Tag Archives: retirement

Our Expectations for Retirement

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I come from an extended family that has always kept its needs simple and has almost never relied on credit. So does my husband. Watching how our relatives have lived in retirement has set my general expectations for my own retirement.

1: We Will Have Our Own Small Home Before Retirement

All of our family has always had a paid-for small home before retirement. Some of them, admittedly, built that home themselves. Others inherited a family home which no one could ever mistake for a mansion. A very few of them sold that home early into retirement and moved into rental housing that appealed to them more than home ownership—but they moved because they chose to not because they had to.

We have had our home fully paid off for several years. So that expectation for retirement has been met.

We might decide to move again but I doubt very highly that we would move somewhere that we couldn’t fully pay for with the money generated by selling where we live now. We are also not averse to renting if needs be.

2: We Will Never Fully Stop Working

Not all of our relatives had “career” types of jobs. Of the ones that did, though, most stopped working in a formal 9-5 way at or before 65. But they didn’t fully stop working.

Among our extended family, “retired” members have worked after retirement as

  • carpenters
  • choir leaders and accompanists
  • antique finders-restorers-and-sellers
  • supply teachers and tutors
  • business consultants
  • couriers
  • desktop publishers
  • investors
  • fine wood workers
  • retail employees
  • potters
  • bookkeepers
  • music teachers
  • farmers

and probably some other things that I don’t know about.

These jobs are in addition to their work as volunteers.

Neither my husband nor I intend to fully stop working at retirement either. There are so many interesting types of work to be done that it seems unlikely we wouldn’t want to try something.

We’ve also seen within the family how earning some extra money can make a retirement more pleasant. Because this extra income is not budgeted for or required, it can be spent on whatever brings joy.

Most of our relatives were and are very conservative spenders. It is difficult for some of them to spend their retirement savings, for example, on a few weeks in the sun during the winter. They brood about the high costs of nursing homes and don’t want to draw-down their capital when it might mean the difference between a good or intolerable nursing home in the future.

Having a few extra thousand dollars of income earned that same year makes it feel acceptable to them to take that enjoyable beach vacation, buy that new computer, give that young relative an expensive gift, or indulge in their hobbies.

I expect we, too, will want to keep working, for the work itself and for the extra funds.

We are both already widening our horizons in anticipation of this. My husband recently finished a continuing education college certificate program in one of his interests. I can see a variety of possible part-time opportunities in that field of interest.

I’ve created this website: while it’s not an income-generating proposition, I can list several opportunities it has created for money-paying work, should I decide to pursue them.

3: We Will Travel But We Are Not Travellers

Most of our family has enjoyed brief journeys every year or two in retirement. A few were limited financially to staying in their home province throughout their retirement. None has travelled extensively (e.g. for months at a time) after retiring with the exception of a few one-off 6-week trips.

Like many of our family, we enjoy brief travels both on this continent and further abroad. We hope to be able to make similar short trips periodically in retirement.

Fortunately, my husband and I are both satisfied with about the same amount of travelling per year. It can be more of a challenge if one partner derives huge joy from extended travel and the other loathes it.

Neither of us would be heartbroken if we were unable to travel. That leaves us in a good place: if our finances permit, we will enjoy some short trips; if they don’t, we will not suffer.

4: Our Hobbies Will Not Provide a Financial Burden and Will Provide a Creative Experience

The members of both of our extended families are very active, involved people. They enjoy a diversity of hobbies and none of them have been the park-in-front-of-the-TV all evening type.

Watching and talking to our relatives about their interests has shown us what a diversity of things there are enjoy. Many of these things have low or no costs.

For example, if you want to garden but can’t afford plants or tools and live in a high rise, there is often a community garden that needs volunteers to help tend and raise flowers and crops. If there isn’t, it’s often just a matter of being the catalyst to get one dug!

Judging by how often my husband and I have trouble finding enough time to participate in all of the activities and hobbies we enjoy, I think we’ll be fine in retirement.

And several of our favourites require almost no cash: my husband can enjoy sketching even on the backs of advertising flyers with a HB pencil stub and I can successfully search for wildlife in even the most degraded roadside ditch. Having proper drawing supplies and a great camera can make both hobbies better but they aren’t critical to the enjoyment.

5: We Will Inherit from Our Relatives

I fully expect to inherit from my relatives if they die before me. I also expect that I will use that 25 cents to create something beautiful in their memory: most probably by buying wildflower seeds at a local meet.

6: We Will Have a Sufficiency if Not a Superfluity of Income

Our relatives have almost all had a sufficient income in retirement. Admittedly that is because they all had very simple expectations. None of them considered an extravagant new car (or indeed any car, in some cases), the newest electronics or frequent meals eaten in restaurants to be part of their needs. They kept their needs to a minimum and only spent beyond that if their income exceeded their needs.

We’ve been saving steadily all of our working lives to help provide for our future. At this point, we believe we have a sufficient amount accumulated to provide for our true needs in retirement. We don’t intend to stop saving, however, because we could be wrong. And if we are right, it only means we would have extra income, which is a welcome problem.

7: We Will Continue to Enjoy Living After Retirement but We Will Not Defer Living Until Retirement

We always try to balance, however, our saving for the future with our wishes for the present. There isn’t always a future as we’ve seen too many times.

So we challenge ourselves at least twice a year and ask ourselves what we would regret if we lose the opportunity to ever do it? Usually the answer is nothing. But when we identify something that genuinely matters to us, we try to get it done, now, before it can become a regret.

One of my closest relatives waited until he was in his eighties to first visit the country from which his ancestors came to Canada. He had a great time exploring (alone! and not speaking or reading the language) and even went back again the following year. He almost left it too late, however, as shortly after his second trip, his health took an unexpected turn.

We’ve had other friends enter retirement as widows and widowers, shocked and bewildered to find they no longer had their life’s partners at their sides as they had planned.

We know it can happen to anyone, even us. So we try to achieve the balance between saving for the future with spending now for what holds meaning and importance.

8: Our Health In Retirement

We have no expectations for our health in retirement. We’ve watched relatives suffer and succumb young and others outlive their annuities.

Like many, we try to do what we can to maintain our health in case that may help us continue to enjoy good health longer. We don’t brood excessively about it, though.

By not deferring the things that matter most to us, we hope that if we do suffer ill health in retirement, it won’t be as devastating to our dreams.

What Expectations Do You Hold for Retirement?

Those are some of our beliefs and plans for retirement. Have you pieced together what you expect?

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What expectations do you have for your retirement? Are you actively working to make them realistic? Please share your ideas with a comment.

One Reason Why Spousal RRSPs Are Useful and How to Make a Contribution to an Existing Spousal RRSP at Tangerine

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Well it’s that time of year again! We’ve received our Notices of Assessment and therefore know exactly what the CRA thinks we can put into our RRSPs for 2014. Since ING Direct was sold to Scotiabank it has become Tangerine.ca with a revised website. So I decided to check exactly how to make a new contribution to our existing spousal RRSP from our existing Tangerine savings account while topping up our RRSPs.

One Reason Why Spousal RRSPs are Useful

Right now, income taxes in Canada for most people are calculated based on the person’s total personal income.

For a married couple,
if one person has income of $150 000 per year with no special deductions in Ontario in 2013 that person would pay about $48 752 in tax.
If the spouse had income of $50 000 that year, the spouse would pay about $8758.
That’s a total in tax of about $57 510.

If, instead, they each earned $100 000, they would each pay about $26 599.
That’s a total of about $53 198.
They would save $4 312 in taxes.

There may be no simple way to ensure two working people have almost identical incomes.

However, with some planning for retirement it may be possible for the couple to have almost identical retirement incomes. This could reduce their combined income tax bill during retirement.

One way to balance retirement income is to create a larger RRSP for the spouse with the lowest other sources of retirement income (e.g. work pension income; investment income; rental income; etc.) Obviously, you would want to only increase the RRSP until the projected taxable income for the two people balances.

Now at this time the Canadian government is letting married and common law couples who are 65 years of age and retired split their RRSP/RRIF, LIRA/LIF retirement income when declaring their income for taxes. They are not allowing couples under 65 to do this yet, though. So if early retirement is a possibility, it’s still worth considering maximizing the RRSP of the spouse who will otherwise have the lowest income until their income is brought up to the same level.

If the spouse with the highest retirement income has no RRSP contribution room, then there is nothing that can be done via a spousal RRSP.

However, if that spouse has contribution room, instead of using it for her or his own personal RRSP, the higher-income-in-retirement spouse can contribute to a Spousal RRSP for their lower-income-in-retirement partner.

Here’s an example:

  • Kimiyo will receive $25 000 a year from a work pension, indexed to inflation in retirement, starting at age 58.
  • Yusuf will receive no work pension in retirement.
  • Both will receive 60% of the maximum CPP and 100% of the maximum OAS.
  • They hope to retire at 58.

If Kimiyo has any available RRSP contribution room, she might want to use it to contribute money to a Spousal RRSP for Yusuf. Ideally, his RRSPs (personal and spousal combined) should be projected to generate  $25 000 per year, indexed to inflation, in retirement, before they start contributing equally to their personal RRSPs.

Making a Contribution to a Spousal RRSP at Tangerine

  1. Go to: Tangerine.ca
  2. From the list of links on the left side of the screen, click on Move my money.
    When the screen opens, usually the CAD button will be shaded the darkest gray. That means that you are requesting to make a contribution is Canadian dollars. For a RRSP contribution, this is the usual choice, so just leave it that way.
  3. In the Amount text box, type the amount you want to contribute to your spouse’s RRSP.
  4. From the drop-down list in the From box, select the account from which to take the money to make the contribution.
  5. From the drop-down list in the To box, select your spouse’s Spousal RRSP account number.
  6. For the When line, click to select, and darken the gray shading, for one of
    • Now
    • Later; or
    • Ongoing

    I selected Now.

  7. Read the warning about checking your RRSP contribution limit. For example, the maximum amount you can contribute to your spouse’s RRSP is *YOUR* maximum allowable RRSP contribution for the year. It doesn’t matter if your spouse has any RRSP room or not. A spousal contribution comes out of your room.
  8. If everything looks ok, click on the Next button.
  9. Review the details of the proposed contribution. If they are ok, click on the Confirm button.
  10. Make a note of your confirmation number in case you need to discuss the transaction with Tangerine. You can print it by clicking on the Print button.
  11. Click on the Continue Banking button. (If you are finished, click on the Log me out and close your browser session.)

Did It Work?

  1. If desired, click on View My Accounts.
  2. Click on the account you used to make the contribution. You should see the withdrawal listed on the Transaction History.
  3. Out of curiousity, I clicked on the link on the left side of the screen called My documents.
  4. I then clicked on the link Tax receipts.
  5. I cannot select 2014 from the View drop-down list. So I cannot view and print my RRSP contribution tax slip yet. I’ll probably have to wait till January 1, 2015.
  6. If you are finished banking, click on the Log me out link and then close your browser session.

Well, that’s another task off the list!

UPDATE: Please be aware that as of January 2015, Tangerine plans to start charging a fee if you transfer your RRSP or TFSA from Tangerine to another bank, credit union, brokerage or financial institution.

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Have you topped up your RRSPs for 2014 yet? Or are you laughing hysterically because the polar ice caps are more likely to start freezing up again today than you are to find enough money today to max out your RRSP? (Until our mortgage was gone we didn’t max ours out either.) Please share your RRSP insights with a comment.

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