Talk:Retirement on a low income

Home ownership as an income source

In the “Home ownership as an income source“ section I’m thinking of adding a warning for retirees receiving GIS.

[If eligible for GIS it is generally preferable to own than rent as your housing costs will typically be reduced, allowing for more margin in your other expenditures. Moreover if selling your home in order to rent, it is likely you won’t be able to shelter all the proceeds in your TFSA and the resulting investment income on the unsheltered part of the proceeds will reduce your GIS entitlement going forward. Earning less income while spending less on housing is preferable to having more income and higher expenses. The implied rent that is not paid by owning your home can’t be taxed or used in the calculation of your GIS entitlement. There is an inherent advantage in owning a paid off home vs renting when receiving GIS.]

Thoughts, changes, corrections welcome. gsp

Yes, we want to protect GIS. But if the current home is (too) large, and there is TFSA space to shelter most of the proceeds from downsizing, then downsizing would work well.--Quebec 14:00, 8 January 2023 (EST)

Good point Quebec. Could we include a note about downsizing, which makes sense when remaining an owner, in contrast to going from owning to renting? When downsizing the freed up capital is also more likely to fit in a TFSA then when selling outright and becoming a renter. Can’t imagine too many houses selling for current 88k TFSA lifetime contribution limit. Likely only applicable to those reaching 65 with a sizeable mortgage outstanding.

I’ve seen firsthand the significant difference it makes to own/rent for GIS recipients. Owner lived a frugal but comfortable existence while renter really struggled on similar income. I do think not accounting for living situation in GIS calc leads to inequalities. Perhaps that is intended re: promoting home ownership and forced savings.--Gsp 14:39, 8 January 2023 (EST)

[If eligible for GIS it is generally preferable to own than rent as a GIS recipient’s housing costs will typically be reduced, allowing for more margin in their other spending. Moreover if selling their home in order to rent, it is likely they won’t be able to shelter all the proceeds in their TFSA and the resulting investment income on the unsheltered part of the proceeds will reduce their GIS entitlement going forward. Earning less income while spending less on housing is preferable to having more income and higher expenses. The implied rent that is not paid by owning their home can’t be taxed or used in the calculation of their GIS entitlement. There is an inherent advantage in owning a paid off home versus renting when receiving GIS. Downsizing allows the cashing out of some home equity while allowing for lower housing cost, without direct impact on GIS entitlement if the proceeds can be sheltered in their TFSA. If downsizing is not an option then a HELOC or reverse mortgages could be considered. They also don’t increase taxable income and therefore don’t impact GIS while maintaining lower housing costs than in the rental scenario.]

Updated to differentiate sell+rent from other scenarios and changed the tone to hopefully conform to the writing style in other sections. Comments, correction, insults welcome.;)--Gsp 21:32, 8 January 2023 (EST)

I suggest posting your your changes in Financial Wisdom Forum topic: "How to plan for retirement on a low income [Stapleton"] and get feedback there. Only wiki editors (those who know how to view the Talk page) will see this discussion.

If the suggested changes result in significant pushback, then create a draft page under your username, e.g. User:Gsp/Retirement on a low income, and update that page until a consensus is reached. Then, update the "live" page. I can assist with the wiki edits, but not the content itself (I'm in the US). --LadyGeek 07:50, 9 January 2023 (EST)

Add citations (references) wherever possible

One of the key policies of wikis is that all article content has to be verifiable. This means that reliable sources must be able to support the material. A good resource is Help:Referencing for beginners. --Peculiar Investor 14:02, 10 January 2023 (UTC)