A woman studies in a group with younger students. There is a growing body of evidence that novel learning is one of the most important measures people can take to maintain brain health as they age.FatCamera/iStockPhoto / Getty Images
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Lily Eng has lost track of just how many courses she’s taken since retiring from her teaching job two decades ago: 20 or 30. Probably more. She’s studied art history, women’s art, Cantonese, Chinese history, comparative religion, critical thinking and the list goes on.
“When I was teaching, I always wanted time to sit down and learn different things,” says Ms. Eng, 80, of Vancouver. “I had to wait until I retired.”
Canadians are living longer, healthier lives and, in many cases, are retiring earlier than any previous generation. Some, like Ms. Eng, also prefer going back to school to more traditional retirement activities such as gardening. And, as Dene Moore reports, there is a growing body of evidence that novel learning is one of the most important measures people can take to maintain brain health as they age.
Can this debt-free young couple afford to retire in their early 50s?
Roland, 41, and Rebecca, 39, are doing all the right things to retire much earlier than most people. The debt-free couple is hoping to hang up their hats in about 10 years. Three years ago, they sold their house in Toronto and moved to a nearby city, buying their new, less expensive house outright. They’re living well below their means. He earns $110,000 plus variable commission in sales, while she brings in $105,000 in a management job. Their retirement spending goal is a modest $40,000 a year after tax.
“We have put ourselves strategically into a position to save heavily in hopes of retiring early,” Rebecca writes.
They have “maxed” their son’s registered education savings plan, which is self-directed. They have registered retirement savings plans; “however, we have been hesitant to max them out due to tax implications,” Rebecca adds.
They are concerned about paying more tax later than they would be saving now. Rebecca has just enrolled in a retirement savings plan at work to which both she and her employer contribute. Roland recently joined a defined contribution pension plan that has a similar arrangement. Short term, they are planning some renovations to their home. Longer term, they’re thinking of buying an investment property. In the latest issue of Financial Facelift, Matthew Sears, a financial planner at T.E. Wealth in Toronto, looks at their situation.
In case you missed it
Why more people are embracing their grey hair
Toronto actor Nicole Fairbairn entered the pandemic lockdown with long ginger locks. The 50-year-old is coming out of it ready to embrace her now natural salt-and-pepper. It wasn’t just the inability to professionally maintain her hair colour with salons closed as part of public health measures, but the self-reflection and shifting of priorities that she experienced in the face of an urgent global crisis.
“I was one of those people that said ‘there’s no way. I’ll go to my grave with dyed hair,’ ” she says. “But then when the pandemic happened, I was like ‘I don’t want to be fussing around with this. There are more important things.’ ” If the proliferation of Facebook groups for “women who dare not to dye,” is any indication, Ms. Fairbairn is far from alone. Dene Moore reports.
Lawn bowling is gaining popularity among retirees
Mike O’Reilly first came across lawn bowling when the Calgary Lawn Bowling Club moved into his neighbourhood six years ago. He and many of his friends were in search of a new activity.
“We thought, ‘wouldn’t it be fun if we all got together and went out as couples and tried this?’ ”
As Kathy Kerr reports, the sport is growing in many parts of Canada, and the amenities are pretty good, too. Many clubs have facilities with kitchens and liquor licenses and offer fun-oriented tournaments and weekend events. O’Reilly likes that it’s a game he can play well into retirement.
“It was a thrill to find an activity that is going to challenge me for many decades to come.”
What else we’re reading
How to enjoy retirement without going broke
In this New York Times opinion piece, Peter Coy, the chief U.S. economist for research firm TS Lombard, talks about the good problem to have in retirement – spending your hard-earned savings.
“Accumulating money for retirement is hard, but decumulating it is tricky, too,” Mr. Coy writes. “Even the experts have trouble saying how to pace your spending so you can enjoy retirement without exhausting your savings before you die.”
He quotes William Sharpe, who won a Nobel Memorial Prize in Economic Sciences in 1990 for his work on financial economics theory, who once said: “It’s really nasty. It’s the nastiest, hardest problem I’ve ever looked at.” It’s not only a tough financial problem, Mr. Coy writes, but an emotional one when flipping from saving to “dissaving.”
How these Toronto-area seniors went digital to connect during the pandemic
In an effort to connect with their communities, a generation once largely unfamiliar with the latest technology found itself getting the hang of FaceTime and Zoom for video chats over chai. In The Globe, writer Tazeen Inam profiles a handful of these newly tech-savvy seniors in the Peel Region. One is Mohini Khosla, known to many as “Mohini Aunty,” who has been regularly singing bhajan over Zoom. The calls keep her linked to her community – and without them, she says she wouldn’t have much to do.
Ask Sixty Five
Question: I am 63, working part-time, and for about a year we have been taking funds out of our non-registered portfolio to fund living expenses. Since I have been selling some assets, we have been triggering capital gains. How can I take a more strategic approach?
We asked Dan Bortolotti, portfolio manager at PWL Capital Inc. in Toronto, to respond:
During your working years, when you’re adding money to your portfolio, taxable capital gains usually aren’t much of a worry. They’re a non-issue in tax-sheltered accounts such as RRSPs and TFSAs, of course, and buy-and-hold investors can defer capital gains in non-registered accounts indefinitely: you only pay the taxman when you sell your holdings for more than you paid.
Alas, once you reach retirement, it’s often time to start paying the piper, as you will likely need to sell holdings from time to time to free up cash to meet your day-to-day expenses. To some extent this is inevitable, like taxable RRIF withdrawals, which also frustrate many retirees.
If your non-registered account includes many holdings, it might be possible to selectively sell those with small gains, and to offset some of your realized gains by selling others with losses. If you have losses from previous years, these can be carried forward to offset gains in the current year.
Now that you are in semi-retirement, it’s important to take a big-picture view. There are a lot of moving parts here: today your income is from part-time employment and your non-registered portfolio, but you’re also eligible for Canada Pension Plan benefits, and when you turn 65 you can start Old Age Security, too. By age 72, you’ll need to start RRIF withdrawals if you haven’t already. Your spouse may also have similar choices, and some of your income can be split for tax purposes. So, the decision to realize gains is only one factor to consider.
A good plan will help you smooth out your taxable income retirement from year to year. For example, if you’re realizing gains in your non-registered account during the next few years, you might want to hold off taking CPP and OAS, both of which can be deferred to age 70, with the benefit of a much higher payout later.
Unfortunately, there aren’t many helpful rules of thumb here, and it gets complicated quickly. A fee-for-service financial planner can be helpful in creating a tax-efficient drawdown strategy for retired DIY investors.
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 e-mail us at sixtyfive@globeandmail.com and we will find experts and answer your questions in future newsletters.