Playing the saxophone and teaching fitness classes are part of a fulfilling retirement for an Ontario man. Plus, some information on CPP survivor benefits

Morris Tait, a 79-year-old retired teacher, plays his saxophone, an instrument which he recently began playing, as he stands inside a walkway near his home in Cobourg on Dec. 5.Alex Filipe/The Globe and Mail

Content from The Globe’s weekly Retirement newsletter.

Morris Tait, 79, retired 25 years ago at age 54 after a career in education, first as an elementary school teacher and later as a school vice-principal and principal.

“It was a wonderful career, but after 32 years I was ready to retire,” he says in the latest Tales from the Golden Age feature.

“For many people, retirement can be frightening, especially if they haven’t prepared for it,” adds the Cobourg, Ont. resident. “I used to do retirement workshops for teachers to warn them about being unprepared. Studies show that it can be an unhappy adjustment and experience, which can result in a loss of self-esteem. It can affect your well-being.”

Mr. Tait believes it’s important to be busy in retirement and to do different things. He owns some rental properties, teaches senior fitness and learned to play the saxophone three years ago at age 76.

Read the full article here.

Why Colombia is on this Canadian’s retirement radar

“As I begin research on my future life as a snowbird – though, for now, I prefer the younger-sounding “digital nomad” – my checklist steadily grows: safety, balmy weather, reliable internet, gay-friendliness, decent health care, a stimulating café society, proper gastronomy and, of course, good value,” Doug Wallace writes in the Globe.

While he’s still a few years away from retirement, Mr. Wallace is starting to consider warmer climates where he can escape Toronto for the winter months. “Boring old Arizona? Somewhere more exotic like Vietnam? The world is brimming with possibilities, but Colombia wasn’t even on my radar until I took a vacation there this past September,” he writes.

Read the full article here.

Can Sadie afford to retire with an after-tax income of $60,000 a year?

When a person dies, they are deemed to have disposed of their property at the time of death. If they are married, their assets can pass to the surviving spouse on a tax-deferred basis. Naturally, questions arise about future taxes.

So it is with Sadie, whose husband died earlier this year. She is 66 and semi-retired, with occasional work in health care.

Sadie has a defined benefit pension of $15,816 a year. She will get a Canada Pension Plan survivor’s benefit to bring her total CPP entitlement to the maximum allowable of $1,254 a month, or $15,048 a year. The market value of their combined investable assets is about $1.14-million.

Because her husband’s taxable income for 2022 was only $40,000, Sadie asks whether she can make a withdrawal from his registered retirement income fund before the end of the year to raise his taxable income and lower hers. “Would this withdrawal be credited to him or me?” Sadie asks in an e-mail. She is the beneficiary. “Should I switch his RRIF back to a registered retirement savings plan in my name?” she asks. She is concerned that her RRSP will be too big if she rolls in his RRIF. “I’d love to reduce it and pay the taxes at a slightly lower level.”

As well, Sadie is deferring property tax on her B.C. house and wonders whether she should pay it off or continue deferring. Her retirement spending target is $60,000 a year after tax.

In the latest Financial Facelift, Ian Black, a fee-only financial planner at Macdonald, Shymko & Co. Ltd. in Vancouver, looks at Sadie’s situation.

In case you missed it

How a senior rediscovered her love for ballet in retirement

Joanne Stuart, 70, retired at age 59 after working as a career development professional in the Barrie, Ont., area. A few years before that, she a month off work so she and her husband Jim and I could spend time in Mexico.

“We were considering moving there in retirement and wanted to see if it would be a good fit. A year later, I asked for two months off to go back again, and my employer asked me if I was interested in retiring. I saw myself working for at least three or four more years, but then Jim and I thought about it more and decided it was time,” says Ms. Stuart in the latest Tales from the Golden Age article. Her husband had retired a few years earlier from a career in real estate.

“I remember the first day of retirement very clearly,” she adds. “It was a Monday, and I was walking down the road near our former home in Penetanguishene, Ont., with this tickle in my stomach. I felt free. I felt childlike, realizing that I could do whatever I wanted all day for the rest of my life.”

Read the full article here including how Ms. Stuart took up ballet and acting in her new home in Ajijic, Mexico.

More Canadians are carrying their mortgages into old age, and it’s complicating retirement plans

More retirement-age Canadians are still paying off a mortgage, and financial advisers say rising interest rates will make it even more challenging for Canadians to pay off their home before they retire.

The number of people older than 65 with an outstanding mortgage in their residence increased from 1.2 million to 1.5 million between 2016 and 2021 according to Statistics Canada, although the agency noted they don’t measure whether others residing in the home are contributing to mortgage payments. However, the number of seniors living alone with a mortgage also grew, from roughly 181,000 to 220,000 in the same time frame.

Canada Mortgage and Housing Corp. data also showed an increase in the share of people aged 65 and older with a mortgage. People in that age group accounted for 10 per cent of mortgages in 2017, and 13 per cent of mortgages in 2022. The age group also accounts for 9 per cent of the country’s outstanding mortgage balance, compared with 7 per cent in 2017.

Furthermore, a 2022 survey of more than 1,500 people conducted by Angus Reid and commissioned by two financial advising firms found that 40 per cent of respondents either planned to delay or have already delayed retirement because they were carrying too much debt.

Jason Heath, managing director of Objective Financial Partners, a fee-only financial planning firm in Markham, Ont., said the trend of more retirement-age people carrying mortgages was first fuelled by years of rapidly increasing housing prices and is now being compounded by rapidly increasing interest rates. Salmaan Farooqui reports.

Retirement Q&A

Question: My husband and I are each turning 65 this year, but since we still both want to keep working, we plan to delay asking for Canada Pension Plan (CPP). I understand that once we are both collecting CPP and Old Age Security (OAS), the surviving spouse will receive 60 per cent of the deceased partner’s payments when one of us dies. My question is: If one of us dies before we start collecting the CPP we are eligible for, does the surviving spouse forego receiving any survivor benefit? Is the survivor effectively seen as a single person (without a claim to the survivor’s portion)? If by not using it, we lose it, we could be leaving our surviving partner at a significant disadvantage. Can you provide some clarity?

We asked Jason Heath, managing director at Objective Financial Partners Inc. in Markham, Ont., to answer this one:

There are several considerations here. For one, if you are still working after 65, you must continue making CPP contributions unless you submit form CPT30 to the Canada Revenue Agency (CRA) and your employer. If you have already earned the maximum CPP pension based on past contributions, the additional contributions will not increase your CPP if you defer your pension.

If one of you dies before starting your CPP, your spouse will not forgo a survivor benefit. You do not need to be receiving your retirement pension for your spouse to be entitled to a survivor pension. If your spouse dies when you are 65 or older and have not yet started your CPP retirement pension, you are entitled to 60 per cent of their retirement pension. Once you start your own retirement pension, no later than age 70, you will receive the survivor pension plus your retirement pension. However, if the total of the two exceeds the maximum retirement pension, you can only receive the equivalent of a maximum retirement pension. So, a long-time CPP contributor may not receive much or any survivor pension.

OAS does not have a survivor pension like the CPP does. There is a temporary “allowance” for the survivor that may be payable if you are 60 to 64 and have a low income, but nothing after age 65.

Many CPP applicants start their pension early because they are worried about leaving their spouse or kids at a disadvantage if they defer. CPP can be deferred as late as age 70 and rises by 8.4 per cent plus inflation for each year of deferral post-65. If you expect to live well into your 80s, you will receive more lifetime income, even after adjusting for the time value of money, by deferring your CPP to age 70. A 65-year-old has a 50-per-cent chance of living to age 90 (slightly less for men and slightly more for women). Only 11 per cent of applicants deferred their CPP to age 70 in 2021; mind you, that was up from just 2 per cent in 2019.

If you defer your CPP and then die at a young age, your partner may have been better off if you started earlier if they will not get much of a survivor pension. But the other assets you saved for retirement will be used to fund lower expenses thereafter, for one of you instead of two of you. If you are still working at age 65, you are probably in reasonably good health. If you are healthy, deferring CPP is more likely to result in a higher income over the remainder of your life, and make you and your spouse both better off.

Interested in more stories about retirement? Sixty Five aims to inspire Canadians to live their best lives, confidently and securely. Read more here.


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