Canadians living longer — but they're also working longer: BMO study
Marg Cammidge retired from the full-time corporate world 20 years ago, enjoying her golden years with some occasional consulting work. But now, at the age of 68, Cammidge has taken on a whole new job with the help of Rover.com, walking and house-sitting dogs.
“I have a lot of hobbies and interests, but I still want to keep really busy, vibrant and active – and this is a way of letting me do that,” said Cammidge in a telephone interview with BNN Bloomberg. “It fulfills my need to be around dogs. The bonus is you make money on the side.”
The growth of online marketplaces like Rover.com, Uber Technologies Inc., Airbnb Inc. and TaskRabbit have led to new ways to find work for retirees like Cammidge, who are a seeking extra income or ways to make ends meet. But there are some challenges, including tax complications and unpredictable income, when it comes to relying on the gig economy during one’s retired years.
The gig economy is casual, yet competitive with no benefits or pension offered. However, finding new sources of income in retirement, or while planning for retirement, may be a welcome opportunity to a number of Canadians who are worried about the costs of living longer.
According to a 2018 survey by the Bank of Montreal, 51 per cent of Canadians said they are concerned about health problems and costs associated with aging, 47 per cent said they are afraid of running out of money and 40 per cent said they worry they will become a burden on their family.
Cammidge says most of the income she’s made dog-sitting is supplemental, and that she’s turned to casual work during her retirement simply to stay active and social. Using Rover.com, she says she charges $40 a night to watch a dog, of which she earns $32 after the company takes its cut.
The Toronto native has been enjoying retirement and travelling a lot, but says this year she is taking some time off to stay at home and make some money rather than spend it.
Although she’s retired, Cammidge’s earnings are subject to the tax man.
When factoring in earnings from driving for Uber or cleaning homes through occasional jobs on TaskRabbit into a retirement plan, it’s important to take taxes into consideration to avoid a major lump sum expense all at once, said Jennifer Diplock, associate vice president of personal savings and investing at TD Bank.
Any income earned in the gig economy working must be reported. Taxes have to be paid on even the smallest of earnings, and GST has to be collected if earnings exceed $30,000, said Diplock. Those who collect a pension are unable to claim employment insurance, but are still required to make EI and Canadian Pension Plan contributions.
The growth of the gig economy comes at a time when many are working later in life, with more traditional employers opting not to offer workers a pension plan.
“Looking at things historically, 46 per cent of employees had a registered pension plan in 1977 versus 38 per cent of employees who had a registered pension plan in 2011,” said Diplock in an e-mail interview with BNN Bloomberg.
“This means that now more than ever, the onus now falls on employees to not only self-fund their retirement, but to also determine how much money they’ll need and how to save for it.”
Retired or not, this type of works comes with a great deal of financial unpredictability, said Diplock. As a result, workers in the gig economy often rely on savings strategies that typically focus on short-term goals like paying bills, rather than long-term goals like saving for retirement.
“None of us know how long we’re going to live or how much money we’ll need,” said Cammidge, adding that she thinks it’s important to do an annual financial check while in retirement.
“If I keep spending at this rate, my opportunity to live the kind of retirement I want to live is going to disappear very quickly. I could be very healthy and still have parts of the world I want to see, but really can’t afford to spend the money.”
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