What Happens to My Retirement Plans if My Spouse Dies? + MORE Nov 20th

When it comes to retirement planning, the 4% rule has stood as a tried-and true method of drawing retirement income from an investment portfolio without depleting the principal of the portfolio prematurely.

Filed under: Retirement and RRSPsBy Kimberly Carter
via DailyFinance

For many women, retirement isn’t the relaxing haven it’s cracked up to be. Because women earn less over their lifetime than men, they tend to have less saved. Women also live longer than men, which means their savings needs to stretch longer. According to a 2011 Stats Canada report, 17 percent of women age 65 and older are living in poverty, compared with only 8.7 percent of men.

Even women with incomes over the poverty level often face financial stress. Nursing homes, which women have a greater chance of entering because they generally live longer, cost an average of $71,000 a year, and assisted-living facilities can cost $32,000 annually.

What can women do to protect their finances? A lot, it turns out. Here are six strategies:Continue reading 6 Tips for Women Who Want to Retire6 Tips for Women Who Want to Retire originally appeared on Walletpop Canada on Wed, 20 Nov 2013 11:08:00 EST. Please see our terms for use of feeds…

Q: Do payments from an annuity (bought with after-tax money) trigger a clawback of the Guaranteed Income Supplement?
—J.T.
A: Money all looks the same when it arrives in your bank account. But when it comes to annuities, it’s not all the same in the eyes of the CRA. Part of the money is simply a return of your capital, explains Beth Hamilton-Keen, Director of Private Client Portfolio Management at Mawer Investment Management. “The annuity provider is giving you some of your money back. That portion was taxed when you earned it, and therefore it isn’t taxed again. But the other part is income you have earned on the investments and that part is taxable.” Had you bought the annuity in your RRSP, the entire payment would be taxable because it wasn’t taxed in the first place.
If the annuity income is high enough, it can indeed trigger a clawback of the Guaranteed Income Supplement, which is reserved for seniors with very low income. The annuity provider will give you a slip to include with your taxes so both you and the government can see the amount of each part…

Separate polls out Tuesday suggest Canadians have resigned themselves to the fact that they’ll owe money for the long haul. Only half of homeowners surveyed for Manulife Bank of Canada said they are confident they’ll be debt-free at retirement even though 83% agree it’s important. Meanwhile the Canadian Association of Accredited Mortgage Professionals (CAAMP) fall report found 68% of mortgage holders feel their mortgage is “good debt.”
Still, Canadians are taking steps to pay off all kinds of debt. Actual mortgage repayment periods have been 30% shorter than original contracted periods in the last two decades, CAAMP said. And this year, 38% of mortgage-holders took steps to accelerate their repayments and shorten their amortizations.
And though the Manulife study found that only 43% are happy with how they’ve managed their day-to-day finances over the past year (one-in-three are “very unhappy”), it’s not all bad. Two-thirds say they always pay their credit cards in full every month with the rest planning to start in January or at least make larger payments/track spending…

When you’re planning for your retirement years, one of the areas that people often overlook is how this picture might change if either you or your spouse should die. This is an especially important consideration if you’re a women, as women still live longer than men.
Rather than enter retirement planning with blinders on, it’s important to face some facts. You have to plan for the possibility that your spouse will not be there for your entire retirement.
Here’s how to make a realistic plan for your future:
Step 1: Determine your “basic” retirement costs.
What are the basic costs you estimate to have in retirement? For example, assume you are in retirement today. What are your fixed monthly/yearly costs (i.e., your mortgage, utilities, food, taxes, insurance, hygiene/personal care)? Which of these costs do you expect to continue to have in retirement? Let’s assume, for example, your basic costs today are around $4,500 a month. At retirement you expect these costs to drop to around $2,300 (today’s value), assuming your mortgage is paid off, you have only one car and the kids have finally moved out…