Retirement Planning

Many of those people may now be wondering, do I have to pay back CERB? While the benefit helped countless furloughed workers to keep paying the bills, a lot of people may not have been aware that, as far as the CRA is concerned, CERB in Canada is taxable. However, tax is not taken off at source (before you receive it), as it is with most pay cheques, so, you may owe tax when you file in 2021.

What is a GIC in Canada good for? In return for lending your money, you receive a (usually) guaranteed rate of interest. However, you have to leave your money in the account for a specific period of time (the term). For a GIC in Canada, this is typically between a year and five years, but you can take out a GIC for shorter or longer periods (as little as 30 days and as long as 10 years). In general, the longer the term, the higher the interest rate.

For older retirees, it can be difficult to keep up with these changes. Financial literacy can help manage the changing world of personal finance, so they are better prepared to stay out of debt and avoid having financial issues in retirement.

The impact of COVID-19 on some Canadians’ finances has been devastating. The pandemic crisis has affected approximately 60% of Canadians financially, with over a million jobs lost in March of 2020 alone. Of those affected who continued to work, almost a third saw their hours cut.

Preparing for retirement is no easy task. While most of us look forward to the freedom it brings, a surprising number of us aren’t prepared financially. A national survey of Canadian pre-retirees found that 56% don’t have a plan for retirement savings. Even among those that do have a plan, almost a third feel that they’re falling behind.

Rapid shutdowns, volatile stock markets, slow economic recoveries and bleeding financial portfolios have wiped out a significant portion of the retirement income that many Canadians were banking on. Those who were on the verge of retirement and counting on income from investments to cover their living costs are seriously considering delaying their retirement. Those who were forced into an early retirement due to COVID-19 may be covered under CERB and Canada Recovery Benefit, but these benefits are applicable for a limited duration and are hugely insufficient to fund most retirement plans.

Preparing for retirement is no easy task. While most of us look forward to the freedom it brings, a surprising number of us aren’t prepared financially. A national survey of Canadian pre-retirees found that 56% don’t have a plan for retirement savings. Even among those that do have a plan, almost a third feel that they’re falling behind.

Medical insurance options for early retirees are probably more attractive, given that they usually don’t qualify for any financial assistance before 65. Is it worth having private health insurance if you’re under 65 and spending thousands on prescription drugs? Probably, but again, it is important to do the math before signing up for any plan.

However, the downside of retirement freedom is having to rely on a fixed income. If that income is inadequate, the retirement dream can soon turn into a nightmare. A national survey of Canadians aged 60-plus found that almost half of them have at least one financial concern.