Why retirement is, for this 70-year-old, a work in progress. Plus, how to plan for the unpredictable and reduce financial fear in retirement

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“I retired in July, 2019, at age 66 after 45 years of working in Toronto as a licensed funeral director – a profession I absolutely loved,” says David Garvie, 70, in the latest Tales From the Golden Age. “I was honoured to help people from different cultures, faiths and communities around the world come to terms with their loss and to help them grieve.”

Garvie and his wife wanted to retire on Vancouver Island and decided the window was closing for us to do it and enjoy it. “She grew up on a small Caribbean island and was looking forward to getting away from the city to return to a slower lifestyle near the ocean. I grew up in a small town in the Ottawa Valley, but I really enjoyed the city life, so I was more concerned at first about the slower pace.”

A few months after moving to their new community in Ladysmith, B.C., the pandemic set in with all its restrictions. Fortunately, because they were living on a huge island, they could still get out and explore the beauty of their surroundings while complying with government and health regulations. The pandemic made building a new social life challenging at first, says Garvie, but now that everything has largely returned to normal, they have a constant flow of new and old friends to spend time with here in British Columbia.”

“We were financially prepared for retirement after years of savings and investing and with the help of a financial adviser. To date, we remain on target with our retirement plan and don’t worry too much about the ups and downs of the markets. Inflation is a concern and, because we live on an island, some expenses are greater and can fluctuate. But, overall we have managed to keep within our budget and can still afford a trip abroad from time to time.

But, Garvie adds, adapting to retirement has been a challenge, even four years in.

Read the full article here.

Are you a Canadian retiree interested in discussing what life is like now that you’ve stopped working? The Globe is looking for people to participate in its Tales from the Golden Age feature, which examines the personal and financial realities of retirement. If you’re interested in being interviewed for this feature, and agree to use your full name and have a photo taken, please e-mail us at: goldenageglobe@gmail.com Please include a few details about how you saved and invested for retirement and what your life is like now.

Why Leon, 80, and Melanie, 70, need to communicate more about finances

Leon is getting on in years and worries about who will handle the investments for his wife, Melanie, after he’s gone. It’s a problem shared by many couples, especially elderly folks: One spouse runs the household and the other the investment portfolio.

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

Melanie and Leon are comfortable financially. They have defined benefit pensions that pay $48,500 a year for Leon and $49,000 a year for Melanie, indexed to inflation. As well, they have substantial investments.

But if Leon predeceases Melanie, she will lose 40 per cent of his pension income as well as his government benefits, although the Canada Pension Plan survivor benefit would make up some of that loss.

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

Recently, Leon has begun shifting away from individual stocks, buying some exchange-traded funds from Horizons ETFs Management Inc. and the Mawer Balanced Fund run by Mawer Investment Management Ltd. He has also added some bonds.

Looking ahead, Leon wonders how to leave Melanie on secure financial ground. Should they do a “dry run” where Melanie adds to their existing portfolio quarterly? “Engage a fee-only financial planner that provides assistance/input on a yearly basis but is available to answer questions two or three times a year?” Should they buy an all-in-one balanced exchange-traded fund such as the Vanguard Growth ETFs Portfolio? Or engage a robo-adviser, or online portfolio manager?

Like many people, Leon equates financial planning with investing. Unlike investment specialists, a financial planner is a generalist, advising on budgeting, saving, investing (mainly asset allocation), tax planning and estate planning. A comprehensive financial plan for a couple such as Leon and Melanie could cost $5,000 or more with an hourly rate for follow-ups. Most investment firms offer financial planning as part of their annual fee for clients with at least $500,000 to invest.

In this Financial Facelift, Ian Calvert, a vice-president and principal at HighView Financial Group of Oakville, Ont., a portfolio management and financial planning firm, takes a look at Leon and Melanie’s situation.

Want a free financial facelift? E-mail finfacelift@gmail.com.

How much greater is the CPP pension if you wait until 70 to start?

In the latest Charting Retirement article, Frederick Vettese, former chief actuary at Morneau Shepell and author of Retirement Income for Life, runs the numbers for postponing the CPP pension here.

In case you missed it

Planning for the unpredictable – how to address longevity risk in retirement

How does a financial advisor plan a client’s retirement when it’s impossible to know how long they will live? After all, writes Simon Barcelon, no one knows at what age they will pass away.

On average, a 65-year-old woman can plan for approximately 22 years of retirement, according to Statistics Canada data. But to remain at least 90 per cent confident that she sufficiently planned for retirement, she will need to plan for 35 years (until she is 100 years old). To be 99.99 per cent confident, she will need to plan for 50 years (until she is 115 years old).

This trend isn’t going away, and it’s similar worldwide. For example, a 2021 report from The Stanford Center on Longevity showed that as many as half of five-year-olds in the U.S. could expect to live to the age of 100, which may become the norm for newborns by 2050.

Generally speaking, living longer is fantastic and should be celebrated. Still, planning for possibly living well into your 90s or even 100s introduces a substantial financial challenge. The time period of 22 to 50 years is a very wide range with many variables, and the consequences of miscalculating a client’s life expectancy can be detrimental.

On the one hand, underestimating their life expectancy can lead to running out of money, creating significant stress for clients and their families. But overestimating their life expectancy leads to a form of “self-insuring.” They will largely underspend, which can be just as damaging; as such, scaling back on travelling or not ticking items off their bucket list may leave them feeling unfulfilled.

Retirees deserve peace of mind and should enjoy their hard-earned money to achieve their goals – not hold back in fear of outliving their savings.

Read the full article here.

How common is it for adult kids to help parents financially?

The Bank of Mom and Dad is the tiresome catchphrase for parents helping their adult children. But, wonders personal finance columnist Rob Carrick, what do we call it when those kids support their parents?

Carrick is open to ideas on that. Meantime, he wants to dig into the economics of adults providing financial support to parents. Below, you’ll find an anonymous survey for people aged 18 and older. Stand by for a full report on the findings.

There’s some demographic urgency to the issue of adults supporting their parents. Canada’s population is aging, and life expectancy keeps rising. The 2021 census shows that one of the fastest growing age groups is people who are 85 and older. During their working years, were these seniors able to save enough for 25-plus years of retirement? Let’s find out.

Take the survey here.

Retirement Q&A

Q: I’m thinking about how my yearly donations can have a greater impact, have further investment growth and time for future donations yet still divert some upcoming tax liabilities. What is a donor advised fund, and how do these investment accounts compare across financial institutions?

We asked Malcolm Burrows, Head, Philanthropic Advisory Services, Scotiatrust – Scotia Wealth Management, to answer this one.

A donor advised fund is a fund exclusively for charitable purposes that is typically established and funded by an individual or family. Donor advised funds are especially valuable to those who have built wealth and have diverse charitable interests. Whether donors are making an exceptional lifetime or estate donation, a single charitable fund simplifies the planning process.

It improves tax efficiency and provides flexibility to give in a personally meaningful and impactful way. Although donor advised funds are invested, they are not investment accounts. These funds enable donors to make a personally significant donation and then provide time to choose the charities they want to support. They exist to facilitate personal philanthropy, and may exist for more than one generation or be granted out in a couple of years.

Have a question about money or lifestyle topics for seniors? E-mail us at sixtyfive@globeandmail.com and we will find experts and answer your questions in future newsletters.

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