Advice for seniors on how to cut down on their belongings, cost considerations of aging in place and a question about the principal residence exemption

Content of the weekly Globe Retirement newsletter. Register now Click here.

Gloria Harding’s move from her condo to an assisted living facility revealed just how much a person can accumulate in their lifetime.The Globe and Mail

Over the past several months, Carolann Harding has helped her mother, Gloria Harding, move from her condo to an assisted living facility in St. John’s. Experience has shown how much a person can accumulate in a lifetime. “It was the process of going through room by room, drawer by drawer, box by box, and mom not realizing half of what she had,” she says.

Fortunately, Ms Harding and her mother were able to examine her accumulated items together, deciding who would get what and what to go. Some are forced to do this difficult task alone in the throes of grief.

“It’s easy to get rid of trash, but the hardest part is going through all the old stuff, finding my grandma’s things when she was a little girl,” says Harding. “What are you doing to honor these memories of your grandparents and your parents and things like the Bibles of 1900? These are the kinds of things that I really struggle with. You can get rid of the trash, but how do you sort and prioritize sentimental things? “

The boom in retail and mass production since the end of WWII has put more things within the reach of more people than ever before. As a result, baby boomers have a lot of things that they either need to downsize now or let their heirs take care of. Dene Moore Reports

How moving to a cheaper city could give this couple more flexibility in retirement

With a house in Toronto and a government pension, Daphne, 55, feels right at home – so comfortable that she is considering packing her over $ 100,000-a-year job in a few years and taking his retirement. She and her husband Michael, 52, would sell their house in town and move to a cheaper location where Daphne could freelance. They have a 16 year old son. Michael, who thinks he can work remotely, plans to keep his $ 80,000-a-year job until he turns 60.

When she retires from work at age 57, Daphne will be entitled to a pension of $ 63,500 per year indexed to inflation, decreasing by $ 12,000 per year when the bridge benefit ends at age 65. Michael does not have an employment pension. Their savings, besides the value of Daphne’s pension, are relatively small. Their plan is to buy a more affordable home outside of the Greater Toronto Area and they would like to know how much they should spend on a home to buy and what should be kept as a nest egg. She also wonders if it would be possible to buy two properties, a house and a vacation spot that they could rent on Airbnb when they weren’t using it.

They have yet to determine how much they will need to live. “What will our budget be and what lifestyle will we have, given these parameters?” Daphne is also inquiring about a possible pension buyback. In the latest Financial Facelift column, Ian Calvert, vice president and director of HighView Financial Group in Toronto, looked at their situation.

In case you missed it

Why retirees should pay attention to withholding tax

Payroll deductions are inevitable during your working years since, for most employees, they are automatically deducted every pay period. Being retired does not exclude you from making payments to the Canada Revenue Agency (CRA) on your retirement income, but there are more choices of how and when to pay the CRA that can impact your retirement income. your lifestyle.

Experts say the key is to have an exit strategy that takes into account your different sources of retirement income and their tax rates, to keep more money in your pocket.

“You really have to think about cash flow planning when you retire and where you’re going to draw from to make sure you can pay your bills every month,” says Allison Marshall, vice president of advisory support financial at RBC. Wealth management in Toronto. Joël Schlesinger reports

How to keep the peace when traveling with adult children and grandchildren

Travel consultant Marcia Proctor suddenly receives many calls from families looking to book intergenerational vacations. For example, she recently hosted a February getaway to the Dominican Republic for three families traveling together, each including grandparents, parents and children. “It’s a multi-family reunion,” she says.

After more than a year and a half with very few bookings due to the pandemic, Ms. Proctor, of Travel Agent Next Door Inc. in Toronto, sees many grandparents looking to travel with their adult children and grandchildren. Many want a respite from the isolation and loneliness of the past 19 months of pandemic restrictions and feel the need to reconnect with the grandchildren they have seen growing up on Zoom calls.

According to Kiran Pure, a licensed child psychologist from Dartmouth, Nova Scotia, multigenerational travel can be psychologically calming for seniors. “Traveling with grandchildren is invaluable in establishing connection and continuity in the relationship through quality time shared together,” Dr Pure told Anna Sharratt in this article.

What else do we read

Cost considerations of aging in place

Mary Deanne Shears sits tight. The 77-year-old former Toronto journalist had planned to downsize. But when the pandemic struck, she realized that the modest suburban Toronto home she once shared with her late husband was where she wanted to be. “I have come to appreciate my garden over the past two years,” she says. It’s something she doesn’t want to give up.

Then there is the financial impact of the move. “I couldn’t sell my house and find a condo downtown,” she says. “Everything is so expensive.

Now that Mrs. Shears has made the decision to stay, she hopes that her savings will allow her to survive.

Although she has a defined benefit pension plan, she is concerned about the high costs of home care. She says she considered a reverse mortgage to free up funds in the future. “I have a good nest egg – but it all depends on how long I have left to live,” she says. “Most of us want to age at home.” Anna Sharratt reports

What interests Angela Merkel as she approaches retirement

Outgoing German Chancellor Angela Merkel celebrated her 50th birthday by listening to a talk given by a neuroscientist – and her 60th with a talk by a historian.

As the famous brain politician ages, her interests shift away from the natural sciences she spent the early part of her career on, Merkel told Reuters in an interview. Now 67, she said she plans to devote her retirement to major issues of social and historical development.

“This is the direction my thoughts are going more and more,” she said. “How to understand the course of history, how to compare it on a global level? How did China develop in 2000 years? What about Europe?

Merkel has already hinted that she may return to academia, but has otherwise given little clue as to how she will deal with leaving the chancellery after 16 years.

Ask sixty-five


My wife and I are retired. We have a cottage an hour’s drive away in the neighboring province. She lives in town to take care of the grandchildren and I live at the cottage, building furniture in my store. We meet 10 weekends a year and for longer vacations in the summer. Can we think of each of these places as our own primary residence?

We asked Mark Skeggs and Mark Chan, both vice presidents of wealth planning at Gluskin Sheff in Toronto, to respond to this one:

For a property to be considered your primary residence in any given year, it must be “usually inhabited” (i.e. child. Since one of you spends long periods in each property each year , the ordinary habitability test seems to be satisfied.

It is possible to simultaneously own several properties that can be qualified as main residence; however, since 1982, a family unit (made up of you, your spouse or common-law partner and your children under the age of 18) can only designate one property per calendar year as a principal residence for the purposes of the exemption for main residence (PRE). Thus, capital gains realized on other buildings would be taxable.

Consider a situation where you have owned the townhouse since 1992 (ie 30 calendar years) and the cottage since 2002 (ie 20 calendar years). For the 10 calendar years between 1992 and 2001, when you owned only the townhouse, that property would be considered your primary residence. For the remaining 20 calendar years – between 2002 and 2021 – you will need to designate one property per calendar year as your primary residence.

Generally, the property with the largest gain per year of ownership would be designated as the primary residence (it is important to note that this designation should not be made until a property has been sold). Following the previous example, assuming the townhouse appreciated $ 1.2 million (or $ 40,000 per year of ownership) and the cottage appreciated $ 1 million (or $ 50,000 per year of ownership), you may wish to designate the cottage as the primary residence for the calendar years in which both properties were owned to maximize the tax savings associated with the ERP.

Thus, two-thirds of the capital gain of the house in the city (i.e. representing 20 calendar years out of the 30 calendar years owned without it being designated as a principal residence) would be subject to income tax. capital gains.

If you have made renovations and other capital improvements to either property, they may be added to the adjusted cost base of the property, which in turn will reduce the capital gain associated with the property. property.

Special rules may apply in certain situations, for example when a property was owned before 1982 and / or 1972, when the land exceeds half a hectare and when the property has been used partly for agricultural or rental purposes. You should speak to a professional tax advisor in these cases.

Have a question about money or the senior lifestyle, or would you like to suggest a story idea for the Sixty Five series? Please email us at [email protected] and we will find experts and answer your questions in future newsletters.

Comments are closed.