Elaine Gamble.Geoff Robins/The Globe and Mail
“I retired in January, 2023, at 55, from an all-consuming career in corporate communications,” says Elaine Gamble, 56, of London, Ont., in this Tales from the Golden Age article. “I lost both my parents at an early age – my dad was 64 when he died and my mom was 69 – and I didn’t want to put off retiring. Life is short, and I have so many things I want to enjoy, such as travel, scuba diving, photography and other activities I’ve yet to discover. When I realized I could afford to retire I thought, ‘There’s no time to lose.’”
The transition to retirement, says Gamble, has been a challenge. As a single person with no kids, she adds that her career defined her. “It was hard to let go of everything I was part of in my work. I felt a loss of identity and purpose. I also missed my former colleagues, many of whom were like family. Now that I’ve been retired for more than a year, I’ve developed new routines and activities.”
Travel has been a big part of Gamble’s retirement plan. “I also document my travel experiences with photography and through my travel blog.” When she’s not travelling, Gamble focuses on health and fitness activities, and online courses to improve her photography and photo-editing skills.
“I feel financially secure in retirement. I have a defined-benefit pension plan, which I took at a reduced rate because I retired early, plus my investments,” she says. “I have a financial advisor who helps monitor my spending and investments to ensure my money will last as long as I do.” Gamble meets every three months with her advisor to review projections and check in on her overall financial health. “The rising cost of living has made me more cautious. I’ve picked up some part-time work as an exam proctor for a little extra spending money.”
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.
Why women (probably) shouldn’t take their CPP early
In last week’s Charting Retirement article, Frederick Vetesse calculated whether a 60-year-old man was better off starting his CPP pension at 60 versus age 70. This week, Vetesse, former chief actuary of Morneau Shepell and author of the PERC retirement calculator (perc-pro.ca), assesses the merits of women starting one age versus another here.
How long can Dennis, 66, and Sylvie, 61, stay in their home?
A few years ago Dennis and Sylvie moved from Southern Ontario to British Columbia, where they bought a house and a rental property. Sylvie, who is 61, has already retired. Dennis, who will turn 66 this spring, runs a general contracting business and hopes to retire at 70.
Dennis earns about $80,000 a year in self-employment income and has no pension plan. Sylvie gets a defined benefit pension indexed to inflation of about $36,000 a year. They have two adult children, age 23 and 27.
Short term, they want to pay down their mortgage loans and hold on to their investment property for a few more years. Their main goal is to stay in their home as long as possible, “ideally for 15 or 20 years,” Dennis writes in an e-mail. “Obviously, our investment property will have to be sold at some point to support our retirement funding,” Dennis writes. Ideally, they would like to have $100,000 a year to spend after tax.
In this Financial Facelift, Steve Bridge, an advice-only certified financial planner at Money Coaches Canada, looks at Dennis and Sylvie’s situation.
Want a free financial facelift? E-mail finfacelift@gmail.com.
In case you missed it
Why Canada’s former chief actuary says you should wait to take your CPP benefits
This is the latest article in an ongoing series, Planning for the CPP, in which Globe Advisor reporter Brenda Bouw explores the decisions behind when to take CPP benefits and reviews different aspects of the beloved and often-debated government-sponsored pension plan.
Jean-Claude Ménard was Canada’s chief actuary from 1999 to 2019, responsible for preparing actuarial reports on programs such as the Canada Pension Plan (CPP) and the Old Age Security (OAS) plan, among others. Mr. Ménard spoke recently with Globe Advisor about why he thinks Canadians should wait to take their CPP or Quebec Pension Plan (QPP) benefits, including his decision to start taking his QPP benefits last year at the age of 67.
Why does Ménard wish more Canadians would wait to take their CPP or QPP benefits? “I don’t want people to outlive their retirement savings,” he says. “What’s the point of creating the CPP – and making it financially sustainable [with the establishment of CPP Investments in the late 1990s] – if it doesn’t serve the people? That’s the main reason. Also, as time passes, longevity rates are increasing.”
Why does he think so many people decide to take it sooner? “First, recent studies show people underestimate their life expectancy by about five years,” he says. “The second is a lack of confidence in the future. The third reason is some people prefer to spend money on leisure activities such as travel in the near term rather than on long-term care when they’re older. The fourth reason is many people know a relative or friend who died at an early age, and see that as a reason why they should take the money sooner.”
For more of Ménard’s advice, and why he chose to take CPP at the age of 67, read the full article here.
If you have any CPP questions, story suggestions or feedback on this series, please e-mail us at globecpp@gmail.com. We can’t respond to every e-mail or question, but we’ll do our best. The answers will appear on Tuesdays. Find more articles in the series here. For more from Globe Advisor, visit our homepage.
Spousal RRSPs still have a place in clever planning
“Last Friday, I came home after work and Carolyn said to me, ‘Let’s go out tonight and have some fun,’” writes Tim Cestnick in this Tax Matters column.
“Sounds good to me,” I replied. “If you get back before me, just leave the light on.”
Now, as it turns out, they did end up going out – together. “I think we’re pretty good at doing things as a couple on a regular basis,” says Cestnick. This includes regular date nights, and even saving for retirement. That’s right. “We’re co-ordinating our savings by using a spousal RRSP in our planning. Some people wonder why. Let me explain.”
The Idea
In a perfect world, you and your spouse – if you have one – should have equal incomes throughout your lives. The reason? You’ll pay less tax as a couple if your income is split about equally than if one of you has a disproportionately higher income.
Read the full article here.
Retirement Q&A
Q: I’m a recently retired senior and I’m getting ready to do my taxes for 2023. Do you have any personal tax-filing tips for someone who’s newly retired, such as how I could lower my tax bill?
We asked Chris Gandhu, partner and Family Office leader in Calgary for KPMG in Canada, to answer this one.
For most individuals, the 2023 personal tax-filing deadline is April 30. But if you or your spouse (or common-law partner) are self-employed, then your filing deadline is June 15. Regardless, if you owe any taxes, it must be paid to the Canada Revenue Agency (CRA) by April 30.
Filing on time ensures there won’t be any interruptions to your benefit payments, including Old Age Security. These payments are based on information provided on your return, so if you don’t file on time, your payments might be delayed – or you may miss out on them.
There are a number of potential tax credits that could help lower your tax bill. Tax credits are generally non-refundable in nature, meaning you can lower your tax bill, but you wouldn’t receive a tax refund for the amount of the credit. These include the Age Amount, Pension Income Amount, Disability Amount and Canada Caregiver Amount, as well as tax credits for charitable donations, home accessibility modifications and medical expenses.
For example, you may be able to claim the Age Amount up to a maximum of $8,396 if you are 65 years or older and your net income is less than $42,336 (the credit is clawed back for net income in excess of $42,335 and eliminated when net income exceeds $98,308). You may also be able to claim the Pension Income Amount up to a maximum of $2,000, if you received eligible pension income in 2023, such as a pension from your former employer.
If your spouse is in a lower tax bracket than you, you may be able to lower your overall tax bill by splitting your eligible pension income with your spouse – up to a maximum of 50 per cent of your pension can be allocated to your spouse. To split your pension income, you and your spouse must complete a “Joint Election to Split Pension Income” form (T1032) each year.
When it comes to charitable donations, you can claim amounts up to a limit of 75 per cent of your net income to a registered charity. In any one year, you can claim donations made by Dec. 31 of the applicable tax year, and any unclaimed donations made in the previous five years.
If you are living with a disability, you may be able to claim the disability amount of $9,428 after being approved by the CRA. To be approved, you and your medical practitioner must fill out and submit a “Disability Tax Credit Certificate” (T2201). If your spouse depends on you for support, you may be able to claim the Canada caregiver amount, depending on a number of factors such as your spouse’s net income. As well, many seniors want to stay in their family home and may be eligible to claim a tax credit of up to $20,000 for home accessibility-related expenses.
For medical expenses, you can only claim eligible expenses on your tax return if you, your spouse or your common-law partner paid for those medical expenses in any 12-month period ending in 2023, or didn’t claim them in 2022. Generally, you can claim all amounts you paid, even if they weren’t paid in Canada. You don’t need to send any documents with your tax return, but keep them on hand in case the CRA asks to see them later.
If you haven’t done so already, you may want to consider sharing your Canada Pension Plan (CPP) retirement pension to lower your tax bill, if your spouse is in a lower tax bracket than you. You would need to apply to Service Canada to share your CPP income for the 2024 tax year and on a go-forward basis. The shareable portion of your pension is based on the number of months you and your spouse lived together during your joint contributory period.
As a retiree, there are a number of ways that you can reduce or save on taxes by following some of these useful tips and staying informed. A tax professional can assess your personal situation and offer sound advice to ensure you maximize your 2023 tax return.
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.
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