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RRSP Spectacular!

RRSP Spectacular!

The deadline is looming and Canadians still ponder about whether they should put more money into their RRSP?

When is the Deadline? According the to TD Waterhouse web site the deadline is Midnight on March 2nd (2020) (so you get an extra banking day) for contributions to count on last year’s income tax. So you still have plenty of time to ponder this.

A useful tool for this exercise is Quicktax’s RRSP scenario tester (it’s too bad no one gave away copies of that software, too late from me, but other bloggers still are giving out copies).

If you really want to “last minute” it, you can do it on line, but I won’t be doing anything like that, since my income was lower last year, I am in a lower tax bracket (for the first time in 20 years), so I will save any RRSP room for next year’s taxes (and instead take advantage of my TFSA to put any extra money in).

Haven’t opened an RRSP yet? Maybe it’s time to think about doing that, but this might not be the best time to do it, given the crush of folks trying to make last minute payments (but then again, I went to my bank yesterday and it didn’t look too crazy (yet)). I would suggest a self-directed account is the best place to put things, but remember that those accounts typically have a hefty yearly charge if you don’t carry a minimum amount in them (I forget that sometimes, given my accounts are above those levels).

What should you invest in? That’s not my call, I can only say that if you aren’t sure if you have a self-directed RRSP you can “park” money in there (simply deposit it) and then figure out what to invest in later. Hasty decisions now could mean unwanted consequences later, so keep that in mind.

Where is my T4?

Your employer should have sent you your T-4 by now as well. They have until March 1st to get it to you, so don’t forget that you really need that to correctly fill in your tax forms. I received 1 of the 2 I should receive, however my former employer’s info is still not received. This will hopefully show up this weekend and then I can submit my returns and be done with this.

T2202A Receipts

I checked with my daughter about the receipts I should receive from her University for tuition payment and I was not happy to see that they leave this all up to the student to collect. It used to be they mailed those to your home address, however now, the burden is on my child to go to the correct web site, and print out a copy of the receipts and send them to me, so I can get my taxes done.

This does save the university a great deal of time and money not having to mail these out, but getting my daughter to collect this data for me, is going to be no easy feat for me.

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Birthday things to remember

I will neither confirm nor deny that my birthday may or may not have or will occur in the past or next few days, however, I will confirm that my age is in between 30 and 75. Having been crystal clear on this point (no, you should not be publishing on the web your birthday and year, since that is the start of someone stealing your identity or something of the like), let’s talk about the things you might do if your birthday anniversary is some time this year (which I hope it is).

Things to Do Financially on Your Birthday

Just some ideas for some of the financial things you can do on the anniversary of your birth:

  • Are you old enough to retire? Seems like a straight forward question, but when can you retire is another question to ask if the answer to the previous question is No? If you can’t even guess when you can retire, then today would be a good day to figure it out, or at least make a guess and work towards it. Aim to retire at 61, that’s an interesting prime age.
  • Can you take today off today? Some companies actually give you your birthday off as a vacation day, I think it would be good to know that one (nope, not in my case).
  • You can get free meals at some restaurants, I think Denny’s is one of those places, but call around and see where you can eat for free. Free meals is a very good way to celebrate a birthday.
  • Does my car registration need to be renewed? Ottawa has an interesting problem because if you don’t renew your registration by your birthday, and take your car to Quebec, you can get fined a LOT of money, because in Quebec they’ll fine you for that one (I think they do in Ontario too, but they don’t worry about it too much until the next month).
  • Did your car driving license expire? I was surprised that one year I realized a month after my birthday that I had been driving with an expired license, I received no reminder in the mail. Luckily I was not pulled over or that might have been expensive.
  • Has your life insurance premium just jumped? If you have crossed an age group, your term life insurance rate may be increasing, so go check that out.
  • Can you get a senior citizen’s discount now? You’d be surprised, a lot of these discounts do not start at age 65, it actually starts at 55. This year I found out you have to be only 55+ for McDonald’s Senior Coffee.

Any other ideas I may have missed that you should do on your birthday?

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Wow, I am Old

Stats Canada put out it’s yearly population estimates with the data showing sex and age correlations, and all I can say is I am starting to feel a lot older.

The Median age of a Canadian as of July 1,2009 was 39.5 years (up about 0.2 years from last year and 3.1 years from 1999). This seems to suggest that the statement that the Canadian Population is aging (as a group) is a correct statement. Why are we getting older as a population?

Fertility rates persistently below the generation replacement level, and an increasing life expectancy are the main factors explaining the ageing process of the Canadian population.

Interesting since in my household we have 4 kids, so we have effectively a doubling fertility rate. The guess is that the Median Age by the 2030s may reach 44.0 years old (by then I’ll be in my 60s), and thus we all get that much older.

Working Age Population?

Yes the working age population is getting older (the median is at least) and this comprises the group of folks between 15 and 64 years old (I’d love to retire before 64, but my guess is I’ll be retiring much later than that). The median age in this group is 40.5 years old, which explains why more and more working folks are worried about: Pensions, Medical benefits and retirement savings plans.

Working Age Median

Working Age Median

The Big Table

This table I really like because it shows what I kept hearing, that women live longer than men, and from age 50 onward there are more women of that age group than there are men.

Age group Total Male Female
Total 33,739,859 16,732,476 17,007,383
0 to 4 years 1,837,724 943,435 894,289
5 to 9 years 1,799,302 925,703 873,599
10 to 14 years 1,974,580 1,011,814 962,766
15 to 19 years 2,252,125 1,153,334 1,098,791
20 to 24 years 2,321,435 1,192,583 1,128,852
25 to 29 years 2,347,947 1,185,618 1,162,329
30 to 34 years 2,261,715 1,131,696 1,130,019
35 to 39 years 2,302,991 1,160,612 1,142,379
40 to 44 years 2,484,703 1,251,761 1,232,942
45 to 49 years 2,790,065 1,402,756 1,387,309
50 to 54 years 2,575,414 1,282,937 1,292,477
55 to 59 years 2,216,810 1,093,223 1,123,587
60 to 64 years 1,887,602 925,914 961,688
65 to 69 years 1,407,085 681,686 725,399
70 to 74 years 1,080,820 507,295 573,525
75 to 79 years 907,974 408,798 499,176
80 to 84 years 675,584 275,225 400,359
85 to 89 years 412,696 143,441 269,255
90 to 94 years 155,198 43,951 111,247
95 to 99 years 42,108 9,527 32,581
100 years and over 5,981 1,167 4,814

What is also interesting to me is that there are over 1,000,000 Canadians 80 years and older and 5,000 of them 100+ years old, wow. All I need to do now is that I have enough money to live that long, and then figure out how to live that long. My firm belief is that death is the leading cause of mortality, but I am willing to listen to counter-arguments.

Where do you fit in this table?

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CPP is OK (for now)

Given the recovery in the markets over the past little while it is not surprising to hear Pension funds claiming they are on the road to recovery, and now CPP claims their assets are up $11B in the first quarter of this year (which is good news). This kind of growth is needed given the losses most pensions took during the great Apocalypse of ’08, however is the Canada Pension Plan going to be able to withstand the onslaught of retirees which will live much longer over the next 30 years?

“We are pleased with the $11.1 billion increase in the fund and the positive 7.1 per cent return for the first quarter,” CPP president David Denison said. “At the same time, the negative returns of our past fiscal year and the positive results of this first quarter both need to be viewed within the context of our long-term strategy. We continue to focus on delivering solid returns over the span of multiple years and indeed decades.”

Since the CPP folks have started investing they have managed about a 4.9% return on their assets (over 10 years) so that is a better thing, but the nagging questions are:

  • Can the fund sustain and continue to pay out to the tidal wave of retirees coming in the next 10 years, or will the government be forced to change the system?
  • What is the percentage of Canadians who will only be using the CPP for their retirement?

As I grow older this worries me more and more.

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Pensions and Severance

This is another of the posts that I wrote during the interim between getting laid off from Nortel, and then finally settling my pension and severance. It ends up being very prophetic, as the Nortel pension did actually collapse, and sooner than I thought, but luckily, I got out of it before that happened.

So one of the major interesting issues financially that I am facing is whether to opt out of my former employers pension plan and take a lump sum payment (which will mostly be transferred to a Locked In Retirement Account (LIRA)) or leave the money in the employers pension plan, and draw from it at either age 55 (at an actuarially lowered rate) or 65.

pension and severance
Nortel Once a Giant Now Deceased High Tech Firm

As I have said previously I will be opting out, as I have very little confidence the money will be available when I get to retiring age, and now I read in the Globe and Mail the following (by Derek DeCloet):

The bad news is that at the start of this year, Nortel’s plans were already short by $1.2-billion (U.S.). The worse news is that 53 per cent of the assets were in stocks, which have been annihilated. So the pension hole has become a cavern – one that will have to be filled with cash that the distressed company would rather use for other things. Like surviving, for instance.

I read this and am not shocked, but I am worried, as I was supposed to receive information within 30 days of my severance about my pension options, however, I have not received anything in the mail as of yet, and I now wonder what new “wrinkles” may arrive in terms of this money.

My view is that this money is mine, and I have earned it over the 20+ years I worked at my former employer. Given they “capped” this pension as of January 1 2007, leaving my money there makes little or no sense to me. If anyone cares to comment or disagree, please feel free I am open to discussion on this issue.

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