Can this couple retire comfortably without selling their home? Plus, smart strategies for your tax refund

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Oliver is 51 years old, Charlotte is 50. Together, they earn $253,000 a year, Charlotte as a consultant and Oliver in sales. They have two teenage children they want to put through university and a mortgage-free home in Alberta.

Neither has a defined benefit pension plan, but both have group registered retirement savings plans into which they and their employers contribute.

“Our biggest question is, will we have enough in retirement to spend $100,000 a year if I retire at 61 and my husband at 64?” Charlotte asks in an email. “We’d like to retire early enough to see the world and be active walking and biking before we’re too old to do what we want,” he writes.

“We’re pretty diligent savers (I think!) but we didn’t get into the savings game early and weren’t lucky enough to have pensions in our jobs,” adds Charlotte. However, “we have a wonderful life with beautiful children and good health. you can’t ask for more.”

In the short term, they want to do some work on their house, travel to Europe and buy a used car. Long term. “We do not want to rely on the proceeds from the sale of our home for retirement purposes, but rather leave it to our children when we die,” he writes. “Is this possible?”

In the latest Financial Facelift, Barbara Knoblach, a certified financial planner at Money Coaches Canada in Edmonton, looks at Charlotte and Oliver’s situation.

Want a free financial makeover? El finfacelift@gmail.com.

The long-term decline in charitable giving is really starting to bite

A new report on charitable giving says more than 30 percent of charities are experiencing a significant decline in revenue, writes personal finance columnist Rob Carrick, while 40 percent say demand for their services has seen a long-term increase since inception. disease

The report was released by CanadaHelps.org, which provides an online portal that Carrick uses himself and has mentioned several times in this newsletter over the years. To learn more about what charities are up against, Carrick invited Duke Chang, CEO of CanadaHelps, for a Q&A.

Read the full article here.

Are Canadians saving enough for retirement? In reality, the number of RRSP contributors is very close to optimal

It’s widely agreed that Canadians aren’t saving enough for retirement, writes retired writer Frederic Vettez. At first glance, the statistics on Registered Retirement Savings Plan (RRSP) investors seem to bear this out. Of the 27.9 million taxpayers in 2020, Vettese notes, only 6.2 million contributed to an RRSP, less than 25 percent. But in reality, the number of RRSP contributors is very close to optimal because there are a number of very good reasons not to invest in an RRSP.

According to Vettese, we may exclude certain taxpayers based on age alone. Contributing to an RRSP makes little or no sense for the oldest and youngest cohorts. For the 6.7 million taxpayers who are 65 and older, their saving days are presumably behind them.

At the other end of the age spectrum, the 3.1 million under-25s should be in no rush to start saving for retirement. For at least a few more years, they’ll usually have higher priorities, such as paying off student loans, trying to save for their first home, or simply settling into the workforce.

Read the full article here.

In case you missed it

Smart use of your tax refund can go a long way

“I was watching Cinderella with my family last weekend,” writes Tim Sestnik in his latest Tax Matters column. “You know the story. A fairy godmother transforms a pumpkin into a beautiful coach fit for a princess. I know it’s been a long tax season when the first thing that comes to my mind is whether the value of the coach should be taxed as regular income or as capital gain.”

Fortunately, Sestnik says, these thoughts will soon fade from our psyches as we approach the end of tax season. And after paying their taxes, most Canadians look forward to receiving their refund. Here, Cestnick shares some facts and ideas for using your compensation wisely.

Read the full article here.

Why do snowbirds who spend a significant amount of time in the US face major tax consequences?

A growing number of Canadians have been blindsided by unexpected tax bills, penalties or worse from the US Internal Revenue Service (IRS) since an information-sharing agreement between the two countries was signed nearly a decade ago.

In fact, the Canada-US Enhanced Tax Information Exchange Implementation Act came into force in 2014 with the aim of collecting unused tax revenue from Canadians who spend a significant amount of time in the US.

“There are a lot of people who don’t understand the data transfer, the day calculation rules and don’t understand the immigration issues,” said Kim Moody, chief executive officer of Calgary-based Moodys Private Client Law LLP.

Mr. Moody, who specializes in cross-border tax matters, has been raising the alarm for the Canada Revenue Agency (CRA) and the IRS since their inception. He says advisers and even some accountants are often not competent to represent properly on behalf of cross-border clients.

Read the full article here.

Pension question and answer

Q: What exactly is probate, how is it different from a will, and why do banks insist on it, even with pension plans?

We asked Neil Milton, a lawyer and registered trademark agent at Miltons Estate Law in Ottawa, to answer this one.

A certificate is required to transfer assets. A trust, not a will, proves the transferor’s right and who is entitled to inherit. So a deed is usually required to transfer a home. Ditto for large unregistered savings. Banks usually require a certificate, unless the amount is small and the right is clear and undisputed.

If the deceased has already retired, is there a successor beneficiary and their right is defined by the pension itself? There is often a successor payment to the surviving spouse of a Canada Pension Plan (or QPP) member. Payments are usually made to the beneficiary and they can enter as they wish.

In Ontario, this right is governed by the Ontario Pension Benefits Act. Normally, if there is no spouse, no one receives a successor pension.

If the deceased died before retirement, there may be a lump sum payment to the designated beneficiary or, failing that, to the deceased’s estate. Again, being depends on the retirement plan. A bond will be required if payment is made to the property.

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