Author: Maurie Backman

Many people look forward to retirement and can’t wait to kick off that chapter in life. But for some people, that part of the story isn’t appealing.

If you’re 63, you’re at a time when it is reasonable to consider your financial stability during retirement. Even though you haven’t hit 65, you’re still old enough to collect the Canada Pension Plan (CPP) benefit, although you’ll be looking at a reduced monthly sum since each year you delay, until age 70, the more you’ll earn.

If you have a decent amount of savings or a pension, you could retire at 63 or shortly thereafter without worry. But it’s not just the financials you’ll need to think about. There’s your mental health and loneliness to consider — aspects of retirement that should not be overlooked.

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Forever young

It’s easy to imagine retirement as being carefree. However, the hard truth is that retirement has the potential to be unfulfilling.

In a 2024 Statistics Canada survey, 61.5% of Canadian aged 65 and older described themselves as satisfied with their lives, compared to 48% for those under 65. However, StatsCan also estimates that between 19% and 24% of those aged 65 and up feel isolated from others, wishing that they could participate in more social activities, illustrating how isolating retirement can be without the community a career may bring to someone.

There’s also the feeling of purpose. Many find that their identities are tied to their jobs, so when they retire a part of themselves disappears. StatsCan found that of all working Canadians aged 65 to 74, 21% were employed in 2022, with 9% doing so by necessity and 12% doing so by choice.

A work schedule also provides structure. In the absence of habit, it’s easy for retirees to shut themselves in their homes, thereby adding to their isolation and boredom.

That’s why experts argue it’s smart to avoid sunsetting a career. Aside from the financial stress and a lack of a steady income, the mental and emotional toll can make retirement unpleasant, even when money isn’t a concern.

Inflation, scarcity and how to invest

Although some might delay retirement due to social or emotional concerns, many delay retirement due to financial woes.

CPP Investments reported that 61% of Canadians worry more about running out of money during their retirement. Delaying retirement allows them to boost their savings and leave their nest egg untapped.

That same CPP Investments survey reveals how high cost of living due to inflation have Canadians concerned about their savings.

Given that CPP benefits only make up about 33% of a person’s pre-retirement income, it’s easy to see why many of them would opt to postpone retirement and keep plugging away at their jobs in order to get ahead of economic hurdles.

There’s also a general lack of savings to consider. A 2023 Healthcare of Ontario Pension Plan (HOOPP) survey found that 44% of working Canadians have not set aside money for retirement that year, with 32% never having set aside money for retirement at all. Delaying CPP boosts monthly benefits by 8.4% per month for each year until 70. But it’s hard to stave off CPP when you don’t have a paycheque.

Some steps can help alleviate the financial burdens that cause Canadians to delay retirement. Boosting savings can address scarcity fears, as can working with a financial advisor to establish a safe withdrawal rate.

Investing strategically can help combat those inflation fears. A portfolio of income-producing assets like bonds and dividends can help retirees keep up with inflation, even when it’s higher than usual.

Stick to your vision

Retirement doesn’t just have financial implications, it can have an emotional impact. One of the best ways to stave off existential dread is to figure out what you want to do with your life after work.

Maybe you’d like to volunteer for a charitable organization, or maybe you’d like to move closer to your adult children to help take care of your grandkids. The key is to stick to your vision and keep yourself occupied.

Having a support network is also important. Before retirement, see what community resources are available to you, whether through a senior centre or a place of worship. If you can’t find one within your vicinity, you may want to consider moving to a senior community that can nurture your social needs, if you can afford it.

One final thing to consider cutting your hours of work back through a part-time job or consulting position; maintain some semblance of a work schedule for as long as your body can handle it. You get the best of everything: time to yourself, an opportunity to get out, socialize and earn a paycheck to alleviate your financial stress.

Sources

1. Statistics Canada: The older people are all right (Sept 24, 2024)

2. Statistics Canada: Employment by choice and necessity among Canadian-born and immigrant seniors (Apr 24, 2024)

3. Healthcare of Ontario Pension Plan: 2023 Canadian Retirement Survey

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

As of 2022, the typical American aged 75 and over had $130,000 in retirement savings, according to the Federal Reserve. However, Americans 65 to 74 had a median retirement savings balance of $200,000.

The reason older people have less money may boil down to the fact that by age 75, a lot of people have been retired for quite some time and have been steadily dipping into their nest eggs.

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On the other hand, there are people in their mid-70s and even beyond who continue to work. For some, it’s because their jobs are a labor of love. For others, it’s a matter of financial necessity.

Let’s say your father has hit 75 and he’s still plugging away at his desk job. Having just $31,000 saved for retirement, it’s natural you’re both worried about how he’ll get by. That frankly isn’t a ton of money, even for a shorter retirement.

But if your father still works and earns a comfortable salary of $70,000 a year, his situation is far from hopeless. And if he’s able to work a few more years, he has a prime opportunity to boost his savings.

The upside of working later in life

Axios analyzed data from the Bureau of Labor Services and found that almost 19% of Americans ages 65 and over were still working as of 2024. And that alone can help compensate for a lack of savings.

If your father is 75, it means he’s beyond the point where it makes sense to delay Social Security. In fact, he hopefully claimed Social Security at 70, since there’s no financial incentive to hold off on taking benefits beyond that point.

If not, encourage him to file right away and see how much of a retroactive benefit he can get. Those retroactive benefits max out at six months, but at least it’s something.

Meanwhile, if your father is collecting a $70,000 annual salary plus Social Security, he may have more than enough income to cover his expenses. At this point, he should, conceivably, be able to either save some of his salary and/or the majority of his Social Security income.

One thing you should know is that while there are age limits for traditional IRAs, they don’t apply for those funding Roth IRAs or 401(k)s. This year, your father can contribute up to $8,000 to his IRA or $23,500 to his 401(k) plan. If there’s a match in his 401(k), it’s worth capitalizing on it. It pays to save in one of these accounts for the tax benefits.

Of course, one thing to keep in mind is that if your father is 75 years old with a traditional IRA, hey may already be on the hook for required minimum distributions (RMDs). With a 401(k), RMDs can sometimes be deferred if the plan holder is still working. Roth IRAs and 401(k)s do not force savers to take RMDs, though. In this case, your father may want to consider rolling over his traditional IRA into a Roth account.

Of course, given your father’s age, it’s important that he not invest any savings he builds too aggressively. He may end up wanting to retire soon, so he needs a good portion of his portfolio in stable assets, like bonds. Your father should also maintain enough cash savings to cover at least a year of expenses.

How much does it take to pull off a comfortable retirement?

A recent Northwestern Mutual survey found that Americans think it takes $1.26 million to retire securely. But the savings data above reveals that most people don’t have anywhere close to $1.26 million by the time they reach retirement age.

The reality is that the amount of savings it takes to retire comfortably depends on your needs and age. Someone who’s still working at 75 may not need as much savings as someone who decides to retire at 65.

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What someone in the situation above needs to do, though, is estimate their annual expenses and see how much savings it will take to cover them in the absence of a paycheck — because at 75, it’s unclear as to how much longer it will be possible to keep plugging away.

Now with regard to your savings, you may want to assume a 4% withdrawal rate. With $31,000 saved, that amounts to $1,240 per year, which isn’t a lot. However, keep in mind that’s on top of Social Security.

The average retired worker today collects about $1,980 per month, or $23,760 per year, in benefits. And with $1,240 from his savings, that would bring him to about $25,000 for the year.

However, someone still working at 75 may have delayed Social Security until age 70 for larger monthly checks. So your dad’s total income may be higher.

Running the numbers

Let’s say his monthly retirement expenses come to $2,800, requiring an annual income of $33,600. Let’s also say he’s getting about $2,600 a month from Social Security because he delayed his claim past his full retirement age of 66 — thereby boosting his benefits by 32% by waiting to take them at 70.

That leaves your dad with $31,200 per year. With $31,000 in savings, that gives you $1,240 per year, you still have a small shortfall to get to $33,600.

But if you can get your savings up to $60,000, a 4% annual withdrawal rate gives you $2,400 from your nest egg. Add that to $31,200 in Social Security, and you’re where you need to be.

Of course, this does mean doubling his savings. But it may be doable with some strategic moves. Your dad is 75 and is fortunate he has a grown child who cares about your financial well being — maybe your or another family member could allow him to move in for a few years to boost his nest egg. There may also be other expenses he can look into reducing.

Keep in mind, too, that he may have leeway to withdraw from his savings at a higher rate than 4% a year because he’s older. If you use a 5% withdrawal rate, $31,000 in savings gives him $1,550 per year. If you use a 6% rate, you’re looking at $1,860. And if you work with a financial advisor to maximize your savings and trim expenses, you may find that your dad doesn’t need to save so much more to get to a place where he can retire and cover his costs.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

It’s not always easy to leave a relationship in the past, especially when there’s a child involved. But sometimes, those ties to an old flame can burn your finances in the here and now.

That’s the situation Beth from Philadelphia is in. She called into The Ramsey Show because her husband rents out his New Jersey house to his ex-girlfriend. The reason for this tie is that they have a daughter together, and his goal with that arrangement has been to maintain a stable environment for the child.

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The problem is that Beth’s husband’s ex is consistently late with payments, which is negatively impacting his credit score. And since Beth and her husband now want to buy their own house together, that’s a problem.

A tough situation

Beth’s husband bought his New Jersey house in 2016-2017. The house is in his name, Beth told show hosts John Delony and Jade Warshaw.

He’s been renting the home to his ex for five years. But he hasn’t been collecting rent payments from his former partner. Rather, he left her to pay the mortgage herself.

The reason for the arrangement, as Beth explained, was that the breakup wasn’t amicable. Beth’s husband wanted to interact with his ex as little as possible, but still wanted to be responsible for their shared child. The mortgage payments are now up to date, but in the past five years, the ex has been late on 20 payments.

Beth’s husband is “on top of his finances with the exception of this situation". The late payments have lowered his credit score to the low 700s.

"That’s not as bad as I would expect," Warshaw said.

To qualify for a conventional mortgage, Beth’s husband would need a minimum credit score of 620, according to Experian. But the higher the score, the more favorable mortgage terms they’ll qualify for. Warshaw and Delony recommended that Beth’s husband try to sell the house as soon as possible and move on, especially since his ex has married someone else. They suggested giving the ex six months’ notice to find a new place, which is more than reasonable.

"I wouldn’t make a big drama about it,” Warshaw said. “I wouldn’t go talk about the past missed payments. I would just say, ‘Hey, it’s been five years, I think we’ve all moved on.’"

Beth expressed some concern about the impact on her husband’s daughter.

"The last thing he wants to do is throw them out," she said.

But, Warshaw and Delony insisted that giving six months’ notice to vacate isn’t leaving the ex and the daughter in the lurch. They also suggested that Beth’s husband could try to sell them the house at a reasonable price. Otherwise, the ex should be given a six-month notice, with the stipulation that if they pay their rent or if they damage the house, then that timeline will be accelerated. In that case, they’ll have to leave in 30 days.

If that threatens his daughter’s financial well-being, Delony suggested Beth’s husband could negotiate a new custody agreement where he sees her every other weekend. But, they need to sever the financial connections for Beth’s husband’s sake.

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The cost of mixing personal and financial choices

It’s not unusual to end up in a situation like Beth’s husband, where your desire to help someone you have a personal relationship with compromises your finances. And it doesn’t have to be an ex. It could be a sibling or a grown child or another close relation.

Of course, the problem with helping someone you care about, you might end up with financial problems of your own. Those could include diminished savings and a negative effect on your credit score, making it harder for you to buy a home of your own.

For example, imagine co-signing for a loan to help a sibling out, but they fall behind on payments. That could leave you on the hook for those payments instead.

That’s why it’s important to be careful. In the situation above, what Beth’s husband could’ve done was to enter into a formal lease agreement with his ex, including a payment schedule and penalties for late payments.

Between now and when Beth’s husband sells the house, Warshaw and Delony suggested that a formal arrangement be put in place that outlines the consequences of not paying on time.

Had there been financial consequences to missed payments, the ex would’ve been more careful, sparing Beth’s husband whatever credit score damage he sustained.

Any financial arrangement you have with a close relative should be made in writing so that each party understands their rights and obligations. Also, be careful with whom you choose to help. In this situation, Beth’s husband has a responsibility to help his ex because they share a child.

It’s not easy to say no to a former partner or family member. But, for the sake of the relationship, as well as your finances, it’s important to be firm and honest when it happens.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

A 2024 CPP Investments survey found that Canadians think it will take $900,000 to retire comfortably, a 29% increase from the year prior.

But a 2024 Statistics Canada report revealed that the median nest egg that Canadians have saved for retirement is $573,040. So clearly, the typical retiree has a large gap to overcome.

If you’re retired with a $3 million portfolio, you’re clearly ahead of the curve. Not only do you have way more assets than the typical Canadian senior, but you also have more than the $900,000 per person that’s supposed to make for a comfortable retirement.

But you may be wondering if it pays to hire a financial planner to help manage your retirement portfolio. And the truth is, there are pros and cons to getting financial help.

Using a financial planner

If you have $3 million in assets, a paid-off home and no other major financial concerns, you might assume that you don’t need a professional to get involved. But there’s a reason 25% of Canadians have a financial adviser or planner, per research from CIBC and FP Canada.

The upside of working with a financial professional is that you’ll have an expert who isn’t emotionally attached to your money offering advice on how to manage your assets. That could be invaluable, especially if life ends up throwing you a curveball.

Things may be going well for you financially right now. But what if your life circumstances change, or your health declines and you wind up needing long-term care?

If you’re uninsured, you could be looking at spending anywhere between $3,500 to $30,000 per month for a home health aide, a Scotia Wealth Management report found. A financial adviser or planner can help you not only prepare for these types of costs, but manage them as they arise.

Also, while you clearly have a decent understanding of saving and investing to have amassed $3 million in time for retirement, there may be some blind spots in your portfolio. A financial professional can help address those and make sure your portfolio is set up to not only produce income, but withstand a major market event or a period of rampant inflation.

Furthermore, if you have $3 million, it’s feasible that you may be in a position to pass on an inheritance, and the value of $3 million today is not the value of $3 million in the future, especially if inflation soars. A financial adviser can guide you on estate-planning options so you’re able to make sound decisions for the type of legacy you wish to leave behind.

Finally, working with a financial adviser could help you feel more secure as you navigate your senior years; it takes the pressure off you to be the expert and to stay current.

Managing your finances solo

The obvious downside to working with a financial professional is that there is an additional cost involved. And that cost can vary depending on who you use, where you’re located and the fee structure your adviser employs. If you manage your finances on your own, you won’t have to pay a professional any fees.

Let’s say a financial adviser charges you a fee of 1% of assets under management. For a $3 million portfolio, you’re paying $30,000 a year for help you may not need.

Granted, because many financial advisers get paid as a percentage of assets under management, they’re motivated to grow your portfolio so they get paid even more. But once you’re retired, you may not need portfolio growth so much as stable income. And if you’re already getting that, there may be little sense in bringing in an adviser.

If you’ve been able to comfortably build and manage your portfolio all of these years, then you may be perfectly equipped to continue doing so — especially if you’re a savvy investor with a pulse on the market who understands the importance of diversification.

Furthermore, while a financial adviser can offer guidance on estate planning, you’ll typically still need an attorney to create a will or trust (or whatever tool you use to pass down an inheritance). So while a financial professional can perhaps steer you toward your ideal option, you’re probably going to be looking at a separate attorney fee anyway.

Before you make your decision, it could be worth sitting down with an adviser or two and seeing what they have to say. But if you’ve gotten to $3 million and are managing this well, you don’t necessarily need to hire someone for extra help at this point. Just be sure that before making any major money moves, you’re as informed as possible. You’re essentially your own adviser.

Sources

1. CPP Investments: Nearly 2 in 3 Canadians worry about retirement savings: survey (Oct 30, 2024)

2. Statistics Canada: Assets and debts held by economic family type, by age group, Canada, provinces and selected census metropolitan areas, Survey of Financial Security (x 1,000,000) (Oct 29, 2024)

3. Cision: Most Canadians are going it alone when it comes to financial planning: CIBC and FP Canada™ Poll (x 1,000,000) (Nov 27, 2023)

4. Scotia Wealth Management: Why aging at home is unlikely for many — and how to change that (Jan 9, 2024)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Taking up residence in a mobile home park can be an economical means of putting a roof over one’s head.

But more than 50 families at County Road Mobile Home Park in Houston, Texas, were displaced after the land they were living on was sold, according to KHOU 11 News. Residents had until April 8 to move out, and some were forced to spend thousands of dollars to relocate.

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Marta De La Garza, who lived in the park with her family for five years, says she had to shell out $9,000 — $3,000 for transportation and $6,000 to set up utilities — to move to a new location.

"We had to pay for the people who moved the mobile home. We had to pay a plumber again. We had to pay for electricity again," she told the local broadcaster in a story published April 9. "It was a nightmare."

Moving costs may also not have been the only financial challenges some residents had to face. Here’s the story behind the challenging evictions, plus ways you can protect yourself as a tenant.

A horrible experience

Residents of County Road Mobile Home Park received eviction notices in September after the property was purchased by a company named Summit Acquisitions, per KHOU 11 News. They were first told they would need to vacate the property by the end of 2024, but that deadline was then extended until the spring.

The forced move has been devastating for several residents, including Frankie Schwarzburg, who says her trailer was damaged beyond repair during transport and is no longer habitable.

"I cannot live in my trailer," she told KHOU 11 News. "I’m out $15,000 and a home."

In addition, the broadcaster reports community advocates say some former tenants were mistakenly charged rent in March and April, even after leaving, while others have been kept waiting for their security deposits to be returned.

"They’re being charged for a place they can’t live anymore," Damaris Gonzalez of the Texas Organizing Project told KHOU 11 News.

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Former residents are calling on legislators to strengthen rights for mobile home owners. State Sen. Molly Cook told the broadcaster she’s introduced a number of bills aimed at addressing these issues.

"I don’t hear people talking about manufactured homes enough," Cook told KHOU 11 News. "The reality is that this is what makes the American dream accessible to so many Texans."

The broadcaster says neither the former property manager nor the new owners immediately responded to requests for comment.

Know your rights as a tenant

If you’re facing eviction, it’s important to understand your rights. You should know that while you can be evicted for failing to comply with the terms of your lease, your landlord can also choose not to renew your lease.

Different states may have different laws regarding evictions. In Texas, for example, you’ll typically be given a notice to vacate. This is not an eviction, and your landlord must give at least three days to vacate. If you don’t move out by that deadline, your landlord can file an eviction suit with the court.

From there, you may have to appear in court to try to state your case (assuming you want to stay in your home). After a judgment is made, either side has the option to appeal the decision within five days. If you lose and don’t appeal yet refuse to move, your landlord can ask the court for a writ of possession and you’ll then have 24 hours to vacate the property. If you don’t, your belongings may then be removed from the property.

It’s important to understand how the eviction process works. If you feel you need help with your case, you may want to consider consulting an attorney.

It’s also important to keep detailed records of communications between you and your landlord in an eviction situation. For example, if you’re being evicted due to violating a lease term and you can prove you didn’t, that’s something to bring to your eviction hearing. You should also document any interaction between you and your landlord where you feel your rights as a tenant were violated.

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Helping the homeless is a good thing – but residents of a suburban neighborhood in Las Vegas say there’s been a lack of transparency and due process in a new project.

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In 2023, Nevada lawmakers approved $100 million in funding for Campus for Hope, a $200 million housing project meant to address homelessness in the city. The rest of the money is being provided by a nonprofit backed by the gaming industry.

The proposed site is the 6100 block of West Charleston Boulevard near Jones Boulevard, and two property owners who live about three blocks away have decided to fight it by filing a lawsuit. They say their quality of life, safety, and home values will be affected by the “arbitrary decision” to place the facility in the current location.

As 8 News Now reports, the suit, which was filed in Clark County District Court, alleges that state officials violated Nevada’s Open Meeting Law by greenlighting the project without giving residents proper notice or allowing members of the public to comment on it.

Last month, the governor even signed a bill to speed up construction of the project, says News 3.

"Why are they trying to push this $200 million project so secretly into the neighborhood?” said homeowner Matthew Wambolt, one of the plaintiffs in the case, to 8 News Now.

The plaintiffs argue the project creates an “incurable defect” in the location and seek to halt it until independent studies are conducted on the potential impact of the facility.

Why residents aren’t happy

The plan is for Campus for Hope to be a 900-bed, 26-acre transitional housing facility. According to Nevada Current, the project will take up space on the Southern Nevada Adult Mental Health Services campus and there are fears that it will displace existing mental and behavioral health services.

According to the lawsuit, the facility raises safety concerns since it is less than a mile from the Linda Smith and Christopher Smith Family Campus, which serves children and adults with intellectual disabilities, and within a 2-mile radius of over 20 schools serving K-12 students.

“This project will dramatically alter the fundamental character of our neighborhood, transforming our quiet residential area into one marked by significantly increased congestion, activity, and potential crime,” it says. “Ultimately, we believe this project will substantially lower property values and negatively impact the quality of life for local residents."

It also says that the approval process for Campus for Hope was not transparent enough.

“Given the secretive nature of project approvals, the deliberate avoidance of community engagement, and the removal of normal oversight mechanisms … there is a distinct appearance of impropriety in the actions and backroom collaboration of certain state legislators and their large donors within the gaming industry are at play here,” says the lawsuit.

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"I have a question for the governor. The Strip, the casinos are giving hundreds of millions of dollars for this project. You’re going to move these people off the Strip to this area?” said homeowner Gail Johnson to 8 News Now.

Campus for Hope said it has “met all the state and local requirements for the construction of the facility,” in a statement to 8 News Now.

Boyd Katz, who works for a security company in the area, told the news station that it’s not that residents don’t want to help the homeless, they simply believe the project needs proper oversight.

"If we add a facility with that many beds here just like that it’s going to severely affect that area … not just the commercial area, but the residential neighborhood nearby," he said.

Who pays?

Another issue is who’s paying for the project.

“Local municipal authorities claim alternative locations were considered but have repeatedly refused to disclose any addresses, evaluation criteria, or comparative assessments that justify selecting our community as the ideal site," James Root, one of the plaintiffs in the suit, wrote in an affidavit. "Our city alone bears the responsibility for an estimated annual $15 million in operating expenses."

The Nevada Current reports once construction is complete, Campus for Hope will run on taxpayer dollars almost entirely, split between local governments and the state. It will be overseen by a board of directors that does not include state or municipal representatives.

With a total estimated $30 million a year in operational costs, this project could also result in a hefty tax burden on residents.

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• This is how American car dealers use the ‘4-square method’ to make big profits off you — and how you can ensure you pay a fair price for all your vehicle costs

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Close to retirement with a nest egg of more than $2 million? No wonder you’re thinking about retiring! To put this in perspective, you’re 58 years old with a $2.5 million saved in an investment portfolio — this is more than four times the savings for the average Canadian. According to Statistics Canada, the average nest egg is closer to $573,040.

But wait, there’s more! Once you’re 60, you can start collecting payments from the Canada Pension Plan (CPP), albeit at a reduced rate. If you opt to hold off collecting CPP (you can delay until age 70), the more government payment you’re entitled to each month.

Based on these factors, there’s a really good chance that you might be able to live off of the dividends produced by your investment portfolio without touching the $2.5 million principal, but you still need to manage your portfolio and make smart money decisions.

Pay attention to diversification to keep your dividend income up

With a dividend yield of at least 3.2%, a $2.5-million portfolio could easily generate $80,000 in annual dividends. That kind of yield is doable if you diversify beyond a basic broad-based exchange-traded fund (ETF) and focus on stocks and other assets with higher-than-average dividends.

For investors comfortable with picking and trading stocks, keep in mind that over time a portfolio loaded with growth stocks can experience more volatility due to market growth. For instance, the value of specific stocks in your portfolio can grow so much that the portfolio is overweighted with certain holdings or assets. Also, companies experiencing rapid growth and accelerated gains don’t always pay high dividends because they reinvest their profits to fuel growth and boost stock prices. Plus, companies are not obligated to raise dividends over time, nor are dividend increases guaranteed to match inflation.

For that reason, you need to keep tabs on a portfolio of dividend-paying stocks. A good bet is to rebalance your portfolio on a quarterly basis — either on your own or with a financial adviser.

Another good option is to add other income-generating asset, such as REITs, or real estate investment trusts. REITs are a great choice for those seeking regular income since REITs are required to pay out 90% of their taxable income to shareholders each year. That means adding REITs into your portfolio will help keep your monthly income stable and allow you to avoid dipping into the principal to pay living expenses during your retirement years.

Keep an eye on inflation

Inflation could impact your investment income dramatically. For instance, if you collect $80,000 in income from your portfolio when you’re 60, and collect the same amount when you are 80, inflation over the years will erode the purchasing power of that money and force you to adjust your spending as time goes on — or dip into your principal investment amount.

The Bank of Canada and the federal government has long targeted a 2% annual inflation rate, the midpoint between 1% to 3%, but even a 2% inflation can erode the spending power of $80,000. And things can happen. Remember that the stimulus policies amid the pandemic rapidly drove the cost of goods and services above 2% and other circumstances can always prompt quick price increases.

Consider taxes

Consider tax implications in your dividend calculations. If the dividends are distributed in a non-registered account, you’ll have to pay full tax on the earnings. The good news is the Canada Revenue Agency does tax dividend income more favourably than other forms of income — as long as the dividends earned meet the CRA’s criteria.

Another option is to shelter your earnings in a registered account, such as a registered retirement savings plan (RRSP) or Tax-Free Savings Account (TFSA). Just be sure you understand when and where it make sense to shelter dividend income in a registered account. To help

On the other hand, if you have a traditional RRSP, you only pay taxes on dividends when you withdraw them.

Your taxes will depend on your filing status and income, as well as what tax thresholds look like in the future. If you’re a single tax filer and your income is between $57,375 and $114,750, then you’re looking at a tax rate of about 7.56% for eligible dividends and 13.19% for non-eligible dividends. Remember that tax laws and rates can change over time. It’s a good idea to consult a financial adviser to plan your short- and long-term retirement strategy.

Sources

1. Statistics Canada: Assets and debts held by economic family type, by age group, Canada, provinces and selected census metropolitan areas, Survey of Financial Security (x 1,000,000) (Oct 29, 2024)

2. Tax Tips: Canada 2025 and 2024 Tax Rates & Tax Brackets

This article I’m 58 and plan to retire in 5 years with a portfolio worth $2.5 million. I expect annual dividend income of $80K but worry this strategy too riskyoriginally appeared on Money.ca

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Real estate scams are all too common and older people tend to be easy targets. When Jose Luis Fernandez of Sunny Isles Beach, Florida invested money with Ybis Del Carmen of Realty Golden Group, he wasn’t worried. After all, he had known her since 2012.

But authorities say Del Carmen wound up stealing more than $1.6 million from Fernandez through an elaborate real estate fraud scheme. And now, Fernandez’s life will never be the same.

"I lost everything," he told WPLG Local 10 News, the pain evident in his voice.

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A devastating financial loss

Fernandez says he trusted Del Carmen to invest his money in a six foreclosure properties valued at around $842,000, reports WPLG Local 10 News. He gave her full access to his business bank account at Truist Bank so she could facilitate those transactions on his behalf.

Del Carmen gave Fernandez documentation in support of the various sales, but it was all fake, say police. She never bought any of the properties she said she did.

Fernandez became suspicious when he wanted his money and Del Carmen kept making excuses about why it wasn’t available. Now, he calls his situation "very complicated."

Members of the Sunny Isles Beach Police Department arrested Del Carmen, who faces charges of organized fraud and grand theft, says Local 10 News. And there’s concern that she may have defrauded investors other than Fernandez. People with knowledge of her real estate fraud, or related fraud, are encouraged to report it anonymously at 305-471-8477.

Read more: You don’t have to be a millionaire to gain access to this $1B private real estate fund. In fact, you can get started with as little as $10 — here’s how

Real estate scams are an ongoing problem

In 2024, there were 9,359 real estate fraud complaints filed, according to the FBI’s Internet Crime Report. All told, consumers lost more than $173,000 million to real estate fraud.

Sadly, it was older people who were most likely to lose money to real estate scams.

In 2024, people ages 50 to 59 lost $22,466,504 to real estate fraud, compared to $6,623,054 among people in their 30s and $9,331,733 among people in their 40s. But people ages 60 and over reported 1,765 real estate crimes last year totaling an astounding $76,324,236 in losses.

Because so many older people live or retire in Florida, it’s not surprising that the state ranks among those with the most fraud complaints. In 2024, Florida came in third in that category, following only California and Texas. It was also third in terms of total financial losses.

A big reason older people may be more likely to fall victim to real estate fraud is that they have more assets than their younger counterparts. And as the FBI states about scams in general, "Seniors are often targeted because they tend to be trusting and polite. They also usually have financial savings, own a home and have good credit — all of which make them attractive to scammers."

In the context of real estate, the problem is that it’s not difficult to create documents that look legitimate. Scammers can download public records and duplicate or manipulate them in a way that seems official.

Plus, it’s just not that difficult to pull off a real estate scam in general, even when the victim is someone younger and relatively tech-savvy. All a criminal needs to do is search for listings, pretend to be the agent in charge, forge some sale documents and take people’s money.

It’s easy enough to look at public records to find a given property’s rightful owner’s name. From there, anyone can draft a contract, get a fake notary stamp and take other such actions that lead an innocent person to believe they’re buying real estate when they aren’t.

How to spot a real estate scam

You don’t necessarily have to be older to fall victim to a real estate scam. But if you’re vigilant, you can potentially avoid one.

First, be wary of properties that seem like too much of a bargain. If you do some research and find that the average home price in your area for a three-bedroom is $400,000, a similarly sized home being sold for $200,000 should raise a red flag.

Also, be careful with off-market properties. If a given home isn’t listed on MLS, you may want to stay away.

It’s also important to verify the credentials of anyone who tries to sell you a home. Before you agree to a transaction, get references for the real estate agent involved and check up on their license to make sure it’s valid.

Unfortunately, it’s possible for someone to have a valid license and still engage in fraud, but it’s an extra layer of protection nonetheless, which means the fraudster has more to lose.

Finally, always read your paperwork thoroughly and dig up all of the necessary property details. Inspect the deed and title of the property and review your contract carefully.

Your best bet may be to hire a real estate attorney who is not only able to review your contract, but help with their expertise to do due diligence so you get extra peace of mind.

What to read next

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• Here are 5 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
• How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement
• This is how American car dealers use the ‘4-square method’ to make big profits off you — and how you can ensure you pay a fair price for all your vehicle costs

Money doesn’t have to be complicated — sign up for the free Moneywise newsletter for actionable finance tips and news you can use. Join now.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.