How to maximize your retirement income

July 28, 2015

If you're retiring shortly, are already in retirement or simply don't have the spare cash to build worthwhile savings, you'll need to find innovative ways of getting by

How to maximize your retirement income

Don't let part-time earnings force an OAS clawback

Your Old Age Security benefits will be subject to a clawback that reduces your OAS benefit by $1.50 for every $10 you earn over a certain threshold.

Delay claiming to boost your pension

  • You can still carry on working after reaching Canada Pension Plan (CPP) age and either claim your pension or delay claiming in return for receiving a higher pension when it is finally paid.
  • You can begin collecting as early as 60 if you meet CPP's earning requirements.
  • You must have either stopped working for a month before your pension begins, or have earned less than the current monthly maximum CPP retirement pension payment in the month before your pension begins.

Delay claiming for a higher monthly payout

  • The CPP adjusts the amount of your pension by 0.5 per cent for each month before or after your 65th birthday.
  • If you begin collecting your pension at age 60, then you'll get 30 per cent less per month than if you had waited until 65, mainly because you will be getting payments for a longer time period.
  • You can delay receiving your pension until as late as age 70, however, and receive an extra 30 per cent a month in payments; however, there's no financial incentive to delay receiving your pension past the age of 70.

Facts to consider if retiring abroad

A good number of Canadians long to escape the icy blast of winter for a warmer climate. But the decision to retire abroad can have a financial impact beyond how much it costs to live there.

Can you keep your pension?

Both CPP and OAS payments continue no matter where you retire, although in the case of OAS, you must have been resident in Canada for at least 20 years.

Will your provincial health care plan cover you?

  • The Canada Health Act requires provincial and territorial health insurance plans to provide "portability of coverage" for insured medically necessary hospital and physician services when you're out of your home province.
  • What that means is that the plan should be paying the same dollar amount for hospital care as it would in Canada.
  • Unfortunately, many provincial health insurance plans don't abide by the requirement. Find out what typical medical costs might be in the country you're visiting and how much your provincial health plan will pay. Then make an educated decision about whether you need additional coverage.

    Don't lose your coverage altogether

  • If you're out of the country more than 212 days in a 12-month period, you may be at risk of losing provincial health coverage overseas. Contact your provincial health ministry for advice.

    Are you covered by your former employer?

    Not everyone needs to purchase travel insurance. Some employer medical plans include coverage out of country, which applies even after you have retired.

    Don't forget to claim

    Some, if not all, provincial health ministries have established a 12-month time limit for people who are submitting claims.

    Get tax advice

  • You can't terminate your Canadian citizenship or residence for tax purposes simply by living in another country.
  • You have to demonstrate that you intend to leave the country permanently. In general, you must have been living out of the country for at least two years and have given up your home, your bank accounts and driver's licence, among other things.
  • What's more, just because you're a non-resident doesn't mean you're no longer subject to taxation. Before you decide whether to become a non-resident, talk to a knowledgeable accountant.
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