Monday, October 19, 2020

What’s the Plan? For LGBTQ Canadians, Financial Planning Has Different Wrinkles

Yes, I’m that guy. The one who Googles things like “how to catch up on your savings” and “gay retirement”—then stews about it for the rest of the day. My partner is the opposite, a saver since birth, always quizzing me on how my RSPs are doing when we have our financial “discussions” (read: deserved chastisement).

Because we’re not married, we never seem to fully wrap our heads around the details common-law LGBTQ couples should be focusing on with regard to financial strategy. Mostly, we feel confident about the future, but there’s always a small, lingering, money-bag shadow: What’s missing? What are we not doing?

Planning for retirement requires some thoughtful decision making. Photo: Flickr/Creative Commons, GotCredit.

Along with the increasing social and legal equality enjoyed by Canada’s LGBTQ citizens, we also want the same financial stability as well. And while the details of saving are the same for everyone, there are a few gay twists to the checklist.

One of the main considerations is to be open with your financial planner about your marital status. “If clients don’t tell me they are in a relationship, it makes it difficult for me to give proper advice,” says Karen Rodricks, a certified financial planner in Toronto. She says it’s also important to let employers know of your status. “If you work for a company and have a pension plan, you’ll want to designate your spouse as a beneficiary.”

Determining what paperwork is necessary for your particular situation is also key. “Sit down with a lawyer to understand what the legal rights are for common-law people in your province, as it may differ from married people,” Rodricks says. “Understand what the legal implications are if you separate or buy property together. Have a will and power of attorney in place—that’s general advice for everyone. And if you have children, this is even more important.”

Married same-sex couples and common-law ones have some different legal rights. Photo: Flickr/Creative Commons, Nadia Chaudhury.

Keep in mind that in Ontario, for example, you’re not considered to be “common-law” until you’ve cohabitated for a minimum of three years (unless you have a child together). Under the law, unmarried same-sex couples are treated the same as opposite-sex common-law couples.

From there, the planning becomes more general, but no less crucial: Have a written plan defining your financial goals and the steps that will help you achieve them. “If your goal is retirement, determine when you want to retire and how much you will need to live the lifestyle you want,” Rodricks says. “We seem to spend more time planning our vacation than we do our retirement! Sit down with a financial planner and design a plan that takes into account government benefits, RSPs, what you’ll need to save to meet that goal,” she says. “Then review the plan on an annual basis to keep everything on track.” Retirement may seem a ways away for now, but that time comes around quickly. I know this all too well.

“If your goal is retirement, determine when you want to retire and how much you will need to live the lifestyle you want.”

Rodricks also has advice for people who work on contract or are self-employed—those without a regular paycheque. “When you work from home, you still need to have a disciplined way of saving.” She suggests setting up a smaller monthly RSP deposit, even $200, then topping that up when lump sums of income do come in. “You can be flexible, but still be disciplined,” she explains. “Pay yourself first, then whatever money you have left is for spending and entertainment.”

Health insurance also comes into play with regard to financial planning, to prepare for the unexpected. “You need to have insurance in place in the event of a critical illness or disability that causes you to take time off work,” Rodricks says, pegging this as more important than life insurance. Though there’s no cash coming in, your bills won’t stop, so it’s important to protect your income.

Most financial advisors will also weave the topic of long-term housing and retirement care into the conversation. Deft research helps secure an environment that will be LGBTQ-friendly when the time comes. Discrimination of gay nursing home residents in Canada is well-documented: Nip that bad business in the bud.

Sound planning boils down to taking control of your future—it doesn’t have to be an eat-the-frog exercise. You may actually be quite good at it. So take stock of what you need to be that person in the retirement TV commercials—laughing, golfing, dancing, gardening—pull the pencil out from behind your ear and away you go.

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