Retirement as a Work in Progress: Insights from a 70-Year-Old Canadian

Retirement as a Work in Progress: “I retired in July 2019 at the age of 66 after 45 years as a licenced funeral director in Toronto – a profession I adored,” says David Garvie, 70, in the most recent Tales From the Golden Age. It was a privilege to assist people from diverse cultures, faiths, and communities around the globe in coming to terms with their loss and grieving.

Retirement as a Work in Progress:

Garvie and his wife desired to retire on Vancouver Island and determined that the window of opportunity to do so was closing. “She grew up on a small island in the Caribbean and was looking forward to leaving the metropolis to return to a slower lifestyle near the water. I grew up in a small town in the Ottawa Valley, but I loved city life so much that I was initially concerned about the slower tempo.

A few months after relocating to their new community in Ladysmith, British Columbia, the pandemic and its accompanying restrictions emerged. Fortunately, because they lived on a large island, they were able to conform with government and health regulations while still enjoying the natural beauty of their surroundings. Initially, the pandemic made it difficult to establish a new social life, according to Garvie, but now that most things have returned to normal, they have a steady stream of new and old friends to spend time with in British Columbia.”

After years of saving and investing, and with the assistance of a financial advisor, we were financially prepared for retirement. We are currently on track with our retirement plan and are not overly concerned with market fluctuations. Inflation is a concern, and because we reside on an island, a number of our expenses are higher and subject to fluctuation. But ultimately, we’ve managed to stick to our budget and can still afford the occasional trip abroad.

But, adds Garvie, adjusting to retirement has been difficult even after four years.

Are you a Canadian retiree interested in discussing your life since leaving the workforce? The Globe seeks participants for its Tales from the Golden Age feature, which analyses the financial and personal realities of retirement. Please contact us at [email protected] if you are interested in being interviewed for this feature and are willing to use your complete name and have a photograph taken. Please describe how you saved and invested for retirement, as well as your current lifestyle.

Retirement as a Work in Progress: Why Leon, 80, and Melanie, 70, must increase their financial communication

Leon is growing older and is concerned about who will manage Melanie’s investments after he passes away. It’s a dilemma faced by many couples, particularly the elderly: one partner manages the household, while the other oversees the investment portfolio.

“I am in my eightieth year and my wife is in her seventieth year,” Leon writes in an email. “Because of the age difference, I am concerned about my wife’s survivor financial position.”

Melanie and Leon are financially secure. Leon and Melanie have defined benefit pensions that pay $48,500 and $49,000 per year, respectively, indexed to inflation. In addition, they have significant investments.

Nonetheless, if Leon passes away before Melanie, she will lose 40% of his pension income as well as his government benefits, though the Canada Pension Plan survivor benefit would compensate for this loss.

After First Leaside Securities Inc. failed in 2010 and they lost $400,000 of their $700,000 investment in the firm, which sold limited partnerships, Leon decided to manage their portfolio.

Leon has recently began to move away from individual stocks by investing in exchange-traded funds managed by Horizons ETFs Management Inc. and the Mawer Balanced Fund managed by Mawer Investment Management Ltd. Additionally, he added some bonds.

Leon ponders how to leave Melanie in a financially secure position. Should Melanie add to their existing portfolio quarterly in a “dry run”? Engage a fee-only financial planner who provides yearly assistance/input and is available to address questions twice or three times per year? Should they purchase a diversified exchange-traded fund like the Vanguard Growth ETFs Portfolio? Or engage a robo-adviser, or online portfolio manager?

Like the majority of individuals, Leon identifies financial planning with investing. A financial planner, unlike investment specialists, is a generalist who provides advice on budgeting, saving, investing (primarily asset allocation), tax planning, and estate planning. A comprehensive financial plan for a couple like Leon and Melanie could cost $5,000 or more, plus an hourly rate for follow-up consultations. The majority of investment firms include financial planning as part of their annual fee for customers who invest at least $500,000.

Ian Calvert, vice-president and principal at HighView Financial Group of Oakville, Ontario, a portfolio management and financial planning firm, examines Leon and Melanie’s circumstance in this Financial Facelift.

How much larger is the CPP pension if you delay until age 70 to begin receiving it?
Frederick Vettese, former chief actuary at Morneau Shepell and author of Retirement Income for Life, examines the financial implications of delaying the CPP pension in his most recent article for Charting Retirement.

Planning for the unpredictable – addressing retirement longevity risk

How does a financial advisor plan a client’s retirement when the client’s lifespan is unknown? Ultimately, no one knows at what age they will die, writes Simon Barcelon.

According to Statistics Canada, a 65-year-old woman can anticipate approximately 22 years of retirement on average. To be at least 90% confident that she has adequately prepared for retirement, she must plan for the next 35 years (until she is 100 years old). To be 99.99% certain, she must plan for 50 years (until she is 115 years old).

This trend is not going away, and it is widespread. For instance, according to a 2021 report from The Stanford Centre on Longevity, as many as 50 percent of five-year-olds in the United States could expect to reach the age of 100, which may become the norm for neonates by 2050.

In general, surviving longer is wonderful and should be celebrated. Nonetheless, planning for the possibility of surviving well into your 90s or 100s presents a significant financial challenge. The range of 22 to 50 years contains numerous variables, and incorrectly estimating a client’s life expectancy can have negative consequences.

On the one hand, underestimating their life expectancy can cause clients and their families to run out of money, causing significant tension. However, individuals who overestimate their life expectancy engage in a form of self-insurance. They will generally underspend, which can be equally detrimental; as a result, they may feel unfulfilled if they cut back on travel or do not complete items on their bucket list.

Retirees have the right to peace of mind and should use their hard-earned money to pursue their objectives without fear of outliving their funds.

National Pension Scheme (NPS): Unlocking Your Retirement

How prevalent is it for adult children to financially assist their parents?

The Bank of Mom and Dad is a cliched term for parents providing financial assistance to their adult offspring. Rob Carrick, a personal finance columnist, wonders what we name it when children support their parents.

Carrick is amenable to suggestions on this matter. In the meantime, he wishes to investigate the economics of individuals providing financial assistance to their parents. Below is an anonymous survey for individuals 18 and older. Wait for a comprehensive report on the findings.

The issue of adults sustaining their parents is urgent from a demographic standpoint. The Canadian population is ageing, and life expectancy continues to increase. The 2021 census reveals that the 85-plus age category is one of the fastest-growing age groups. Were these retirees able to save enough during their working years to enjoy a 25-year retirement or longer? Let’s find out.