All posts by saskpension

How to avoid the growing trend of financial elder abuse

As my mother has aged and her dementia has progressed my sister and I have had to take over more and more of her financial affairs. To simplify matters, while she was still cognizant enough to do so, she added us as joint owners of her chequing account. When she last revised her will years ago, she also signed powers of attorney for property and health naming us to act on her behalf.

Her foresight has allowed us to sell her condo when she moved to a nursing home and invest the proceeds of sale to support her. But the unfortunate reality is that at this stage my mother or any other person in a similar situation would sign almost any document a trusted friend, relative or caregiver put in front of her. And if one of these individuals is unscrupulous, the results could be a disaster.

In June last year, Global News reported on the case of a Saskatchewan woman who was convinced by her daughter to sign over everything before she underwent hip replacement surgery. When her mother came out of the hospital she had nothing left but a small pension. In another case, the police laid criminal charges against a 49-year old caregiver after she allegedly stole close to $270,000 from an elderly Coquitlam couple under her care.

Leanne Kaufman, Toronto-based head of RBC Estate & Trust Services has seen her fair share of financial elder abuse. “It’s not always easy to see financial abuse of an elder as it’s happening. More often, cases are discovered after large portions of one’s savings have gone missing,” Kaufman says. “But there are warning signs that loved ones should watch for. One big red flag is if a new friend, companion or romantic interest appears on the scene.” She also suggests that another red flag is social isolation. “Loved ones should be on the lookout for any sudden changes in social networks and patterns of behavior.”

The Federal/Provincial/Territorial Ministers Responsible for Seniors Forum has developed a series of resources for seniors including What every older Canadian should know about financial abuse.

If you think you or someone you know is experiencing financial abuse, ask for help. Abusers may try to make the victims think that they are the causing the problem, but this is typically not true. If injured parties do not have a family member or close friend who can help them, there are community resources they can use to stop the abuse.

For example, banks or credit unions, local seniors’ centres, doctors and the local police can help. The Saskatchewan Public Guardian and Trustee works to protect vulnerable adults’ property and can also investigate allegations of financial abuse.

Here are some tips and safeguards to help protect yourself or others who may be vulnerable to elder financial abuse now or in future:

  • Keep your financial and personal information in a safe place.
  • Have an enduring or continuing power of attorney prepared appointing someone you can trust to look after you, so that even if you are ill and unable to look after yourself, your finances will be protected from others who might try to take advantage of you.
  • Ask for help if you think you are experiencing financial abuse.
  • Keep a record of money you give away and note whether it is a loan or a gift.
  • For major decisions involving your home or other property, get your own legal advice before signing documents.
  • Ask someone you trust to look over contracts and other papers before you sign them.
  • Be very cautious if you open a joint bank account – the other person can take away all the money without asking.
  • Make an effort to keep in touch with a variety of friends and family so you don’t become isolated.

Laura Watts, a Toronto lawyer who focuses on elder law issues told Global News the prototypical “unsuccessful son in the basement” accounts for about 75% of elder financial abuse cases perpetrated by family members. “Picking a power of attorney with budgeting acumen and who isn’t in financial stress themselves is critical,” Watts says. “You should always pick someone who doesn’t need money.”


Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information on and your name will be entered in a quarterly draw for a gift card.

Written by Sheryl Smolkin
Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.

Best from the Blogosphere: 2018 Federal Budget Edition


What I find most interesting about budgets are the provisions that are often buried in the fine print and don’t make the front page of the newspaper. You will find links below to some widely-reported features of the 2018 Federal Budget and others you may not yet be aware of.

The graphic above illustrates how the new EI parental-sharing benefit will operate. The Investment Executive reports that in an initiative that was widely-anticipated in the lead-up to the February 27th budget, the Liberal government introduced a new Employment Insurance (EI) parental sharing benefit that will provide extended EI parental benefits when both parents agree to share parental leave. The proposed “use-it-or-lose-it” benefit will increase the duration of EI parental leave by up to five weeks for parents who share a standard 12-month parental leave, or up to eight weeks for parents who share an extended 18-month leave. This incentive is expected to be available starting June 2019.

And while details are sketchy, MPs may finally be entitled to long over-due maternity and parental leave. According to the Budget Papers (p.52):

“The Government is supportive of, and will work with Parliament on, the recommendations put forward in the report of the Standing Committee on Procedure and House Affairs entitled Support for Members of Parliament with Young Children. This includes…improving work-life balance, providing access to child care and designated spaces for the use of Members with infants and children, and a change to the Standing Orders of the House of Commons to allow an infant being cared for by a Member of Parliament to be present on the floor of the House of Commons. The Government will also bring forward amendments to the Parliament of Canada Act to make it possible for Parliamentarians to take maternity and parental leave.”

The government has backtracked on key tax measures for small businesses. Mark Burgess at explains how the federal government will tie the passive income threshold to the small business deduction. He notes that the plan put forward in Tuesday’s federal budget takes a different approach to the one the government proposed last summer that received considerable blowback from business owners.

If a corporation earns more than $50,000 of passive investment income in a year, the amount of income eligible for the small business tax rate is reduced and more of the company’s active income is taxed at the general corporate rate. The $50,000 threshold originally announced in changes the government made to its proposals while under pressure from business groups in October is equivalent to $1 million in passive investment assets at a 5% return.

Julie Cazzen at Maclean’s lists 15 ways Budget 2018 will affect your wallet.  Here are a few of the interesting budget provisions she highlights:

  • The Canadian Child Benefit will be indexed to inflation starting July 2018.
  • You will be able to open an RESP and claim the $500 Canada Learning Bond grant at the same time that you apply for a birth certificate for your child. This will automatically enroll children born into low-income families for the grant.
  • Canada Student Grants and Loans has expanded eligibility for part time students, as well as full and part time students with children, and introduced a three-year pilot project that will provide adults returning to school on a full-time basis after several years in the workforce with an additional $1,600 in grant money starting Aug 1, 2018.
  • A new Apprenticeship Incentive Grant for Women will give women in male-dominated trades fields $3,000 per year of training (or up to $6,000 over two years). Almost all Red Seal trades are eligible.
  • The CPP death benefit is now $2,500 for all eligible contributors (whereas before it was pro-rated.)

Rob Carrick in the Globe and Mail discusses seven changes that could affect your finances. For example, following up on public consultations in 2016, the federal government is poised to announce improvements to Canada Deposit Insurance Corp. The consultations looked at adding registered disability savings plans (RDSPs) and registered education savings plans (RESPs) to the list of registered accounts that are covered and adding foreign currency deposits to covered products.

This would benefit snowbirds keeping large deposits in U.S.-dollar accounts. Other reforms could add coverage for guaranteed investment certificates of longer than five-year terms. Increasing the current $100,000 coverage limit for eligible deposits does not appear to be in the government’s plans.

Some other lesser known and unexpected Budget proposals reported by the Financial Post are:

  • The government will create an advisory council to begin “a national dialogue” on a national pharmacare program.
  • The government is moving to provide more support for Canadians suffering from mental health issues – including veterans – by helping them with the cost of psychiatric service dogs. Specifically, starting this year, the Medical Expense Tax Credit will be expanded to cover costs associated with the animals.

The federal government also announced in the budget that it will eventually move away from its problem-plagued Phoenix pay system – which has overpaid, underpaid or completely failed to pay tens of thousands of public servants – and invest $16-million over two years to develop a new pay system.

You can see the full document tabled in the House of Commons here.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information on and your name will be entered in a quarterly draw for a gift card.

Written by Sheryl Smolkin
Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.

Interview: Evelyn Jacks talks taxes*


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Click here to listen

Today I’m interviewing Evelyn Jacks for Evelyn is the founder and president of Knowledge Bureau, a virtual campus focused on professional development of tax and financial advisors. She was recently named one of Canada’s Top 25 Women of Influence. She is also one of Canada’s most prolific and best-selling authors of 51 personal tax and wealth management books, and a highly respected financial commentator and speaker.

Every year there are income tax changes and they impact individuals filing personal tax returns. First of all, I’d like to highlight some of 2017 changes that listeners should keep an eye on when they’re getting ready to complete their tax return.

Q: Evelyn, taxpayers with children are going to see a major change in tax credits for 2017. Can you bring us up to date on what these changes are? 
A: Yes, absolutely. The most notable changes found in the past are that the children’s arts amount which was the non-refundable tax credit on the Federal tax return has been eliminated and in addition, the refundable tax credit for the children’s fitness amount is gone.

On the employer’s side, the government has also discontinued a 25% investment tax credit for child care spaces of March 22, 2017. These are quite significant changes, especially because on the federal return, there are no other places, with the exception of disabled children, to claim minor children.

Q: What has happened to tax credits for tuition, education, and textbook amounts?
A: Again here, we’re seeing some significant changes. As of January 1, 2017, only the tuition credit can be claimed on the Federal tax return and then only if the total exceeds $100 in the year. What’s happened is that the finance department has removed the monthly education amount of $400 for full time students and $120 for part-time students, as well as the monthly text book amount, which was $65 for full-time students and $20 for part-time students.

However, when you look at the tax return you are still going to see references to the tuition education and textbook amount found in Schedule 11. That’s important because, students can still carry forward any unused amount from all three components of this credit from prior years.

The other thing I should mention is that the provinces all have education credits but that’s changing too, so, in Saskatchewan, for example, there has been an elimination of both the tuition and education credits as of July 1, 2017. Therefore, on the Saskatchewan provincial return you can only claim those credits for half of the year.

Q: Now, the public transit credit is also gone. What’s the effective date on that? 
A: On the Federal side, we saw that credit eliminated as of July 1, 2017. So again, it’s a situation where you’re going to have to keep your receipts and make the claim, just for half the year in 2017.

Q: In your view, what was the Liberal government’s rationale for eliminating these credits, and what did taxpayers get in return?
A: Well, the government is really undergoing quite a significant tax reform at the moment. When they came in with their first tax changes after the election, one of the first things they did was reduce the middle-income tax rate, for income between about $46,000 and about $92,000, from 22% to 20.5%. In addition,  they created an upper income tax bracket increasing the tax rate from 29%-33% on income over $202,800. The third thing they did was they introduced the more generous child benefits.

In fact, that benefit has recently been indexed for the beneficiaries starting in July 2018. If your family net income is under $35,450 then you’ll be able to receive over $500 a month for each child under the age of 6, and around $450 a month for each child age 6-17. These are quite lucrative amounts but they require the filing of a tax return and the combining of net family income.

Q: The eligibility for medical tax credits for fertility treatments has been expanded retroactively. Please explain those changes and what actions taxpayers who are impacted should take to realize the full benefit of these changes.
A: Yes, starting in 2017 and subsequent years, the expenses for medical treatments to conceive a child will be deductible even if the treatments are not required because of a medical condition, which was the criteria in the past. If the expenses ocurred in a year from 2008 forward they can still be adjusted, because we have a 10 year adjustment period that we can take advantage of.

Q: What, if any, other surprises might tax payers have when they start filling out their 2017 tax return?
A: Well, there are a lot of things that change every year including indexing of various tax credits, tax rates and claw back zones. But I think the one big change that I’d really like to point out is the caregiver credit. It’s new for 2017, and it replaces three credits from the past: the family caregiver tax credit, the caregiver tax credit, and the tax credit for infirm dependents. So now one caregiver can get credit.

The second thing is that there are two different amounts: one that I call a mini-credit of $2,150, and one that I’m going to call the maxi-credit of $6,883. So on the mini-credit side you must claim this. It’s the only credit you can claim for an infirm or disabled minor child. But not necessarily one who receives a disability tax credit, but someone who is infirm as it relates to normal development of other children on both a physical or a mental basis.

A person that can claim this mini-credit is someone for whom you are a claiming a spousal amount or an equivalent to spouse amount. Now, the maxi-credit generally is claimed for an eligible dependent who is over the age of 18. But in some cases, if you have a spouse with a low income, you can claim a top-up credit of up to $1,683.

So you’re going to have to take a close look at Schedule 5 on the tax return and at net income allowance, particularly for low income earning spouses, to make a complicated tax calculation. What you need to remember is that your dependents no longer need to live with you. You cannot claim this amount for someone age 65, who is healthy, which is what you could do before under the caregiver amount.

Q: It sounds very complicated. Can taxpayers typically rely on their tax software to guide them and ensure they get all the credits and deductions they are entitled to? In what circumstances do you think that they should seek professional advice?
A: Well, you know, I’m a big fan of tax software because these programs, first of all, take the worry out of the math for you, and some of the math calculations, particularly as you are calculating federal and provincial taxes is very complicated. But the tax program is not necessarily going to prepare the tax return to your best advantage. There are lots of ways to do the math correctly. What you are aiming for is to calculate to your family’s overall benefit, and to do some tax planning as well.

For example, there are a number of carry-forward provisions that people may not be aware of, or they don’t enter properly. You can carry forward charitable donations to up to five years. You can carry forward capital losses in stock market investments indefinitely to offset capital gains in your future.

The other thing is that starting in 2017, you absolutely have to file the refund titled T2091, a designation of principle residence form, even if you sell a tax-exempt principle residence. Anyone who sells property starting in 2017 has to fill in this complicated form. The tax software may or may not tell you about that, and if you miss it you could be issued a penalty of up to $8000. That could really hurt.

Q: What are the most frequent errors or omissions tax payers typically make when completing or filing their income tax return?
A: Any expense that is discretionary, so, I’m thinking of child care expenses and other kinds of expenses where people have out-of-pocket costs. Moving expense are really lucrative, for example. Also, missed medical expenses are very common.

Q: If you had three pieces of advice to offer tax payers to help ensure they file a correct tax return, and get all the credits and deductions they are entitled to, what would they be?
A: The first thing is to catch up on any delinquent filed returns. The option to benefit from the long available disclosure program is actually changing and it will close for some people, effective March 1, 2018. So if you chronically ignore your filing obligations, not only will you be unable to avoid tax-evasion policies, you may not be able to avoid interest relief in some harsher cases. That’s really important. Catch up if you’re behind.

The second thing is to make a RRSP contribution by March 1st this year because that RRSP contribution will reduce your family net income, which will increase things like your child’s health benefits, your GST credit or other refundable or non-refundable tax credits. The RRSP contribution is your ticket to bigger benefits or bigger tax refunds.

The last thing I would say, the average income tax refund in Canada is $1,735, which is a lot of money. That’s just your overpayment of taxes. Most people don’t realize that’s an interest-free loan that you give to the government. Turn that around, and put that money to work for you. Invest it in a TFSA because that’s going to allow you to earn tax- free investment savings for your future, or if you have children in the family, why not take advantage of the lucrative Canada Education Savings Grants and the Canada Learning Bonds by investing in an RESP. There’s lots of ways for people to leverage the money that they pre-paid to the tax department.

That’s really helpful Evelyn. Thank you very, very much. It was a pleasure to chat with you today.

Thank you so much for giving me the opportunity.


This is an edited transcript of an interview recorded 2/07/2018.

Canadians can receive easy-to-understand interpretations of breaking tax and investment news by subscribing to Knowledge Bureau Report at   Look for the Newsroom Tab. You can also follow Evelyn Jacks on twitter @evelynjacks.


Written by Sheryl Smolkin
Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.

Feb 26: Best from the blogosphere

This week we feature content from old friends and new dealing with a range of interesting issues.

On You and Your Money, Ed Rempel writes about Understanding the Differences Between Financial Advisors and Brokers. He says, “I do think everyday investors are much better off if they have someone in their corner who is recommending a particular investment product because it actually is the best product for them, given their circumstances and life stage. Not because there’s a commission on the sale at the end of the day.”

Doris Belland on Your Financial Launchpad tackles How to deal with multiple requests for donations and money. According to Doris, “The key is to run your financial life deliberately and consciously. Instead of barrelling through life with your nose to the grindstone, dealing with a plethora of urgent matters, spending on an ad hoc basis depending on which squeaky wheel is acting up, I suggest you make a plan and decide ahead of time which items are worthy of your valuable monthly cash.”

If you are spending a lot on Uber, should you buy a car? Desirae Odjick addresses this question on her blog half/BANKED. If you are laying out a large sum (say $1,000) every month on Uber, she agrees that a car makes sense. But if it’s a seasonal thing in really cold weather when you cannot easily walk, bike or take public transit she nixes the idea.

Mark Seed at My Own Advisor interviews Doug Runchey about the perennial question, Should you defer your Canada Pension to age 65 or 70? Runchey suggests that the main reasons for taking CPP and OAS as late as possible are:

  • You don’t necessarily need the money to live on now.
  • You have good reason to believe that you have a longer-than-average life expectancy.
  • You don’t have a reliable defined pension with full indexing, and the CPP and OAS are integral to your inflation-protected, fixed-income financial well-being.
  • You are concerned about market risk to your savings portfolio.
  • You aren’t concerned about leaving a large estate – so you use up some or all personal assets before taking government benefits.

And finally, Maple Money’s Tom Drake puts the spotlight on Canada’s best no annual fee credit cards and the perks they offer. His list includes the:

  • Tangerine Money-Back Credit Card
  • President’s Choice Financial Mastercard
  • MBNA Rewards Mastercard
  • SimplyCash Card from American Express.

The features of each of these cards and a link to the relevant website are included in Drake’s blog.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information on and your name will be entered in a quarterly draw for a gift card.

Written by Sheryl Smolkin
Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.

Interview with Shannon Lee Simmons: Debunking Financial Myths*


Click here to listen
Click here to listen

Today I’m interviewing Shannon Lee Simmons for She is a Certified Financial Planner, Chartered Investment Manager, media personality, personal finance expert and founder of the online New School of Finance. Shannon has also won a whole slew of awards including being named one of Canada’s Top 30 under 30. She has a monthly column for the Globe and Mail as well as being a personal finance columnist for CBCs On The Money and Metro Morning.

So Shannon is a very busy lady!

I heard her speak at the 2017 Canadian Personal Finance Conference last November, where she debunked many financial myths that inhibit people from saving, investing and ultimately retiring successfully. And that’s what we’re going to talk about today.

Welcome Shannon.

Hi, thanks for having me Sheryl.

Q: First of all tell me what you mean by precarious work and why you think we need to revise dated financial assumptions in light of the rise of precarious work?
A: Precarious work basically means working in the gig economy, freelancing or being self-employed. You’re not entirely sure where your money’s going to come from maybe even a month from now or two months from now. And to me that’s what it means to be precariously employed from a financial planning point of view, and I think that can create stress and anxiety for a lot of people.

So if we have a whole bunch of people who don’t necessarily know where their next paycheck is going to come from, they need to have really big emergency accounts, and that may mean stepping back from investing and putting money into RRSPs until they can make sure that they’re safe and secure. That’s why the rise of precarious work has really changed the way that I give financial advice.

Q: Under normal circumstances what would the three main elements of financial advice be?
I think that the three things we hear a lot are:

  • Don’t leave money waiting on the sidelines. Make it work for you by investing it.
  • Own a property versus renting.
  • You need a million dollars to retire on.

Q: Let’s start with rent versus buy. Home ownership is the Holy Grail in Canada and many people view home equity as their retirement nest egg. What percentage of income should people plan to spend on a mortgage and other housing costs?
A: I still think that buying is a wonderful way to build equity. The problem arises when you buy a home that you can’t afford. I think that the thing that you want to make sure of is that you don’t have a mortgage that’s more than five times your family’s household income. That means if you make $100,000 a year you shouldn’t be carrying a mortgage that’s more than $500,000, and you might even want to be more conservative (i.e. four times your household income) because that’s going to allow you to still make payments and have a little bit of extra money left over for life and other types of savings.

Q: Many of my readers or most of my readers are Saskatchewan residents, and the median price of a two-story home in Saskatoon is approximately $412,800 dollars. What would the qualifying income typically be for a person to buy a house of that value?
A: Oh that’s a really hard question to answer because I’m not a mortgage broker. From an affordability standpoint, I would say an income of anywhere from $70,000 to $100,000 couul support a home in that price range. However, some people have debt or they have massive car payments. It comes down getting a customized answer for yourself that will allow you to handle the other bills in your life.

Q: If an individual or family cannot qualify for a mortgage or they choose to rent how can they accumulate a comparable nest egg for their retirement?
A: What’s really exciting about the shift happening in financial planning is we’re seeing renting as sometimes the smarter financial decision. What you need to do as a renter, is just make sure that you are taking advantage of the fact that you don’t have to fix the furnace if it breaks, or if the roof is leaking it’s not your problem. And so if you don’t have to spend $25,000 over five years on home maintenance you can save the money instead.

I say to people who are renting, be proud that you’re renting, but just make sure that you’re also renting affordably because where renting becomes a silly throwaway piece of advice is if the rent is higher than 30% to 40% of your after tax income. So I would say you want to keep your rent in and around 30% to 40% of your after-tax income. Then you want to be making sure that you’re saving for your retirement portfolio at least 10% of your gross income if not more, because you’re not building that equity every single month paying off a mortgage. 

Q: In view of the more precarious employment environment, how much should people keep in an emergency fund?
A: Usually we hear like three months, but if you’re precariously employed I would blow that out to five or six months. If you have a large emergency account then you have less fear on a daily basis because you know that even it’s a slow season or if your contract doesn’t get renewed that there’s money in the bank that will help you survive and pay your bills and eat for at least five to six months.

When I say five to six months I mean basics like bills and groceries and toiletries, because if you don’t have any money coming in the chances are you’re probably going to pull in your spending on discretionary items like entertainment until money comes back into the household. 

Q: That’s a challenge though I guess because if you do have casual or precarious employment then the problem becomes to find the cash even to grow that emergency account.
A: One of the things that I talk about is just staying lean. If more and more of our wages are stagnating and many of us are precariously employed, we need to make sure that we don’t leverage ourselves too much or really spend outside of our comfort zone, outside of our means so to speak. That might mean kind of adjusting expectations a little bit to become more realistic.

Q: If an individual has to spend the emergency funds in a period of unemployment or other crisis, how important is it to replenish it as soon as possible?
A:  Let’s say you just had an emergency or you’ve had a period of unemployment and you just about emptied everything out. The first thing you want to do when money starts coming back into the house, is to pay off any debts that you might have racked up  during that period of time. That obviously means credit card debt first, followed by any unsecured lines of credit. Replenishing the emergency account is the next priority. Then and only then will you step into investing land, which is like RRSPs and TFSAs and building that bigger nest egg.

Q: The standard mantra is to invest cash and make it work for you. In your view does this also apply to emergency funds?
A: No you should never invest your emergency fund. It should be liquid, safe and accessible at all times. The money that should get invested is your longer-term dollars that have time to go up and down a little bit with market volatility.

Q: How crucial is it for Canadians looking for financial stability to stay out of debt or pay down debt?
A:  Paying off debt is important not only so your net worth rises and because obviously you’re spending money on interest that could be going back into your pocket. But also, I think it gives you confidence and motivation to move forward with your finances. The fact is, when we carry debt for so long, we start giving up. And that attitude and that mindset when it comes to money is detrimental because it will continue and bleed into other areas, and then you’re never going to get back on your feet and you’re never going to move forward. Imagine making that last payment on your debt. How exciting is that to finally have the use of your money to spend or to save instead of servicing your debt?

Q: TFSA or RRSP for savings? And why?
A: TFSA all the way. Both are tax shelters you can invest in for the long term. The TFSA doesn’t have that deduction that everyone gets very excited about during RRSP season. But my view is if you can only save enough to max out your TFSA, I would say TFSA first then RRSP. And if you can only save enough to max out your TFSA every year (say $5,500), then chances are your income is probably not 80 or 90 or $100,000 a year where you’re really getting a big bang for your buck with your RRSP tax refund. If you are earning that much, then you can likely save the first $5,500 in a TFSA and then even still save an additional amount to the RRSP afterwards, and take advantage of some of the tax savings.

Money in a TFSA is also more accessible, so if your mortgage is up for renewal four years from now and interest rates have skyrocketed, you could take money from your TFSA and put it on the mortgage, but you can’t do that with an RRSP without tax consequences. And last but not least, in retirement when you take money out of the TFSA it’s tax free. Your marginal tax rate in retirement is much lower and entitlement to government benefits like OAS will not be reduced or eliminated.

It’s never been more important for all of us in Canada to qualify for as many inflation- protected guaranteed pensions as we can at the end of our working career because hardly anyone has workplace pensions anymore.

Q: If you could give us three quick pieces of financial advice what would they be?
A: Okay the first thing would be, do not overextend yourself financially. Don’t buy a house you can’t afford. If you are going to rent, rent affordably because if you have those fixed costs under control then you have a lot more flexibility over what you can do with the rest of your money. So that’s the number one thing I would do. 

The second thing would be to pay off debt and build an emergency account before you do any other kind of savings. Doing those two things will put you back in control of your cash flow and it will motivate you to make changes going forward. It will also make you less afraid all the time.

And the third thing I would say and we just kind of went over this, would be once you get to that point where you want to start saving, max out your TFSA first then save the balance in your RRSP.

That’s great thank you so much for joining me today Shannon Thanks so much for having me, Sheryl.

*This is an edited transcript of a podcast recorded in January 2018.


Written by Sheryl Smolkin
Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.

Feb 19: Best from the blogosphere

Unfortunately, what goes up must come down and recent volatility illustrates that the stock market is no exception. Your head knows this is the time NOT to check your investments every day or start selling at a loss, but your heart is still going pitter patter at random hours of the day and night.

There is little doubt that unpredictable markets will likely be the norm for the near future. This week we present blogs and mainstream media articles to help you achieve the intestinal fortitude to ride out the storm, particularly if you are retired or close to retirement.

The S&P 500 and Dow Jones Industrial Average both entered correction territory in early February — closing down 10% from the all-time highs that each hit several weeks earlier. The TSX also shed hundreds of points. Fortune explained the drop this way:

“The selloff comes as investors grow worried that the stock market may have run up too much too fast in anticipation of the impact of President Trump’s tax reforms…..The Bank of England likely also fueled some concerns that central banks worldwide would boost interest rates.”

On the Financial Independence Hub, Adrian Mastracci wrote that although you may be rattled by the correction, Diversification keeps your nest egg on the rails. He explained that diversification among asset classes, economic regions, time to maturity, foreign currencies and investment quality increases the odds of you being right more often than wrong. When some selections are suffering, others can step up and help cushion the rest of your portfolio.

For example, the diversified Saskatchewan Pension Plan Balanced Fund is professionally-managed by Greystone Managed Investments and Leith Wheeler Investment Counsel. As of December 31, 2017 the balanced fund portfolio is invested as follows:

  • 30.6%: Bonds and mortgages
  • 19.3%: International equities
  • 19.2%: Canadian equities
  • 18.8%: U.S. equities
  • 10.2%: Real estate
  • 1.9%: Money market

SPP has rated the volatility of this fund as low to medium. Nevertheless, the fund does not have any return guarantees.

The Globe and Mail’s Rob Carrick offers reasons why you should be grateful for the market freakout. “The markets are likely to be ornery for the next while, but there’s no need for radical surgery on properly diversified portfolios of stocks, bonds and cash that you’re holding for the long term,” he says. “Think about strategically adding stocks, not subtracting. After any big market decline, put a little money into quality stocks or exchange-traded funds and mutual funds that hold them.”

On the HuffPost Ann Brenoff addresses How To Handle A Stock Market Drop When You’re Retired. She acknowledges that for retirees or those close to retirement recent market gyrations are gut-wrenching. She comments, “Even those in their 60s likely have many investment years ahead of them. And with that length of time, you will have plenty of opportunity to recover from these types of market drops, she said. The key, though, is staying invested.” Brenoff also points out that if you were invested even just a few months ago, there’s an excellent chance you’re still ahead despite two days of falling prices.

Several months ago Ian McGugan’s column in the Globe and Mail suggests Five things to do if you’re nearing or in retirement and fearing a market pullback. He cites several takeaways from Wade Pfau, an economist at American College in Philadelphia:

  1. If you’ve won, stop gambling.
  2. Plan for lower returns.
  3. Think safety, not wealth.
  4. Consider alternatives such as annuities.

Pfau also recommends you ask yourself two questions if you are in doubt whether to stay heavily invested in the stock market: “How would you feel if your wealth doubled? How would you feel if your wealth fell in half? “Most people find the prospect of losing a substantial part of their portfolio far outweighs the possible pleasure of having substantially more,” he said.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information on and your name will be entered in a quarterly draw for a gift card.

Written by Sheryl Smolkin
Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.

Group vs Individual RESPs: What’s the difference ?

The “holy trinity” of tax-assisted savings plans available to Canadians are TFSAs, RRSPs and RESPs. RESPs (Registered Educational Savings Plans) are primarily designed to help families to save for post-secondary education.

Each year, on every dollar up to $2,500 (to a life time maximum of $50,000) that you contributed to an RESP for a child’s education after high school, a basic amount of the Canada Education Savings Grant of 20% may be provided. Depending on the child’s family income, he/she could also qualify for an additional amount of CESG on the first $500 deposited, which means $100 more if the 2017 net family income was $45,916 or less and up to $50 if the 2017 net family income was between $45,916 and $91,831.

In total, the CESG could add up to $600 on $2,500 saved in a year. However, there is a lifetime CESG limit of $7,200. This includes both the basic and additional CESG. Lower income families may also be eligible for the Canada Learning Bond (CLB) that could amount to an additional $2,000 over the life of the plan.

Contributions to RESPs are not tax deductible, but the money in the account accumulates tax-free. Contributions can be withdrawn without tax consequences and when your child enrolls in a university or college program, educational assistance payments made up of the investment earnings and government grant money in the RESP are taxable in the hands of the student, generally at a very low rate.

When our children were young, we purchased Group RESPs for them and their grandparents also purchased additional units. I was so impressed with the program that I even took a year before transitioning from family law to pension law and sold RESPs.

Each child collected about $8,000 from the plan over four years of university, which helped them to graduate debt free. Fortunately, both my daughter and my son took four straight years of university education so there was no problem collecting the maximum amounts available to them minus administrative fees.

However, I’ve come to realize the potential downside of Group RESPs so we started contributing $200/month to a self-administered plan with CIBC Investor’s Edge for our granddaughter soon after she was born. She is now 5 ½ and as I write this, there is already $22,000 in the account.

Our decision to self-administer Daphne’s RESP was influenced in part by what I learned from other personal finance bloggers about the potential downside of group plans.

Robb Engen notes that group plans tend to have strict contribution and withdrawal schedules, meaning that if your plans change – a big possibility over 18 plus years – you could forfeit your enrollment fee or affect how much money your child can withdraw when he/she needs it for school.

With a Group RESP, contributions, government grants and investment earning for children the same age as yours are pooled and the amount minus fees is divided among the total number of students who are in school that year. Typically the pool is invested in very low risk GICs and bonds.

In contrast, there are no fees in our self-administered plan other than $6.95 when we make a trade. The funds are invested in a balanced portfolio of three low fee ETFs. We can easily monitor online how the portfolio is growing and as Daphne gets closer to university age we can shift to a more cautious approach.

Macleans recently reported that the total annual average cost of post-secondary education in Canada for a student living off-campus at a Canadian university is $19,498.75 and it will be much higher by the time your child or grandchild is ready to go off to college. So learn as much as you can about RESPs, get your child a social insurance number, set up a program and start saving.

However, as Engen suggests before you choose a group or individual RESP provider make sure you read the fine print and ask about:

  • Fees for opening an RESP;
  • Fees for withdrawing money from a RESP;
  • Fees for managing the RESP;
  • Fees for services and commissions;
  • What happens if you can’t make regular payments;
  • What happens if your child doesn’t continue his or her education; and
  • If you have to close the account early, do you have to pay fees and penalties; do you get back the money you contributed; do you lose interest and can you transfer the money to another RESP or different account type.


Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information on and your name will be entered in a quarterly draw for a gift card.

Written by Sheryl Smolkin
Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.

How to choose a diamond ring

Wedding Bells reports that 20% of engagements take place in December, but Valentine’s Day is also a popular time to pop the question. Historically people have used other types of jewelry and gems to propose, but in 2013,  the Jewelry Industry Research Institute reported that 75% of brides wear a diamond ring.

If you propose with a diamond ring, it is largely as a result of a hugely successful advertising campaign from De Beers, one of the largest diamond companies in the world. In 1947 De Beers launched its promotion for diamond engagement rings with the slogan “a diamond is forever.”

Between 1939 and 1979, the company’s marketing budget soared from $200,000 to $10 million per year, according to The Atlantic. Over the same period, its wholesale diamond sales in the United States grew from $23 million to $2.1 billion. Also over the 40 year interval, De Beers went from recommending spending one month’s salary on an engagement ring to two month’s pay.

I was not able to find Canadian data, but according to the Knot’s 2015 Real Weddings Study, Americans spent an average of $5,871 on engagement rings, up from $5,855 in 2014. Wedding bands for the bride and engagement rings combined cost between $5,968 and $6,258.

Each individual must decide how much to budget for an engagement ring, but regardless of the amount you plan to spend, you need to understand what to look for when you are shopping for rings. First of all, the price and value of diamond jewelry is influence by the 4Cs: color, cut, clarity and carat weight.

It is of primary importance when you select stone(s) and a setting that you are dealing with a reputable jeweller. It may also be advisable before you finalize the transaction to have an independent gemologist appraise the stone(s) to ensure you are getting good value.

In addition you should receive a certificate from your jeweler (sometimes called a grading report). This is a complete evaluation of your diamond that has been performed by a qualified professional with the help of special gemological instruments. Each stone bears its own recognizable, individual characteristics, which is listed on the certificate.

Here are some other important things to consider when selecting stones and a setting for an engagement ring.

  1. Understand your partner’s taste in jewelry
    White or yellow gold? Old fashioned or modern? Chunky or delicate? Diamonds only or embellishment with coloured stones?
  2. Ring size
    Borrow a ring he/she already owns and trace the size. You can always have the ring re-sized after you propose but there may be additional cost. Also, who wants to take the ring off and part with it for days or weeks while adjustments are made?
  3. Favourite shape and cut
    Diamonds come in a myriad of cuts ranging from square, round and oval to pear shaped. A diamond’s cutting style refers to its facet arrangement, rather than its shape. The fewer the facets, the more visible any inclusions will be, so a cutting style such as a step cut (a.k.a. emerald cut), for example, requires higher clarity in the diamond.
  4. Setting
    The setting can vary from a solitaire or single stone, to a large stone with small stones on each side to three stones of the same side. A halo stone is where a center stone is surrounded by tiny gemstones  (usually diamonds), to add sparkle and give the appearance of a larger center stone. The setting you select will depend on a combination of preferred style and your budget.

No matter how much you pay for your ring, speak to your home insurance company and decide whether you should have it specifically listed on your policy so it is insured in case of loss or theft.

I lost the pear shaped diamond from my ring at the gym several years ago. In spite of the fact that paying a premium to insure the ring was no fun, I was quite relieved when my policy reimbursed me for the considerable value of the lost stone.


Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information on and your name will be entered in a quarterly draw for a gift card.

Written by Sheryl Smolkin
Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.