Canada Pension Plan – Should You Take it Early?

New Rules governing the Canada Pension Plan took full effect in 2016.  Under these rules, the earliest you can take your CPP Pension is age 60, the latest is 70. The standard question regarding CPP remains the same – should I take it early or wait?

If you take it at the earliest age possible, age 60, your CPP income will be reduced by 0.6% each month you receive your benefit prior to age 65.  In other words, electing to take your CPP at age 60 will provide an income of 36% less than if you waited until age 65.

CPP benefits may also be delayed until age 70 so delaying your CPP benefits after age 65 will result in an increased income of 0.7% for each month of deferral.  As a result, at age 70, the retiree would have additional monthly income of 42% over that what he or she would have had at 65 and approximately 120% more than taking the benefit at age 60. The question now becomes, “how long do you think you will live?” Read more

The Importance of Critical Illness Insurance in Retirement Planning

There are a number of obstacles that could potentially de-rail a comfortable retirement. These include marriage breakdown, a stock market crash, and being sued. Another huge obstacle would be the diagnosis of a life threatening critical illness affecting you or your spouse. While it might be difficult to insulate yourself against some of the threats to retirement security, Critical Illness insurance goes a long way to mitigate the financial disaster that could result from a change in health as we approach retirement.

Considering that the wealth of many Canadians is comprised of the equity in their homes and the balance of their retirement plans, having to access funds to combat a dreaded illness could put their retirement objectives in jeopardy. Imagine that you are just a few years into or approaching retirement and you or your spouse suffers a stroke. The prognosis is for a long recovery and the cost associated with recovery and care is projected to be substantial. Statistics show that 62,000 Canadians suffer a stroke each year* with over 80% surviving* many of whom would require ongoing care. Since 80% of all strokes happen to Canadians over 60 those unlucky enough could definitely see their retirement funding jeopardized. Read more

TFSA or RRSP 2018

One of the most common investment questions Canadians ask themselves today is, “Which is better, TFSA or RRSP”?

Here’s the good news – it doesn’t have to be an either or choice.  Why not do both? Below are the features of both plans to help you understand the differences.

Tax Free Savings Account (TFSA) 

  • Any Canadian resident age 18 or over may open a TFSA. Contribution is not based on earned income.  There is no maximum age for contribution.
  • Maximum contribution is $5,500 per year.
  • There is carry forward room for each year in which the maximum contribution was not made. For those who have not yet contributed to a TFSA, the cumulative total contribution room as of 2017 is $52,000.  Read more

What the Wealthy Know about Life Insurance

If you have ever thought that life insurance was something you wouldn’t need after you reached a certain level of financial security, you might be interested in knowing why many wealthy individuals still carry large amounts of insurance.  Consider the following:

  • A life insurance advisor in California recently placed a $201 million dollar life insurance policy on the life of a tech industry billionaire;
  • Well known music executive David Geffen was life insured for $100 million;
  • Malcolm Forbes, owner of Forbes Magazine, was insured at the time of his death in 1990 for $70 million.

While life insurance is most often looked upon as a vehicle to protect ones family or business, the question that springs to mind is why would individuals with wealth need life insurance?  Read more

Supporting adult children takes its toll on boomers’ retirement plans: survey

As baby boomers approach retirement while their children look for financial help, many are feeling the financial strain.

A new TD survey found 62 per cent of boomers can’t save enough for retirement because they’re supporting adult children or grandchildren. Those kids, however, aren’t taking that money obliviously: 44 per cent of millennials who rely on their parents’ or grandparents’ support said they know that help means fewer retirement savings, and 43 per cent said they’d cut costs rather than asking for financial help.

Read: Canadians postpone retirement to support children

“As a parent or grandparent it’s natural to want to help our kids and grandkids who may be facing financial challenges such as finding full-time employment or paying their day-to-day expenses,” Rowena Chan, senior vice-president at TD Wealth Financial Planning, said in a news release. “It’s important that this desire to help is balanced with the goals you have when it comes to retirement.” Read more

Retirement – Are you Prepared?

Whether you are decades away from retirement or if it is just around the corner, being aware of the planning opportunities will take the fear and uncertainty out of this major life event.

Blue sky your retirement plans to get clarity

As you approach retirement, preparation and planning become extremely important to help ensure that this period of your life will be as comfortable as possible.   If you are like most, you have spent considerable time contemplating the type of retirement you wish for yourself.

  • Is extensive travel your dream?
  • Do you have an expensive hobby or two you want to take up?
  • Will you stop working totally or continue to do some work on your own terms using your life experience and skills to supplement your income.
  • Will you remain in your house or will you downsize to smaller, easier to care for premises? Or perhaps housing that will be more compatible with the challenges of aging?

Read more

Three trends that will drive Canada’s economy in 2017

There are three trends that will guide the Canadian economy in 2017. Those are:

  1. the strength, or lack thereof, of oil prices;
  2. domestic housing developments; and
  3. whether the U.S. economy continues to improve.

So says Russell Investments’ 2017 Global Market Outlook, which calls for modest growth in the coming year for Canada.

“Moderate improvement in the price of oil and reasonable growth of the U.S. economy are weighed down by debt-laden households,” says Shailesh Kshatriya, director of Canadian strategies at Russell Investments Canada Limited. “We expect domestic equities to be positive, but without the exuberance of 2016. However, domestic bonds likely will be challenged as lacklustre fundamentals may be partially offset by rising yields in the U.S. […] On balance, we see 2017 economic growth in the range of 1.6% to 2%.”

 

Read more

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Boomer + Sandwich Generation + Club Sandwich + Boomerang = Financial Instability

The Sandwich Generation was a term coined by Dorothy Miller in 1981 to describe adult children who were “sandwiched” between their aging parents and their own maturing children.  There is even a term for those of us who are in our 50’s or 60’s with elderly parents, adult children and grandchildren – the Club Sandwich.   More recently, the Boomerang Generation (the estimated 29% of adults ranging in ages 25 to 34, who live with their parents), are adding to the financial pressures as Boomers head into retirement. It is estimated that by 2026, 1 in 5 Canadians will be older than 65. This means fewer adults to both fund and provide for elder care.  Today, it is likely that the average married couple will have more living parents than they do children.

What are the challenges? Read more

The Single Premium Insured Annuity

Available until January 1, 2017

A New Approach

 A new method of structuring an insured annuity has restored its favourable results.  The new approach involves combining the prescribed annuity with a Universal Life policy.

  • The UL policy is funded with a single deposit to provide lifetime coverage.
  • The remaining capital is then used to purchase the prescribed life annuity.
  • On the death of the insured/annuitant, the annuity income ceases
  • The Universal Life policy now returns the full amount of the capital to the intended beneficiaries.

Read more

Ease Your Retirement Worries with Immediate Annuities

The majority of Canadians work hard to accumulate a retirement fund and many are averse to exposing savings to unnecessary market risk after they retire.

In today’s prolonged low interest rate environment, immediate annuities are often dismissed or overlooked as a viable vehicle for providing retirement income. Perhaps they shouldn’t be.

An annuity is an investment that provides a guaranteed income stream for a set period of time or for the lifetime of the annuitant. While annuities may not be for everyone, for those trying to find a way to guarantee income in retirement Immediate Annuities may be the answer.

3 Retirement Risks to Avoid Read more