Pattie Lovett-Reid: It doesn't have to be all doom and gloom for retirees
Brochures offering various retirement savings options are pictured, in Montreal, Feb. 3, 2012. (Ryan Remiorz / THE CANADIAN PRESS)
We often focus on saving for retirement, but what about Canadians who are already retired?
The youngest of the baby boomers have now entered into that phase of their life and you have to wonder how it might differ from the previous generation, a cohort with what some might call more traditional values (cost-conscious savers who avoided debt). They regarded their home as their nest egg and in many cases, had pensions they could count on.
Data that Statistics Canada released in 2016 showed the average age of retirement went from 61 in 2005 to 63 in 2015. Improved health and longevity is trending higher, but could be seen as a double-edged sword. The longer you live the higher the costs and health care expenses likely to grow.
Those in retirement will tell you they wish they had saved more. But it isn't all doom and gloom – there are options. Boomers have wanted to chart their own course throughout their life and retirement isn't likely to be different.
Some may opt to stay in their home with help, others will explore retirement residences with graduating living assistance. Understanding your costs on a line-by-line basis from health care, to dining out, to Uber is imperative. Everyone has a different definition of "assisted living" for seniors in Canada, and it often comes down to the amount of assistance required and the expectation of what can reasonably be provided. The boomer generation is lucky enough to have resources, education and options such as selling their home to fund their future or borrowing against their home should they choose. As the baby boomers age, they will likely have a big impact on the financial services arena as senior care continues to evolve.
The sheer fact that so many are entering their "golden years" suggests that retirement living in Canada is an evolving landscape with many facilities encouraging an active lifestyle, provisions for longer term care and on-site medical facilities.
However, "an aging population combined with longer life spans and strained social services has in recent years seen more and more Canadians taking on the role of caregiver for their aging parents," CIBC Deputy Chief Economist Benjamin Tal said in a report earlier this year. "And, in the coming years that tendency is only likely to intensify." According to a 2012 Statistics Canada study, there are eight million Canadians providing care to loved ones.
As the population ages, senior costs are going to continue to escalate. Sitting down with a tax expert is a must to ensure all your income streams, tax benefits, and funding options are explored and fully utilized.
People over the age of 65 spend over five times more on health care than people of working age, according to Dean Orrico, president and chief investment officer at Middlefield Capital.
The good news, there are some tax breaks that can often go overlooked or not be fully utilized. Here's a look at some of them:
The Home Accessibility Tax Credit: If you renovate a home for someone over the age of 65 for the purposes of accessibility, you may be able to claim a non-refundable tax credit. To qualify, it must reduce the risk of injury to a senior. The renovations can include a walk-in tub, light sensors, railings etc. You can claim up to $10,000.
The Medical Expense Tax Credit: CRA offers tax credits to anyone whose medical expenses exceed three per cent of their total income. Medical expenses can mount quickly and you might be surprised what is covered – supplements, computer enhancements that aid the vision impaired, crutches, service animals, even gluten-free products for those with a gluten sensitivity or celiac disease. The refundable credit is 25 per cent of medical expenses. Income stipulations may apply so it is best to check with your tax adviser.
Compassionate Care: Caregivers can lose countless hours of work to care for a family member. If you have 600 hours of EI insurable hours of work in the last 52 weeks you may qualify for the maximum payment of $537 per week from Canada’s employment Insurance benefits program.