Pay, work in retirement?

You who count the dodos before you “hit” for the last time, have you heard the bosses’ pleas for a little nudge on the wheel?

it was in The newspaper, yesterday. The Conseil du patronat wants to make the prospect of gainful employment after 60 or even up to 70 more attractive. There are already companies willing to take on “experienced” workers, but there we will try to document and communicate best practices in this area to employers.

I am in favor. It just seems to me that it took some time.

It’s never too late to do a good job, and to speed things up, here are the pillars of a strategy: reduced and flexible schedule; Possibility of seasonal work. The problem is the implementation.

Above all, of course, workers want to feel like it’s worth it: how much will they keep in their pockets?

Governments have been more proactive than companies in this regard. What are these advances? What remains to be done?

Two effective tax measures

The Research Chair in Taxation and Public Finance (CFFP) at the University of Sherbrooke has documented these files well. A few fiscal measures have been introduced over the years to encourage people to stay and return to work, but two are particularly beneficial to many people in their 60s.

In Quebec, it is the career extension tax credit. Introduced in 2012, it has been constantly improved and expanded since then. The latest improvements are from 2019.

For workers ages 60 to 64, the maximum credit is $1,500; from the age of 65 it rises to 1,650 US dollars. It gradually decreases once the labor income threshold of $36,950 (in 2022) is reached, to disappear completely as it approaches $70,000. It is particularly effective for seasonal or part-time workers due to the range at which it works at its maximum.

The other federal measure affects Guaranteed Income Subsidy (GIS) recipients, i.e. potential workers over the age of 65. The problem with the GIS is that for every additional dollar of income, it reclaims about 50%. This implicit “tax” has historically discouraged applicants from improving their fortunes through part-time work.

As of 2020, an individual can report $5,000 in earned income without having their GIS truncated. Half of earnings between $5,000 and $10,000 are excluded from the calculation, meaning the GIS clawback rate is no longer 50%, but 25%.

Other long-awaited measures

Other work incentive measures may benefit older workers, such as the job bonus, Canada Worker’s Allowance, and the tax shield.

Together they leave more money in the pockets of older workers than meets the eye. What is missing to make them want to delay retirement even further?

Compulsory contributions to the Quebec Pension Plan at age 65 should be optional.

During the last federal election campaign, the Liberals introduced a career extension tax credit similar to Quebec’s. It remains to materialize it.

In both Quebec and Ottawa, these loans would encourage more retirees to join the labor market if they were eligible. Quebec’s is “non-refundable”, you must pay taxes to benefit.

We could also move the age limit for converting an RRSP into an RRIF (Registered Retirement Income Fund) to 75 years.

The CFFP also proposes excluding earned income from the calculation of old-age pension reclaims. A topic for discussion!

CALCULATE WHAT REMAINS IN YOUR POCKETS

Wondering if going back to work is worth it? The Ministère des Finances du Québec has put online a tool that makes it possible to assess the earnings remaining after retirement. It contains all the elements discussed above.

The tool is accessible at this address to add to your bookmarks: https://www.budget.finances.gouv.qc.ca/budget/outils/revenu-travail-retraite-detail-fr.asp

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