The recently released federal budget has a few new wrinkles. The Liberal government announced changes in the budget that will benefit those working through their retirement.
In particular, the federal budget allows working seniors to keep more of their income before triggering a claw-back in the Guaranteed Income Supplement (GIS). Under the old rules, eligible seniors and their spouses can only earn up to $3,500 a year per person before triggering a reduction in GIS benefits, and earnings from self-employment were ineligible for an exemption.
Under the new rules eligible seniors can earn up to $5,000 from any combination of employment and self-employment income before the government rolls back benefits.
The changes come into effect in July 2020 and will cost the federal government close to $1.8 billion over four years.
Another development is a proposal to introduce ‘advanced life deferred annuities’ or ALDAs to seniors. These annuities would pay out a set amount once activated on a
specific date. Currently annuity payouts must start by age 71.
With an ALDA however, Canadians could defer payouts until their 85 th year of age. The measure was proposed to try help Canadians keep more money in their registered retirement income funds (RRIFs) for longer.
Overall, this is welcome news to those who are working while retired. A lower tax bill encourages more engagement in the economy at a time when life spans are expanding, and experienced professionals have a lot to offer and companies that
need their wisdom.