Retirement – sailing off into the sunset

Jars filled with cut up credit cards
May 10, 2022

Retirement is something that most working people look forward to – having time to the things we truly love and with a livable pension.  For most working people, the former is more likely than the latter.  Unionized employees usually have some form of pension benefit in place, government workers almost always do, but there is still a great void.

The CPP pays out a pittance and is augmented by the Guaranteed Income Supplement (GIS) and the Old Aged Security.  “The maximum CPP payment in 2021 is $1,203.75 per month or $14,445 per year. This maximum amount is payable at age 65 but most people will never reach this maximum. To receive the maximum CPP payment requires making 39-years of maximum contributions between age 18 and 65, so this is a difficult threshold to achieve.

Not everyone has been sufficiently well paid during their working life to make the maximum CPP contribution.  Most CPP recipients, we have seen over the years, seem to average little more than $600 per month and they rely on other supplements to get by.  “Unlike CPP, OAS is available to all Canadians at age 65. For 2022, the maximum monthly OAS benefit is $642.25. In addition, the lowest-income seniors can receive the OAS Guaranteed Income Supplement (GIS), which maxes out at $959.26 per month.”

All told, seniors do not have sufficient income from government pensions alone to support the continuance of the lifestyle they became accustomed to during their working life.  This is true even for low paid employees, who find that retirement chips hundreds, if not thousands, of dollars off their work incomes.

Some folks find themselves dipping into pension savings before they retire, to pay off debts, to buy a new vehicle, etc.  The double disappointment occurs with the realization that taxes must be paid on each withdrawal.  After RSPs are converted to OHOSP loans they are not always paid back which is another problem altogether.

Stock markets are always volatile, but some of the volatility that we are seeing today is the direct result of poor fiscal management at the governmental level.  Mutual funds and retirement savings plans have all seen devastating losses, some will undoubtedly recover, but how long will it take?  Just as human nature tells us to assume the fetal position when resented with danger, that same nature directs investors to bail on investments that are losing money.

The old adage “buy low and sell high” challenges us all.  If your investments are doing really well it is hard to pull out and put money elsewhere, especially into a stock that is not performing well.  That’s why it is important to stand your ground, with appropriate advice, buy when the fund, you are interested in supporting, has dropped in value.

Inflation is destroying the livelihood of many seniors, as monthly returns on investment decline the cost of living is skyrocketing.  Affordable, geared to income, housing is scarce, buildings that were intended to be for seniors have been used for other unrelated purposes.  One of the toughest things for seniors to face is debt – after decades of working and paying bills it is challenging for seniors to talk to a Licensed Insolvency Trustee about their options for dealing with the debt.

A bankruptcy will not affect a pensioner’s pension, neither will a proposal, both are great options for folks with reduced incomes and more debt than they can afford to pay off.  Get more information – call us at 519-646-2222 to find out if an insolvency proceeding is right for you or your family member.