{"id":577883,"date":"2026-07-31T22:20:11","date_gmt":"2026-07-31T22:20:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/577883\/"},"modified":"2026-07-31T22:20:11","modified_gmt":"2026-07-31T22:20:11","slug":"now-single-can-randy-61-afford-to-help-his-niece-and-nephew-financially","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/577883\/","title":{"rendered":"Now single, can Randy, 61, afford to help his niece and nephew financially?"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

With a net worth of $5.6-million and no children of his own, Randy wonders if he can afford to help his niece and nephew pay for their postsecondary education.Melissa Tait\/The Globe and Mail<\/p>\n

Six years ago, Randy was earning more than $250,000 a year in banking. He had a million-dollar stock portfolio and a house in Toronto that he was renting out.<\/p>\n

While they kept their finances separate, Randy and his common-law partner were sharing ownership of another house.<\/p>\n

He had just been diagnosed with Parkinson\u2019s disease.<\/p>\n

Those were the circumstances of his previous Financial Facelift<\/a>. Now 61 years old, Randy is single again. The house he shared with his partner has been sold. \u201cMy Parkinson\u2019s disease has progressed and I\u2019m now on long-term disability from work until I turn 65,\u201d he writes in an e-mail. He also gets Canada Pension Plan disability benefits, which will change to CPP retirement benefits at 65.<\/p>\n

The benefits total about $9,980 a month.<\/p>\n

On the bright side, Randy\u2019s investments have grown. \u201cThe markets have been on a tear and my net worth has increased significantly,\u201d he writes.<\/p>\n

With a net worth of $5.6-million and no children of his own, Randy wonders if he can afford to help his niece and nephew pay for their postsecondary education. He may also want to help them to purchase a home in the future. His retirement spending goal is $125,000 a year after tax, rising in line with inflation.<\/p>\n

\u201cShould I convert my RRSP to a RRIF now given I won\u2019t be returning to the workplace?\u201d he asks. \u201cShould I consider buying an annuity to reduce my stock market exposure?\u201d<\/p>\n

We asked Chris Tringham, a portfolio manager and certified financial planner at Park Place Financial in Kingston, Ont., to look at Randy\u2019s situation. Mr. Tringham also holds the chartered financial analyst designation.<\/p>\n

What the expert says<\/p>\n

Randy wonders if he should take advantage of these low-income years to convert his RRSP to a RRIF and begin withdrawals. Reducing the size of an RRSP before age 72 will lower the mandatory withdrawals later and may reduce any clawback of Old Age Security benefits, Mr. Tringham says.<\/p>\n

\u201cAnother option for generating taxable income in these low-income years would be to crystallize gains in his nonregistered account and pay the capital gains tax owing,\u201d the planner says. The advantage of this strategy is that only half of the gain is taxable. \u201cHe could then repurchase the shares at a higher price. This would have the effect of increasing the adjusted cost base of the securities, reducing future capital gains tax.\u201d<\/p>\n

\u201cI tend to favour a combination of both strategies: RRSP withdrawals and capital gains crystallization,\u201d Mr. Tringham says. \u201cThe bigger question is how high of a taxable income is desirable.\u201d<\/p>\n

How should Faye, 68, and Ava, 60, draw down their RRSPs given their $108,000 spending target?<\/a><\/p>\n

Because the biggest jump in combined federal and provincial marginal tax rates occurs above the $117,045 income amount, at which point it increases to 43.71 per cent, \u201cI typically recommend that clients go right up to that level and not exceed it if possible,\u201d he says. <\/p>\n

\u201cI would suggest that this be done as half RRSP withdrawals and half crystallizing capital gains.\u201d There is no need to convert to a RRIF at this time given that the RRSP withdrawals will achieve the desired taxable income and also maintain flexibility for the future.<\/p>\n

As for annuities, they were quite popular in the 1980s when interest rates were higher than normal, the planner says. Rates are lower today, but many Canadians continue to wonder if these are a good fit for their retirement.<\/p>\n

Annuities are generally suitable for individuals who are worried about outliving their assets but are nervous about investing in the stock market and who may have a very low tolerance for investment risk, Mr. Tringham says. An annuity pays a fixed amount each month to the retiree and can be indexed to inflation if the annuitant chooses.<\/p>\n

\u201cAnother situation where annuities could make sense is if the annuitant\u2019s family has a history of longevity and they themselves feel fit and healthy,\u201d he says, an indication their life expectancy may be longer than normal. <\/p>\n

In Randy\u2019s case, \u201dthere is a confluence of factors that lead me to conclude that an annuity is not ideal,\u201d the planner says. First, Randy\u2019s investments are predominantly in stocks, which indicates that he has a high tolerance for market risk.<\/p>\n

Second, the Parkinson\u2019s diagnosis could have an impact on Randy\u2019s life expectancy, so he may not receive the number of annuity payments needed to break even on the annuity. Insurance companies price an annuity based on the average life expectancy of the annuitant, so an earlier death would mean that the annuity didn\u2019t make enough payments to cover the initial principal cost. <\/p>\n

The planner\u2019s forecast shows that Randy will likely leave a large estate \u2013 in excess of $6-million. He could realistically give a large percentage of this away during his lifetime, Mr. Tringham says. \u201cRandy mentioned $200,000 as a ballpark amount to give away and I would feel very comfortable that this wouldn\u2019t impact his financial plan in any material way.\u201d<\/p>\n

As well, Randy could give funds to his niece and nephew to be deposited to a First Home Savings Account. Annual FHSA contributions of $8,000 will grow tax-free and can be withdrawn tax-free when they purchase a home. Giving his niece and nephew money to put in a tax-free savings account is also a good option, he says.<\/p>\n

In preparing his forecast, the planner assumes Randy starts collecting government benefits at 65 and lives to be 85.<\/p>\n

Have Giovanni, 41, and Tiyana, 37, underestimated spending and jeopardized their retirement plan?<\/a><\/p>\n

His long-term investment return is estimated at 6 per cent based on a portfolio of 60 per cent equities, including some non-conventional assets, and 40 per cent fixed income. This assumes fixed-income returns of 4 per cent and 7 per cent for equities. Inflation, measured by the consumer price index, averages 2.1 per cent a year.<\/p>\n

Randy may consider setting up a donor-advised fund to lower his taxable income and manage his estate, the planner says. Donor-advised funds allow clients to create a separate account where deposits can be claimed as charitable donations and the eventual transfer to a charity can be controlled by the donor. <\/p>\n

This allows the full amount to be recognized as a donation now but the eventual transfer to a charity can be spread over time. \u201cHe is almost certainly going to pass away with a multimillion-dollar investment portfolio that he may want to give to charity,\u201d Mr. Tringham says.<\/p>\n

Client situation<\/p>\n

(Income, expenses, assets and liabilities provided by the applicant.)<\/p>\n

The person: Randy, 61.<\/p>\n

The problem: Should he convert his RRSP to a RRIF? Should he buy an annuity? Can he afford to help his niece and nephew financially?<\/p>\n

The plan: Consider a combination of RRSP drawdown and taking capital gains in his non-registered portfolio. Given his health situation, an annuity probably isn\u2019t suitable. Go ahead and help the niece and nephew and give some thought to a donor-advised fund for his eventual estate.<\/p>\n

The payoff: A satisfying retirement.<\/p>\n

Monthly after-tax income: $9,625 non-taxable benefits.<\/p>\n

Assets: GICs $145,000; non-registered stock portfolio $2,782,105; TFSA $238,080; RRSP $769,140; employer pension plan (group RRSP) $715,905; residence $1,000,000. Total: $5.65-million. <\/p>\n

Monthly outlays: Property tax $465; water, sewer, garbage $70; home insurance $130; electricity $115; heating $100; maintenance $600; garden $100; transportation $835; groceries $1,500; clothing $265; charity $800; vacation, travel $700; personal care $200; club memberships $200; dining, drinks, entertainment $1,500; sports, hobbies $1,500; subscriptions $110; health care $1,055; communications $120. Total: $10,365.<\/p>\n

Liabilities: None. <\/p>\n

Want a free financial facelift? E-mail finfacelift@pm.me<\/a>.<\/p>\n

Some details may be changed to protect the privacy of the people profiled.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: With a net worth of $5.6-million and no children of his own, Randy…\n","protected":false},"author":2,"featured_media":577884,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[72,176,2726,61,60,174,175],"class_list":["post-577883","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-finance","tag-financialfacelift","tag-ie","tag-ireland","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/577883","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=577883"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/577883\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/577884"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=577883"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=577883"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=577883"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}