
Kristine Pollard and her husband.Supplied
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“I retired last year at the age of 45 after working as a police officer,” says Kristine Pollard, 46, in the latest Tales from the Golden Age article. “My husband retired a few months earlier at 51, after running his own IT consulting business.” Shortly before the couple retired, they sold their home, car and almost all of their possessions and packed what was left into two backpacks, she says. “We’re living a nomadic life, travelling to different countries, while keeping Canada as our home base. We’ve been to Spain, Brazil, Argentina, Uruguay and Mexico.”
Time drove the couple’s decision to retire early. “Both my husband and I had a parent who died relatively young after having just retired in their 60s,” says Pollard, who adds that her job was also a big factor in her decision to stop working. “As a police officer, I often saw people’s lives change in an instant. You never know what the future holds or when your time will be over.”
When the couple met in 2019, they started following the FIRE [financial independence, retire early] movement, she says. “We also don’t have kids, which made it easier to save money.” They lived on Pollard’s salary and invested her husband’s income in the markets using a strategy known as the Smith Manoeuvre [a legal tax strategy that effectively makes interest on a residential mortgage tax deductible].” Their goal was to retire in 2028, when Pollard turned 50 and would be eligible for a full pension, but then their investment strategy started to go better than expected.
Retirement was a bit difficult at first, says Pollard. “It was hard to go from a high-stress, fast-paced job to a lifestyle in which the only thing you need to do in the day is wake up and have a coffee.” The challenge, she adds, has been slowing down and learning to relax – and also trying to take better care of themselves, spending more time with family and friends, travelling the world and meeting new people.
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.
Cost-saving reasons to travel early in retirement – and avoid the U.S.
A fresh angle on vacation planning: Where and when should you travel to minimize the essential cost of insurance for medical expenses?
Retirees, travel medical coverage costs increase as you age, writes personal finance columnist Rob Carrick. Taking a trip in your 80s could cost a fair bit more than in your 60s and 70s. Also, excluding the United States in your travel itinerary can save money as well. “Insurers recognize lower health care costs in other countries outside of the U.S., and they reflect that in their premiums,” said Martin Firestone of Travel Secure, a travel insurance specialist.
Travel medical insurance typically treats people aged 60 and under the same, which means no specific health questions are asked and premiums are similar. Health questions apply after 60, and they affect premiums. So does getting older.
Mr. Firestone explains that travel medical insurance premiums move up in five-year bands, which means someone who is 70 to 74 pays more than a traveller who is 65 to 69.
Read the full article here, where you’ll find premium comparisons and other factors, from health to the length of your trip, that can impact premium costs.
Subscribe Carrick on Money here.
Aspiring retirees consider three strategies to make sure they don’t run out of money
Pat, 63, and Maggie, 60, are about to retire. Their goal is to draw as much income as they can from their savings while being reasonably sure their money will last until their 90s.
In this Charting Retirement article, Frederick Vettese, former chief actuary of Morneau Shepell and author of the PERC retirement calculator, takes a look at the three strategies the couple is considering to help make the money last.
In case you missed it
Can you prevent hip replacement surgery?
“Hips have been on my mind lately,” writes Geoff Girvitz. “Orthopedically speaking, that is.” The number of people Girvitz knows with artificial hips is growing and he’s been wondering if he will someday find himself on that same list. “I don’t expect to die with my joints in pristine condition – as if that were possible – but I also don’t want the wheels to fall off early. I want to get ahead of things.”
So, he embarked on a quest to find out how healthy his hips are and what he can do to prevent hip replacement surgery in the future. Unfortunately, he finds, there isn’t a clear path toward a solution.
Girvitz started by asking his friend, emergency room doctor Sunita Swaminathan, about what kind of exploratory hip imaging he might get. “The health care system is really just designed for people already dealing with problems, not getting ahead of them,” she tells him.
Girvitz researched private options and discovered that if you are willing to pay out of pocket, there are clinics that will scratch that imaging itch, typically for $500 to $950, although private pay MRIs are not available in Manitoba, New Brunswick, Newfoundland and Prince Edward Island.
Next, he spoke to Greg Lehman, a researcher and lecturer on pain science and rehab who describes himself as a “movement optimist.” What might signal the need for a future hip replacement? His answer is simple: “Your biggest indicator is a previous hip injury – especially a traumatic injury.”
Read the full article here.
This retired engineer’s emergency fund blossomed inside his TFSA thanks to a dividend ETF
It is fairly well known that tax-free savings accounts can be used to save for major purchases, build retirement funds and bet on speculative stocks, writes Larry MacDonald. Less well known is using TFSAs to hold emergency funds.
Unexpected calamities do sometimes arise, so it’s good to have emergency funds that can be accessed right away. Historically, this has meant holding them in a chequing or savings account. But the interest rates are low and subject to tax.
Rodger, a retired engineer living in Toronto, prefers to hold his emergency fund in a TFSA because the returns are tax-free yet still easily withdrawn. TFSAs also offer a range of investments that allow savers to select their preferred mix of return and safety.
Rodger has other assets such as a retirement fund and a pension, but having fairly steady returns in his TFSA emergency fund is still important. As much as possible, he wants to be able to unload his emergency funds at a profit, “no matter the ups and downs of the markets.”
Perhaps this was a risk starting out, but he does not need to worry any more about withdrawing at a loss. Having maxed out his annual contributions to a total of $102,000, his TFSA is currently worth more than $207,600. He had the good fortune of not having any emergencies that required dipping into the fund.
Read the full article here, including a financial expert’s take on Rodger’s strategy.
Larry MacDonald is a freelance business journalist and author. His latest book, The Shopify Story, was published in the fall of 2024.
This is from TFSA Trouncers, a series that profiles Canadian investors who’ve accomplished incredible feats with their tax-free savings accounts. If you have grown your TFSA to half a million dollars or more, drop us an e-mail at dakeith@globeandmail.com. You may choose to be anonymous, but we do require an e-mail address and may request a screengrab of your portfolio for fact-checking purposes. We’ll also be profiling people who haven’t been so lucky with their TFSAs.
Retirement Q & A
Q: I recently learned that I will be inheriting a low six-figure sum. I am 63 years of age. RRSP or TFSA? I am also semi-retired, with no plans to fully retire until around 70. Also, how can I pass some of it onto my daughter without any tax or cost?
We asked Howard Kabot, vice-president of financial planning, family office services, RBC Wealth Management Canada to answer this one.
A: To answer this question, it would be good to know what your annual taxable income amount is. Do you have unused RRSP room? If so, how much? Contributing some of your inheritance into the RRSP could result in a sizable tax refund depending on the amount of room you have and the marginal tax bracket that you are in. Keep in mind that amounts coming out of the RRSP are taxable.
On the flip side, the TFSA is a good option for some of the funds since the funds can grow tax free inside the account and are not taxable when you make a withdrawal. Unlike the RRSP, you do not get a tax refund when the funds are first contributed. So, to answer your “RRSP or TFSA” question without knowing more, I would recommend you consider contributing to both account types depending on how much contribution room you have in either of them.
In either case, you should try to shelter the funds from tax as much as you can given your current age, the age you intend to retire and your ability to continue to generate earned income.
As for the issue of passing the funds onto your daughter, assuming your daughter is an adult, you can pass any sum of money onto her without tax consequences. The one exception being that if the funds were in the form of capital property (e.g. stocks, bonds, mutual funds, etc.), then you would have to report any gain and pay the tax accordingly. This would be the case even if you gifted the asset to your daughter as opposed to actually selling it to her.
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. Interested in more stories about retirement? Sixty Five aims to inspire Canadians to live their best lives, confidently and securely. Sign up for our weekly Retirement newsletter.