SANDRA MARTIN -- Michael Redhill
Writer
'Artists occupy an unusual category. I don't think they can really count on being able to build a sensible retirement fund for themselves.'
Late on a winter afternoon, writer Michael Redhill is heading back to his office after taking his son, Benjamin, to a swimming lesson. As he drives, he juggles the vicissitudes of rush hour traffic with the equally troubling question of whether literary prizes and glowing reviews will provide more than cold comfort when he hits retirement age in 2031.
"Around the age of eight I decided it would be great if I never had to go to work," he laughs when asked about his retirement strategy. "I have always thought that to survive in old age, I would have to have a partner with her own RSP because I wouldn't be able to support anybody with what I have."
In truth, retirement is a moot point for the 36-year-old Mr. Redhill in that writing is a vocation as much as an occupation. Instead of puttering around in the garden or putting his feet up, he expects "to be carried out on my shield," or more likely his computer screen. "Artists occupy an unusual category," he says. "I don't think they can really count on being able to build a sensible retirement fund for themselves."
That's not to say they don't think about it, however. It is all a matter, he says, of "husbanding your own artistic legacy in an intelligent way." Paperback rights, foreign editions, screen adaptations, backlist titles that are still earning royalties and Public Lending Right payments from libraries are just some of the ways that a persistent, productive and popular writer can create the equivalent of a retirement annuity.
Selling or donating your personal papers to a research institution is another means of getting either cash or a tax write-off to keep the bill collectors at bay.
A poet, dramatist, novelist, essayist, ghostwriter and an editor of the literary periodical Brick, Mr. Redhill is no slouch when it comes to practising his craft. Although it took him 10 years to write his first novel, Martin Sloane, a grinding process that at times had him blocked and in despair, the novel was a finalist for the Giller, the Trillium and the City of Toronto literary prizes and won the $7,500 Amazon.ca/Books in Canada First Novel Award in 2001. He put some of that prize money toward a used 1999 Toyota mini van.
"I have a book of short stories coming out in April called Fidelity,"he says, "and I am working on a novel called Consolation,which will probably appear in 2005."
Foreign rights to Sloane have been sold in four countries and two years ago, Mr. Redhill signed with high-powered American agent Ellen Levine.
Mr. Redhill is into high production mode on more than his literary career. He and his partner have been together for seven years. Besides four-year-old Benjamin, they have Maxime, who is almost two, and a hefty mortgage.
Unlike the stereotypical image of the impractical writer who throws receipts into a shoebox and then dumps the whole lot on the accountant's desk with a shrug and a plea, Mr. Redhill actually thinks about income security and the future. His planning began more than 20 years ago with a bar mitzvah gift of some Bell telephone stock.
He held on to them for a decade, then cashed them in for about $15,000 when he was 24 and invested the money in an RRSP stocked with mutual funds with the CIBC. "It has grown well," he says. Or rather, it did until the last couple of years, when he admits to being hit "like everybody else."
Although far from obsessive about his RRSP, Mr. Redhill knows full well that if he continues to contribute at the rate he has been doing for the last 10 years, he will spend his old age in poverty.
Some years he hasn't been able to contribute at all and, in terms of it acting as a tax shelter, there has been no benefit at all because "many years the deduction was meaningless because I wasn't going to be paying taxes on my income anyway."
He still has less than $35,000 in RRSPs, which he admits "is just this side of pathetic." His partner, a healthcare consultant, has some RRSPs invested in mutual funds, but as a contract worker, she has no access to a company pension plan.
They have about 50 per cent equity in their house in a neighbourhood where recent sales have been around $300,000. That's good news, but a house is worth only as much as somebody is willing to pay for it and they do need to live somewhere.
"I am not as huge a believer in RRSPs as I used to be," Mr. Redhill contends. "A lot of people believe that RRSP money is never going to be taxed and that is not true. You are simply delaying paying tax and you may be delaying it until a time when you will be paying higher taxes. Your income goes down when you retire, but who knows what the personal income tax rate is going to be in 30 years time. It is a bit of a roll of the dice, especially if the government changes the rules."
He much prefers a mixed investment retirement strategy that also includes a small self-directed stock portfolio, such as the one he manages through E*Trade Canada. "I don't have a lot of money in anything so I don't stand to lose a lot," he says. Besides, "once you pay taxes on your capital gains, they are safe."
People tend to think that investing in stocks is a terrifying thing, but Mr. Redhill enjoys the challenge and the independence of managing his own portfolio. Trying to beat the market is a "crap shoot" in his view. Meeting the market is about the best you can do and that is why he likes indexed funds. He claims that he doesn't speculate. Rather he buys stock in companies based on research and a rudimentary knowledge of how to read a balance sheet. "An indexed fund is probably a better investment over the long term than a managed fund," he believes.
He credits that piece of wisdom to a close friend who works in the securities division of CIBC. The two have talked money and stocks informally ever since they were in high school. Mr. Redhill's friend, whom he declines to name, "really pushes indexed funds" rather than managed funds because "fewer than 10 per cent" of market managers beat the market every year. "Most of the time you are putting your money into a mutual fund that is not going to perform better than the market. So what is the point?" he asks rhetorically.
He made money on E*Trade until two years ago and then he "took it in the neck." The Nortel stock he had bought at $60 now sits at about $3. "That money is basically gone," he admits. He hasn't bothered to sell it, even though he could get a tax break.
He was luckier with his purchase of bid.com, a Toronto auction company that was a Canadian counterpart to eBay. He bought at $2 about four or five years ago and sold it at $30 just before the company when under.
Mr. Redhill hasn't looked at his investment portfolio in about nine months. "Too scary," he admits. Even so, he is confident that he will have enough books earning an annual return that his children won't have to support him when his fingers can no longer hit the computer keys.
Call it artistic bravado if you will, but as Lord Byron, the romantic poet whose work has survived its author for almost 200 years, says "truth is always strange; stranger than fiction."
© The Globe and Mail
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