To some extent, the senior on a fixed income is a myth.
Canada Pension Plan retirement benefits are adjusted for inflation once annually, and Old Age Security payments are reviewed quarterly to reflect rising living costs. Many of the dividend stocks that many seniors own directly or through funds increase their cash payouts every year or so. Growth from owning stocks or equity funds also takes the edge off inflation.
Seniors fortunate enough to have defined benefit pensions may also have some degree of inflation protection, particularly those who worked in government. DB pensions pay monthly cash for life – you don’t have to worry about the kind of volatility we’re seeing in financial markets today.
And yet, seniors are very far from inflation-proof. Retirees can’t take advantage of today’s tight job market to ask for a raise or bonus, or find a better-paying job. Short of going back to work, they don’t have a way to make the kind of leap in income that compensates for today’s high inflation rate.
Seniors, tell me how you’re doing with inflation by completing this anonymous survey. I’ll report back soon on what the results tell us about facing up to inflation when you’re retired.
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Rob’s personal finance reading list
Top 10 investing terms people search for online
Find out what your fellow investors are asking about. A mix of basic and more advanced topics that highlight how investors have been drawn to risky strategies by high flying stocks.
Feeling cooked by inflation?
Try a pre-cooked rotisserie chicken at your local grocery store. The CBC Radio show Cost of Living found it’s quite a bit cheaper than buying an uncooked chicken at the same store.
Top 10 mortgage mistakes
A mortgage broker and real estate agent put together this list of mistakes people make when financing the purchase of a home.
Who’s investing in real estate? At least one in five MPs
At least 65 members of parliament hold rental or investment real estate assets, according to information filed with the federal conflict of interest commissioner. Investors buying up houses and condos is one of the reasons why house prices have soared in the past couple of years.
Q&A
Q: My husband and I have come into some U.S. dollars from an inheritance. We thought we’d invest some in the U.S. market and, later, convert it to Canadian dollars when the exchange rate is more favourable. My question is whether it’s worth the hassle. I read about withholding taxes on dividends.
A: Check out this tax guide for info on the treatment of dividends from Canadian and U.S. stocks in both registered and nonregistered accounts.
Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.
Today’s financial tool
Twelve life insurance beneficiary mistakes to avoid. Included are slip-ups that could results in unintentional exclusions – or inclusions.
The Money-Free Zone
For my fellow Curtis Mayfield fans – a career-spanning Mayfield mix by the Japanese hip hop artist and DJ, Muro.
What I’ve been writing about
- How parents can use the new Tax-Free First Home Savings Account for kids
- This hard-working 24-year-old is nailing it financially. But where’s the happiness?
- His tech ETFs are down 30 per cent – should he weather the storm or sell?
More Rob Carrick and money coverage
Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.
Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Cryto is booming, but should you invest? https://stress-test.simplecast.com/episodes/cryptocurrencies-are-booming-but-should-you-invest How are young Canadians dealing with soaring rents? https://stress-test.simplecast.com/episodes/rents-are-soaring-what-does-it-mean-for-millennials-and-gen-z
Are your parents giving you money? • Why it’s time to stop shaming the renting lifestyle • Is now the right time to buy a house? • Why are young Canadians leaving the cities they love? • Eating in: How COVID has shifted our food spending • Crisis-proof your finances? • Can you afford to live downtown? • The cost of kids
- ✔️ The housing file: The housing boom is ripping apart the financial fabric of Canada • Shut out: A well-qualified millennial home seeker throws up his hands after losing multiple bidding wars • Big city housing affordability is over – now what? • She sold her Toronto house to retire somewhere cheaper, but it didn’t work • How young adults and the whole country win with a tougher mortgage stress test for home buyers • Can’t afford your house? It’s likely not your fault
- 📈 Investing: Robo-advisers have grown out of the novelty stage. Here’s help in finding one right for you • The 2021 ETF Buyer’s Guide: Best Canadian equity funds • The 2021 Globe and Mail online brokerage ranking: Who’s best for investing … and answering the phone • Are these the stock market returns of a lifetime? • On the cusp of retirement and wondering about an ETF that pushes the limits on aggressiveness
- 💰 Your money: The five most important numbers for checking the health of your personal finances • Today’s freakishly low mortgage rates can’t last. What will pandemic home buyers do when they rise? • There’s a cost in money, isolation and family stress when seniors choose to remain in their own private homes • Taking CPP early can cost you $100,000 and limit your long term options • Fleeing the city for the suburbs? Watch out for higher property taxes, more cars and other costs
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
