All posts by Jonathan Chevreau

Retired Money: How tax filing changes in Semi-Retirement

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Here is my latest MoneySense Retired Money column: Tax filing advice for retirees.

It relates my personal experience of filing this year’s tax returns for the 2016 calendar year.

There is quite a difference between the key tax documents when you’re a full-time employee and the ones you receive when you’re fully retired. And in semi-retirement, it’s an interesting combination of both. Instead of T-4 slips from full-time employers, and RRSP receipts that help you minimize the high tax rates of employment, the semi-retiree now may be receiving T4A slips that tell you (and the Government) how much pension income you received in the prior calendar year and how much (if any) tax was withheld at source.

And the mirror image of the RRSP receipt in retirement or semi-retirement is the T4RSP slip, which tells you how much money you withdrew from your RRSP and how much (if any) tax was withheld at source.

The article also links to an earlier Retired Money column on “Topping up to Bracket,” which describes how you really want if at all possible to tap into the roughly $20,000 “Tax-free” zone made up of the Basic Personal Amount ($11,474 in 2016, which rises to $11,635 in 2017), another $2,000 for the Pension Credit and for those who are 65, the $7,125 Age Credit.

Age Credit escapes the axe … for now

As I noted in my Budget blog last night and this morning, despite fears that the Age Credit might be the victim of the Liberal zeal to jettison costly tax credits, evidently the fear of offending the 5.2 million seniors affected stayed the hand of Finance Minister Bill Morneau. While it is income-tested, for modest-income seniors I view the Age Credit as essentially making Old Age Security (OAS) benefits tax-free, assuming they are commenced also at the magical age 65. Continue Reading…

Budget 2017: No capital gains tax hike for investors, Age Credit for seniors remains intact

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Seniors and affluent investors who were bracing for a hike in capital gains taxes or other attacks on investment income can breathe easy, at least for a few months as Ottawa monitors developments south of the border.  And homeowners will be relieved to know that there was no move to end the capital gains exemption for principal residences.

Bye bye CSBs, hello electronic T-4s

Budget 2017 hikes a few sin taxes, imposes a sales tax on Uber and did eliminate some tax credits. Oh, and they killed Canada Savings Bonds!  For full report, read this Globe & Mail summary. Or these 10 things you need to know. And Rob Carrick reviews ten ways the budget may affect our personal finances. (You may not be able to access the link if you’re not a G&M subscriber.) Among the points: the first-time donor’s super credit expires as planned in 2017, and Ottawa will review the use of private corporations by high earners to minimize taxes.Oh, and a 3-year pilot program that starts in 2018-2019 will make it easier for adults to qualify for Canada Student Loans and grants.

Continue Reading…

Latest crop of fixed-income ETFs keeps pressure up on fees

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My latest MoneySense blog on ETFs looks in more depth at the four new fixed-income ETFs Vanguard Canada debuted in February, and how they sit versus existing funds in the category. Click on the highlighted text to retrieve the full article: Latest crop of Vanguard ETFs keeps up pressure on fees. 

The Hub noted the arrival of these new fixed-income ETFs when they were announced — here — but since then the 2017 edition of the MoneySense ETF All-stars has come out. For this article, we were interested in what some of the six panelists responsible for selecting the All-Star ETFs had to say about the new Vanguard funds.

The chart below, prepared by Forstrong Global Asset Management Inc. from industry sources, shows the four fixed-income categories the new products cover: Canadian Broad Government bonds; Canadian Broad Corporate; Canadian Short Government; and Canadian Long Aggregate.  As the chart shows, before these new arrivals, there was one iShares fixed-income ETF in three of those categories, except for the well-served Canadian Short Government bond segment, which had one iShares offering, two BMO products and one from First Asset. Actual product names and tickers are shown below, along with data on Duration, MERs, credit quality and the mix of government and corporate issues:

Canadian Broad Government
Ticker Name MER1 Duration1 AAA2 AA2 A2 BBB2 Federal/ Agencies2 Provincial/Municipal2 Corporate2
VGV Vanguard Canadian Government Bond Index ETF 0.25%3 8.0 54% 42% G4% 0% 51% 49% 0%
XGB iShares Canadian Government Bond Index ETF 0.39% 7.9 55% 28% 16% 0% 51% 49% 0%
Canadian Broad Corporate
Ticker Name MER1 Duration1 AAA2 AA2 A2 BBB2 Federal/ Agencies2 Provincial/Municipal2 Corporate2
VCB Vanguard Canadian Corporate Bond Index ETF 0.23%3 5.5 7% 30% 24% 40% 0% 0% 100%
XCB iShares Canadian Corporate Bond Index ETF 0.44% 6.1 4% 25% 34% 38% 0% 0% 100%
Canadian Short Government
Ticker Name MER1 Duration1 AAA2 AA2 A2 BBB2 Federal/ Agencies2 Provincial/Municipal2 Corporate2
VSG Vanguard Canadian Short-Term Government Bond Index ETF 0.18%3 2.7 77% 18% 4% 0% 74% 26% 0%
FGB First Asset Short Term Government Bond Index Class ETF 0.25%3 2.9 72% 17% 12% 0% 71% 29% 0%
ZFS/L4 BMO Short Federal Bond Index ETF 0.23% 2.6 100% 0% 0% 0% 100% 0% 0%
ZPS/L4 BMO Short Provincial Bond Index ETF 0.28% 3.0 9% 55% 36% 0% 0% 100% 0%
CLF iShares 1-5 Year Laddered Government Bond Index ETF 0.17% 2.5 61% 21% 18% 0% 49% 51% 0%
Canadian Long Aggregate
Ticker Name MER1 Duration1 AAA2 AA2 A2 BBB2 Federal/ Agencies2 Provincial/Municipal2 Corporate2
VLB Vanguard Canadian Long-Term Bond Index ETF 0.17% 14.8 32% 54% 8% 6% 26% 64% 10%
XLB iShares Core Canadian Long Term Bond Index ETF 0.18% 14.4 29% 30% 33% 9% 24% 54% 22%
1. MER and duration data as of February 28, 2017
2. Credit quality and issuer breakdowns are approximate and based on the most recent publicly available data from the ETF issuers
3. Represents management fee only, as an audited MER is not yet available.
4. ETF offered in both distributing units and accumulating units (L)
Sources: BMO Capital Markets, National Bank Financial, ETF Issuer Websites

The “Work Optional” stage: Work because you WANT to, not because you HAVE to

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Nice to see the phrase “Work because you want to, not because you have to”  used by NestWealth.com in its just-posted Retirement blog that looks at Victory Lap Retirement.

VLR, as co-author Mike Drak and I call it, has in some recent weeks cracked the Globe & Mail non-fiction bestseller list.

The line “Work because you want to, not because you have to,” was originally coined by me in the prequel to VLR: Findependence Day.

Aman Raina

Meanwhile you can view a “video book report” on Victory Lap Retirement in this clip by Sage Investor’s Aman Raina, who regular Hub readers may recognize as a guest blogger who provides considerable insights into the robo-adviser space. You can also find the video book report here via iTunes.  Aman’s most recent Hub blog was this one reviewing Year 2 of his personal Robo-adviser experience and test.

Continue Reading…

Review & Excerpt of Clay Gillespie’s Create the Retirement You Really Want

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The Financial Post has just published my review of a new book by Vancouver-based financial advisor Clay Gillespie: Create the Retirement You Really Want: And Retire Smarter, Richer and Happier.

You can find the online review by clicking on this highlighted headline: From Dreams to Legacy: New Book Details the 5 Stages of Retirement.

And below is an excerpt from the chapter highlighted in the review. We may also run at least one other excerpt in the coming weeks. Over to you, Clay!

By Clay Gillespie

Special the Financial Independence Hub

Retirement isn’t an event; it’s a process, and it begins years before you actually retire. Working with hundreds of clients over many decades, I’ve come to realize that retirement success is best achieved in five distinct stages. Each stage reflects a different aspect of who you are and where you want to be in retirement, and it all begins with a dream.

       1.) Dreams stage

The Dreams stage of retirement typically begins about five or six years prior to actual retirement. This is the time when people have decided to retire but aren’t yet sure of the date. It’s the time where retirement goals and hopes for the future become defined and a preliminary retirement plan is developed. For couples, especially, retiring now becomes an ongoing topic of discussion, not just something brought up in passing.

2.) Reality stage

The Reality stage usually occurs between 6 and 24 months before retirement and its temporal proximity really starts to hit home. Lifestyle issues come into greater focus, along with fears that one’s retirement nest egg may be inadequate. This is a crucial time from a planning perspective. Old Age Security (OAS) and Canada Pension Plan/Quebec Pension Plan (CPP/QPP) applications need to be made, income streams need to be consolidated, taxes need to be minimized and portfolios need to be optimized for income and growth.

3. Transition stage Continue Reading…