By Dian Cohen

Local Journalism Initiative

I’ve been passionate about estate planning and financial wellness for over fifty years, and I want to share some thoughts that might be helpful for those who are retired or getting ready to retire.

It’s tax time. Whether you do your tax return or have someone do it for you, it’s important to know how your retirement income is taxed and what tax perks are available to seniors. Not knowing this can make it tough to figure out how much money you have for living expenses.

Table 1 shows the major ‘pots’ from which retirement income comes and how they are taxed:

Table 2 shows the major federal tax perks — make sure to check if there are any provincial-level tax credits or tax deductions for seniors. For example, for Quebecers aged 70 and over, there’s a Senior Assistance Tax Credit which offers up to a maximum of $4,000 for eligible couples and $2,000 for individuals.

Just because you need to withdraw money from a tax shelter does not mean you have to spend it. If you don’t need the funds for your living expenses, consider investing them in a taxable, non-registered account. If you’re one of the lucky ones who can do this, this is good. Consider this: if you retire at 65 and live until 95, you’ll need 30 years of annual income, which could nearly match the income you earned during your working career. People are living longer, and the odds are good that at least one spouse, if not both, will live into his or her 90s.

It’s a good time to think about protecting yourself against “longevity risk” – the risk of outliving your money. Aside from investing in the stock market, an advanced life deferred annuity (ALDA) can help address this problem. This annuity can be purchased from a life insurance company and the income payments can be deferred to any age up to 85. Because the guaranteed payments are deferred, this type of annuity is cheaper than other annuities.

Another area of concern has been brought to my attention. It has to do with the internet. Older people can be more susceptible to scams. Maybe it’s because we grew up before the internet and tend to be more trusting, or perhaps we aren’t as aware of the latest digital scams. Whatever the reason, it’s important to know what to watch out for.

If you get a phone call, email, or text from someone claiming to be with the income tax department—whether it’s the CRA or Revenu Quebec—just hang up or delete the message without clicking anything. Legitimate agencies know how to reach out to you properly – and this is not it!

Never, ever, click on or open an email from someone you don’t know, and never, ever, download anything from a website you’ve been directed to. Never click on a pop-up window or open an attachment sent by someone you don’t know. One wrong click could expose all your computer files to a scammer.

Just recently, a news story highlighted a man who Googled “best GIC rates” and then received an email from what appeared to be a legitimate financial institution offering him a 6 percent return. Despite never having worked with them before and knowing that the typical rate was 3 to 3.5 percent, he transferred $750,000 from his trusted bank to what turned out to be a scam. Tragically, he lost all that money. If you are doing financial stuff online, consider doing it with a friend or family member. It’s always better to be safe than sorry.

Cohendian560@gmail.com