Old Age Security pension or OAS

Understanding Old Age Security Pensions

First Published Date: May 29, 2010

Retirement can be a stressful time for many individuals when they realize that they will no longer have a steady income, and instead will be hoping that the savings they put together will be enough for them to live on. While company pensions are great, they do not always cover everything and that means many retired individuals rely on old age pensions. In Canada, the old age pension is the Old Age Security Pension, which is a taxable-monthly social security payment that is available to Canadians who are 65 years and over. Currently, the basic amount for the old age pension is $502.31 per month. During tax season, if you have an income that is greater than $64,718, you must pay back a portion of your Old Age Security to the tune of 15 percent of your total net income.

It is important to note that not everyone will qualify for the old age pension. Depending on your circumstances, you may or may not qualify. If you want to collect a full pension, then you must meet the following requirements:

1.    For Category 1, you will have had to live in Canada for at least 40 years after you turned 18.

2.    For Category 2, you must have been born on or before July 1, 1952 and you must have lived in Canada for some period of time between that point and July 1, 1977.

If you want to collect only a partial pension, which usually happens if you are not approved for a full pension, then you need to meet the following conditions.

1.    You must be over 64 years of age.

2.    You must be a Canadian Citizen or a Permanent Resident of Canada.

3.    You must have lived in Canada for the last 10 years at least.

Just because you lived in another country though, that does not mean that you cannot collect payments. Canada has agreements with many countries that can allow you to count years spent in another country so that you qualify for your Old Age Security pension. It is important to determine what countries they are but generally the United States, the United Kingdom and much of Europe allow you to qualify.

If you do not have much income, then your Old Age Security can be supplemented by a Guaranteed Income Supplement, which is non-taxable. That means that you are not taxed on that income, which gives you more money to use. The amount of money you receive with this Guaranteed Income Supplement will depend on how much you make your marital status and the age of your spouse if you are married.

Currently, the maximum supplement that you can receive as one individual with no other source of income is $597.23 and $392.01 for each spouse if you are married to someone.

It is also very important that you do not confuse the Old Age Security pension with the Canada Pension Plan, which is something that you contribute to, and which is earnings-related, which is paid in addition to the Old Age Security pension.

2015 Kiplinger's 10 Best States to Retire

Delaware is The Best State to Retire

First Published Date: July 16, 2015

Personal finance magazine Kiplinger recently looked at factors such as affordability, economic health, crime rates and tax laws, etc. among all 50 American states, including the District of Columbia, and rated the top best states to retire in America. Here are the best 10 states:

1. Delaware

2. Florida

3. West Virginia

4. Pennsylvania

5. South Dakota

6. Arizona

7. Hawaii

8. Iowa

9. Kansas

10. Wyoming

Those states that are economically healthy and affordable, along with low crime rates, are favoured by the rankings. If you recall my 2015 America’s Best Places for Retirement by Bankrate, the top ten places were very different than this rating. For example, Delaware and Hawaii were absent and 3 cities from Arizona were among the top. The full Kiplinger report can be viewed here.

New 4 Percent Retirement Withdrawal Idea & Free Financial Planning Software

How Much You Can Spend in Retirement?

First Published Date: June 6, 2015

A retired financial planner in California, Bill Bengen, researched and came up with his 4 percent retirement rule. The New York Times recently published a detailed article on this, as his retirement 4 percent concept has attracted criticism both accepting and rejecting it.

Based on the assumption of that the retirees’ portfolio is made of stocks and bonds half half, Mr. Bengen’s 4 percent withdrawal concept survived every thirty year period from 1926.

However, there are other complex methods created by retirement analysts that call to withdraw from 2.85 percent to 4.95 percent, as the article points out.

Critics argues that Mr. Bengen’s method does not take account into various factors such as investment fees, tax rates, locations, etc. and should not apply to all retirees.

If you search online for various methods of retirement withdrawals, you will be astonished to see how many are there. The best course of action is not to go by any single idea you stumble into. As everyone’s situation is unique, it’s best to seek help and sit down with a qualified financial professional who can assess your own situation and create a plan that will suit your needs and lifestyle.

Free Financial Planning Software

Developed by Boston University economist Laurence Kotlikoff, ESPlannerBASIC Canada is free financial software that can calculate how much you can spend and save to sustain your living standard in retirement life. The planning tool takes consideration into other factors such as changing jobs, moving, having kids, pensions, etc. can affect your financial future. You can access this free tool here:

America's Best Places for Retirement

Top American Cities to Retire

First Published Date: June 17, 2015

If you are thinking beach paradise California or mega metropolis New York City are on the best places to retire list, think again. Financial website Bankrate recently published its first ranking on America’s best and worst cities to retire and many famous cities are not on the list.

Bankrate looked at various factors such as cost of living, walkability, weather, crime rate, health care quality, tax rates, a specialized wellness score for seniors, etc. among 172 American cities and came with its lists of best and worst places to retire in America.

Here are the ten best cities:

1. Metro Phoenix, AZ
2. Arlington, VA
3. Prescott, AZ
4. Tucson, AZ
5. Des Moines, IA
6. Denver, CO
7. Austin, TX
8. Cape Coral, FL
9. Colorado Springs, CO
10. Franklin, TN

And here are the worst 10 cities:

1. New York, NY
2. Little Rock, AR
3. New Haven, CT (and surrounding area)
4. Buffalo, NY (and surrounding area)
5. Newark, NJ
6. Albany, NY (and surrounding area)
7. Hartford, CT (and surrounding area)
8. Oakland, CA
9. Indianapolis, IN
10. Cleveland, OH

Some highlights from this report:

– Only one city in Florida made it to the best list
– Cities in Arizona, including the 1st, 2nd, and 3rd, swept through the list. No wonder so many Canadians are flocking to Arizona and buying properties.
– The Big Apple is not so big on the list and made it to the worst city to retire, due to its high cost of living.
– No city in California is on the list.
– Las Vegas was not represented.

If you are interested in finding out Canada’s best places or the world’s best places to retire, visit the A Dawn Journal Retirement Section.

The Dark Side of Retiring Abroad

Retiring in Low-Cost Countries May Not Be As Glorious As It Seems

First Published Date: December 29, 2014

It’s hard not to come across those alluring and glorious ads, websites, and stories about retiring in a low-cost country. The promise of living in a heavenly beach resort bungalow or ocean-view condo for $1000 per month is hard to pass on. However, things may not as glamorous as promised. Before you board a plane to a tropical paradise to catch your dream, consider all the ins and outs of living in a foreign country. Today, I will mention a few of them.

Security – This is my number one concern. These low-cost countries where heaven is promised for $1000 or even less a month are still 3rd world countries. Security and law enforcement are nowhere near comparable to countries like Canada, USA, Australia, and so on. If you keep an eye on news, you will often come across those where foreign retirees in these countries were killed in their ocean-view bungalows by intruders during a robbery. Are you willing to take your chances and live somewhere where corruption is widespread and security is non-existent?

Friends and Family – Living in a foreign country means you are losing your network of relatives and friends and also the support you receive from them. Yes, you can communicate via Internet or phone, or even possibly visit them once every few years – but it’s not the same when you have your friends and family available for you 24/7.

Health Care – Access to universal health care is a must-have during retirement years. Even if you are able to buy healthcare in these low-cost countries, it will not be nowhere near in quality and technological advancement as your home country. Also, if your are from a country like Canada where health care is free, you will have to spend a lot of money for health care in your new host country, and as you get older health care spending will grow larger.

These are only a few I mentioned above. There are much more, as retiring abroad adds layers of complexity to every aspect of life. Before deciding on moving abroad, do your homework and make educated decisions to live a happy life, whether at home or in a foreign country.