Two timely books focus on essential questions for everyone who expects to live to collect on his or her pension: What will be left after taxes and what will it buy? The issue – who will pay for retirement and what it will cost – has to be faced. Both authors agree that government will be unable to finance retirement in the style to which most Canadians would like to be entitled. Both agree that every man and woman has to battle the tax and investment systems to accumulate capital for the final decades of life. But the authors’ paths to their plans are quite different.

Stephen Gadsden, a financial planner, offers a well thought out, carefully drawn map of the system of income generation and deferral in public and private retirement planning systems, touching on estate planning, living wills, and the selection of annuities. The tone is didactic, the information solid, and the result is a reference book to consult when mutual fund and insurance salespeople make their pitches.

Gadsden frames his analysis from the outset as a description of how Canadian governments created barriers to savings and investment through high taxation, inept administration, and a destruction of the universal pension system that Canadians grew up paying into and feeling entitled to draw upon. In due course, he gets to tax control strategies. He offers nothing new, for there really isn’t anything that hasn’t already been tried, but his lists of ideas are worth perusing. He finishes with a list of advanced tax plans – use of the $500,000 super exemption for qualifying small businesses, the family farm exemption, and estate freezes. There is nominal treatment of the role of insurance in financial planning, and a concluding list of 30 sound ideas for keeping what’s yours.

Economist Dian Cohen takes a wide-ranging approach to financial strategies, examining the economy, the structure of the health care system, public pensions, and private investment alternatives. Her outlook is broader than just retirement planning, yet her insights are valuable.

Cohen notes that Canadian living standards have slipped, the result of rising taxes and falling productivity. She observes that the dependency ratio, the fraction of population that has to be supported in youth or old age divided by the number of people able to support them, is rising and imperiling the capacity of the nation to maintain its pension system. Her solution is better financial planning by such conventional methods as contributing to an RRSP and using the tax savings or refund to pay down one’s mortgage. She deals with post- pension issues such as estate planning. Many pages are devoted to work sheets and inventories and a glossary of terms ranging from economist John Maynard Keynes to the World Trade Organization.

A tax revolt could persuade Canadian governments to cut taxes, but that’s not the way things are done. So Canadians go on paying some of the highest tax rates among all advanced democracies. The economy is throttled by these high tax rates, acknowledge the authors, and there is little sign that the federal and provincial governments will be reducing taxes substantially in the foreseeable future.

Both Gadsden’s focused financial plans and Cohen’s broader critique of the Canadian economy offer help to the beleaguered taxpayer. But there is a profound question neither book raises nor answers: is it wise to spend a career working in Canada’s harsh tax climate to prepare for a long and possibly not very rich retirement?
Gadsden and Cohen offer a plan of self-help for Canadians working toward retirement. Choose Cohen for analysis of why Canadians’ fortunes are sinking, Gadsden for instruction on what to do about it.