Older seniors may want to age in place, a stance that became more pronounced during the pandemic as some long-term care facilities came under scrutiny for less-than-stellar conditions.Dean Mitchell/AFP/Getty Images
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Advisors are seeing more of their senior clients opting to stay put in their long-time homes instead of downsizing to a smaller house or apartment condo setup, writes reporter Deanne Gage in this Globe Advisor article.
“A lot of our clients are either not planning to downsize, or if they originally planned on it, they don’t end up doing it,” says Chris Ferris, certified financial planner (CFP) at Ryan Lamontagne Inc. in Ottawa. “Many wait until it’s necessary for health care reasons.”
Some clients are stymied by the process of buying and selling property, moving, land transfer fees and, of course, downsizing furniture and other household items.
A recent report from the Canadian Foundation for Financial Planning found that people who have a strong emotional attachment to their house are more likely to want to remain in that house during their retirement years. Only 26 per cent agreed or strongly agreed with the idea of using their house to partially fund retirement.
He notes that older seniors may want to age in place, a stance that became more pronounced during the pandemic as some long-term care facilities came under scrutiny for less-than-stellar conditions.
“They’re reluctant to give up their house and independence,” he says. “There’s that fear of what happens if we have another pandemic?”
Some also consider the basic economics. For years, homeowners, especially those in major urban centres, counted on selling their house at top dollar and downsizing to a cheaper location, using the proceeds for retirement or other ventures.
“Once they looked at the numbers, they’re not coming out as far ahead as they might have thought,” he says. “Selling at a large gain is nice, but they’re turning around and buying or renting in a more expensive market, too. That dissuades a lot of people.”
Jackie Porter, CFP at Carte Wealth Management Inc. in Mississauga, is finding similar sentiment with some of her senior clients.
“If downsizing is not going to put that much more money in their pockets, they’re asking is it really worth their while to sell?” she says.
Read the full article here.
For more from Globe Advisor, visit our homepage.
Does Maggie, 50, need to delay retirement to pay down her mortgage?
Maggie is age 50 and on her own again with two teenaged children. She is eligible to retire from her $105,000-a-year teaching job in five years.
“Having bought out my ex, I have a mortgage again,” Maggie writes in an e-mail. “It is unclear to me if I should continue working past my retirement date as my mortgage is quite high,” she writes. “Or should I retire and supply teach for a couple of days a week?”
Maggie recently inherited some mutual funds from her parents. “Should I cash these in to pay down my mortgage or keep the investments?” She and her former spouse will share postsecondary education costs for the children. Even so, she wonders if she should continue working as long as the children are in school.
Her goals are to retire without having to worry about mortgage payments, to travel and to help her children with education and living expenses while they are in university. She also wants to help each of them with a down payment on a first home after they’ve graduated.
In this Financial Facelift, Tom Feigs, a certified financial planner with Money Coaches Canada, looks at Maggie’s situation.
Want a free financial facelift? E-mail finfacelift@gmail.com.
When did you start taking CPP? Was it too early or too late? Share your thoughts with The Globe
Canadians are encouraged to delay receiving their Canada Pension Plan or Quebec Pension Plan benefits until age 70 to get the maximum payout later in life, writes Globe Advisor reporter Brenda Bouw. Still, she notes, research shows less than 1 per cent do. Canadians most commonly take their CPP/QPP benefits as soon as they are eligible, at age 60.
Why don’t more Canadians wait, especially given the financial incentive? It’s not an easy decision, especially considering Canadians are living longer compared to when the CPP and QPP were first introduced in 1966.
The Globe is interested in talking to Canadians about when they started taking their CPP/QPP benefits, and why they started then. Was it the right decision in hindsight? Would waiting longer have been beneficial? Should they have started sooner?
Take our survey at this link. We’ll report on the responses and interview a handful of Canadians who took their CPP/QPP benefits at various ages between 60 and 70. Their insights could help the next generation decide when to start taking theirs.
In case you missed it
As much we talk about financial fraud, too many people are getting sucked in
It’s normal for complaints about banks and investment dealers to jump in hard economic times, but this year’s numbers are still an eyeful, writes personal finance columnist Rob Carrick in this opinion article. Banking complaints have roughly quadrupled year-over-year and investment complaints look like they’ll be up 70 per cent by year’s end, said Sarah Bradley, CEO of the Ombudsman for Banking Services and Investments.There are a lot of moving parts in the rising complaint trend, but fraud is the one that stands out for OBSI.
“Fraud is a scourge that has been our No. 1 banking issue for many quarters, and it’s huge right now,” Ms. Bradley said in a recent interview. As much talk as there is about fraud risk in the financial world, too many people are getting sucked in and losing money, says Carrick. We’re at a point where every finance-related e-mail, text, phone call or door-to-door contact must be challenged. When in doubt, he advises, back away, delete or say no.
Read the full article here.
Your investment loss could be your spouse’s tax gain
You might have heard of the Darwin Awards, says Tim Cestnick in this Tax Matters article. The awards, created by author Wendy Northcutt, he adds, are given to people who die in such an idiotic manner that their action ensures the long-term survival of the species, by selectively allowing one less idiot to survive. Maybe not surprisingly, a study a few years ago showed that 88.7 per cent of people receiving a Darwin Award are men.
This doesn’t surprise Cestnick’s wife in the least. Last weekend she got angry at him for breaking a window at their home when he decided to install some Christmas lights by stacking two ladders on top of each other to reach above their kitchen window. Cestnick told her he’d make it up to her: He’s going to put some money in her pocket through some clever tax planning. “No need to thank me,” he said to her. Here’s the idea he’s got in mind.
Read the full article here.
Retirement Q&A
Q: I turned 66 this year, and I have been dipping into my registered pension plan since I retired last year. How do I know if I might be eligible for the pension credit?
We asked Dami Gittens, senior wealth planning associate and client relationship manager at Nicola Wealth Management Ltd. in Vancouver, to answer this one.
The pension income tax credit is a non-refundable federal tax credit of 15 per cent on a maximum amount of $2000 of eligible pension income. This equates to $300 of federal tax savings in a year. However, there are also provincial pension income amounts, which could allow you to receive the first $2000 of pension income on a tax-free basis if you are in the lowest tax bracket.
To be eligible for the pension tax credit, you must be 65 years or older and receive income from an eligible annuity, a Canadian registered pension plan or a vehicle such as a RRIF (Registered Retirement Income Fund) or LIF (Life Income Fund).
A portion of an RRSP can be converted to an annuity and the payments received from that annuity are also eligible for the tax credit. Do note that RRSP withdrawals are not eligible for the pension credit.
The CRA also has a handy tool to help you determine if you can claim the pension income amount.
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.
Why more seniors are opting to stay put rather than downsize their homes. Plus, when did you start taking CPP? Share ... - The Globe and Mail
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