This 30-year-old freelancer makes $125,000 a year and pays modest rent living with his parents. Should he invest in retirement or buy a home? + MORE Feb 3rd
Suze Orman on why you should work until you’re 70, be careful giving money to your kids and sell your home sooner rather than later Mar 9th
How the coronavirus pandemic could change the way we think about retirement in Canada + MORE May 4th
We owe $525,000 on our mortgage and our home is valued at $1.2 million. We currently pay a mortgage of $1,845 biweekly at an interest rate of 2.99% (30-year amortization). We hope to pay off the home within 10 years, with extra payments of $20,000 per year. We plan to live in this home and potentially sell it if we cannot live there anymore due to health issues.
Right now, we have $560,000 in Registered Retirement Savings Plans (RRSPs), $20,000 in a Locked-In Retirement Account (LIRA), $22,000 in Tax-Free Savings Accounts (TFSAs), and $10,000 in non-registered shares. We contribute $50,000 per year to our investments. We also each have a defined benefit pension plan, but will lose quite a bit if we retire at 55, which we are aiming to do. At 55, we will receive $20,000 per year each. The pension is not indexed to inflation and there is no bridge benefit. We have both worked full time in Canada since we were 22 years old and are eligible for Canada Pension Plan (CPP) and Old Age Security (OAS) benefits…
While war is, of course, terrible and destabilizing, it turns out that conflict can bolster portfolios. In 2013, the CFA Institute ran some numbers and found that during periods of conflict, equities rise and, in many cases, have even beaten the market’s long-term average annual return. During World War II, the Korean War and the Gulf War, U.S. large-cap stocks rose by 16.9%, 18.7% and 11.7%, respectively, outperforming the average large-cap annual return (between 1926 and 2013) of 10%. Large-caps didn’t perform as well during the Vietnam War, but they were still up, returning 6…
When I do my Canadian taxes using tax preparation software, the reported net foreign rental income doesn’t flow to the net rental income line of the return, but instead flows to other income and is therefore not taken into account to calculate RRSP room. Am I doing something wrong or does foreign rental income not eligible?
A. Canadian residents are taxed on their worldwide income. Foreign rental income is therefore taxable in Canada—as you know, Jerry—but not everyone knows or reports this income. The income may also be taxable in the country in which it is earned, and may require filing of a foreign tax return as well. Foreign taxes paid are generally eligible to claim for a foreign tax credit in Canada, often reducing Canadian tax payable dollar for dollar to avoid double taxation of the income…
Preparing for retirement can be intimidating. You’re facing great uncertainties about how your financial future will unfold, with a lot at stake. Fortunately, a comfortable and sustainable retirement should be within your reach if you prepare for it properly.
You’ll find that a little planning can go a long way to getting you where you need to go, although that doesn’t mean it’s necessarily easy. You will need to gradually define retirement planning objectives for the kind of retirement you want and then find a way to get there. There’s no one right retirement for everybody, so you need to create your retirement plan to fit your individual situation.
Before we get into details, we should draw a distinction between what are typically the core activities of retirement planning and preparing financially for retirement in the broader sense. Retirement planning typically focuses on setting retirement objectives and then outlines a path for achieving them, whether it’s in a formal written financial plan or is more informal…