Estate planning

September 03, 2021

Common law spouses not necessarily entitled to pension benefits

A recent court decision has created new worries for the 'married but not yet divorced' set.

The case in question involved a man who died prior to retirement, leaving behind both his long-time common law spouse, with whom he was living at the time of his death, and his first wife, to whom he was still legally married even though they lived apart.

The question was who should receive the man’s pension death benefit: his common law wife, his legal spouse or his designated beneficiaries?

Continue reading »

June 25, 2021

Baby boomers underestimate cost of long-term care: study

Baby boomers have mistaken ideas about the future costs of long-term care and about the years they will spend in retirement, according to a recent Nationwide Financial survey.

When asked to estimate how much a year nursing home care will cost in 2030, they estimated an average of $111,507  -- roughly half the actual estimated costs for that year. However, most correctly estimated current costs at approximately $67,000 a year.

"Nursing home costs have increased more than 4 per cent annually since 1974,” says John Carter, Nationwide's president of retirement plans. "What a year of nursing home care costs today will not even come close to the actual cost when boomers really need it."

Continue reading »

June 20, 2021

Do you really care if you die in debt?

Do you care if you die in debt? According to a recent Sun Life report, roughly 27% of Canadians couldn't care less -- which is bad news if you're one of their creditors and likely worse if you're one of their beneficiaries.

Borrowers face three types of creditors, explains Sun Life's Kevin Press: "Preferred creditors (Canada Revenue Agency is an example); secured creditors (like the bank that’s holding your mortgage loan); and general or unsecured creditors (everybody else)."

Preferred creditors get paid first, followed by secured creditors and then unsecured creditors, he explains. If there aren’t enough assets to pay everyone off, then somebody gets left holding the bag -- and that's certainly not going to be the government.

Continue reading »

June 10, 2021

Federal government moves to eliminate value of testamentary trusts

Starting in 2016, the federal government wants to effectively abolish testamentary trusts, a common estate planning technique that allows Canadians to reduce tax on the investment income earned from their assets, by their beneficiaries, after their death.

This type of arrangement allows one person, typically known as the estate trustee, to hold and manages the deceased's property for the benefit of someone else, known as the beneficiary, explains Jamie Golombek, who runs CIBC's estate planning unit.

Right now, testamentary trusts and estates pay federal tax at graduated tax rates starting at 15% federally for income under $43,561 (in 2013) and ultimately rising to 29% once income reaches about $135,000. Each province then takes its own proportional cut.

But it's still a great deal, since trusts are not that dificult to establish and are used extensively by advisors.

Continue reading »

May 23, 2021

Looking for lost insurance money can pay off

Millions of dollars in life insurance goes unclaimed each year for one simple reason: the beneficiaries simply don't know the money exists.

Even in this wired age, if the insurance company can't locate the beneficiary — or for that matter, even ascertain that the policyholder has died — that money will go unclaimed, eventually being turned over to the public purse, Consumer Reports reveals

Sometimes it's a communication problem. All too often, however, people buy life insurance and don't let their beneficiaries know about it. But Consumer Reports argues that insurance companies know that policies sometimes go astray and may not be working as hard as they might to find beneficiaries. 

If you know or suspect that a particular insurer underwrote the policy, contact that carrier’s claim office by phone or online. If you don't get a positive response, don't give up. Many companies have an ombudsperson to contact, for instance.

Continue reading »

May 21, 2021

Worries over aging investors being abused likely overstated: report

Regardless of gender or education level, most people become considerably less literate when it comes to handling money issues after age 60, according to a recent study.

The result is that retirees with significant cognitive deficits will have problems making sound financial decisions. They may make investment mistakes that cause losses in their retirement accounts that will reduce their retirement incomes and standards of living.

Or, even worse, unscrupulous advisors might take advantage of them by selling them inappropriate investments, or one with excessive commissions -- something that's more more easily done when decision-making abilities and the grasp of financial concepts are diminished.

Continue reading »

May 16, 2021

Canadians losing sleep over finances

1034045_56715244Life happens.

And with it, so do unforeseen hardships.

That's why it is always good to be proactive and have a plan.

A new report by BMO Wealth Institute reveals that while many Canadians have a financial plan in place, very few have considered what would happen if unexpected life events arose that could cause financial hardships.

Continue reading »

April 25, 2021

Do you think you'd buy an annuity in retirement?

Transition Boomers — those ages 55 to 65 and closing in on retirement — are more interested in protecting their retirement savings with a guaranteed return even though they realize the stock market may offer better returns over the long haul, according to to a recent survey.

87% say they'd be more interested in a financial product with a 4% return, which is guaranteed not to lose value, over one with an 8% return but which is subject to market downturns.

Despite this, only 25% say they currently own an annuity, a product that can help answer the demand for guarantees, largely because they don't feel comfortable with them, it seems.

75% of admit to a general lack of understanding, saying either “there’s a lot about annuities I’m not sure about” (37%) or “I haven’t got a clue” (38%).

And that's too bad, according to a recent C.D. Howe Institute report, which suggests that more Canadians approaching retirement should be looking at annuities.

Continue reading »

March 07, 2022

Canadians investing in retirement with RRSPs

It seems that Canadians are investing in their retirement a little more than usual.

Now that the RRSP contribution deadline has passed, BMO Bank of Montreal released a study which revealed that 63 per cent of those polled made or had planned on making a contribution to their RRSP before the March 1 deadline.

That's an increase over the previous year when only 38 per cent indicated they were contributing.

So what's the logic behind stashing away your cash now for your golden years ahead?

Continue reading »

March 01, 2022

Retirees are happy and busy as bees

You would think that life slows down in retirement.

But in fact, according to a new report by BMO Bank of Montreal, Canadian retirees are busier than ever. 

There's not enough hours in a day for all the activities retirees have these days.

The report revealed that more than one-third of those polled have more activities than time in which to do them and one in three admit that retirement is more expensive than they expected.

However, 82 per cent say they are happy with their current lifestyle.

Continue reading »


Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...