Seniors are busting out their travel bucket lists, how the Tragically Hip’s final concert inspired an expat to retire early and tax tips for dual Canadian-U.S. citizens

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Elizabeth Forsythe wasted no time reserving a visit to Florida after journey restrictions had been lifted on the Canada-U.S. border.

The 69-year-old from Sussex, N.B., can be heading to Orlando with a gaggle of girlfriends for some purchasing and enjoyable within the solar in mid-Could.

“We now have rented a automotive and a home and plan to do numerous purchasing, consuming, sitting across the pool and take some day excursions,” says Ms. Forsythe. She is used to going south not less than annually to go to her brother in South Carolina and revel in a sun-destination getaway, plus some fast jaunts throughout the border.

“We’re [close] to the border and I’m going purchasing with mates in Bangor a number of instances a 12 months. With the pandemic, this all got here to a screaming halt.”

Like many Canadians who plan to reap the benefits of their retirement years by travelling, Ms. Forsythe may be very happy restrictions have ended. Dene Moore reports.

Why the CRA desires a better have a look at investments held in RRSPs

Buried within the greater than 300 pages of Canada’s newest federal price range are three brief paragraphs that caught many monetary advisors unexpectedly.

Beginning within the 2023 taxation 12 months, banks can be required to report the entire truthful market worth of property held within the registered retirement financial savings plans (RRSPs) and registered retirement revenue funds (RRIFs) they administer. The aim behind growing disclosure necessities to the identical stage as tax-free financial savings accounts (TFSAs) is to “help the Canada Income Company (CRA) in its risk-assessment actions relating to certified investments held by RRSPs and RRIFs,” the doc stated.

Ottawa hasn’t given numerous element when it comes to what it’s on the lookout for or attempting to keep away from by including this requirement, says Wilmot George, vice chairman of tax, retirement and property planning at CI Investments Inc. in Toronto.

“However we do have sufficient info to know that they’ve some issues,” he says. Jameson Berkow reports.

Choice to retire early straightforward for 57-year-old entrepreneur, however follow-through proved troublesome

Shayne Smith, 57, made the choice to retire on the evening of his 52nd birthday – a birthday he shares along with his spouse of just about 33 years.

“We had been each attending the CBC’s stay broadcast of The Tragically Hip’s final live performance at a gathering of Canadians in Los Angeles. The conclusion that life is just too brief got here because the tears streamed down my face listening to Gord Downie sing Fiddler’s Inexperienced. I retired six months later,” Mr. Smith says within the Globe’s newest Tales from the Golden Age characteristic.

Can this 40-something couple keep their present stage of spending and nonetheless retire at 60?

At age 40, Leon and Lydia “take pleasure in a great life – dinners out, good-quality groceries, a wine assortment, journey, a private coach,” Lydia writes in an e-mail. A few years in the past, they purchased a century home in southeastern Ontario. “We now have no debt aside from our mortgage and might all the time pay the payments,” she provides.

They each take pleasure in skilled careers in schooling, bringing in a mixed $245,000 a 12 months. They each contribute to defined-benefit pension plans, partly listed to inflation, in addition to to registered retirement financial savings plans and tax-free financial savings accounts. “We’d like to know if there are further issues we must be doing to set ourselves up for a profitable retirement in 15 to twenty years,” Lydia writes. “Is our spending cheap given this state of affairs, or ought to we attempt to reduce on some luxuries?”

Within the Globe’s newest Financial Facelift column, Stephanie Douglas, associate and portfolio supervisor at Harris Douglas Asset Administration in Toronto, seems to be at their state of affairs.

In case you missed it

How you can lower your children out of your will

Are you enthusiastic about disinheriting your children?

Consultants say that deciding to chop off a baby or youngsters in your will comes with monetary, emotional and sensible concerns. It’s your proper to not move your property on to an unbiased grownup little one or youngsters, nevertheless it’s essential to get good recommendation, doc your causes, certify your way of thinking and talk your needs to these you’re disinheriting.

“It shouldn’t come as a shock,” says Rachel Blumenfeld, a associate within the tax, trusts and estates group at Aird & Berlis in Toronto and deputy chair of the Society of Belief and Property Practitioners (STEP) Canada.

She says the explanations dad and mom disinherit children can vary from disagreements over way of life selections or political opinions to emotions of estrangement, issues that their heirs don’t want cash and fears that their offspring lack the judgment or the monetary wherewithal to deal with the funds. Mary Gooderham reports.

Suggestions for turning into a inexperienced thumb in your senior years

Gardening is among the most versatile retirement actions, starting from rising a couple of flowers on the balcony to designing formidable full-yard plant landscapes.

A survey by Dalhousie College researchers discovered 31 per cent of people that began meals gardening in 2020 had been between 54 and 72. Fans cite advantages together with being energetic open air, fostering creativity and – significantly throughout the pandemic and amid rising grocery costs – having reasonably priced and wholesome homegrown meals.

Gardeners throw themselves into the interest for various causes and are all the time prepared to supply suggestions. In this article, Kathy Kerr talks to 4 Canadian inexperienced thumbs who provide recommendation for seniors on easy methods to dig in.

Ask Sixty 5

Query: I’m a 66-year-old twin U.S.-Canadian citizen in a public sector job with a wage of near $250,000. I additionally earn about $60,000 consulting as a sole proprietor. I’m single with no debt or dependants (I’ve helped my grown youngsters purchase their first houses and so they’re now having households of their very own). I plan to retire in three years from my public sector job however proceed consulting and earn about the identical revenue of $60,000 yearly.

I’m paying numerous tax on high of withholding, greater than ever earlier than, as a result of my journey and different business-related bills have been a lot decrease throughout the pandemic. Additionally, till final 12 months, I owned a two-bedroom condominium that I rented out at a loss, which lowered my taxes.

What are my choices to cut back taxes payable on my consulting revenue this 12 months and the subsequent few years after I retire? Ought to I think about growing my charitable contributions? Does benefaction make sense? Or are there different tax-efficient methods to contribute to charitable causes or my household’s final well-being that I ought to find out about? Perhaps a belief or life insurance coverage? What are my choices contemplating that I’m a twin citizen?

I notice that I’m very lucky to have a great wage from a job I take pleasure in and the capability to seek the advice of alongside. Nonetheless, I really feel as if I’m lacking some essential methods. Thanks for any recommendation you may present.

We requested Ryan Connolly, a senior monetary planner with Coleman Wealth at Raymond James Ltd. in Toronto, to reply this one:

First, it’s essential to differentiate the final word goal; scale back yearly taxes or enhance web value? ‘Don’t let the tax tail wag the canine’ is a saying that also holds true. Take into account that:

• $60,000 of revenue, much less $30,000 of bills, much less $16,059 of taxes = $13,941
• $60,000 of revenue, much less $0 bills, much less $32,118 of taxes = $27,882

Being a twin citizen provides complexity and elevated prices to make sure methods are compliant on each side of the border. Typically, the best option to scale back an ongoing tax legal responsibility with out sacrificing web value is to maximise relevant retirement funding autos. Having a great cross-border crew, together with an accountant, lawyer and monetary adviser, will definitely assist.

Rising charitable donations generally is a legitimate means of decreasing your ongoing tax legal responsibility. It’s essential to notice that this isn’t a dollar-for-dollar profit. You donate a greenback to cut back taxes by a share of that greenback by means of the charitable donation tax credit score.

A residing inheritance could also be value exploring, after finishing a stress-tested monetary projection to your retirement. There’s additionally talk about the reversion of the U.S. estate and gift tax exemption on the finish of 2025. In session along with your cross-border accountant/lawyer, it could be prudent to make the most of a few of your exemptions accessible earlier than 2026.

Life insurance coverage, particularly entire life or common life, generally is a device to make use of with different funding autos. Funding the coverage yearly could scale back ongoing taxation from funding revenue, assuming a redirection of capital into the coverage yearly. Nonetheless, does the life insurance coverage coverage qualify beneath the Canadian and U.S. tax legal guidelines? The legal guidelines and accompanying exams aren’t the identical. It might be helpful to make use of the usage of an actuary educated in such issues.

Implementing an alter-ego trust as a will substitute begins to look engaging when analyzed towards the price of probate and the time it takes for the property to be distributed. An property lawyer can present a memorandum illustrating the set-up and advantages of using such a construction. It’s crucial that you simply take care of a cross-border legislation agency, because the penalties from mishandling the set-up could outweigh any projected profit. We now have to be conscious of property and tax legal guidelines in each nations for the a number of generations which may be concerned within the construction.

Have a query about cash or way of life matters for seniors, or wish to counsel a narrative concept for the Sixty 5 collection? Please e-mail us at sixtyfive@globeandmail.com and we’ll discover consultants and reply your questions in future newsletters.