Aaron Oshry inside his home in downtown Edmonton, where he lives with his wife.MEGAN ALBU/THE GLOBE AND MAIL
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“I retired in June, 2021, at age 80 after working as a lawyer for more than 50 years – first in South Africa and then in Canada – where I moved to at age 33,” writes Aaron Oshry, 82, from Edmonton, in this Tales from the Golden Age. “I loved my career, but there comes a time for a professional to stop, and my time had come. I started to find trial work to be too strenuous. I transitioned to retirement slowly, working four days a week for a few years and then gradually taking on less demanding cases. Thankfully, my daughter, who had been practising with me for about 30 years and is a partner at our independent firm, was very capable of taking over.”
The switch to retirement was easy for him, says Oshry. “I thought a lot in advance about what I would do and how I would keep busy. I’ve been retired for more than two years and am rarely bored. I swim three or four times a week, work with a personal trainer once a week, and go for lunch twice a week with two different groups of friends.” Oshry also has a rule to never watch TV during the day. “I believe there are better ways to spend my free time. I sometimes worry about being unable to drive as I get older because it could impact my ability to stay active, but I’m fine for the foreseeable future.”
Oshry says he had a successful career while ensuring that money would not be a problem for him and his wife in retirement. They’ve also been cautious with their spending while also saving and investing their money. “I use an advisor to manage about half of our investments and handle the other half myself. It’s something I enjoy. I spend about an hour a day looking at our portfolio, both out of interest and to keep an eye on it.”
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.
Can Louis, 62, retire now or should he wait for his wife, Jackie?
At age 62, Louis is facing the prospect of looking for another job after his $75,000-a-year contract ends in a couple of months. His wife, Jackie, who is 59, has a secure job paying more than $100,000 a year. She also has an indexed defined benefit pension plan that will pay about $47,000 a year in six years.
“I would love to retire, but haven’t been able to save enough,” Louis writes in an e-mail. Jackie will be eligible to retire at age 65, but not with a full pension because she started her current career late.
“Our most significant financial asset is our house, which we paid off a couple of years ago,” Louis writes. “We really don’t have a financial plan and could definitely use some guidance.” Their daughter is 22 and they’re still supporting her through university, “but probably won’t be able to cover all four years,” he adds.
“Jackie and I are both prepared to continue working part-time into our late 60s or early 70s if finances require and our health permits,” Louis writes. “We’re also open to other means of generating income, if necessary, like renting out our Toronto house and renting in a lower-cost community.”
Can Louis retire now or should he wait until Jackie retires at 65? Their retirement spending goal is $80,000 a year after tax.
In this Financial Facelift, Jason Heath, an advice-only financial planner at Objective Financial Partners Inc., based in Markham, Ont., looks at Louis and Jackie’s situation.
Want a free financial facelift? E-mail finfacelift@gmail.com.
Canada Pension Plan changes will raise contributions at a very wrong time
The Canada Pension Plan will launch a new level on Jan. 1 and – no surprise – it will cost Canadians more, writes Gordon Pape in this Investing column.
The CPP has been getting a lot of attention because of the Alberta government’s proposal to opt out and set up a parallel provincial plan, à la Quebec, he notes.
Based on a report commissioned by the provincial government, Alberta would take 53 per cent of CPP assets with it on departure, a figure that has dumbfounded everyone who has read it.
That won’t happen, says Pape. Even if Alberta were to leave, estimates he has seen suggest it would only be entitled to about 20 per cent of the CPP fund.
In short, the proposal isn’t going to fly, at least not on those terms. It seems to be a case of Premier Danielle Smith trying to mess with Justin Trudeau’s brain.
What is real is the launch of CPP2 in January, notes Pape. Most people are unaware that’s the date when a plan to raise coverage levels kicks in. We’ll be paying the usual increased contribution, plus a surtax for higher-income workers.
Read the full article here.
Have you started taking your CPP/QPP benefits? At what age did you start? Was it the right time, in hindsight? Would waiting longer have been beneficial? Should you have started sooner? Share your thoughts with The Globe by taking our CPP/QPP survey. The survey closes on Friday Nov. 17, so send your reply soon.
In case you missed it
How retirees are using reverse mortgages to downsize before selling their existing homes
Advisors typically view reverse mortgages as a last resort for cash-strapped homeowners to boost their retirement incomes, writes reporter Deanne Gage in this Globe Advisor article. But some clients are using reverse mortgages increasingly for other reasons, such as securing that desired house or apartment earmarked for downsizing.
Angela Calla, mortgage broker at Dominion Lending Centres in Vancouver, has found many retired clients looking to buy the new downsized property first before selling their current home. She says some want to hold onto the first house in case things don’t work out with the downsized home, or move out and renovate to get a higher sale price once they are out of the home. It can be harder for retired clients to get a traditional mortgage or secured line of credit because to qualify, they need to prove consistent income that qualifies with a stress test of more than 9 per cent.
To qualify for a reverse mortgage, there are no income requirements. A homeowner must be age 55 or older and have equity in their home. The reverse mortgage lender releases up to 55 per cent of the assessed value of the home and no payments are required as long as the homeowner remains in the home.
Read the full article here.
For more from Globe Advisor, visit our homepage.
Canada’s workplace pensions have an inflation problem
Inflation versus your pension is an unfair fight, writes personal finance columnist Rob Carrick in this Opinion article.
Canada Pension Plan and Old Age Security benefits are indexed to inflation, so you’re protected there. But many workplace pensions aren’t keeping up with today’s unusually large increases in the cost of living, he notes. Understanding this flaw, he adds, is crucial to managing your retirement investments.
In your working years, there’s a decent chance of getting raises that partly or fully offset inflation. The average hourly wage went up 4.8 per cent year-over-year in October, says Carrick, which means pay is more than offsetting the rising cost of living.
Life in retirement is more complicated because, aside from CPP and OAS, there may not be any automatic protection for your income. Retirees without pensions may understand this because they have to be hands-on with their investments. But if you’ve got a pension, says Carrick, it’s easy to be complacent about your retirement savings.
Read the full article here.
Retirement Q&A
Q: If we decide to stop working at age 61 and do not apply to collect CPP yet, but just live by withdrawing from our RRSPs until we reach 65, would it make sense? And are we able to continue making CPP contributions even if we’re not working?
We asked Howard Kabot, vice-president, financial planning, RBC Wealth Management Canada, to answer this one.
Yes, there is some sense in what you’re suggesting. However, your decision with regards to CPP should be made within a larger retirement framework.
You’re suggesting that you will “just live by withdrawing from your RRSPs until age 65.” I’ll assume that you have crunched the numbers and that you can live comfortably (paying your expenses) by doing so. You haven’t indicated what will happen after age 65. How will you fund your post-65 retirement years? I’ll assume you have thought this through.
The standard age to begin collecting CPP is age 65. If you decide to collect prior to age 65, your payment will be reduced by 0.6 per cent each month (7.2 per cent a year). So, taking CPP at age 61 will mean your monthly payment will be 28.8 per cent smaller. The maximum CPP amount for 2023 is $15,679. Taking the payment at 61 would therefore result in a loss of $4,516 per year. So, if you can afford to wait to age 65, you should wait.
Some people choose to take CPP as early as possible (age 60) even though they are getting considerably less. One reason often given relates to longevity. i.e., that by waiting to collect, they will not maximize what they could have gotten by the time they have passed away. This is obviously a difficult point to counter. On a positive note, keep in mind that you can defer collecting CPP all the way to age 70. If you start after age 65, payments will increase by 0.7 per cent each month (8.4 per cent a year), up to a maximum increase of 42 per cent at age 70.
So, to summarize the answer to your question, yes, it would make sense to defer collecting your CPP till age 65, and longer if you can manage it. Finally, no, you can’t make contributions if you’re not gainfully employed or self-employed.
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.
