All posts by Jonathan Chevreau

Retired Money: Retirement planning is about more than money

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Meta at her 100th birthday party early in December

My latest MoneySense Retired Money column was published today. Click on the highlighted text for the full piece: Retirement planning is about more than money.

The piece is based on a recent Seniors’ Luncheon hosted by the Toronto church I attend and as you will read, I was struck by how the experiences of these seniors — who ranged in age from 82 to 100 — reinforced the theme of my recently released co-authored book, Victory Lap Retirement.

In short, every senior at the table believed in continuing to work in some fashion even in their looming old age. Including 100-year-old Meta, pictured. While I changed the names of the other seniors in the article, Meta is a real name and used there and here with her permission.

Here’s the thing. Until she suffered a hip injury earlier this year, Meta was still working one or two half-days a week at a nearby printing firm. And at her 100th birthday celebration earlier this month, this continued work connection meant several of the people celebrating with her were from work, as well as the church, neighbours and various other circles.

And now that the din over her 100th birthday milestone has subsided, Meta told me last week that she wanted to return to work one day a week, because she misses her co-workers and she likes to get out of the house (she lives in the top floor of a house overlooking Lake Ontario, and has been there since the 1960s. The last thing she would want would be to move to an institution catering to seniors.)

The danger of retiring “too soon”

As for the senior men I chatted with that day, one regretted having voluntarily retired “too soon” at the tender age of 58: Kevin (not his real name) said he did so because he had a good teacher’s pension but when his wife passed away soon after, found himself with too much time on his hands.

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Americans worried about Retirement, unlikely to save more in 2017

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While 70% of Americans say they saved for retirement in 2016, many are anxious about the level of their savings and the need to direct money towards other goals and expenses, says a Harris Poll of 2,000 American adults conducted by the personal finance site NerdWallet. You can find the full results here.

Other major financial concerns include lack of emergency funds (cited by 35%), health care expenses (also 35%)and credit-card debt (27%). Retirement remains the most commonly cited savings priority (mentioned by 28% surveyed) but only 29% feel confident they saved enough in 2016, while one in three aren’t saving for retirement at all (including 43% of Millennials aged 18 to 24). Lesser forms of financial anxiety in 2016 include making mortgage or rent payments (19%), stock market volatility (17%), student debt (14%), and paying income taxes (13%).

Next year may not be much better: of those with workplace pensions, only 32% plan to increase their contributions in 2017. Older Americans aged 45 to 54 are most likely to report concern about lack of retirement savings (40% surveyed), while only 20% are confident they saved enough this year.

Savers should favour tax-advantage accounts over savings accounts

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What happens to your TFSA upon death?

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Human mortality seems to be the Hub’s theme today. This morning we posted Lorne Marr’s 20 tips on getting life insurance without having to take a medical exam first.

Subsequent to that, my latest MoneySense Retired Money blog looks at the topic of estate planning as it related to Tax-free Savings Accounts (TFSAs). To access the full blog, click on the highlighted text here: Why your TFSA needs a Successor Holder.

We had mentioned in an earlier blog that TFSAs were excellent vehicles for estate planning and minimizing tax of families as a whole. See How TFSAs can aid your Victory Lap.

We also said that it’s by far preferable for couples to name each other Successor Holders on their respective TFSAs. Otherwise, things get pretty complex, which is what the MoneySense blog goes into in some depth.

TFSA succession planning often not well understood 

Sandy Cardy

The blog is based largely on input from Mackenzie Investments and a brochure it published entitled What happens to your TFSA at the time of death?, which you can access in full by clicking on the link. It also quotes regular Hub contributor Sandy Cardy, who was the head of tax and estate planning at Mackenzie when that brochure was published. In that role, she was responsible for educating the financial advisors who sell mutual funds on estate planning, including its role in TFSAs. As she notes in the MoneySense blog, this topic of TFSAs at death is not well understood even by some financial professionals.

These days, following her own brush with cancer in 2012 (she’s fine now) Cardy blogs as much on health as she does on Wealth. See for example, a recent Hub blog titled The Mind-Body Connection: How Stress Affects Your Health. Her website can be found here, and you can find her estate planning “novel” by clicking on this  highlighted title: The Cottage The Spider Brooch and The Second Wife. 

Appetite for ETFs to keep rising in 2017: BlackRock

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Head of iShares Warren Collier (CETFA.ca)

The popularity of exchange-traded funds (ETFs) in Canada continues to surge and 31% of domestic investors now report they own ETFs, says BlackRock Canada’s first-ever ETF Pulse Survey, released Friday.

Furthermore, 93% of existing ETF owners and 38% of non-owners are interested in buying ETFs in the next 12 months. The survey suggests education plays a big role in the adoption of ETFs: more than half of Canadian investors plan to learn more about ETFs in 2017 and non ETF investors are more than twice as likely to seek out more ETF knowledge next year.

41% are replacing mutual funds with ETFs

Not surprisingly, the survey found that 41% of investors polled are choosing ETFs largely to replace mutual funds while 45% are doing so to replace individual stocks. Improved diversification was cited by 53% while 43% felt ETFs would help reduce their risk profile. BlackRock added that these findings are consistent with a Greenwich Survey of Canadian institutional ETF users, which pointed to a rise in ETF allocations among institutional investors in the coming year.

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How TFSAs can aid your Victory Lap

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depositphotos_43073977_xs-300x295My latest MoneySense Retired Money column on TFSAs is now online. You can read the whole thing by clicking on this highlighted link: How retirees can use TFSAs to save on tax.

I’m a huge fan of The Tax-free Savings Account or TFSA both for young people and for seniors, and everyone between.

It’s the single most powerful investment tax shelter available to Canadian investors. (For any American readers, the TFSA is roughly the equivalent of Roth IRAs).

So if you’re a member of the much-touted “Millennial” generation, you should move heaven or earth to maximize the annual $5,500 contribution as soon as you turn 18 – even if you have to solicit a “matching” contribution from your parents.

If you’ve not yet opened up a TFSA,  as of 2017 the cumulative TFSA room built up since the plan’s debut in 2009 will be $52,000. As I say in the column, for millennials the combination of the newly expanded Canada Pension Plan and a TFSA maximized from age 18 on means that by the time they are old enough to read the Retired Money column, they will be well positioned for retirement.

While late for Boomers, TFSAs can still be a boon in retirement

But as this particular MoneySense column has been dubbed “Retired Money,” the focus is on what the TFSA can do for near-retirees and seniors already retired. When it first came out in 2009, we aging baby boomers lamented the fact the TFSA hadn’t been available when we we were just starting out.

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