Transcript Slide 1

How to be financially secure in
your business & personal life
Philip Boland, CIM, CFP, CLU, FCSI Director, Private Client Group Financial Advisor
Mike Busby, CFP, Associate Financial Advisor
Overview
• 3 Keys to Success
• Issues to Consider
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#1 Success –
Have a Plan
• Plan for your business
• Plan for your personal finances
• Review and Update your plan
Those without plans, plan to fail
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#2 Success –
Build Equity
Build personal + business equity
Prudent borrowing
Pay down debt
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#3 Success – Work
with Professionals
• Assemble a team
• Help get you there
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3 Key Issues to Consider
1) Am I going to be okay?
2) If I cannot work, will my family and I be
okay?
3) If I am no longer around, will my loved
ones be okay?
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Basis of financial comfort during retirement >
Income
CPP/OAS
Company
Pension
RSP/RIF
TFSA
Open
Acct
Financial Comfort
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Magic Formula…
Today @ age 42
Retire at age 67
1) Income Goal
2) Savings today
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Mike and Angela age 42
• Retire at age 67
• Require Annual Income $45,000
• 23 years of income (90-67)
• Inflation 2%+ 4.5% annual return
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Basis of financial comfort during retirement >
Income
CPP/OAS
Company
Pension
RSP/RIF
TFSA
Open
Acct
Difference
$25,000
$20,000
Financial Comfort
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$45,000 per yr or $20,000 (age 67-90)
Today @ age 42
Retire at age 67
1) Income Goal
2) Savings today
At age 67 need
$282,955!
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Mike and Angela…
Today @ age 42
$60,000
Retire at age
67
What do I need
to save today?
Age 42-67
At age 67 need
$282,955!
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Financial Plans …
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Need to save $2,302 per yr….
Today @ age 42
$60,000
$2,302 year
or
$191/mth
Retire at age
67
At age 67 need
$282,955!
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We are Living Longer!
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Basis of financial comfort during retirement >
Income
CPP/OAS
Company
Pension
RSP/RIF
TFSA
Open
Acct
Financial Comfort
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CPP Changes :
Early CPP, lower benefits
Later CPP, higher benefits
 2012 you can continue to work and also start drawing CPP
 If you do this, you’ll be required to make further contributions until
65 (voluntary thereafter)
 If you work past 65 and keep contributing, your employer is
obligated to kick in its share too!
 In past, took at age 60, 30% less than you took it at age 65
 By, 2016, take at age 60, 36% less than you take it at age 65
 Take CPP after age 65 > 0.7% per month vs old 0.5% per month
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CPP Estimate Sheet Request
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OAS Changes
Raising qualification from age 65 > 67
• Born March 1958 or earlier – You do not need to worry!
• Born Apr 1958 > Jan 1962 – Eligible between ages 65 > 67
• Born Feb 1962 or after – Eligible age 67
• Can defer OAS now – (7.2% increase every yr or by age 70 > 36% increase)
• 2014, Full OAS is about $6,612 annually or $551 month
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Basis of financial comfort during retirement >
Income
CPP/OAS
Company
Pension
RSP/RIF
TFSA
Open
Acct
Financial Comfort
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TFSA
• Tax sheltered
• Withdrawals are not taxed
• Money you take out won’t effect your Federal
income-tested benefits like OAS, GST,
Canada Child Tax Benefit
• Estate Planning purposes
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Am I going to be okay?
1) Level of Contribution
2) Time
3) Return (%)
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3 Key Issues to Consider
1) Am I going to be okay?
2) If I cannot work, will my family and I be
okay?
3) If I am no longer around, will my loved
ones be okay?
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Protection of Income and business interruption
sickness/disability
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Job A / Job B
Consider two job Opportunities?
Healthy
Sick or injured
Job A:
$120,000/yr
$0
Job B:
$116,000/yr
$60,000/yr tax free
If offered, what would you choose?
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Disability
Protect your Income
Loss of driving force of the leader > lose momentum
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Getting insurance for things less likely to happen
• Chances of your house burning down
• Chances of being involved in an auto
0.08%
accident 4%
• Chances of developing a critical illness before 65
35%
• Chances of developing a critical illness before you are 81
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65-70%
The impact of suffering a critical illness…
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Causes of Critical Illness insurance claims paid in
Canada (up to 2012)
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$16,000,000 in claims up to 2013!
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Withdraw RSP to pay expenses..
Net RRSP Withdrawal + Your Marginal tax rate
Gross RRSP withdrawal
Marginal
tax rate
$50,000 $75,000 $100,000 $150,000 $200,000 $250,000 $300,000
30%
$35,000 $52,500 $70,000
$105,000 $140,000 $175,000 $210,000
35%
$32,500 $48,750 $65,000
$97,500
$130,000 $162,500 $195,000
40%
$30,000 $45,000 $60,000
$90,000
$120,000 $150,000 $180,000
45%
$27,500 $41,250 $55,000
$82,500
$110,000
50%
$25,000 $37,500 $50,000
$75,000
$100,000 $125,000 $150,000
$137,500 $165,000
The above example is for illustration purposes only. Situations may vary according to specific circumstances.
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Closing thought’s on Critical Illness
1) Do you know of anyone who in the last few years has suffered
from cancer, heart disease, or a life threatening illness?
If Yes > Did that event have an impact on their lifestyle and
finances?
If Yes > Would a lump sum benefit have helped?
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If I cannot work, will my family and I be okay?
sickness/disability
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3 Key Issues to Consider
1) Am I going to be okay?
2) If I cannot work, will my family and I be
okay?
3) If I am no longer around, will my loved
ones be okay?
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Don’t leave a mess for your family…
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POA – Personal Care
POA - Property
Estate Directory
Will
Do you have a Will?
No Will
• “Intestate” > arbitrary formula
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•
Court will appoint a “Personal Representative”
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Take longer for estate to be distributed to beneficiaries
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Higher cost of administering your estate
“Talking to your customers about wills, estates
and Joint ownership”
“Keep costs down through preparation and forethought. You
can reduce 50% of legal costs if everything/all appropriate
information is packaged together properly”
Arthur Fish, Borden Ladner Gervais LLP
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Purpose for Life Insurance: Early and Later in Life
Early in Life
Later in Life
•Protection for surviving
dependents
On death of 2nd spouse…
•Replace earnings
•Future Education costs
Solution:
A)Term Insurance
Or B) Combination of Term
Insurance + Permanent
Insurance
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Insurance to assist in funding
your estate’s eventual tax
liability
Solution:
A) Permanent Insurance
Priority of the Estate Distribution
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Terminal Tax Return > Deceased Female, single 76
Market
Value
Original
Cost
RRIF,
beneficiary
son
$475,000
$350,000
Nonregistered
Assets
$66,000
Bank
Account
Townhome
RRIF,
beneficiary
son
$475,000
$8,000
$6,000
Nonregistered
assets
$0
$220,000
Bank
Account
$50,000
$150,000
purchas
e price
$483,000 @ 45% MTR = $217,350 tax owing!
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Taxable
Income on
the
Terminal
return
Townhome $0
Terminal
Income
Tax!
$483,000
Explanation
$66,000-$50,000 =
$16,000 @ $50% =
$8,000
3 Key Issues to Consider
1) Am I going to be okay?
2) If I cannot work, will my family and I be
okay?
3) If I am no longer around, will my loved
ones be okay?
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How to be financially secure in your business
and personal life
• Build a plan/work with people you can trust
• Supported by Hollis Wealth Advisory
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Questions?
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