Author Topic: Investments for liw income senior Canada  (Read 1509 times)


  • 5 O'Clock Shadow
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Investments for liw income senior Canada
« on: August 16, 2016, 10:14:43 PM »

I am looking for some thoughts on how to help my mom. She has never contributed to RRSPs or a TFSA. She will have only the CPP and GIS to live on. She is 64 and still working (in the service industry, full time, for minimum wage), and plans to continue working as long as she is physically able.

She just sold her house and after paying off all her debts, she will have about 160k cash.

This is all she will ever have. So should I encourage her to put it into GICs within a TFSA  (to the maximum)? The rest in a taxable account? I have read frequently that the RRSP tax deferral and later withdrawals is not ideal for low income seniors.

I would like her to see some return, but is it just too risky? Even the most conservative couch potato portfolio?

She will take her CPP summer 2017. There is extreme longevity on both sides of her family (mid to late 90s on average).

She is a poor budgeter and a spender so the money needs tobge tied up so that she cannot access more than 4% of the amount per year.

Would really appreciate thoughts. Anyone else have parents in this situation?



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Re: Investments for liw income senior Canada
« Reply #1 on: August 16, 2016, 10:50:05 PM »
Yes to the TFSA.  Stuff it to the maximum.  Since there's a good chance she'll live another three decades, the GICs are too risky as she's likely to run out of money.  You need some equities for growth and inflation protection.  You're reading the Canadian Couch Potato - figure out your mother's risk tolerance (psychological and situationally) and invest according to that.

The money is going to be in her name, so is she likely to contact the brokerage to sell her investments to access the cash?  (Hopefully not.)  If not, then you can work out a system to withdraw cash regularly to give her an allowance.  Otherwise, you may need some other way to prevent her from spending it all in one go (if she wants that assistance to her willpower).

For the other $100k or so, it's important to know how much she's going to be collecting from CPP, OAS, and GIS.  Investing that money could produce taxable income that claws back her OAS/GIS benefits.  Is she considering buying another (modest) home?  That could be one way to tie up the money (unless she takes out a home equity line of credit or reverse mortgage) while still having it provide for her (eliminating some shelter costs).  Plus, any capital gain on her primary residence is not taxable (so no claw back concerns).


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