The Globe and Mail

December 8, 2023
Christopher Katsarov/The Globe and Mail

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Fate has been both cruel and kind to Owen. He came down with a chronic illness, and he inherited more than a million dollars.

He is 61 and self-employed with no dependants.

“I am at a point now that I am in need of a thoughtful and realistic financial plan,” Owen writes in an e-mail. He’s still working part-time, earning about $60,000 a year, and collecting a pension of about $48,000 a year from a previous employer that is not indexed to inflation.

“However, my situation has changed dramatically. I now have to deal with new and ongoing health issues and related costs,” he writes. The recent inheritance – which he describes as modest – “will help with the overall picture,” Owen adds, “but I feel I must be financially prudent going forward.”

Given his new-found wealth, Owen is naturally concerned about managing it.

Short term, he wants to buy a new car. Longer term, he wonders if he can afford to buy a vacation or retirement property. His retirement spending goal is $108,000 a year after tax.

In this Financial Facelift, Warren MacKenzie, a fee-only certified financial planner (CFP) and chartered professional accountant in Toronto, takes a look at Owen’s situation.

Technically, I’m a senior but I’m very good at hiding it

“I am still trying to adjust to my new senior designation and l have to confess I feel it’s a stereotypical negative, improperly understood label,” says Susan Wener, in this First Person article.

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“Yes, I am now 65, but no I am not succumbing to the designation.
I’m not going to bore you with the obvious complaints about reaching the senior label. You’ve heard them I’m sure.”

Wener tries to escape the senior issues of invisibility, body upkeep and forgetfulness by sitting in a cavernous industrial space that houses a Toronto coffee bar, gourmet foods and wines, and dry-cleaning service.

“I began to take stock of how – as a first-year senior – I must be an anomaly,” she notes. And not just because she was one of the oldest people in the hip, cool establishment. “I’m getting used to that when I walk downtown.
I consider myself somewhat of a rebel. If at age 65 I still have yet to change most of my acting-like-I’m-25 behaviours. I suppose I never will until my body sends me to the next stage: Decrepit.

“I have been told on more than one occasion that I don’t look my age. Wow, great. I look 60 instead of 65. Yeehaw!”

First Person is a daily personal piece submitted by readers. Have a story to tell? See our guidelines at tgam.ca/essayguide.

How much does retirement income depend on investment returns?

Ideally, you would not have to worry about investment risk in retirement. But, in this Charting Retirement article, Fred Vettese, former chief actuary at Morneau Shepell and author of Retirement Income for Life, looks at the difference between the returns for those with defined pension plans and those without, here.

In case you missed it
Too much wealth tied up in real estate can hurt your retirement, report suggests

Canadians heading into retirement are in a great position, said no one ever.

But even by this usual standard of negativity, a new report on retirement by Deloitte Canada is a stunner, according to personal finance columnist Rob Carrick. It says that 55 per cent of people aged 55 to 64, about 1.7 million individuals, will have to make lifestyle compromises to have a comfortable retirement. The report, adds Carrick, says that near-retirees are too dependent on their houses for wealth, they invest too conservatively and they don’t have access to the advice and investing products they need.

The Deloitte report includes some suggested remedies, including more options for people tap into their home equity to finance retirement. But the take-away for people retiring in the next few years can be summed up as follows: Find a way to save more or scale back your retirement lifestyle expectations.

The report is based on a study of 4,000 households of people between 55 and 64 who are heading into or already in retirement.

Read Carrick’s full take on the Deloitte report here.

What I learned at sea on a round-the-world cruise

In January of this year, Gloria Galloway packed two large bags of luggage, flew to France and boarded a ship. “It was the start of a mostly westward sea voyage that landed me back in Marseille 118 days later.
My friends and family call it my ‘trip of a lifetime,’” writes Galloway, in this travel article.

“Though I am not sure they all fully understood why I would want to go around the world, on my own, as a woman in her 60s with limited cruising experience. In fact, I had long dreamt about this voyage.”
Galloway’s grandparents did the full global trip in the early 1970s, she recalls. “The weekly accounts of their adventures, mailed to us on blue onion-skin envelopes, were magical. Plus, I worked as a journalist for four decades and saw a few bad parts of the Earth but not many nice ones. I knew I was taking several steps out of my comfort zone but I wanted to go while I was still young enough for my body to keep pace with my ambition.”

A world cruise, however, is like a tasting menu: You sample a tiny bit of each country on the itinerary and then choose which ones you will revisit later, she advises. “I did not truly get to ‘know’ any of the places we visited.”

The MSC Poesia departed from Marseille, with 2,550 passengers for a 118-day voyage to circumnavigate the globe.

“Now that I’m home, I am often asked whether it was worth it. The answer is an unequivocal “Yes!” But that’s largely because I did my research ahead of time and I got what I expected.”

Retirement Q&A

Q: If we intend to apply and start collecting CPP when we are 61 years old, and we will still continue to make regular monthly CPP contributions through our employment, will the CPP payout amount keep increasing accordingly year by year until we stop contributing when we reach 65?

We asked Shelley Smith, investment advisor at TD Wealth, to answer this one.

In a nutshell, yes. This is thanks to the introduction of the CPP Post-Retirement Benefit by the federal government in 2012. Individuals aged 60 to 70 who are receiving CPP benefits and continue to work and make CPP contributions can increase their monthly CPP benefit. These increased benefits are called the CPP Post-Retirement Benefit or PRB.

Each additional year you continue to work and contribute after you start to collect your CPP will earn you a new PRB. The PRB amount will be added to your monthly CPP payment the following year, increasing your monthly benefit. You do not need to apply for the PRB, you will automatically receive it the year following your year of contributions, as long as you file an income tax return. Prior to the introduction of the PRB, individuals would stop paying into CPP as soon as they decided to take their benefits.

Depending upon your age however, the PRB rules will differ:

  • If you are aged 60 to 65 and continue to work, you are required to continue making CPP contributions.
  • If you are aged 65 to 70 and continue to work, you can choose not to make CPP contributions.
  • If you are over the age of 70 and still working, you cannot contribute to the CPP.

The amount of your PRB benefit will depend on the following: Your average earnings – The amount of PRB you receive is based directly on your CPP benefits. Your CPP benefits are based on your average earnings throughout your working life and your contributions to the plan. Generally, your PRB is about 1/40 of your CPP benefit.

The age when you start receiving benefits – Just like CPP, PRB benefits are adjusted based on when you take them. If you take them early, they are reduced by 7.2 per cent (0.6 per cent per month) for each year before age 65. If you take them after 65, they increase by 8.4 per cent (0.7 per cent per month) for each year after 65.

You can get an estimate of your CPP retirement pension payments by signing in to your My Service Canada Account.

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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