family would spend some time at the cottage, and rent it out when they’re not there to help cover expenses.
Can they do it without jeopardizing their other goals? Sébastien asks. If so, how should they finance the purchase and renovation? In the latest Financial Facelift article, Matthew Ardrey, a vice-president, portfolio manager and financial planner at TriDelta Financial in Toronto, looks at the couple’s situation.
In case you missed it
If your home is your retirement plan, check out this recent news on reverse mortgages
Another step was taken recently in the march of reverse mortgages toward the mainstream of Canadian financial life. Ontario Teachers’ Pension Plan has bought HomeEquity Bank, by far the largest provider of reverse mortgages in this country. As Rob Carrick writes, for the reverse mortgage business, this is a big deal.
Pension plans own assets chosen to help them meet their obligations to pay income for life to retired plan members. Teachers obviously sees the reverse mortgage business providing the stability and growth it needs. Essentially, it’s betting that reverse mortgages will get more popular. No doubt, they will. Aging demographics, a shift in attitudes toward long-term care and ballooning home equity in a hot housing market are all factors that support the inclusion of reverse mortgages as a retirement planning option. So does the view among some homeowners that their house is their retirement plan.
How seniors are finding love in their later years
Connie Sturgess is 73, single and ready to mingle. The Calgary grandmother has been divorced for some time from a 20-year marriage. Healthy, retired, and adventurous, she is the embodiment of the baby boomer generation’s ‘silver singles.’
“I still want to bike. I still want to hike and canoe and kayak. I still want to dance,” she says. “I want a life.”
What she doesn’t necessarily want is a husband. “I don’t know if marriage is up there on my radar,” says Ms. Sturgess, who has signed up for online dating websites, tried speed-dating and has been set up by friends.
She likes meetup activity groups, not necessarily for dating, or singles meetups because, she says, they are great for connecting with new people and trying new things. “You have to have a sense of adventure,” she says. “Never say no. I’m so grateful for all the wonderful experiences I’ve had.”
The number of people living alone in Canada has more than doubled over the last 35 years, from 1.7 million in 1981 to four million in 2016, according to Statistics Canada data – more than a quarter of them were age 65 and older. Dene Moore reports on how seniors are looking for love, or at the very least a little companionship.
The pros and cons of having a dog in retirement
When Maureen Lloyd decided it was time to move from her condo to a retirement home this year, she really had only one stipulation: the place would have to allow her to move in with her cockapoo Lucy and cat Gulliver.
The 82-year-old looked at three or four possible destinations before settling on the Chartwell Waterford Retirement Residence in Oakville, Ont., because of its pet-friendly policies.
As Paul Brent writes, there are some compelling reasons for considering a dog in retirement. (And sorry cat lovers, our feline friends do not offer the same array of benefits.)
Many of the positives are obvious: they get you up and out in good weather and bad, they act as a social lubricant that gets strangers chatting, they improve your mood and ease loneliness and create a built-in routine of feeding and walks. Heck, dogs have even been shown in some studies to reduce blood pressure in their owners. Read more about the pros and cons of dog ownership in retirement here
What else we’re reading
Is the 4% rule still relevant?
For nearly three decades, investors have been citing the “four-per-cent rule” as a rough guide for how much money they need to retire comfortably.
The rule, developed by financial advisor William Bengen in 1994, states that a retiree with a 30-year time horizon could withdraw four per cent of their portfolio in the first year of their retirement, followed by inflation-adjusted withdrawals in subsequent years. The rule is the foundation for popular investment strategies like the Financial Independence Retire Early Movement (FIRE) and a regular topic of discussion between everyday investors and their advisors.
What started out as research – based on historical returns for stocks and bonds from 1926 to 1976 – has become one of the most talked about, scrutinized and misunderstood investing rules of thumb around, even as many experts argue it’s increasingly irrelevant amid volatile markets, a wider variety of retirement income sources and longer lifespans.
The main problem with the four-per-cent rule is that it’s a one-size-fits all approach, said Moshe Milevsky, a finance professor in the Schulich School of Business at York University in Toronto. Brenda Bouw reports for Globe Advisor
Tips on having a happy retirement
Everyone wants to be happy in retirement. So, what will it take to get there?
It’s not just saving money, as this CNBC article states, although that is key according to certified financial planner Wes Moss, chief investment strategist at Atlanta-based Capital Investment Advisors and author of the upcoming book, What the Happiest Retirees Know.
“Does more money buy more happiness?” he said. “Yes, it does, actually, but only up to a certain point.” What’s the threshold? Read the full article here
Ask Sixty Five
Question:
I am in my late 70s and I have a mortgage-free home that I would be interested in selling. The current net after-tax value of my estate is $203,175 for each of my seven children, or a total of $1,422,226. This net value is after allowing $699,978 for income tax on RRIF value, tax-free legacies of $271,050, commission on the pending sale of the residence, staging, pre-sale repairs, landscaping ($66,222). Also, Ontario estate administration tax of $37,530, estate executor’s fees of $30,000 (already fixed at this amount, with my two executors, trustees who are my children) and $16,000 to estate solicitor and tax accountant. My home has a current marketable value of $849,000.
I wish to offer my home for sale to anyone one of my seven children and would permit any of the children to purchase my home for $849,000 minus the following expenses that I would incur by listing the home with a real estate agent, and allow the purchaser to now use the current value of their share of the eventual estate.
1. $66,222 real estate commission and related expenses,
2. $203,175 by waiving rights to estate proceeds at any time in the future,
3. Selling price to any child wishing to purchase ($849,000 – $66,222 – $203,175 today’s value of estate share) for the net selling price of $579,603.
Can I have your opinions on my intent to proceed along this path?
We asked Jag Gandhi and Mark Chan, both vice-presidents of wealth planning at Gluskin Sheff in Toronto, to answer this one:
The numbers you have illustrated above, as the net after-tax value of your estate, are based on the assumption that you pass away right now, which is hopefully not the case. While the numbers can provide you with some guidance on what the distribution of your estate would look like at the time of death, these numbers can fluctuate substantially based on your needs during your lifetime, for example, you may need long-term care if you become ill, which could be very costly and impact the final amount for distribution.
If a child is interested in purchasing your home now, and you would like to have a portion of their future inheritance taken into consideration, you should speak to an estate planning professional who can discuss the various ways that you can equalize between your children on death through your will when you have provided a gift or advance to them during your lifetime, commonly known as a hotchpot provision.
You should speak to a tax professional about the principal residence exemption, which can eliminate any capital gain on the sale of your home to a child. Generally, if you haven’t owned other properties during the years, you have owned your home and your property doesn’t exceed one-half hectare (subject to exceptions), you should be able to claim the exemption.
If a child does purchase your home during your lifetime or on your death for an established price higher or lower than fair market value, the Canada Revenue Agency will consider your selling price to be the home’s actual fair market value. Assuming you can claim the principal residence exemption, this result is likely inconsequential to you. However, this result is not beneficial to your child as they would benefit from a higher adjusted cost base if they were to report a taxable capital gain on a future sale or change of use of the property.
You may also want to consider any land transfer tax that the child would be required to pay as a result of purchasing your home. This could cause conflict between the children if the child did not anticipate this additional cost and it reduces the amount that they expected to inherit.
If a child does purchase your home during your lifetime, you should speak to a financial professional to revisit your financial goals and ensure that the sale proceeds are sufficient to cover living accommodations, basic necessities, leisure and budgeting for potential health care costs.
Interested in more stories about retirement? Sixty Five aims to inspire Canadians to live their best lives, confidently and securely.The Globe and Mail
Have a question about money or lifestyle topics for seniors, or want to suggest a story idea for the Sixty Five series? Please email us at sixtyfive@globeandmail.com and we will find experts and answer your questions in future newsletters.