2024-02-24 20:30:00
A 70-year-old cashier working full time in a convenience store will soon have to reduce her working hours to escape the clutches of taxes when the time comes to start withdrawing her RRSPs.
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“I’m going to have to work fewer hours, it’s going to hurt me,” confides Carole Cadorette before taking a sip of black coffee in a restaurant in Quebec.
“Or maybe I’ll have more taxes taken from my pay to compensate,” she adds, putting down her cup, thoughtfully. “It’s organization, you have to think about that.”
Ms. Cadorette is a rare bird. At 70, she still works seven days a week in a convenience store in Limoilou. “That gives me 35 hours,” she explains. I do it every morning, it’s my social, then afterwards I have time for my activities. I wouldn’t have to do it, but I have fun and I’m healthy.”
As she will turn 71 in the coming weeks, she will have to start withdrawing her RRSPs next January, which will increase her taxable income. If she does not reduce her employment income, she will also lose part of her old age security pension.
- Listen to the personal finance discussion with Jean-Sébastien Jutras, financial planner at Jutras Gestion de Patrimoine, via OLD :
“They say they want to keep us in the job market and there is a labor shortage. Why don’t they let us choose for ourselves when we want to start drawing on our RRSPs?” she said, gesturing. “Or at least leave us a tax-free $10,000!”
“What the hell?”
The holder of the Chair in Taxation and Public Finance at the University of Sherbrooke, Luc Godbout, believes that Carole Cadorette is right to be outraged by the situation in which she finds herself. “She sees all this and she says to herself: what the hell is this? […]? And she’s not wrong,” he said in an interview.
Courtesy photo
“The obligation to stop contributing to the RRSP and to begin withdrawals at age 71 was going well in 1957 when this plan was created,” explains the tax expert. “But 67 years later, it is no longer the same to be 71: life expectancy has greatly increased, we no longer have, at that age, the same state of health nor the same ability to work than before.”
A question of will
“This is why we have been suggesting for several years to the federal government to push back the age limit for contributing to an RRSP to 75,” adds Luc Godbout, who believes that it would also be possible to relax the rules of the old age security pension for those who continue to work into the age of wisdom.
“These are not big changes, and it could have positive effects on encouraging career extension,” he notes.
However, for the moment, there is nothing to suggest that Ottawa will make these changes in the short term. In response to questions from Journalthe office of the federal Minister of Finance, Chrystia Freeland, said it could not “speculate on what[il] may or may not be considering – especially in pre-budget times.”
Seniors who become poorer while working: “It’s a myth!” launches the Minister of Employment
Although seniors are forced to reduce their working hours after a certain age to avoid losing money, this situation is a “myth” for the vast majority of people, argues CAQ Minister Kateri Champagne Jourdain.
“I absolutely want to tackle this myth!” says the Minister of Employment in an interview. “There are plenty of financial and social benefits to staying in the job market.”
Among the measures in place, Ms. Champagne-Jourdain recalls that since January 1, the contribution to the Quebec Pension Plan (QPP) is optional from age 65, which allows those who already receive their pension to have more money in the short term rather than benefiting from a supplement in the longer term.
Swearing in of the Council of Ministers at the National Assembly of Quebec, Thursday, October 20, 2022. Kateri Champagne Jourdain Minister of Employment Minister responsible for the Côte-Nord region. STEVENS LEBLANC/JOURNAL DE QUEBEC/AGENCE QMI) Stevens LeBlanc / Journal de Québec
The maximum age at which a person can start receiving a QPP pension has also been pushed back to 72 years old. “Quebecers can therefore continue to increase their income by working,” she illustrates.
When it is pointed out to her that the measures in place mainly target workers aged 60 to 69, the minister agrees that a “marginal” share of workers over 70 are currently disadvantaged by rules that fall under the jurisdiction of the federal government.
Tax expert Luc Godbout shares the minister’s opinion. “People who have too high an income, and who lose part of their old age security pension, are still a fairly small portion of the population,” he notes.
After the age of 70, most people who are still working have little enough income to continue to receive the various federal credits, such as the PSV and the guaranteed income supplement, adds Mr. Godbout.
Even if for the moment, few people find themselves losing money by staying at work, Minister Champagne Jourdain believes that it will be necessary to look at their situation “in the future”, due to the increased life expectancy.
But in the meantime, the minister is working on measures to help companies welcome what she very politely calls “experienced workers”. An announcement about this will be made on Monday.
Retirement… not yet!
228,700: This is the number of workers aged 65 and over in Quebec.
Of this number, 84,600 are over 70 years old.
40% of septuagenarians still on the job market work full time, or around 34,100 people.
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