Retirement Reimagined: Breaking Conventional Wisdom and Embracing Hot Topics: Navigating Modern Financial Realities

By A. Cameron Strong, CPA, CA

The harsh reality is most Canadians have concerns about their debt, and are losing sleep over their financial issues due to rising costs, restrictive credit conditions and high interest rates. The average Canadian has trouble affording the essentials and maintaining a home. Together we will examine solutions to this modern financial reality.
You want to retire, but housing costs and inflation are conspiring to thwart this dream. You lack a strategy to retire. You don't know how much to save, what to invest in, when to stop working, what government programs can assist you and at what age. Should you live in the same province, out of province or out of the country?This book is about giving back control, setting priorities and establishing stability.
You are worried about how you are going to navigate and manage your healthcare and access healthcare services when you retire. You may have to enter long-term care, and there are options and solutions for how you can live and finance it.
In the early years, you may want to travel in retirement. You need to create a rigorous budget plan to do so effectively. You want to help your children. Let us examine how you do this with the least amount of financial damage to you and to them.

• Language: English
• Publisher: Tellwell Talent
• Release date: Jun 17, 2024
• ISBN: 9781779419538

A. Cameron Strong, CPA, CA

A. Cameron Strong, a retired Canadian CPA, has held senior finance positions in the private and public sector since obtaining his chartered accountant degree in 1986. As the former chief executive officer and broker of record for Invis Mortgage Intelligence, a pair of mortgage and insurance companies, Cam was attracted to the start-up that was Invis in 2000, which later acquired Mortgage Intelligence in 2008 and then merged with the M3 group in 2016.During a 24-year career at Invis Mortgage Intelligence, Cam was vigorously blogging and educating brokers and consumers who had not experienced the kinds of economies we find ourselves in today, of high interest rates, high inflation, global turmoil, lack of housing supply and economic hardship for Canadians. His brokerage firm helped hundreds of thousands of Canadian homeowners realize their dreams of home ownership, with over $200 billion of closed, successful mortgages across Canada.Cam is an avid Toronto Maple Leafs fan and has two millennial-age sons living out of the family home, and two Gen Z sons living, saving and investing at home.

Book preview

Retirement

Reimagined

Navigating Modern Financial Realities

Breaking Conventional Wisdom and Embracing Hot Topics

A. Cameron Strong, CPA, CA

Retirement Reimagined: Breaking Conventional Wisdom and Embracing Hot Topics

Copyright © 2024 by A. Cameron Strong, CPA, CA

All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the author, except in the case of brief quotations embodied in critical reviews and certain other non-commercial uses permitted by copyright law.

Tellwell Talent

www.tellwell.ca

ISBN

978-1-77941-952-1 (Hardcover)

978-1-77941-951-4 (Paperback)

978-1-77941-953-8 (eBook)

Disclaimer

This book and its author, A. Cameron Strong are solely providing financial literacy and education and the contents are not intended to constitute advice to anyone in any given financial situation. Before proceeding with any idea or educational material gleaned from the information contained in the book it is important to consult your chosen financial, tax, insurance, and legal professional.

This book is not intended to promote any particular products or services. Make sure you seek professional advice before embarking on any material decisions. Also note, government budgets and programs, changes to the various tax, estate, and legal laws in Canada and other financial circumstances can move quickly. To receive the most up-to-date information, consult government websites and seek out qualified professionals in their specialized subject matter.

Acknowledgements

I would like to thank many people for their collective wisdom, inspiration, valuable insight, and encouragement to write this book. The list includes:

Kelly Neuber, former Vice-President of Marketing for Invis Mortgage Intelligence, and currently a freelance marketer. I am forever indebted to Kelly for the title of this book.

Anne McLaughlin, Marketing Manager at Invis Mortgage Intelligence.

Dr. Eric Kam, Professor, Director of the International Economics and Finance Undergraduate Program, Toronto Metropolitan University. Dr. Kam makes economics fun and exciting.

Rob Carrick, Personal Finance Columnist, The Globe and Mail.

Larissa Meleca, Vice-President of Simplinsur (Insurance brokerage).

Oksana Leba, Red Seal Chef (retd), realtor (retd), and loving wife.

Ted Tsiakopoulos, Senior Economist at the Canada Mortgage Housing Corporation (CMHC).

Bruce Kirkby, Canadian adventurer, photographer, and writer. One of a kind Canadian who inspired me to write and share my knowledge and life experiences.

Table of Contents

Disclaimer

Acknowledgements

Facing the Realities of Aging

Chapter 1 - The Burning Question: How Much Money Do I Need to Retire

When do you plan to retire

Now that you have an outline budget let’s begin the work

Reviewing expense items to cut expenses

A few ideas to boost your income before retiring

Budgeting priorities for seniors through the decades

Concerns for retirees

Chapter 2 - Basic Investing—Start Early, Continuing Until Retirement and Beyond

Available investment options

Low-risk investment options

Higher risk investment options

Bitcoin

A do-it-yourself investment strategy

Building a financial plan

Case studies and scenarios for consideration

Chapter 3 - Investing in Your Accumulation Years

The bottom line on the RRSP and TFSA savings debate

The First Home Savings Account

When to use an RRSP and why it is important

Chapter 4 - The Most Common Government Retirement Income Sources and Planning Strategies

The Canada Pension Plan

The Old Age Security benefit

The Guaranteed Income Supplement

Chapter 5 - The Differences Between a RRSP and a RRIF

What if you don’t need the money from your RRIF

The Longevity Pension Fund and its place with RRSPs and RRIFs

Chapter 6 - Life Annuities—Important Key Features

Chapter 7 - A Beginner’s Guide to Understanding Bonds

Individual bond terms to pay attention to

Chapter 8 - Naming Beneficiaries is Vital

Vacation property assets

Chapter 9 - The Importance of Wills and Power of Attorneys

Avoiding or reducing estate probate tax

What will it cost if subject to probate

Choosing an executor

Are you thinking about disinheriting your kids

Protecting your will from disputes

Chapter 10 - The Nitty Gritty of Settling an Estate of a Deceased Parent

Chapter 11 - The Case for Renting or Owning a Home When Retired

Chapter 12 - How to Grow Old in Your Own Home

A home equity line of credit

The reverse mortgage

Renting out a portion of the home

Assisted living at home options

Chapter 13 - Living at Senior Assisted or Long-term Care Homes

Assisted living

Independent living

Long-term care homes

Memory care

Government assistance programs for nursing homes in Canada

Chapter 14 - Growing Old in New Locales

Interprovincial moves

The cost of leaving Canada

Chapter 15 - Making Wise Intergenerational Transfers

Beware of the new bare trust tax rules

Chapter 16 - Taking on Debt in Retirement and Ways to Avoid It

Is downsizing an option

Types of credit

Reverse mortgages - a deeper look

Chapter 17 - Why Use a Mortgage Broker in Retirement

Chapter 18 - The Consequences of Grey Divorce

Chapter 19 - When To Use Creditor Insurance for Your Largest Asset

Chapter 20 - How to Avoid Scams Directed at Retirees

Types of scams

Signs of a scam

Spoofing

Chapter 21 - Publicly Funded Medication and Other Essential Services

Hearing tests and hearing aid benefit programs in your province

Dental care benefit programs

Case study of medical and dental coverages

Chapter 22 - What Are You Doing to Stay Healthy During Retirement

Appendix 1

Calculation terms defined

About the Author

Facing the Realities of Aging

Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma—which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. ~Steve Jobs, who passed away at age fifty-six.

It is difficult to imagine that you must plan for twenty-five or even thirty years of retirement after the age of sixty-five.

Think you will live to age ninety and still be living and mobile?

Think again, according to Statistics Canada¹ only approximately 90,000 males will live to the ages of ninety to ninety-four. But the numbers are better for females at approximately 170,000. That is approximately 0.2 per cent of Canada’s population for males and just over 0.4 per cent for females.

Statistics Canada also reported that in 2024 the life expectancy in Canada is currently 83.11 years of age, which is above the US at age 79.25.

There are three common types of financial planners in Canada: certified, personal, and registered. And these financial planners commonly use ninety to ninety-five years of age as a default range for life expectancy. They advocate that you need twenty-five to thirty years of retirement income after the age of sixty-five and typically charge a competitive annual fee of approximately 1 per cent of your assets under management.

Do not misunderstand my message; financial planners, portfolio managers, and advisors are extremely important. Both for providing excellent holistic advice to your financial picture and especially because cognitive impairment is a function of aging, and you may need their help. Cognitive impairment due to genetics, illness, medication, or an accident can strike at any age, but it is more frequently seen in those over the age of seventy.

One of the first casualties of our aging brains is the ability to make sound financial decisions. And I know this firsthand from observing my once brilliant, educated mother and father go through this stage of life as they approached their late eighties.

At my current age of sixty-four and beginning my retirement, there are a million males in Canada alive who are my age—or 2.5 per cent of our population. I am acutely aware that almost half of retirees leave the workforce earlier than they planned. Some are simply forced out with a severance package. Others have health issues or must care for loved ones who are sick or disabled. And there are those people who must keep working out of necessity because they have bills to pay and too little savings.

I am a recently retired Chartered Professional Accountant (CPA), Chartered Accountant (CA), Broker of Record for a mortgage brokerage firm, and a Chief Executive Officer (CEO). Having worked in the financial sector for the last twenty-four years, I have had the privilege of reviewing a broad cross-section of Canadians’ financial situations. I’ve been part of a team that has helped half a million homeowners and facilitated the funding of $200 billion in mortgages and other types of loans. But some we could not help.

And do not think I have had it financially easy in life. I went through an asset draining divorce at age fifty-five.

My goal with this book is to assist you in navigating Canada’s modern financial realities successfully with forethought and planning.

Let’s turn back to the topic of life expectancy and to the ability of enjoying your wealth in your eighties or nineties. Such as, someone who desires to travel in their eighties and beyond on planes and needs the cash flow to do so.

Brian L. Tracy, Ph.D., an Associate Professor in the Department of Health and Exercise Science at Colorado State University stated, Functional limitations can become increasingly impactful for older adults over the years. Muscle strength can decrease by as much as 50 per cent from twenty-five to eighty years of age and impair the ability to move the body effectively and perform activities of daily living that require significant muscle force.

I’ve spent two decades criss-crossing Canada on flights for business and I’ve witnessed many risks and the distress of elderly passengers.

Not to start off on a note of all doom and gloom but a friend of mine, a retired Canadian Airline pilot once explained to me that on long haul flights (six to twelve hours), the cabin pressure is not at sea level. Any elderly passenger waking up on a long haul flight will sometimes faint when they try to stand up after either sitting for an extended period or sleeping. And there are those elderly individuals who do not wake up and pass away. Once the flight crew becomes aware of this situation, normally the flight carries on to its destination with the deceased person covered discreetly in a blanket up to their neck once the advice from remote medical advisors is given.

For elderly and unhealthy people, air travel—particularly long flights—may pose more serious health risks than previously thought says Eileen McNeely, an instructor in the Department of Environmental Health at the Harvard T.H. Chan School of Public Health and a director of the school’s corporate health and sustainability program. She advises:

Today, the population of air travellers has changed. More and more people are travelling when they retire, and close to 70 per cent of people over age sixty have some sort of cardiovascular disease. And when you put them at 8,000 feet cabin pressure, it is quite challenging for their health, especially when they live at sea level.

Add to that the fact that, by the time people get inside the airplane they are probably very stressed, because they’ve gone through TSA checkpoints, they’ve maybe walked a good distance to get to the airport gate, they might not have had enough sleep or enough hydration, and their heart could be pumping hard. And the plane’s ascent to the cruising level of 35,000 feet happens really fast—in about fifteen minutes. On the flight, people often take medications that knock them out, or they drink alcohol. Those are actually the worst things you can do because they add physiological stress. Some medications, for example, may lower breathing rates in an already low-oxygen environment. Other medications, if they cause sedation and reduce the chance that people will move around, may put people at risk for deep vein thrombosis (DVT). Although the risk for DVT in flight is very low, lack of mobility complicates it.

Alcohol can sedate people too, and it also increases dehydration. Besides having low oxygen levels, the aircraft cabin is very dry, so people should be drinking lots of water instead of alcohol.

As we age, retirees show less inclination to travel, to eat out, and to spend copious amounts on clothes and entertainment. Retirees spending on personal insurance and registered retirement savings plans also disappears.

You see a lot of unintended bequests among affluent retirees who pass away with pots of unspent money, says Michael Finke, a retirement researcher and Dean of the American College of Financial Services in Philadelphia.

This tendency to save in retirement reflects declining health and mobility and an obsession with maintaining the size of their starting financial position to mitigate the risk of running out of savings. As a result, they save.

When I announced my retirement at the age of sixty-four, what was immediately apparent was the reduction in intellectual stimulation, the loss of a large element of my social network, and an adjustment in my sense of purpose. It is a mental shift to wake up at 6:00 a.m. in the morning (my usual time) and plan for a day that is not in the office.

It is important to stay healthy, both in mind and body in retirement and to stay socially connected. Many of us tell family, friends, and work colleagues before we retire that we are going to travel around the world and golf everyday when we retire, which for most of us is not the reality for many reasons. It is physically draining and exhausting to live in airports, hotels, and out of suitcases. And everyday golf after a few weeks is just boring and taxing on one’s energies.

I am staying physically active with a variety of activities including hockey, which is also incredibly social, occasional golfing, swimming, planned and limited travelling, volunteering, and gardening. Anything that produces minimal impact on the joints and body and provides a wider connection with people. Long walks or bicycle rides a few days a week in the warmer months is also comfortable.

Mentally, I highly recommend you learn how to play or become more proficient with a musical instrument in retirement—for me it is the drums. Continue to learn and read more now that you are not working. You will laugh, but I learned a unique and fun Ukrainian card game with my wife and every afternoon we sit, talk, and play this unusual game. Use your time to pursue new topics and connect with new and old friends and especially family. Take those international trips in moderation while still in your sixties if you can afford to and are in good health.

Retirement is the ideal time to finally explore those items or activities that you couldn’t do before because of work or family commitments. If you don’t do them now, when will you? Create new memories and follow wherever adventure and fun take you.

Most Canadians need to plan to have enough savings in retirement to last until one reaches eighty years of age from the age of sixty-five (i.e., fifteen years and not thirty). This book will hopefully provide you with strategies to retain control and rigour over your finances.

After eighty, cash flow needs for most Canadians should reduce dramatically as travel, shopping for the latest items, many other costs, and mobility lessens. And Canada has many wonderful safety nets for those over eighty.

Some of the most common government income streams are the Canada Pension Plan (CPP), Old Age Security (OAS), and Guaranteed Income Supplement (GIS). In addition to these government cash flows you may be able to combine these with whatever remains in your personal Registered Retirement Income Funds (RRIFs), Tax-Free Savings Accounts (TFSAs), personal savings, company, or government pension plans if you are fortunate to have these, along with annuity income, Life Income Funds (LIFs), real estate, and other sources of income. We will discuss them all in this book.

There are also new provincial and federal programs geared toward low- and medium-income seniors for drugs, dental, eye care,