Posts Tagged “Retirement”

Moving Abroad an Option for Retiring Canadians

015th Jan 2013Business News, Canadians, Income, Real Estate, Retirement, Savings, Self Employed, Taxation, Taxes, Work from home, , , , , , , , , , ,

Dwindling pension benefits are forcing many Canadians to rethink how they’ll spend their golden years, but that doesn’t necessarily mean giving up their dreams of a sun-soaked retirement.

Some experts say that with proper planning, uprooting to an exotic locale can actually help cash-strapped seniors stretch their retirement dollars.

Aside from milder temperatures, they say many of the destinations favoured by Canadians — including parts of Mexico, Panama and Costa Rica — offer another advantage prized by those on a fixed income: a lower cost of living.

“It’s sometimes assumed that an international retirement vision or lifestyle is something that wealthy people pursue,” said Rod Burylo, a Calgary-based financial advisor specializing in international retirement.

“The reality is… some people retire to Mexico because it’s so darn cheap,” he said.

“One could reason, therefore, that if the economy suffered and their finances suffered, they may be more inclined to retire to Mexico because… they could have a better quality of life than they could have here.”

Many Canadians are having to make tough financial choices — including prolonging their careers or downsizing their homes — in preparing for retirement as debt-ridden governments and companies scale back benefits.

While financial considerations alone are rarely enough to prompt a drastic change of scenery, they often play an important role in the decision-making process, according to a recent survey by the BMO Retirement Institute.

The survey by one of Canada’s largest banks found more than 70 per cent of Canadians aged 45 or older have given thought to where they want to live out their golden years.

But it also found that while many fantasize about retreating to faraway lands, just over 10 per cent of respondents said they were willing to follow through and leave Canadian soil.

“I think you get people moving abroad for two reasons,” said Brian Burlacoff, a financial advisor with Sun Life Financial.

“You get a proportion of people who do want to spend time very purposely outside of Canada — snowbirds, for example, in Florida or Arizona — (and) they have a plan for that,” he said.

“But the other group that you get moving away are people that have no plan and they’re kind of drawing at straws because they have to find a place that’s less expensive to live in order to carry out their retirement objectives.”

That kind of “reactive” move, he said, is similar to trading a downtown Toronto lifestyle for a more affordable one in a neighbouring suburb.

But unlike a simple hop across municipal borders, crossing national boundaries can have serious tax and health care implications, he warned.

And even regions where the average day-to-day costs are low can drain the savings of those without a clear budget plan, he said.

A guidebook published by the Department of Foreign Affairs lays out the potential pitfalls for those looking to retire abroad, from the loss of Canadian citizenship or residency — and the resulting loss of health coverage — to the intricacies of foreign tax systems.

“Many developing countries lack the resources to collect taxes on foreign-source income, so they compensate by imposing high consumption taxes or import duties,” the document reads.

“Make sure you take into account all taxes, duties and fees, as well as the withholding taxes you will pay on income originating in Canada.”

Burlacoff and Burylo both recommend consulting an advisor who understands the specific challenges involved, and keeping in touch throughout the preparations and after the move.

At 61, Kerry Strayton believes he’s still up to a decade away from retirement, but that hasn’t stopped the Richmond, B.C., resident from getting a head start on his plans to retire abroad.

He’s already “actively researching” possible destinations for him and his wife, such as Colombia, Uruguay and Thailand — places with a pleasant climate and a thriving cultural scene, that he says are accessible enough that their son and daughter will be able to visit.

Moving seems like a necessity for the couple, whom Strayton says will have to live off their savings and his wife’s “small, very modest” pension given that his employer doesn’t offer a pension plan of its own.

He estimates it would cost roughly $1,500 a month in one of his chosen destinations to keep the same standard of living that would cost $2,500 in Richmond.

“To be honest, living in this part of the country in particular, which is very, very expensive, it’s hard to see how we would manage to have at least some kind of reasonable lifestyle,” he said.

Many unknowns remain: for one thing, the couple hasn’t decided whether to make a permanent move or take the more popular snowbird route.

But with several more years of squirrelling away savings ahead, the pair has some time to figure it out.

And in the meantime, Strayton said, they’ll be checking out the top contenders to see which one could eventually become their new home.

ORIGINAL SOURCE: Retirement Canada: Moving Abroad Still Possible For Canadians With Cash Woes

 

Canadians fear retirement savings will run out

014th Jan 2013Business News, Canadians, Home Based Business, Income, Retirement, Savings, Self Employed, Work from home, , , , , ,

Nearly one-third of Canadian retirees are worried that they’ll run out of money over the long term, even though they are generally satisfied with the current quality of retirement, says a new poll by CIBC.

The survey, conducted by Leger Marketing and released on Monday, found that 69 per cent of retired Canadians say the quality of their retirement is what they had hoped for. However, 28 per cent said they are afraid of running out of money over the longer term.

British Columbia retirees were among the most afraid (45 per cent) of running out of money to sustain certain lifestyles, while Atlantic Canadians were among the least likely (21 per cent) to be worried about running out of money.

“While it is positive to see that a majority of retired Canadians are living the retirement they hoped for, our poll findings also show there is concern around whether their retirement savings will sustain them in the years to come,” says Christina Kramer, executive vice president, retail distribution and channel strategy at CIBC.

Kramer added there are some unique factors facing retirees including low interest rates on savings and the need to make their retirement funds last longer than previous generations, which makes long-range planning even more important.

The results also showed that more than half of retired Canadians indicate that a short-term financial shock could cause cash flow problems, with 54 per cent saying they would not be able to handle an unexpected extra payment of $500 a month given their current budget. Of that figure, 34 per cent said it would be very unmanageable and 19 per cent said it would be somewhat unmanageable.

The poll was conducted online and used a sample of 867 pre-retirees and retirees between over a period of four days in late September, according to a CIBC release.

ORIGINAL SOURCE: Canadians fear retirement savings will run out

Retirement Income

An unfortunate reality in today’s world is that many people either in retirement or near retirement are struggling to make up the shortfalls that recent economic challenges and financial crises have created. So searching for a way to supplement your retirement income is completely understandable.

Further, the traditional pensions we all heard our parents or grandparents talk about or enjoy are also pretty much a thing of the past, so what is a person to do.

Some are forced into working part time at menial jobs such as greeters in Wal-Mart or McDonalds, while others pick up part time jobs delivering newspapers or tele-sales in an effort to supplement their retirement income, but for many health issues make it very difficult to take on part time jobs.

 

Only 6 Countries Have Sound Pension Systems, Luckily Canada IS On The List

012th Dec 2011Canadians, Freedom, Retirement, Savings, , , , , , , ,

Only 6 Countries Have Sound Pension Systems, And America Isn’t On The List

Andrew Shen and Gus Lubin

Only six national pension systems earned a ‘B’ grade on Mercer’s 2011 global index, which was given to systems with “sound structure” and “room for improvement.”

The best systems are in the Netherlands, Switzerland, Sweden, Australia, Canada and the UK.

Every other pension system was rated as unsound, jeopardizing the future of the elderly population. The U.S. earned a C grade, signifying “some major risks and/or shortcomings.”

Canada — rated “B”

Adequacy: 74.1/100

Sustainability: 55.8/100

Integrity: 79.7/100

“B” refers to: A system that has a sound structure, with many good features, but has some areas for improvement that differentiate it from an A-grade system. Adequacy is an index based on funding. Sustainability is based on demographic trends. Integrity refers to private-sector plans.

 

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