Retirement issues

older woman sitting next to flowers

Splitting CPP Retirement Pension With Your Spouse

You might be able to save tax by splitting your CPP retirement pension with your spouse or partner. For instance, if you are in a higher tax bracket than your spouse because of other pensions or investment income, it may be beneficial.

 There are some requirements, like always. These include:

  • you must both be at least 60 years old

  • one (or both of you) must be receiving CPP retirement pension

  • you were living together during the time one or both of you were contributing to CPP (during your joint contributory period)

You can apply to receive equal shares of the CPP retirement pensions that you both earned during the years you were living together.

 When the pension sharing ends (upon death, or other circumstances), the pension amount of each spouse is adjusted to the amount that they were to receive before the pension-sharing arrangement.


Old Age Security Can Be Deferred

Since July 1, 2013, the Government allows for voluntarily postponing the OAS pension, for up to 5 years, from 65 to 70 years of age. Then you receive a higher pension later on.

The OAS pension will be increased by 0.6% for each month that it is deferred past the usual starting age of 65. This is 7.2% for each full year that it is deferred. If it is deferred for the maximum length of time (to age 70) it will be increased by 36%.

This may be a good thing to do if your income will still be in the OAS clawback range past age 65.

If you are already receiving your OAS pension and decide that you want to postpone it, you can request this - if you've been receiving it for less than six months.

As usual, if you think any of the above might apply to you, talk to your friendly neighborhood superhero, uh, I mean accountant.


Investments and the Rule of 72

This article is for us math nerds (and for those concerned about fixed income investing, like in GICs). Want to know how long it will take for your investments to double? The Rule of 72 provides a simple way to estimate how long it will take.

  1. Just take 72.

  2. Then divide by the compound annual rate of return on your investments.

The result is the number of years it will take to double your investment.

For example, if the investment rate is 12%, divide 72 by 12. The investment will double in approximately 6 years. At 9% rate of return, it would take 8 years to double.

At 0.1%, the approximate rate paid by most high-interest savings accounts in 2021, it would take 720 years for your investment to double! However, inflation is much higher than that (somewhere between 1.3% and 2.7% for 2021 according to StatCan), so you would actually be losing money.

So those 'safe' investments like GICs aren't as safe as they used to be when interest rates were higher than the inflation rate.