Latest news with #CanadaPensionPlan
Yahoo
9 hours ago
- Business
- Yahoo
Can Bianca afford to retire at 66 with a mortgage?
Bianca* is 65, enjoys her job and knows her employer would love her to stay as long as possible. However, she turns 66 at the end of this year and thinks this might be the right time to retire – if her investment portfolio can generate $6,000 a year in after-tax dollars. Is this a pipe dream? Would she be better off working an additional year or two, especially given the high cost of living and the fact she has a mortgage? Bianca was mortgage-free until she recently purchased her $800,000 forever home in Ontario to be closer to her daughter. She is making accelerated payments of $2,564 a month at 4.59 per cent on her $232,000 mortgage, which matures in nine years. While Bianca says having a mortgage at this stage in life is not ideal, it is manageable on her annual income of $140,000 before tax. Her current total monthly expenses are about $5,200. Each year Bianca contributes 10 per cent of her base salary and her employer contributes three per cent to a registered retirement savings plan (RRSP) that is now worth $825,000 and is invested in bank stocks. The employer portion of the savings plan — $164,000 — is locked in. When she retires, Bianca plans to direct 50 per cent of those locked-in funds into a life income fund (LIF) and 50 per cent to her RRSP, which she will convert to a registered retirement income fund (RRIF) when she turns 71. If she does retire at 66, she will also receive an employer pension of $46,000 a year before tax (the pension is not indexed to inflation) and is eligible to receive $1,377 a month in Canada Pension Plan (CPP) payments. She has delayed CPP and Old Age Security (OAS) because she is still working, and wonders when she should start drawing both government benefits to avoid facing any recovery tax or clawback. 'I do not have any plans for what I will do in retirement and I know that is not a good thing. I think it's why I keep working,' said Bianca. 'My expenses are likely to stay similar to what they are now. I don't see anything changing. Will I be able to maintain a comfortable retirement if I retire at the end of this year?' 'Bianca is asking the right questions and has the right concerns. The effects of inflation over the next 30 years will be significant and since almost half her gross retirement income is from a defined benefit pension that has no indexing, she needs to be confident the other sources of income can bridge this future gap,' said Eliott Einarson, a retirement planner at Ottawa-based Exponent Investment Management. 'A retirement plan will integrate inflation and taxes into all assumptions to determine what's possible given what's available. Without a plan you really enter retirement blind. Often, people neglect to withdraw adequately from their registered assets for retirement income, which can create tax problems in the future for themselves and the estate.' The good news is Bianca's investment portfolio combined with her pension and government benefits will more than meet her income needs after tax. Right now 40 per cent of her income needs are tied to the mortgage. At her current accelerated payment rate, Einarson estimated this will be eliminated about 10 years post retirement, providing increased flexibility and more future savings power — likely double the income she needs in her mid 70s and beyond. Einarson said that, rather than deferring additional registered income to age 71 and then withdrawing the minimum, she should strategically draw down enough registered assets in addition to other income sources to meet her total income goal of $6,000 net per month and maximize TFSA contributions. 'Why wait until age 71? She can benefit now from more income. Once the mortgage is paid she will have more than enough income.' As for CPP and OAS, Einarson said if she does retire at 66 she can start her benefits then and should not be in danger of the clawback on OAS if the income from the RRIF is managed well. Bianca should consider making changes to her portfolio construction to determine if it is appropriate for her future needs, Einarson said. 'If it is all invested in bank stocks, she may want to look at diversifying both geographically and by industry. Canadian bank stocks offer good dividends but investing in only one industry is a major investment mistake.' She may want to consider engaging a firm with a tailored portfolio management approach if she doesn't want to assume the responsibilities of managing her retirement income portfolio when she leaves her employer's plan, Einarson said. Couple approaching 65 with a mortgage worry tariff war will torpedo retirement Couple wonders: Start investing or stick with rental income to build nest egg? 'A good firm will also provide the retirement income planning up front and updates to the plan as her life circumstances evolve,' he said. 'Engaging in retirement planning is going to help Bianca clarify her future and her idea of retirement, while also building confidence. Her biggest risk now might be not taking advantage of her financial position and enjoying these early retirement years.' *Name changed to protect privacy. Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you starting out or making a change and wondering how to build wealth? Are you trying to make ends meet? Drop us a line at wealth@ with your contact info and the gist of your problem and we'll find some experts to help you out while writing a Family Finance story about it (we'll keep your name out of it, of course). Sign in to access your portfolio
Hamilton Spectator
2 days ago
- Business
- Hamilton Spectator
Ford government is still underfunding education despite budget increase, school boards say
School boards say they are still facing a shortfall of $404 per student despite a boost in funding from the Ontario government. Although the province will spend $30.3 billion on per-pupil funding in 2025-26 — a 2.6 per cent increase which is expected to meet or exceed inflation — it doesn't make up for years where funding didn't keep up with inflation, says the Ontario Public School Boards' Association after conducting its own analysis of last month's Ontario budget announcement . 'While this year and last year represent a step in the right direction, the challenging reality is that funding still falls short of closing the gap that has developed since 2018,' said OPSBA president Kathleen Woodcock. 'We are also concerned by projections in the budget document that suggest education funding will plateau in the years ahead. This would be a step backward at a time when the needs of students, the demands on school boards, and cost pressures continue to rise.' Woodcock said the government's spending increases on cybersecurity, busing and portables have helped, but that the province has not provided funding for mandatory contributions that have also gone up, including Canada Pension Plan and Employment Insurance. Emma Testani, press secretary for Education Minister Paul Calandra, said 'this year, Ontario is providing a record $30.3 billion in core education funding to school boards. We expect all boards across the province to spend every dollar of these funds directly on students, parents and teachers.' She added 'that is why last week, we introduced legislation that, if passed, would strengthen government oversight, accountability and transparency in school boards. Parents deserve confidence that boards are making decisions in the best interests of their children's education,' referring to a proposed bill that critics have characterized as a ' power grab .' The OPSBA said that when the Ford government took power in 2018, per-pupil funding was $12,282, and in the upcoming school year will be $14,560 — but when adjusted to 2018 dollars, funding has actually dropped, leaving a $693-million gap for the province's 31 English public boards alone. (The association noted, however, that the per-pupil funding increase in the 2024-25 school year actually exceeded inflation, after earlier estimates projected it would not.) School boards have incurred extra costs in particular in areas such as special education and in keeping small schools open because of a province-wide moratorium on closures, the association says. On Monday at Queen's Park, New Democrat MPP Chandra Pasma, her party's education critic, accused the Ford government of underfunding the education system by billions of dollars over the years. Students 'need teachers, books, and safe and healthy schools,' she said. 'You know what the people of the province of Ontario want to see? … They want to see that $6.5 billion returned to our education system.' She also slammed the government's proposed bill, adding parents 'want to have a say in the decisions that affect their kids' schools, but this minister is taking that away from them and giving himself the power to push aside democratically elected school boards for literally any reason he feels like.' During the legislature's daily question period, Calandra fired back. 'I don't need school boards or trustees writing curriculum. I don't need them opining on global affairs,' he said. 'You know what I need them doing? Sitting at their desk putting money back into the classroom. Anything else, I don't need them to do.'
Business Insider
3 days ago
- Business
- Business Insider
We thought we'd planned for a successful early retirement — but we're picking up side hustles just a few years in
My husband and I retired at 55 and did a lot to prepare for it, like paying into pension plans. But unexpected bills, rising costs of essentials, and lifestyle creep have stretched our budget. We've already dipped into our savings and began working side gigs to help maintain our lifestyle. My husband and I thought we did all the right things to prepare for successful early retirements at age 55. We worked hard for over 30 years in our respective careers and both had pension plans. Plus, we invested in RRSPs (popular retirement savings plans in Canada) for extra cushion. Before we retired, we paid off almost all of our debts and purged 30 years' worth of accumulated belongings. An inheritance and the sale of our acreage also allowed us to build our new forever home without taking on a mortgage. Over the years, we've sought advice from different financial advisors, who all assured us that retiring at age 55 and living a comfortable life thereafter was attainable. Now, we're not so sure. Despite all of our planning, we found ourselves worrying about money In 2015, my husband retired at 55 and helped out with his nephew's construction business until I joined him in retirement a few years later in 2023 when I turned 55. At first, early retirement was off to a great start. As empty nesters without a mortgage, we suddenly found ourselves with more free time and extra disposable income. In a way, we experienced a lifestyle creep. We upgraded our vehicles and went out to concerts, on day trips, and even occasional cross-border shopping expeditions. We planned future vacations to the US, thinking we'd "made it" and that we'd fairly easily be able to maintain this lifestyle from here on out. Several major appliances broke down in our home within just a few months and we paid for unplanned home renovations to accommodate our son's family after a devastating house fire. Soon, we were withdrawing huge sums from our emergency savings account. We didn't expect to touch those savings for several years, but our monthly cash flow is limited now that we're both retired. On top of the unexpected bills, tariffs and inflation mean many essentials, like fuel and food, cost more than we'd anticipated. Soon, we began dipping into our savings to help pay off credit-card bills, too. For now, I'm grateful that we have skills and assets to help keep us going Although we receive my husband's payments from his Canada Pension Plan, mine haven't kicked in yet. And, like many in our age group, our net worth consists mostly of assets and investments. When we realized our pensions alone would not sustain us, we began finding ways to supplement our income. My husband works seasonally in construction and sells woodworking projects. Since I'm a retired teacher, I can choose to take substitute teaching gigs. I also have freelance writing and translation contracts that allow me to pick and choose my work days. These gigs have helped us get back some of the freedom and flexibility we sought in retirement — and we're still available to help with our grandkids as needed. Fortunately, we're in good health and we've found joy in creatively using our transferable skills to our advantage during retirement. Hopefully, these gigs won't be necessary forever. As we get older, additional Social Security benefits, like Old Age Security, should kick in to give us extra income and stability. For now, we're trying not to take our situation for granted. We're fortunate to have pension plans and no mortgage, plus assets we could sell to maintain our current standard of living if needed. We don't know how long we'll live or what other surprise expenses may come up, but we're trying to be way more careful with our spending in the meantime. It's probably for the best that we learned early on how important it is to keep reassessing our desires, needs, and budgets if we really want to reap the rewards of retirement.
Global News
4 days ago
- Business
- Global News
Paying mortgage into retirement? Here's how you could plan your finances
A generation ago, it would have been unthinkable for many Canadians to carry the mortgage on their home into retirement. But for many on the cusp of retirement now, that's no longer the case. A survey of 1,626 Canadians conducted by real estate firm Royal LePage in May found that two per cent of Canadians expect to retire in 2025 and three per cent in 2026. Of these, around one-third (29 per cent) say they will continue to pay down their mortgage into their retirement years. 'Canadians today are much more inclined to carry debt because either working later into their lives or they've got some more disposable income that they can utilize to pay these things off down the road. But they're not just saying, 'I want to have my home paid off,'' said Shawn Zigelstein of Royal LePage. Canadians are also buying their homes a lot later in life, one financial planner said. Story continues below advertisement 'People are buying homes later and now they also have the option for a 30-year amortization. That pushes mortgage payments further into what used to be the traditional retirement years,' said Jason Evans, whose firm offers financial planning advice for retirement. Bloom Financial works exclusively with Canadians aged 55 or over and CEO Ben McCabe said a large part of his clientele is now retirees looking for options on how to pay down their mortgage. 'For 80 per cent of the clients that we speak to at Bloom, that is a situation that they're in,' he said. 2:06 Missed debt payments reach highest level since 2009: Equifax How can you plan? 'Retiring with a mortgage is possible, but there are some pitfalls to watch out for,' Evans said. Story continues below advertisement Evans recommends waiting until you're 70 to start drawing Canada Pension Plan benefits. Get breaking National news For news impacting Canada and around the world, sign up for breaking news alerts delivered directly to you when they happen. Sign up for breaking National newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy 'The first is the temptation to start CPP benefits early. While this can help with cash flow, it means smaller CPP payments for life. For many people, waiting until age 70 leads to higher monthly income and would provide them with the most value from the program,' he said. He said some older Canadians might want to dip into investments to pay off mortgages, but they need to watch the markets carefully. 'A mortgage also means higher monthly expenses in retirement. To cover those costs, retirees may need to take out more from their investments. That can work when markets are strong, but during a downturn, it might force them to sell at a loss just to pay the bills,' he said. McCabe said the problem some Baby Boomers face is that there is a huge gap between how much their home is worth and the amount of liquid cash they hold. 'They've never earned more than $30,000 or $40,000 a year in their career, but they're sitting on a $2-million home because they happened to buy a house in Little Portugal (in Toronto) in the '70s,' he said. 'There's this disproportionate amount of real estate wealth versus liquid wealth or income,' he said. Story continues below advertisement An option that some homeowners can exercise to get some cash in hand is a HELOC – a home equity line of credit. As the name suggests, a HELOC is a form of credit that you can take out on your home. However, McCabe said it might not be for you if you're already well into your retirement. 'It's a better solution for younger people who have employment income and can service the interest payment that's required on that HELOC,' he said. 5:49 Creating a Financial Plan for Retirement How do reverse mortgages work? A financing option available almost exclusively for Canadians over 55 is a reverse mortgage. Story continues below advertisement 'A reverse mortgage is a loan against one's home. It's only available if you're a senior,' McCabe said. The key difference between a reverse mortgage and any other kind of financing option is that there are no monthly payments. 'The loan isn't due until you pass away or until you sell your home. So effectively, until you no longer occupy that home as your principal residence,' he said. He said many older Canadians use their reverse mortgage to replace the primary mortgage on their homes. 'Effectively, you'd be replacing a mortgage that has monthly payment obligation with a mortgage that doesn't have one,' he said. He gave the example of a retiree with a household income of $4,000 a month, with $1,500 going to the bank every month for a mortgage payment. 'Now all of a sudden, you have that full $4,000 of income in your net income that you can apply towards your living expenses and living well retirement,' he said. 2:05 Business Matters: Canadian home sales fell in February amid tariff uncertainty Downsizing According to the Royal LePage report, 47 per cent said they don't plan to downsize within two years of retiring, while 44 per cent said they do. The rest were not sure. Story continues below advertisement The most popular downsized dwelling was a standard condominium, with 43 per cent saying they would prefer to downsize to a condo and a quarter (25 per cent) preferring to downsize to a senior living community. Only 16 per cent said they would live in a detached home and 11 per cent said they would prefer live in an attached home. The rest were undecided. Condominium prices have been dropping rapidly in some of Canada's hottest housing markets. According to one report, condo prices will have dropped by 15 to 20 per cent in the Greater Toronto Area by the end of the year, compared to a 2023 high. 'Downsizing can be a good option for some. However, it can sometimes be challenging to find a suitable next home at a lower price point,' Evans said. 'Moving to a new area is often required to free up a meaningful amount of equity. If downsizing is part of a person's retirement plan, it's important to keep an eye on the real estate market and consider a few different housing options,' he said.
Yahoo
5 days ago
- Health
- Yahoo
B.C. man who got $8M says he'll be penniless if made to pay sex assault damages
VANCOUVER — A British Columbia man who was awarded $8 million after being wrongfully convicted of sexual assault and spending 27 years in prison says he'll be left "homeless and penniless" if forced to pay civil damages to victims who won a lawsuit against him. The B.C. Court of Appeal ruled this week that five women who were awarded $375,000 each in January against Ivan Henry can't go after his home or vehicles pending his appeal, but ordered him to pay $232,000 into a trust account. "The value of the (January) judgment exceeds my net worth," Henry said in an affidavit. "I would be homeless and have no means to support myself." Henry was convicted of 10 counts of sexual assault in 1983, but was released after an appeal determined he was wrongfully convicted and he was acquitted in 2010. The appeal ruling says Henry was awarded more than $8 million in 2018 for breaches of his Charter rights after suing the province and others for wrongful conviction, but five women sued him in 2017, alleging he sexually assaulted them in their Vancouver homes in the early 1980s. The B.C. Supreme Court sided with the women in the civil case but the appeal ruling says Henry has not taken any steps to pay them and both he and the plaintiffs have filed appeals. The five women are appealing the court's refusal to award punitive damages in the case of $1 million each. This week's ruling says Henry applied to "stay execution" of the damages award and he told the court he spent millions defending the lawsuit, gave away more than $2 million, and now lives in a mortgage-free home on a monthly stipend from old-age security and the Canada Pension Plan. Henry filed an affidavit in the Court of Appeal this month that outlines his current living situation, his finances and the history of the case. It says he has had "significant health issues" since his release from prison, undergoing quintuple bypass heart surgery in 2016. Henry, now 78, said he lives alone at his home in Hope, B.C., with an assessed value of $650,000, and he owns two vehicles worth a combined $40,000. Henry said his Charter damages were paid out in instalments. He said he "gifted" more than $2 million to family members and a former partner, and also made donations. "These gifts were unconditional gifts with no expectation of repayment," said Henry, who estimated his annual living expenses at around $40,000. He said the rest of the money went toward living expense and legal expenses fighting the civil lawsuit. Henry said he continues to have "anxiety and other long-term effects" from his time behind bars, and asked the court to allow him to remain in his home until the appeal is decided. "My home provides me with a consistent and secure environment that supports my ability to manage these challenges. It is a place where I feel safe and can maintain a routine." The Court of Appeal found discrepancies in Henry's claims, finding his evidence leaves $1.8 million "unaccounted for," while he couldn't explain where "large sums" flowing in and out of his account went between 2018 and 2023. The ruling says Henry's affidavit is "not consistent" with what he said in an examination by the plaintiffs a week before he filed the document. He had said on May 5 that he gave away an estimated $3 million by 2017. He also said he had about $2 million and a house in 2024, but lost millions defending the civil action. Justice Nitya Iyer found that it is possible Henry doesn't have the money to pay the award and may lose his home, but "inconsistencies" in his affidavit and the examination "raise real questions about whether Mr. Henry has access to more funds than he claims." The ruling says the appeal will likely be heard this fall, with a decision in the spring of 2026. Lawyers for Henry and the complainants did not immediately respond to a requests for comment. The women who sued Henry described sexual assaults in their ground-floor or basement suites between May 1981 and June 1982. The judge in January's civil ruling found Henry liable, saying "it is more likely than not that he was their attacker and performed the sexual assaults … on a balance of probabilities." This report by The Canadian Press was first published May 30, 2025. Darryl Greer, The Canadian Press
