Three Cornerstone Estate Planning Documents

Your basic estate planning documents should include:

• A Will
• A Power of Attorney
• A Representation Agreement

Your Will is the document which sets out who you would like to administer your estate and receive your assets after your death. You can also use it to appoint a guardian for your minor children. If you die without a will, your estate will be divided according to provincial law (which may not necessarily reflect your wishes).

Some of your property may be able to pass on to your beneficiaries outside of your estate. Some examples of assets in this category would include:

• Life insurance proceeds (named beneficiary)
• Pension benefits (spouse or named beneficiary)
• Registered Retirement Savings Plan (successor annuitant or named beneficiary)
• Registered Retirement Income Fund (successor annuitant or named beneficiary)
• Property owned as a joint tenant with another person

You will want to give your lawyer special instructions about making a gift to a beneficiary who is dependent on you for financial support. If the person you wish to provide the gift to has a disability, you will need to think about whether he or she could manage it and if it would affect any government benefits your beneficiary is receiving. A trust may be a good way to take care of these funds. Your lawyer will be able to advise you on this.

A Power of Attorney is a signed document which allows you to appoint another person to look after your legal and financial affairs if you are unable to do so for yourself. Your attorney may step in if you become incapacitated due to illness or an injury, or because you are traveling and will not be able to attend to matters personally. An Enduring Power of Attorney remains valid even if you lose mental capacity therefore, the person you choose would have to be someone you trust implicitly to act for you and make decisions as you would. It may be helpful for you, your attorney, and your financial advisor to sit down to discuss your financial affairs and your wishes should his or her services be required.

A Representation Agreement is a combination of a personal directive, advance health care directive, and living will. This document allows you to appoint someone to make decisions about your health and personal care if you are not able to make them yourself. Again, you will want to choose someone you trust implicitly. You can list any particular health care wishes you have in your Representation Agreement.

These three documents form the basis of your estate planning. Preparing them involves consulting with your lawyer to obtain advice and instructions. A separate appointment will be arranged so that you can sign the documents. The will must be signed in front of witnesses.

As an experienced financial advisor, I can review your financial documents to help you get ready for an estate planning meeting with your lawyer. Please contact me to schedule your complimentary consultation.

The Pooled Registered Pension Plan (PRPP) is available to employees working for companies under federal jurisdiction. The British Columbia government had introduced legislation to allow individuals and businesses this type of plan, but it died on the order paper when the most recent election was called. Hopefully, new legislation will be introduced soon which will allow more people to take advantage of this savings vehicle.

Pooled Registered Pension Plan Overview

A Pooled Registered Pension Plan (PRPP) is a deferred income plan. You would open a PRPP through your employer or at a participating financial institution. Participants’ assets are pooled with those of other individuals, which will help to keep administrations costs down. Your contributions to your PRPP are tax-deductible, in the same way that you would deduct your RRSP contribution.

How the Pooled Registered Pension Plan Works

There are two types of plan members under the plan:

Employed members are employees of an employer that offers a PRPP as a benefit; and

Individual members are either employees of an employer that does not offer a PRPP or self-employed individuals.

This is voluntary enrollment plan. Once a person enrolls in a PRPP, he or she can choose from a range of investments. If the plan member is an employee, contributions are automatically deducted from his or her pay on a regular basis in the same way that Canada Pension Plan or group Registered Retirement Savings Plan (RRSP) contributions would be deducted. Individual members would have the option of making regular contributions and/or making a lump sum contribution to their plan.

Annual Contribution Limit to PRPP

The annual contribution limit to a PRPP would be the same as a taxpayer’s RRSP limit for the year. Contributions to the Registered Pension Plan will be deducted from the RRSP contribution room for the year. Any contributions that your employer makes to your PRPP will also be counted toward your limit for the year.

Transferring Funds from a PRPP to Another Retirement Account

You can transfer funds from a PRPP to another retirement account if you wish. This is a portable retirement vehicle, and you can move funds directly to one of the following on a tax-free basis:

• a RRSP
• a Registered Pension Plan
• a Registered Retirement Income Fund (RRIF)

You also have the option of transferring the funds to a licensed annuities provider to buy an annuity (under certain conditions). This would be an option to look at when you are close to retirement and you want to look at options to create an income stream for life. Your financial advisor would be able to help you determine whether this would be the right choice.

While the Pooled Registered Pension Plan is not available to employees under provincial jurisdiction yet, this savings vehicle will likely be made available to workers over time. It has the advantage of being portable, and workers can contribute to the plan on a voluntary basis.

As an experienced financial advisor, I help my clients prepare for the type of retirement lifestyle they want. Please contact me  for your personal consultation.

photo credit: Alan Cleaver via photopin cc

Changing Jobs a Fact of Adult Life

How many jobs have you held in your lifetime? According to the results of a report released by the U.S. Bureau of Labor Statistics, younger members of the Baby Boomer generation held an average of 11 jobs from the ages of 18 to 44. Twenty-five percent of people had 15 jobs or more, while 12 percent held up to four jobs during this period.

Over the past 20 years, participation in employer-sponsored defined pension plans has dropped. If you happen to work for a public-sector employer, you will likely have a Defined Benefits Pension Plan. Private sector employers are less likely to offer this benefit to their workers. Today, only one in three working Canadians are part of an employer-sponsored pension plan.

Group RRSPs (Registered Retirement Savings Plans)

Saving for retirement through regular payroll withdrawals which are deposited into an RRSP account can help you save for your retirement. Some employers will match your contributions up to set amount per year. You will still need to determine how you want to invest the funds to get the best return on your investment to reach your financial goals. The funds could potentially be accessed before retirement, so you will need to be disciplined enough to leave them in place, rather than withdrawing them in a lump sum for some other purpose.

Defined Benefits Pension Plan Can be Restrictive in Retirement

If you pay into a Defined Benefits plan while working for an employer, you have the advantage of knowing that you will receive a certain income stream for the rest of your life. Your benefit will never decrease. Unfortunately, it is possible to be “pension rich but cash poor” as well. Your pension could be worth a significant amount, but you aren’t able to tap into it to gain access to a lump sum payment if your personal situation changes to pay for unexpected expenses.

Evaluate the Retirement Pension Plan and Have Your Own Savings Available

An employer-sponsored pension plan can be an important part of your overall retirement planning. Before you accept a job offer, get details of the whole package, including the retirement benefits, and discuss them with a financial advisor. You can get information you need about how this plan would work and how it would fit into your overall financial plan. You may even be able to transfer your existing pension credits to your new employer’s pension plan and consolidate all of them into one plan.

Holding some retirements savings outside of your company pension plan will give you greater flexibility when you do retire. You’ll want to have some cash available from a personal RRSP or a Tax-free Savings Account (TFSA) that you can access in that instance.

As an experienced financial advisor, I help clients make sense of their finances so that they can get the most out of life. Please contact me for your personal consultation.

How do you figure out the right choice, especially if you didn’t decide to leave the company voluntarily? You consider your options carefully. (Not every one will apply to you.) Get professional help from a financial advisor who can help you see the big picture, since your contribution to your company pension plan lowers your annual RRSP contribution limit. Then you’ll be in a better position to figure out how your company pension fits into your overall retirement plan.

Defined Benefit Pensions and Defined Contribution Pensions

Employer-sponsored pension plans can be set up in two ways: Defined Benefit Plans or Defined Contribution Plans. Contributions are made by the employer alone or the employer and the employee.

Defined Benefits Plan (DB). With a defined benefits plan, employees are guaranteed that they will receive a certain level of income in retirement based on a set formula, usually dependent on years of service and income they earn. In DB plans, employee’s contributions are set, leaving the employer responsible for contributing as much as needed to provide the guaranteed pension benefits.

Defined Contributions Plan (DC). Under a defined contribution plan, the employer and employee’s contributions are set. The exact amount of pension benefit is not known in advance but will instead be dependent upon the amount contributed and the performance of the invested funds over time. A selection of investment options is given for the employee to choose, from putting the risk in their hands to ensure enough funds will be there in retirement.
In both plans, the employee contributions are tax-deductible and employer contributions reduce the amount of RRSP room an employee has available.

Is Your Pension “Vested”?

Vesting is when you qualify for pension benefits. If you are leaving your job before your pension is vested, you would lose the right to receive the value of an employer’s contributions. The vesting period is set at a certain number of years of service using ranging from two to five years.

If you leave your job before your pension is vested, any money you contributed to the pension plan will be refunded to you, plus interest. You can choose to:

• Transfer the funds to your RRSP (Registered Retirement Savings Plan)
• Take a lump sum payment (and pay income tax on the full amount)

Vested Company Pension Plan

In a situation where you are leaving the company and you have enough years of service that your pension plan has vested, you have some choices to make. If your employer has a Defined Benefits Plan, you get a commuted (or discounted) value based on your age. You have the option of leaving your credits right where they are until you are ready to retire. At that point, you will receive a monthly income.

You also have the option of transferring the money into a Locked-in RRSP (LRSP). The money will continue to grow on a tax-free basis, but you will not be able to withdraw the funds until you reach a certain age.

In a DC plan, if your pension is vested you would get is the combined employee/employer contributions plus investment returns. You would have the option of taking the lump sum amount and putting it into a Locked-in Retirement Savings Account (LRSP).

Transfer Pension Credits to Your New Employer’s Plan

Your new employer’s pension plan may allow you to transfer your pension credits directly into the plan when you start work. If you have worked for several companies and have pension credits under several plans, it makes sense to consolidate them in one plan. Another option would be to take a lump sum and buy an annuity, which would guarantee you a lifetime income.

Changing jobs is a major life change, even when it’s something that we plan for. It’s even more challenging to deal with when it’s unplanned. As an experienced financial advisor, I give clients the facts they need to make the choices that are right for them. Please contact me to schedule your personal consultation today.

Life Insurance After Retirement

Do you need life insurance after retirement? There are some good reasons to keep this coverage in place, even after you have stopped collecting a pay cheque. The tax-free funds can be used for any or all of the following:

• Final Expenses

Even the simplest funeral or memorial service, including cremation or burial, will have some cost involved. How will your loved ones cover these expenses? The proceeds from the life insurance policy is extra money set aside which can be used for this purpose.

• Pay Off Debts

Part of settling the estate includes paying off debts. This step must be completed before the beneficiaries can receive their inheritance. Funds from the life insurance policy can be used to pay off credit cards, lines of credit, a mortgage, or other debts.

• Legal Fees and Expenses

The cost of hiring an attorney to settle the estate is another expense that your loved ones will need to deal with after your death. Funds from the insurance policy settlement are a source of ready cash that can be used for this purpose.

• Final Income Tax Return

Your estate will need to file a final income tax return for the year of your death. Some assets may be transferred directly to a spouse. If your spouse pre-deceases you or you are leaving assets to a child or grandchild, your estate may need to pay capital gains tax on investments or real estate. Or if you have registered funds that are not going directly to a spouse or financially dependent child/grandchild a huge tax consequence may be triggered. The funds received from the life insurance policy could be used to pay this expense, leaving more for your beneficiaries.

• Provide Income for Your Beneficiaries

The proceeds from the life insurance policy can be used to support your spouse after you pass away. Pension income often takes a dramatic drop after the passing of one spouse. Life insurance can supplement the drop in income.

Many older adults are in a situation where they are also helping their adult children and their grandchildren financially. If you are supporting an adult child with a disability, you may want to consider keeping coverage in place that can be used to continue that arrangement after your death. Your financial advisor can explain your options.

Don’t Cancel Your Existing Coverage

Don’t cancel an existing life insurance policy until you have discussed your plans with your financial advisor. Even if you decide you don’t want to keep the policy in force, the decision you make can have a profound effect on your beneficiaries. A solution would be to consider asking the beneficiaries for help paying the premiums or transferring ownership of the policy to the beneficiaries outright.

The latter choice means that you would no longer have control over the insurance policy, and the beneficiaries would be able to increase or decrease the level of coverage, or cancel the policy. This is a decision that would require a lot of thought, and you would need to get expert advice before making it.

Are you looking at your life insurance coverage but aren’t sure whether the policy still fits you and your retirement lifestyle? As an experienced financial advisor, I can sit down with you to make sure that you have the right type and level of coverage for your needs. Please contact me for your free, no-obligation consultation.

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Retirement Math: When You Focus on the Money

You already know that one of your goals should be to put aside a portion of your income for retirement. Sit down with a financial advisor to talk about what retirement means to you and how you would like to spend your days during this stage in your life. The answers you provide will help your advisor calculate how much you should be saving for retirement.

If you ask, you will be given a lump sum figure that would make for a comfortable retirement. It will, no doubt have plenty of zeros after it. You can choose to focus on “the number” and you will probably be more than a little intimidated by the idea that you will have to save that amount for your retirement.

Keep in mind that you will have more than one income source in retirement, which will take some of the pressure off the idea that all of your retirement income has to come from your savings. Putting aside some money and letting it compound over several years will go a long way toward helping you reach your retirement goals. In the meantime, you shouldn’t be so focused on the future that you forget to live now.

How Much Will Your Annual Lifestyle Cost in Retirement

When you are trying to determine how much you will need to live on in retirement, don’t forget to include your government pension benefits in your calculations. The following figures were provided by Service Canada:

Canada Pension Plan

Maximum Benefit: $1,013.50
Average Benefit: $534.65

Old Age Security

Maximum Benefit: $546.07
Average Benefit: $515.48

Next, add in how much you can expect to receive from your defined benefit pension, income from your RRSP (Registered Retirement Pension Plan) or RRIF (Registered Retirement Income Fund). Do you have funds in a Tax-free Savings Account or non-registered investments? Your financial advisor can help you with your calculations.

Your goal in retirement should be to plan to plan your income around the marginal tax brackets. British Columbia residents pay income taxes once their earnings reach $11,038.00. The next income tax bracket is $37,013.00.00. There is only a two percent hit when the taxable income goes up to just under $43,561.00. At $75,138.00, the income tax rate increases to 29.7 percent, so you would want to make sure your income in retirement stays or below the $43,561.00 level if possible.

As long as your income stays under $70,954.00 per year, you will avoid having any of your Old Age Security payments clawed back by the government.

Couples can use income splitting as a way to reduce taxes. Their Canada Pension Plan and pension income can be split to bring the higher earning spouse or partner into a lower tax bracket.

Keeping careful track of the numbers can reap huge benefits at tax time in retirement. As an experienced financial advisor, I help clients understand how to make their retirement numbers work for them. Please contact me to schedule your confidential consultation.

Strategies to Help Cut Your Tax Bill for Next Year

• Share Your Canada Pension Plan Benefit

You and your spouse can apply to share the Canada Pension Plan Benefit. If both of you are currently receiving CPP benefits, the payments can be adjusted so that both of you are receiving the same amount. If only one of you is receiving a CPP benefit, it can be divided so that you and your spouse each receive half.

This type of arrangement can be put in place if you and your spouse or partner are over the age of 60. You must apply for the assigning of benefits, but you only need to do so once. The pension sharing cannot be backdated.

The arrangement will continue as long as you are in a relationship with your spouse or partner. (If you decide that you no longer wish to share your pension at any point in the future, you can write a letter to Service Canada and ask that the arrangement be stopped.) You can find out more information at the Service Canada website.

• Split Your Other Pension Income with Your Spouse or Partner

Are you or your spouse receiving life annuity payments from a company pension plan? Starting in 2006, these payments could be split with a spouse or partner. There is no age restriction on the person receiving the annuity payments.

If you are over the age of 65, you have more options for splitting pension income. RRIF and annuity payments from an RRSP or deferred profit-sharing plan can also be split.

To take advantage of this option, you and your spouse or partner will need to file a Joint Election to Split Pension Income (Form T1032). This form must be filed annually. Before sending it in, you should sit down with your financial advisor to determine whether it is to your advantage to split your pension income.

If you decide to split the pension income, you are not limited to a straight 50/50 split. Another arrangement may be to your advantage (60/40, 30/70), especially if you are looking at clawbacks for the Old Age Security benefit. Your financial advisor can help with these calculations as well.

As an experienced financial advisor (and a fellow taxpayer), I help my clients implement strategies to maximize their income and keep their tax rate as low as possible. If you are experiencing sticker shock after completing your income tax return, please contact me for a confidential consultation.

According to book, The Retirement Maze: What You Should Know Before and After You Retire, by Rob Pascale, Louis H. Primavera and Rip Roach, 45% of retirees miss their jobs. This number doesn’t decline even as people settle into their new “freedom” as retired people. According to Pascale and his co-authors, retirees still miss participating working even 11 years after leaving the workforce. What’s wrong with us?

Coping with the Loss of Identity as a Worker in Retirement

The problem here is not retirement, it’s more about your plan for retirement. You may have spent a lot of time during your working life talking about and focusing on the financial part of your retirement plan. That is important, and you need to have the resources in place to finance the lifestyle you want, but it’s only one part of the overall picture.

Work is not just something that provides a source of income. For many people, it gives them a sense of identity as well as provides structure for their day. Retiring without having a specific plan for how to fill in the eight or more hours that you would have spent at work may seem like a vacation for the initial “honeymoon” phase. After that point, you may find yourself at loose ends, and retirement may not be as satisfying as you had hoped.

Talking About Retirement and Making Choices that Work for You

• How will talking about coping with retirement now help you when the time comes? Getting these issues out in the open means you can look at them and work out a plan so that you aren’t suddenly facing huge chunks of time with nothing to fill it.
• Rather than going from working full-time to fully retired, you may decide to ease into a retirement lifestyle by slowly decreasing your working hours over a few months or years. Your financial advisor can help you determine how this would look so you can make the choice that best fits your needs.
• Many retirees say they miss the relationships they had with coworkers. If you don’t need to generate income in retirement, consider volunteer “work” for an organization, coaching, mentoring, or helping out in some capacity. It will keep you busy and help you make some new friends.
• Make a point of taking up a new hobby or interest that you didn’t have the time to pursue while you were working. Sign up for a class or lessons as a way to mark this new phase in your life.

Ultimately, a good financial plan gives you the freedom to choose to live the way you want to in retirement. It allows you to decide to work because you want to, not because you have to. You can fill your days with activities that are meaningful to you, even though you may no longer be identified as a worker.

As an experienced financial advisor, I can help you make the transition from worker to whatever you want to be in retirement. Let’s sit down and have a conversation about what that can mean for you. Please contact me to schedule your no-obligation consultation today.

Why You Should Not Count on Your Home Equity to Fund Your Retirement

Here are some reasons your home should stay your castle, and not be relegated to something you would draw on to fund your retirement:

• You may not make a lot of money if you tried to sell it when you retire.

If you live in a city where housing costs are high and want to buy another home in the same area, you will be paying a lot of money for your new home as well. The only way you will end up with a lot of cash in your pocket to fund your lifestyle in retirement is if you were planning to move to a smaller city or town where life is slower and more relaxed. This is not the right choice for everyone, and you would have to think about whether it fits your goals and lifestyle, as well as your financial plans, before taking this step.

• You may not find a buyer for your home.

Depending on market conditions and how quickly you need to sell, it may take some time before you are able to sell your home. Assuming there are other retirees in your area who are also downsizing, you may have a lot of competition when trying to sell your home. There are only so many potential buyers for larger homes.

If you are trying to sell your home, don’t buy a new one until you sell your existing home. The last thing you want is to be stuck owning two houses.

Plan for Retirement With Your House as an Asset

While you don’t want to ignore your house as an asset, don’t make it the prime focus of your retirement plan. Most people would prefer to remain in their homes in retirement, if possible. Sit down with a financial advisor and start talking about what retirement means to you.

• Where would you like to live? Would you like to stay in the same area?
• How do you feel about downsizing to a smaller home?
• Do you have children and grandchildren? Do you want to live in a particular area so you can be near them?
• What other assets will you have to draw on in retirement?

Start thinking about and working toward your goals now so that you can have the kind of lifestyle you want when you are ready to retire. As an experienced financial advisor, I can help you put the pieces together to get you there. Please contact me for your no-obligation consultation.

According to reports, 60 percent of parents are providing financial support to their children well into adulthood. In some instances, these young adults are receiving help in their late 30s! Economic conditions are challenging for many young people and it has forced them to make tough choices. At the same time, you don’t want to forego your dream of a comfortable retirement for your child, either. Is there a way to balance your child’s needs without putting yourself in the poor house and feeling angry and resentful in the process?

Helping Your Adult Children: Start with a Conversation

• Talking about money is a difficult subject.

You may have been raised at a time when it wasn’t polite to talk about how much money someone made or what they had. If your child approaches you about getting some financial help, the first thing you need to find out is how much help he or she needs and what it is for.

• Separate “needs” from “wants.”

There is a difference between someone who has run into financial difficulty due to a job loss who is actively looking for work and a person who needs money to go on an expensive vacation. While you may choose to provide support in the first instance, it may be harder for you to justify paying for the second one, especially if it means that you will have a hard time covering your own expenses.

• Get help to have the conversation from a professional financial advisor if you need it.

Talking about money is a loaded subject that can bring up a number of other emotions, such as anger, resentment, jealousy, and bitterness. If the conversation is not handled well, it can create a rift in your relationship with your child that can take a long time to heal. Enlist the help of a financial advisor who can help to keep the conversation on topic.

• Talk to your child about his or her financial situation and plans going forward.

Your goal should be to offer a “hand up” to your child who need it but not a “hand out.” You want to make sure that you are offering temporary assistance, not a constant stream of revenue. It’s perfectly acceptable to ask your child about his or her plans to make sure that he or she gets on track toward independence within a timeframe that the two of you can agree on.

• Discuss whether the money is a gift or a loan.

If the money is a loan, you’ll need to put the terms in writing. Write out a payment plan, including an interest schedule. Both of you will need to sign it. Formalizing the arrangement means that you and your child will take the matter more seriously.

In a situation where you are deciding to make a gift of money to your child, you may want to write that down as well. If you have more than one child, it may cause resentment in the family if the other siblings don’t receive help at the same time, even if they don’t need financial assistance.

• Make sure that you don’t jeopardize your own retirement cash flow to help your children.

It can be difficult to say “No” to an adult child, but you need to consider your own retirement needs as well. As an experienced financial advisor, I can help you start a conversation with your children about these delicate matters. Please contact me today for your confidential consultation.

According to the survey, Canadians still consider being debt free for retirement to be important, along with spending time with family, having hobbies, and living close to family members. Why is there a disconnect between what retirees are saying is important to them and the level of debt they are carrying into retirement?

Reasons Debt-Free Retirement is Challenging

• Debt is accessible

At one point, lenders discouraged clients from accumulating debt. Now, they make it easier for clients to access debt through loans, lines of credit and credit cards.

• Consumption is encouraged and valued

We live in a consumer-driven society. Everywhere we look, we are encouraged to buy the newest and latest version of products, whether we actually need them or not. Easy access to credit means that people not only spend money they have, but they spend money they haven’t actually earned yet. Every time we go online, watch television or open up the newspaper, we see something encouraging us to spend money.

• Low Interest Rates

Rising house prices have done their part to add to Canadian debt. As the cost of home ownership increases, Canadians have had to go further into debt to buy the same home they would been able to buy even five years ago. Canadian lenders have made it easier for prospective homeowners to borrow money over a longer time. At one point, banks were offering amortization periods of up to 40 years until the government brought in legislation to shorten amortization periods. All of these reasons have compounded the issue of more debt.

• Difficult Economic Conditions

The recession and stock market corrections have taken a toll on people’s ability to save money over the past few years. Some people have had to go into debt to stay afloat during periods of unemployment or lower income. For a number of people, life has thrown them a curve ball and they are still trying to recover from it

You Can Deal with Debt Before Retirement

If you would like to get rid of your debt before you retire, you have to have a plan. Review your financial situation and make it a priority. Are there places where you can divert some of your spending toward debt reduction and still live today?

Ideally, you want to have some balance in your life. It can be tempting to set the debt reduction bar really high and eliminate all discretionary spending, but this type of strict financial “diet” is not something you will be able to stick with over the long term. As an experienced financial advisor, I can help you make some long-term lifestyle changes that can help you reach your goals of a comfortable retirement and help you pay down your debt. Contact me today to arrange your free consultation.

Image Credit: Retirement by 401(K) 2013, on Flickr

Estate Planning Mistake #1: Not Making a Legal Will

Would you like to have a say in how your assets are distributed on your death, or would prefer to have the government make the decision for you? Most people would prefer to make this very personal decision themselves.

What happens if you die without a valid will in British Columbia? Your estate will be distributed according to the Estate Administration Act instead of your personal preferences. Here’s how the law would divide your assets in different situations:

Consult an attorney and make a will so that your money and property will be distributed in the way you choose.

Estate Planning Mistake #2: Failing to Update Your Will

Your will should be updated if your marital status changes. If you remarry, your will is automatically revoked unless you make a new one in contemplation of your new marriage. You’ll likely also want to make a new one if you get divorced unless you want your former spouse to inherit a portion of your estate.

Other situations where you will need to update your will would be if one of the beneficiaries dies or if you buy or sell an asset that you mention in it. You may also change your mind about how you want your estate divided, and this will mean consulting a lawyer to make changes to your will.

Once you update your will, consider registering a wills notice with the Vital Statistics Agency. You would pay a small fee to register that you have made a will and where it is kept. The Agency does not keep a copy of your will or have access to any of its contents. Your next of kin would be able to search the registry to find the document to confirm that they have your last will and testament after you pass on.

Estate Planning Mistake #3: Writing Your Own Will

Going the DIY route is not the best choice when making your will. Picking up a package at an office supply store and filling in the blanks may be convenient, but it doesn’t replace consulting with an experienced attorney. You may miss out on some important details that can make a big difference to your estate, such as failing to include all of your assets or using incorrect wording.

Take the time to get expert advice about your estate. As an experienced financial advisor, I know that it can be awkward to start a conversation about these matters. Let’s sit down and talk about the gifts you would like to leave your loved ones. Please contact me today to arrange your confidential consultation.

Retirement: A Major Financial and Lifestyle Change

If you were to ask people at random to describe what retirement meant to them, you would get several different answers. The “traditional” picture of spending one’s Golden Years puttering around the house and working on hobbies is no longer the norm for today’s active seniors. People are living longer, healthier lives. Many people want, and expect, retirement to be a kind of “second act” where they will get to do things they didn’t have the time or money to do when they were younger.

For some people, that may mean stopping work entirely and moving from an employee collecting a salary to drawing an income from their investments. Other people, either from choice or necessity, continue working past the standard retirement age of 65. They may choose to start receiving their Canada Pension Plan benefits at age 60. If they choose this option, it will mean receiving a lower monthly benefit than if they had waited until age 65 to start receiving payments.

Starting a business is an option for some retirees. They want to stay active and have the time to devote to getting a new venture off the ground. For others in this age group, staying active involves volunteering their time for an organization that can benefit from their knowledge and experience.

It Pays to Have a Plan for Retirement

For many couples, retirement is a vague concept. During the years when they are focused on paying down a mortgage and raising a family, contributing to their RRSP may not be their top priority. Unless a couple has a clear idea of what they want their retirement to look like, they run the risk of getting to the point where one or both spouses will be about to leave the workforce and they will be looking at each other thinking, “Now what?”

To avoid that unfortunate circumstance, a couple should talk about their hopes and dreams for retirement. This is the starting point to making them a reality. Sitting down with a financial advisor early on can help to clarify the steps necessary to break them down into goals.

Over time, the goals for retirement may change. A good financial plan should have some flexibility in it to account for unexpected circumstances that may come up along the way.

Start to Prepare Your Marriage for Retirement Now

It’s never too early in your marriage to start talking about the retirement that you both want. A good way to discuss your goals is by asking some open-ended questions. Here are a few to help you get started:

• At what age would you ideally like to retire?
• How do you see yourself spending a typical day in retirement?
• Would you like to live in the same city or would you consider relocating?
• If you are interested in moving, how much would it cost to live somewhere else?
• Is downsizing to a smaller house or an apartment part of your plan?

Whether you need help to start the conversation or you have a clear picture in mind for the lifestyle you want, as an experienced financial advisor I can help you devise a plan to make it a reality. Contact me today to arrange your personal consultation.

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Define what early retirement means to you.

Everyone has a different image of their retirement. What’s yours? Take some time visualizing how you want to spend the next phase in your life.

• When do you want to retire?
• Where do you want to be living?
• How do you want to be spending your time?
• What will it cost?

What income will you be able to bring in at your earliest desired retirement date?

• Will you be able to collect your company or government pensions at your desired retirement date? If so, how much income will this be?
• If not, will your other sources of income (investments, rental, etc.) be enough to cover your income needs?
• If you have a shortfall, are you willing to take other steps to achieve your desired early retirement date (work part-time, spend less and save more now, reduce your desired retirement lifestyle and costs)?
• Am you willing to reconsider your desired retirement date?

Do you have a retirement plan in place?

Knowing the answers to the above questions means you are well on your way to having a plan in place. A financial planner is the best next step. A financial planner will go through the above questions and answers with you, gather all your personal information and will make a plan to help you achieve your financial goals. If a realistic and doable plan is created, implemented and you stay the course, then achieving your desired early retirement is a feasible goal.

Helpful Tips for an Early Retirement

• Start when you are young

How young is young enough to start preparing for early retirement? How old are you right now? Today is the perfect day to start preparing for retirement. If you started in your 20s or early 30s, it means you will be further along on the road to reaching your goals. If you are getting off to a later start, you have some catching up to do, but the point of getting started now still holds true.

• Make small, regular contributions.

If you treat your RRSP contributions like a bill, you will find it easier to keep up with them. Set up an automatic deduction at each pay period in an amount you feel comfortable with.

• Ensure you participate in your employer pension plans or ESOP programs.

If your employer offers any type of savings programs in which they will match your contributions, be sure to take advantage of this benefit. It’s an easy way to grow your investment.

• Invest conservatively for the long haul.

Many young investors take a very aggressive approach when choosing savings vehicles for their retirement savings. They want to make a killing in the market and make big money quickly. A much better approach is to take a slow but steady approach to investing, as opposed to going for the big gain, panicking when the market corrects and taking a loss by jumping out. Your financial advisor will ask you some questions to determine what level of risk you feel comfortable with and recommend a mix of investments that will fix your profile.

• Increase your level of savings as often as you can.

Will you receive an income tax refund this year? Are you expecting a salary increase or a bonus from work? Try to invest at least half of this money in your RRSP. If you pay off a loan or other debt, use a similar percentage of your increased cash flow toward increasing your retirement savings.

• Review your retirement savings regularly.

Sit down with your financial advisor at least once a year to review your investments. You’ll want to discuss any changes in your life and how they affect your money situation. Have you gotten married, had a child, bought or sold a house? How secure is your job? Do you feel good about your marriage? Will your children be starting or graduating from college or university soon? All of these factors need to be discussed with your financial advisor.

• Make plans to transition from worker to retiree.

You will need to make a plan to move from earning a salary to drawing from your investments, Canada Pension, and Old Age Security. Your financial advisor can help you see what those numbers would look like if you wanted to retire at different ages so you can make the decision you feel comfortable with.

As an experienced financial advisor, part of my job is to listen to clients describe their dreams for retirement and when they would like to achieve them. We work together to make them a reality. I’d welcome the opportunity to hear you describe what retirement means to you at a free, no-obligation consultation. Please contact me today to schedule your appointment.

How will you help me to reach my financial goals?

Reaching your financial goals starts by assessing where you are at today, where you want to be in the future and how you will get there. In other words, you need to have a financial plan.

Do I have a plan?

A lot of people think they have a financial plan when in fact; they just have a brief overview of where they are at financially or recommendation on how they should be investing. That is great to have but it’s not a detailed personalized financial plan.

Why is a plan important? Well, imagine taking a family vacation driving across country. Before you start your adventure you will assess where you are at today (location, your vehicle, and your resources) and how you are going to get to your desired destination:

• Will you need a road map?
• How will you decide on what routes to take?
• How much gas you will need?
• Where you will stop over?
• What clothes will you need to pack?
• How much food will you need to bring?
• How much will this cost?

So you have basically created a travel plan. A financial plan is no different; it should tell you where you are at today (what you own and what you owe, how you are spending your money or what is coming in and what is going out) and where you want to be with regards to your financial goals (savings for your kids’ education, buying a home, paying down your debt, protecting your income, saving for retirement). A financial plan is a road map, or detailed instructions, on what you need to be doing today to reach or achieve your future goals. So do you have a financial plan?

Now that I have a financial plan, am I guaranteed to reach my financial goals?

Well unfortunately, no. Your financial plan is a life-long journey. Unless you are fortunate enough to have a financial life that operates in a completely straight line that never has any bumps in the road, you will need to review your plan regularly and be flexible to make room for life changes such as family illness, losing your job, forced retirement, or divorce. Life events can’t always be predicted; sometimes you are just plain sideswiped. However, proper planning can help when they occur.

Review your financial plan annually with your financial advisor unless a life event occurs, at which time you will need to let your advisor know right away and meet soon after to make any necessary adjustments needed to your plan.

Is my retirement plan on track to meet my goals?

Retirement is usually the biggest component of a financial plan, as you may conceivably have to pay for 20 or more years of living. If you don’t have a company pension plan or are worried about government pensions, then your personal savings will be responsible to cover the majority of your retirement living costs. Start saving EARLY and save as much as you can!

The closer you are to retirement, the more important it is to keep a close eye on your retirement plan, your long-term goals and day-to-day spending. Even if it’s awkward, you should be able to open up to your financial advisor about concerns you have about whether your job or marriage is secure. Do you need to make plans to care for a disabled child or are there other special circumstances in your life that need to be accounted for in your financial plan?

What happens to my plan after I retire?

Planning doesn’t stop once you reached your retirement goals; instead it shifts to retirement income planning which is an approach that will help you to wisely draw down on your savings to sustain you throughout the rest of your life. We are living longer and we want to be sure we have enough money to cover day-to-day expenses as well as the unexpected. How we invest and spend our money in the early years of retirement greatly impacts our financial wellbeing later on. Ask your financial advisor for a retirement income plan as you enter into your golden years to be sure you are on track.

Along with retirement income planning often comes estate planning; who do you want to leave your money to when you die?

As you can see, your financial life is a voyage that needs to be navigated carefully. As an experienced financial advisor, I can help on this journey and guide you safely to your financial destinations. I can answer all these questions (and even clear up some ones you may not have thought to ask.) Please contact me today for your complimentary, no-obligation consultation.

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