Content from The Globe’s weekly retirement newsletter. To describe Click here. Vince Mayne originally retired in 2012 after a career as a CPA, the latter part of which was as an IT executive at Hewlett Packard. “At first I was ambivalent about retirement. “A lot of my personality was wrapped up in my work because of the international travel and responsibilities, so I did some contracting at IBM for another two years before officially retiring in the fall of 2015,” says Mr. Mayne, 69, of St. Catharines, Ont., in the latest film Tales from the Golden Age. Three different financial advisors assured him he was financially ready to retire. “The last one told me I would have to live until I was 116 to empty my bank account. Even if I lived that long, I’m not sure I want the quality of life that might come with it,” he said. While Mr Mayne was financially prepared, he says there was “a huge void in my life” after his wife died of cancer while he was still working. Read the full interview here, including some of the big changes Mr. Mayne has made in his life since then and how he spends his time in retirement. “I like to describe myself as a ‘sen-ager’, which is an old man with money and no curfew,” he says.
“The most discredited financial instrument in history” is coming back to Canada
A forgotten financial relic from the pre-industrial era has been resurrected to help Canadians save for retirement. Guardian Capital has introduced a range of mutual funds that debunk the concept of the tontine – a financial instrument that more or less disappeared a century ago. A tontine is an investment fund with a dark twist – all participants benefit when one of them dies. In the most extreme version, shareholders lock up their money for life, with the entire capital amount going to the last survivor, making tondines a classic plot in Agatha Christie novels, murder mystery dinner theater, and even an episode of The The Simpsons. It was a milder form of the tontine that gained huge popularity in Europe starting in the 17th century as an annuity that paid an increasing dividend as investors died. About 200 years later, a type of tonin sponsored by American life insurance companies flourished, before an embezzlement scandal brought about a regulatory crackdown. This effectively killed the tondino, at least in North America, bringing an ignominious end to what British economic historian Edward Chancellor once called “perhaps the most discredited financial instrument in history.” Moshe Milevsky, an economics professor at York University, has argued for years that tonins deserve a reboot to help plug a gap in Canadians’ collective pension security. A June poll by Angus Reid found that more than six in 10 Canadians aged 55 and over have delayed or plan to delay their retirement due to a lack of savings. The average Canadian retires at age 64, leaving at least two decades of living expenses to plan. This has created a growing longevity problem. As people live longer, the risk of outliving their savings increases. Tim Shufelt reports
Can 59-year-old Carl afford a $1.25 million renovation of his Toronto waterfront home without jeopardizing his retirement plan?
For years, Carl has wanted to tear down his dilapidated old house in Toronto’s waterfront suburb and build a new, larger one with a few rental units for income. Now that he’s retired, he wonders if he can manage it financially. Carl is 59 and single with one grown child. “I bought my current home in 2008,” Carl writes in an e-mail. “I’ve always meant to renovate/remodel, but I’m only getting around to it now in retirement,” she adds. “It’s a property with a pretty spectacular water view, but it’s falling apart.” Carl says the construction price has increased by 37 percent from the original design estimate, and that has him looking to sell investment properties to help finance the project. The cost is now expected to be $1.25 million. Most of his gross income of $125,000 comes from his investments, so the projected rental income “is to help diversify my sources of income in retirement,” he adds. Its cash flow goal is to continue to generate $125,000 per year before taxes. In the latest Financial Facelift column, Ian Calvert, vice president and director of HighView Financial Group in Toronto, examines Carl’s situation.
Ask Sixty Five
Question: I took my Canada Pension Plan (CPP) at age 60, but now I regret it. Can I stop taking it and put it off until I’m 65 or 70 or is it too late? What are my options? We asked Jamie Golombek, managing director of tax and estate planning at CIBC Private Wealth in Toronto, to answer this: If you started receiving your CPP retirement pension and change your mind, you may be able to stop payments, but only if you act within the first year. Under the rules, you can cancel your CPP pension up to 12 months after you start receiving it. This request must be made in writing and you must return all CPP income you have received. Contact Service Canada to cancel your privileges. You can then start receiving your CPP pension later, until you reach age 70. Have a question about money or senior living issues? Email us at [email protected] and we’ll find experts and answer your questions in future newsletters. Interested in more pension stories? Sixty Five aims to inspire Canadians to live their best lives, with confidence and security. read more here and Sign up for our weekly retirement newsletter.
