Connie Sturgess is 73, single and ready to mingle. The Calgary grandmother has been divorced for some time from a 20-year marriage. Healthy, retired, and adventurous, she is the embodiment of the baby boomer generation’s ‘silver singles.’
“I still want to bike. I still want to hike and canoe and kayak. I still want to dance,” she says. “I want a life.”
What she doesn’t necessarily want is a husband. “I don’t know if marriage is up there on my radar,” says Ms. Sturgess, who has signed up for online dating websites, tried speed-dating and has been set up by friends.
She likes meetup activity groups, not necessarily for dating, or singles meetups because, she says, they are great for connecting with new people and trying new things. “You have to have a sense of adventure,” she says. “Never say no. I’m so grateful for all the wonderful experiences I’ve had.”
The number of people living alone in Canada has more than doubled over the last 35 years, from 1.7 million in 1981 to 4 million in 2016, according to Statistics Canada data – more than a quarter of them were age 65 and older. Dene Moore reports on how seniors are looking for love, or at the very least a little companionship.
WHY ‘AGING IN PLACE’ REQUIRES CAREFUL FINANCIAL PLANNING
More Canadians are rethinking where they want to live in their old age after seeing the devastating impact the COVID-19 pandemic had on seniors’ living facilities across the country.
The Canadian Institute for Health Information published a report in March that found COVID-19 affected retirement and long-term care homes disproportionately in the first six months of the pandemic, accounting for 69 per cent of all COVID-19 deaths.
As a result, a survey released last autumn by the National Institute on Ageing at Ryerson University shows that almost seven in 10 respondents aged 65 and over prefer to age in their home – and have health care professionals come to them – in light of the pandemic’s impact on seniors’ living facilities.
”Considering we had to send in the armed forces into retirement homes in Canada and … the highest reported COVID-19 deaths took place in these facilities, that prompted a lot of ‘Where am I going to go, and what can I afford?’ discussions with advisers,” says Tiffany Harding, vice-president and head of wealth planning at Gluskin Sheff + Associates Inc. in Toronto. Joel Schlesinger reports.
CAN THIS 91-YEAR-OLD GIVE HER CHILDREN AN ADVANCE ON THEIR INHERITANCE WITHOUT TRIGGERING A HUGE TAX BILL?
At age 91, Irene is more physically active than some much younger people, hiking, skiing and boating over the trails and lakes of her rural Ontario home. She feels she could live to be 105 – so no wonder she worries about running out of money.
When her husband died a few years ago, he left Irene his defined benefit pension plus a stock portfolio that had risen substantially in value. But when her husband’s long-time broker retired, Irene was adrift, her account transferred to a stranger in Toronto. Now, with almost half of her $1.8-million portfolio sitting in her bank account, Irene is looking for advice on investments, tax planning and estate planning.
”She has no one advising her on any of her accounts,” her daughter Milly writes in an e-mail. “She wants to find the right balance for her age between simplicity and safety.”
Irene’s problem – not a bad one to have – is the substantial unrealized capital gain in her portfolio, which would trigger a big tax bill if she sells. She’s thinking of giving each of her three children an advance on their inheritance “to lessen the tax burden in settling her estate” when she eventually dies.
Irene gets $29,000 a year in pension income, $11,700 in Canada Pension Plan benefits and $7,400 in Old Age Security, for a total of $48,100 before tax, indexed to inflation.
In the Globe’s latest Financial Facelift article, Warren MacKenzie, head of financial planning at Optimize Wealth Management in Toronto, looks at Irene’s situation.
In case you missed it
THE PROS AND CONS OF HAVING A DOG IN RETIREMENT
When Maureen Lloyd decided it was time to move from her condo to a retirement home this year, she really had only one stipulation: the place would have to allow her to move in with her cockapoo Lucy and cat Gulliver.
The 82-year-old looked at three or four possible destinations before settling on the Chartwell Waterford Retirement Residence in Oakville, Ont., because of its pet-friendly policies.
As Paul Brent writes, there are some compelling reasons for considering a dog in retirement. (And sorry cat lovers, our feline friends do not offer the same array of benefits.)
Many of the positives are obvious: they get you up and out in good weather and bad, they act as a social lubricant that gets strangers chatting, they improve your mood and ease loneliness and create a built-in routine of feeding and walks. Heck, dogs have even been shown in some studies to reduce blood pressure in their owners. Read more about the pros and cons of dog ownership in retirement here.
SHOULD YOU GIVE YOUR KIDS A LIVING INHERITANCE?
There’s an old saying that it’s better to give with a warm hand than a cold one. Put another way, for many parents, there are benefits to gifting money to the next generation while you’re still alive or providing what’s known as a “living inheritance.”
There’s an emotional reward that comes with giving adult children money to buy a house, start a business, or simply support their families, experts say, as well as financial benefits of reducing the value of your future estate. The trick is not giving away too much so that it spoils the kids, or worse, curbs your retirement lifestyle.
”Assuming parents are in a strong financial position to do so, and if there are excess funds beyond their income retirement needs, then that’s when gifting should often be considered,” Kelly Ho, a partner and certified financial planner at DLD Financial Group Ltd. in Vancouver, tells Joel Schlesinger in this article.
What else we’re reading
CLIMATE CHANGE PUTS CANADA’S SENIORS AT RISK
Unprecedented temperatures scorched Canada this summer, and July was the hottest month on record globally. The effect of heat wave after heat wave has been devastating for seniors, as well as people with disabilities. In this opinion piece in the Globe, two physicians note that older adults and people with disabilities have often been most at risk during successive waves of COVID-19, and are also most likely to fall ill and die during climate-induced heat waves.
“Our body’s physiology changes as we grow older, so that by the time we feel thirsty, we may already be mildly dehydrated. And those who have illnesses such as dementia and frailty are often dependent on caregivers to monitor for signs of dehydration and provide fluids,” they write.
They also say older adults and people living with disabilities are more vulnerable to the adverse health effects of forest-fire smoke, and are least able to survive extreme weather events such as droughts and floods.
Climate change threatens the very survival of older adults and people with disabilities now, with conditions only projected to get worse in the years to come. And so we must adapt and prepare immediately.
ASK SIXTY FIVE
Question: I wonder if you can answer a question that has bothered me this year. Last year, I instructed my financial adviser to transfer some shares from a U.S. index fund to another fund because I didn’t like the way they distributed gains. It was listed as “interest income” and is taxed at the highest rate. I was careful with the amount because I had a $40,000 capital loss carried forward which I wanted to apply to offset the capital gain. I thought all was good.
However, it seems that the Canada Revenue Agency (CRA) taxes me based on my net income and not my taxable income. As a result, my Old Age Security (OAS) is being clawed back by $500 per month and my instalment payments have been increased substantially, even though my taxable income is $70,000. I have made numerous calls to the CRA to ask for an explanation and get nowhere. I just don’t understand the logic. Can you explain it?
We asked Brad Coutts, a financial adviser at Nicola Wealth Management in Vancouver to provide an explanation:
In response to the first paragraph, you’re right, income from capital gains or Canadian dividends would be taxed much less. Only half of the capital gains would be subject to tax and income distributed as eligible Canadian dividends would get generous dividend tax credits.
To answer your question: the ‘devil is in the details,’ as they say, especially when it comes to income tax. The dreaded OAS clawback is calculated based on “net income before adjustments,” in line 23400 of your tax return. Therefore, the OAS clawback is based upon your income before any potential losses that may have been claimed. Your taxable income on line 26000 may only be $70,000 but this amount does not have any relevance to the calculation of the OAS clawback.
The only solace I can provide is that, if you are making instalment payments and also incurring $500 per month of OAS clawback then, all else being equal, your 2021 tax return is likely to get you a nice refund.
It’s never a bad idea to check with your accountant and financial planner during the year to ensure you know how the tax rules will be applied to your transactions at tax time.
Note that many people don’t realize that registered retirement savings plan (RRSP) deductions are included in the calculation of “net income before adjustments” line 23400 of your tax return. Therefore, if you are still able to make an RRSP deduction, you may be able to get a tax deduction and reduce the OAS clawback.