Transcript MD Physician Services

Faculty/Presenter Disclosure
• Faculty: [Bridget Paton]
• Program: 51st Annual Scientific Assembly
• Relationships with commercial interests:
• Not applicable
Disclosure of Commercial
Support
• This program has received financial support – not applicable
• This program has received in-kind support from – not applicable
• Potential for conflict(s) of interest:
– Bridget Paton has received income from
MD Physician Services Inc.
– MD Physician Services Inc. distributes
financial services and products that will
be discussed in this program: Retirement
Planning for Incorporated Physicians
Mitigating Potential Bias
• We will be discussing mainly financial services and
concepts that we can assist with using our service &
product offering at MD Physician Services Inc.
Faculty/Presenter Disclosure
• Faculty: [Adrian Leandro]
• Program: 51st Annual Scientific Assembly
• Relationships with commercial interests:
– Adrian Leandro has received income from MD Physician
Services Inc.
– MD Physician Services Inc. distributes financial services and
products that will be discussed in this program: Retirement
Planning for Incorporated Physicians
Disclosure of Commercial
Support
• This program has received financial support [ MD Physician
Services] from in the form of [An educational grant].
• This program has received in-kind support from [MD Physician
Services] in the form of [Logistical support].
• Potential for conflict(s) of interest:
– [Adrian Leandro] has received [payment/funding, etc.] from [MD
Physician Services].
– [MD Physician Services] [developed/licenses/distributes/benefits
from the sale of, etc.] a product that will be discussed in this
program: [MD Management].
Mitigating Potential Bias
• We will be discussing mainly financial services and
concepts that we can assist with using our service &
product offering at MD Physician Services Inc.
Faculty/Presenter Disclosure
• Faculty: [Greg Leja]
• Program: 51st Annual Scientific Assembly
• Relationships with commercial interests:
• Not applicable
Disclosure of Commercial
Support
• This program has received financial support – not applicable
• This program has received in-kind support from – not applicable
• Potential for conflict(s) of interest:
– Greg Leja has received income from MD
Physician Services Inc.
– MD Physician Services Inc. distributes
financial services and products that will
be discussed in this program: Retirement
Planning for Incorporated Physicians
Mitigating Potential Bias
• We will be discussing mainly financial services and
concepts that we can assist with using our service &
product offering at MD Physician Services Inc.
Faculty/Presenter Disclosure
• Faculty: [Greg Leja]
• Program: 51st Annual Scientific Assembly
• Relationships with commercial interests:
• Not applicable
Disclosure of Commercial
Support
• This program has received financial support – not applicable
• This program has received in-kind support from – not applicable
• Potential for conflict(s) of interest:
– Greg Leja has received income from MD
Physician Services Inc.
– MD Physician Services Inc. distributes
financial services and products that will
be discussed in this program: Retirement
Planning for Incorporated Physicians
Mitigating Potential Bias
• We will be discussing mainly financial services and
concepts that we can assist with using our service &
product offering at MD Physician Services Inc.
Retirement Planning
For The Incorporated
Physician
Presented by:
Bridget Paton, CFP, FMA
Greg Leja, CFP, FMA
Adrian Leandro, CFP
Agenda

Canadian physicians at retirement

Retirement planning
 Corporate considerations

Take action
Profile Of Canadian
Physicians At Retirement
As in all successful ventures, the
foundation of a good retirement is
planning.
- Earl Nightingale
What Age Do Most Canadian
Physicians Plan To Retire?
0–64
A.60–64
B.
B.65–69
65–69
75+
C.70–74
D.75+
CMA Baseline Research
June 2010
What Percentage Of Canadian
Physicians Choose To Semi-Retire
Before Going Into Full Retirement?
A. 18%
B. 25%
C. 33%
D. 38%
38%
Years in semi-retirement?
Mean = 7.68 years
% of retired
1 to 2 years
31%
3 to 5 years
34%
6 to 9 years
13%
10 years or more
23%
CMA Baseline Research
June 2010
What Percentage Of Retired Canadian
Physicians Have An Average Income
Of $50,000+?
A. 66%
30%
Average annual income, before taxes, in retirement
25%
B. 76%
C. 86%
86%
D. 96%
24%
23%
20%
14%
11%
10%
3%
0%
CMA Baseline Research
June 2010
Top Retirement Goals
Being financially secure
95%
Spending more time with my family
85%
Preparing for the non-financial aspects of retirement
66%
Giving back to my community
58%
Volunteering / helping others
53%
Travelling and experiencing new places
53%
Teaching others and transferring my knowledge
45%
Being recognized for the work that I do
25%
Continuing to develop my medical skills
24%
CMA Baseline Research
June 2010
Retirement Planning With
Corporate Considerations
Over 8,000 physicians trust MD
to manage more than $4 billion
for their professional medical
corporations
Retirement Planning: Some Key
Questions
How will I spend my time?
► What do I need vs. What do I want?
► What are my priorities now vs. my long-term objectives?
► How can my goals become SMART?
Am I financially secure?
► Where will my retirement Income come from and will it be tax
efficient?
► How will my net worth evolve over time and what are the
estate implications?
► Will my portfolio provide what I need and stand up to market
surprises?
MD’s Five Step Retirement Preparation
Process
Step 1: Identify And Prioritize Your
Goals

When you think of your retirement, what
vision comes to mind?
simply
retire
something;
Don't
What would
an average
weekfrom
in retirement
look like?
have something to retire to.

What is it about practising medicine that
you’ll
– Harry
Emerson Fosdick
miss most?

What could you see yourself doing in
retirement in order to fill that gap?
Goal-setting Exercise
The purpose of this exercise is to help you identify what
you really want from retirement.
Things to consider when identifying retirement goals:
►
Needs satisfied by work
►
Needs satisfied by current leisure
►
Needs satisfied by past leisure activities
►
Work skills and leisure skills
Goal-setting Exercise
Goal-setting Exercise
–
–
–
–
buy a new car
renovate the kitchen
wind down practice
update will
– find a hobby
– save and invest more
– buy a vacation
property
– financial peace of
mind
– time with
grandchildren
–
–
–
–
golf & travel more
charitable giving
write a book
help children or
grandchildren
financially
Identify And Prioritize Your Goals:
Incorporation Exercise

Minimize current taxes

Grow net worth

Protect income
 Estate preservation
SMART Goals
Specific
Measurable
Attainable
Relevant
Timed
This is key to meeting your goals.
SMART Goal Examples

Buy a new Lincoln MKZ Hybrid by December 2013, paid for
with cash from my primary savings account …

Complete kitchen renovations by summer of 2014 – focus
on doing most of this on my own to limit budget to $25,000
 Wind down practice so that I will be fully retired by
January, 2015 and ready to assist in caring for
grandchildren two days a week.
Step 2: Determine Your Income

Clarify goals and assign a cost where applicable.

Determine sources of income and risks associated with
generating that income.
Sources of Income In Retirement?

Canada Pension Plan (CPP)/Old Age Security (OAS)

Registered Retirement Income Fund (RRIF)

Sell Property
 Tax Free Savings Account (TFSA)

Inheritance

Bank Account

Joint Investment Account (JtIA)

HOOP, Sick Kids pensions

Corporation – Dividends & Return of Capital
Provided Income Ratio (PIR)
Income you can count on
_
Income you would like during retirement
Income from fixed sources such as
CPP/QPP, OAS, and defined pensions
Desired retirement income
= Provided Income Ratio
_
_
Income Risk (Age 72)
Provided Income Ratio (PIR)
Income Risk
0 – 10%
Excessive
11 – 25%
High
26 – 40%
Medium
41 – 65%
Low
66% +
Minimal
Step 3: Create Your Roadmap

Winding down practice

What to do with corporation

Where will my income come from

How will my net worth evolve
 Will my portfolio stand up to market surprises

Have I considered contingencies
Winding Down Your Practice
Things to consider:
►
What to do with patient records
►
Dealing with staff. i.e.: termination benefits, etc.
►
Making arrangements for office closure and fixtures
►
Arrangements with hospitals and clinics
►
Advising CPSO, OMA, etc.
What To Do With My Corporation?
Two scenarios:
1. Primary purpose of corporation has been income
splitting.
If so, it is unlikely that there will be any future income splitting
(fully retired), and the corporation has minimal assets.
2. Purpose of corporation has been to build capital
for retirement.
If so, there could be:
a) Opportunity for income splitting in retirement
b) Non-liquid corporate assets
c) Corporation may have a role to play in your estate
planning.
Corporation Wind-up
You will need to:
►
Liquidate all corporate holdings
►
Pay out all final expenses, taxes and equity
►
File final tax return and notify CRA
►
Close all bank and investment accounts
Continuing Corporation
►
►
►
Lawyer must conduct a name change. “Medicine
professional” can no longer be in the name.
You may wish to amend share structure. Talk to your
MD Advisor, accountant and lawyer about this first to
ensure you understand the impact of changes.
No longer need to renew your Certificate of
Authorization.
Where Should I Get Money
In Retirement?
Perspective
Withdrawal Order (first to last)
Minimize current tax
TFSA, JtIA, Corp, CPP, RRIF
Net worth growth
CPP, JtIA, RRIF, Corp, TFSA
Risk management
Corp, JtIA, TFSA, RRIF, CPP
Estate preservation
RRIF, CPP, Corp, JtIA, TFSA
Perspective Ramifications – Option 1
Minimize Current Tax vs. Preserve
Estate
 Personal tax (10yrs): current tax focus better by $138,000

Personal tax (20yrs): preserve estate better by $209,000
 Net worth (10yrs): current tax focus better by $280,000

Net worth (20yrs): current tax focus better by $230,000

Estate value (10yrs): preserve estate better by $120,000

Estate value (20yrs): preserve estate better by $167,000
Will My Portfolio Stand Up To
Market Surprises
►
Annuities
►
Increase fixed income portfolio
►
Dividend income considerations
►
Discretionary investment management
Managing Investment Income

MD Management &/or MD Private Investment Counsel
– Purpose & Time Horizon
– Capacity for Risk
– Protection from Market Volatility
– Tax Considerations
Sample $1M
Portfolio
Medicine Professional
Corporation
$550,000
RRSP $450,000
A more tax efficient
asset location
US
Equity
7%
Int’l Cash
Equity 3%
6%
Int’l
Equity
24%
Cdn
Bond
64%
Cdn
Equity
20%
Cdn LongTerm Bond
0%
Total portfolio
Cash
3%
Cdn
Bond 3%
Cdn LongTerm Bond
11%
Cdn
Equity
34%
US
Equity
25%
Cash 3%
Int’l
Equity
16%
US
Equity
17%
Cdn Equity
28%
Cdn
Bond
30%
Cdn LongTerm Bond
6%
Total Portfolio Asset
Allocation
Total Cash &
Fixed Income
39.5%
Total Equities
60.5%
Contingencies
Risk assessment
►
Income
►
Markets
►
Health
Step 4: Leave A Legacy, Protect
Your Assets And Close Your Practice
Questions to consider…

When are you closing your practice?

How do you feel about charitable giving?

What are your plans for your corporation?

How would you like to be remembered by your
beneficiaries?

What strategies have you explored to ensure the transfer
of your estate is done tax effectively?
Advanced Estate Planning Strategies
►
Multiple wills
►
Trusts
►
Bump
►
Pipeline
Trusts
Two types of trusts: inter vivos and testamentary. Both can
play an important role in your estate plan.
►
Inter vivos. Created during lifetime
-Spousal Trust
-Joint Partner Trust
-Alter Ego Trust
►
Testamentary. Created upon your death and are
outlined in your will.
What About Insurance?
►
Terminate or convert term life contracts?
►
Terminate disability contracts?
►
Consider long term care insurance
►
Consider permanent insurance to maximize your
tax-effectiveness.
Step 5: Review Your Plan
Arriving at one goal
is the starting point of another.
MD’s Five Step Retirement Preparation
Process
Taking Action
►
Our presentation began by sharing some context
regarding retiring physicians.
►
We then moved through five steps to formulating a
retirement plan – with a healthy dose of the
incorporation perspective.
►
In our final segment of the agenda we want to leave you
with two things:
1.
We encourage you to act – regardless of where you
are please identify your next step and take it; and
2.
At MD, we want to help!
Total Wealth Management
Exclusively
For Physicians
Next Steps
►
Book an appointment with your MD Advisor
►
Complete the goal setting exercise with your MD
Advisor. Ask for a copy of our Forward Thinking
retirement planning kit.
►
Follow the five steps of preparing for retirement.
Thank you!
MD Physician Services provides financial products and services, the MD Family of
Mutual Funds, investment counselling services and practice management products
and services through the MD group of companies. For a detailed list of these
companies, visit md.cma.ca.
Estate and trust services are offered through the MD Private Trust Company, a CMA
company.
Insurance products are distributed through MD Insurance Agency Limited, a
subsidiary of the Canadian Medical Association. All life licensed MD Management
Advisors and MD Insurance Consultants have life licenses with MD Insurance Agency
Limited.
© MD Physician Services Inc. All rights reserved.
Retirement Planning
For The Incorporated
Physician
Questions?