Without savings, how can I retire?
Tax Credits and Benefits for seniors with Low Income
Canada grants multiple tax credits and benefits for low-income elders.
Here’s a list to help you understand your options and what you can apply for:
Regional Land Tax Deferral Program for low-income seniors
• The Ontario Drug Benefit (ODB) program
• The Ontario Guaranteed Annual Income System (GAINS) for seniors
• The Guaranteed Income Supplement
• The Trillium Drug Program (for costly prescription drugs)
• The Ontario Seniors’ Public Transit Tax Credit
1. Canada Pension Plan (CPP) and Quebec Pension Plan (QPP)
The CPP and QPP are retirement plans paying monthly payments, given you contributed to it during your working years. The Canada Pension Plan Investment Board (CPPIB) runs CPP contributions. The CPPIB invests your contributions to guarantee there are enough funds in the plan to afford monthly payments to current and future retirees. The monthly expected payments to receive from CPP depend on how long and how much you have contributed to it. The amount also depends on the time you decide to start collecting your CPP or QPP. You can choose to start as early as 60 years old, or you can delay until you turn 70. The later you start collecting your CPP or QPP, the more abundant your monthly payments will be.
2. Old Age Security
The OAS pension is a monthly benefit intended for Canadians who are 65 or older. It’s a government-sponsored retirement plan, and you can collect the monthly payments even if you’re still working or have never worked. You don’t have to contribute to the OAS pension to benefit from it. You can decide to start collecting OAS payments at 65 years old or delay it until you turn 70.
3. The OAS pension increases for each month you delay collecting it.
To qualify for OAS, you need to be a legal resident or citizen in Canada for at least ten years. The sum you receive through the OAS pension depends on how long you’ve lived in Canada. You can expect to get the maximum OAS monthly payments if you have lived in Canada for more than 40 years.
4. Guaranteed Income Supplement
The Guaranteed Income Supplement (GIS) gives a monthly non-taxable benefit for OAS receivers with low income, but you need to file your income tax return each year to be qualified and to be 65 or older.
5. Employee Pension Plans
Employee pension plans come in many different types. Some are self-directed, while others are employer-sponsored. There are also retirement plans mixing self-directed and employer-sponsored pensions. Despite what option is available to you, it’s a smart idea to benefit from any opportunity your employer is offering to save for your retirement. Some plans require employers to contribute to a vested retirement plan exclusively.
Therefore if you work for the same employer until you retire, it pays out in full, given you have completed the years of service specified with the employer. Other retirement plans permit you to set aside a certain amount from each paycheck to add to your retirement pension. Your employer may or may not offer a percentage based on your contributions. Some employers do not participate in such a plan but let you create forced savings by setting aside money into a Registered Retirement Savings Plan before calculating your paycheck.
Self-Directed Pensions and Savings Plans
The case is about how to retire in Canada with no money and assuming you didn’t contribute to self-directed pensions and savings. However, it is worth briefly explaining the different options available to you.
• Registered Retirement Savings Plan
This is a savings account created to help Canadians save money for retirement. Contributions you make to your RRSP are Tax deferral and come in several kinds of investments. Your profit from any of your RRSP investments will increase without incurring taxes; given you remain invested in your assets. This enables your portfolio to grow considerably by the time you retire.
• Registered Retirement Income Fund
A Registered Retirement Income Fund (RRIF) is a tax-deferred retirement plan that arrives after the RRSP. You can start it when you turn 55, or you can decide to keep your RRSP intact. After you turn 71, all of your RRSP is automatically transferred into an RRIF without incurring taxes.
Without savings, it will be hard to have the same lifestyle you enjoyed throughout your working years in retirement. Seniors who have not set aside enough money for retirement but still own a house can use it as an income source. Some people may decide to rent out a part of their property as a separate house. Others may choose to live with a roommate. If you have extra space at your home, visit Airbnb’s website to rent out a portion of it. If you need more money to pay your basic expenses, you also may need to find a job. The Internet can help you a lot if you prefer working remotely. If you’re not a fan of remote jobs, you can take a part-time job at retailers.
Shop owners will be pleased to have your help. The reason is, seniors usually have much more experience and tend to be very loyal. There’s one more thing to consider. People often underestimate how much they are members of their society and how well they understand “the norms.” Social and economic standards are very different in each country or state. I’m trying to tell you that you can live your retirement years somewhere else, for example, somewhere cheaper. You only have to learn about adjusting to the new environment.
Ask a pension advisor if you can get CPP or OAS. Based on your age and income, they can offer you secure methods. Another prominent option is not to retire. You can find part-time jobs based on your experience and skills. You can also check for online employment; you can teach online, start a blog or become a freelancer. If you like art and have a creative side, you can make goods and sell them; wood crafts and candles are an excellent way to make money. However, you probably will have to cut some expenses, move to a smaller house if that’s an option, and cancel all the memberships you haven’t used in the past month.
Renting a part of your house can be an excellent easy way of spending your retirement without any savings. http://rentals.ca/ and http://airbnb.com/ are two websites where you can sign up as a host and wait for your guests.
Consider renting a room, or just upstairs to the guest, depending on how much time and money you want to spend on maintenance of the rental part of your house.
Another thing you can do to keep your cash flow alive is to become a consultant in your finished career. You can ask the company you’re working with to just use online calls and texts in the time of need. Spending retirement without savings and working is not possible, I guess.