Canadians are fortunate to enjoy one of the best lifestyles in the world.  The comfort and luxuries we are accustomed to are the envy of many other societies.

A new client came in for a meeting.  I asked her, “ what is the most important financial issue on your mind currently “ .  She answered jokingly:  “I am here to ensure that I don’t become one of those Wal-Mart greeters in retirement”. 

Not that there is anything wrong with being a Wal-Mart greeter but there is a big difference between having to be and wanting to be a greeter.  This may seem an extreme scenario but really, could this be the reality of some? 

To preserve your lifestyle, you need to plan and most importantly, save enough and early enough.  Many recent studies clearly show that Canadians do not save enough.  Most will need to continue working well past their 60s and will even see their lifestyle drop when the paycheques stops. The amount of money required to fund one’s lifestyle for 20, 30 and even sometimes 40 years, will be, for most, over $1million.  It takes time and discipline to achieve this.

Saving adequately and investing wisely is required to preserve lifestyle.  If it weren’t for inflation, cash and bonds would be all you need. But even with modest inflation of 3% a year, your buying power would be cut in half in about 25 years, so you need to invest for future growth, too. We all have to turn to equities to provide the inflation protection we need for that lengt h of time.

Invest consistently to ensure that your nest egg grow with your lifestyle!  For most, an RRSP is the best place to save for retirement.  Make your contribution by March 1st 2010!

RRSP loan rates are the most inexpensive I have seen in years.  Our best rate is 2.75% for a one year loan.  Even 3, 5 and 10 years loans are low.  Does it make sense to borrow to make an RRSP?  Well it depends on your personal circumstances.

Generally speaking if the rate of return exceeds the loan rate it is a good idea.  With markets in recovery mode, it could not be a better time to invest also, for the long-term.  You also have to consider your cash flow however.  Make sure the payments are affordable and that your income is secure.

If you have a debt that you are trying to repay at a higher interest charge, you could use any refund to reduce it or pay it off!  You would have effectively used Canada Revenues’ money to reduce your debt!! I like that!!

Otherwise you could use the resulting refund to reduce the RRSP loan or apply it to your mortgage or use it for an extra RRSP counting for next year! 

Just contact us to assess your personal situation! 

We’ve reached the 1st anniversary of the Tax-Free Savings Account and this means another $5,000 in eligible contributions (bringing the total to $10,000).  We’ve talked about TFSA strategies before, but there are so many key money-saving tips associated with this account, that they are definately worth mentioning again.

Below are two articles you must read on how and when to best utilize the TFSA.  They discuss ideas such as:

-TFSA vs. RRSP - Which should we use? When to use both? At what age, income level, and tax rate is one better than the other?

-Placing the refund of an RRSP contribution into a TFSA

-Which highly taxable assets should be placed in a TFSA?

-Using the TFSA as a homebuyer’s or emergency fund

-Income earned or withdrawals from a TFSA do not affect eligibility for income-tested government benefits and credits (important for retirement planning).

-Using the TFSA to supplement RESP savings.

Both articles explain these strategies in simple terms.  If you have any questions or would like to open a TFSA (if you haven’t already done so), please let us know.

Article 1: RRSP strategies from Advisor.ca

Article 2: RRSP strategies from Morningstar.ca

A new Investors Group survey of 500 Canadian boomers—aged 43 to 63—finds a large proportion are either supporting their children, their parents or even both!  More than 40% of those respondents said that they expect the support will erode their ability to save for retirement.

Two-in-ten boomer parents have a child aged 19 or over living at home. More than half of these (58%) say their adult child makes no financial contribution to the household.

The boomers in the most difficult financial situation are those providing financial support to both parents and children simultaneously. One in 10 boomers are currently in this group.

The individual surveyed were asked the question what kind of impact supporting both their parents and children was having. Four out of 10 say they are reducing the amount they expect to save in retirement, and one quarter of respondents say they have adopted a less comfortable lifestyle or had to actually take on more debt.

Helping boomer clients efficiently support family members is an area we can add value. We can crunch the number, evaluate the impact and help you make appropriate planning decision.  The worst would be to delay the planning.  It is best to incorporate the situation into the plan.

If you’ve made it to retirement, congratulations! You’ve accumulated enough money to create your own portfolio-generated paycheck. Excellent work.

But you can’t take it too easy, because you’ll receive a severe pay cut if you deplete your portfolio too fast. How much can you take out each year and be almost certain that you won’t outlive your savings? Sherry Cooper BMO Chief Investment Officer states in her book, the New Retirement, no more than 5% a year. Other studies says 4%. That’s the withdrawal rate that would have sustained a balanced portfolio over most 30-year historical periods. Sure, if you retire on the eve of the next bull market, you can take out more. However, if you quit working right before the next bear market, then taking out more than 4% or 5% a year could send you starving and back to work in old age.

In my practice, retired clients tend to be very responsible and follow the plan we have worked out for them.  But some new clients that come our way show that even millionaires can deplete too fast.  A million dollar may seem like a lot of money but by the 5% withdrawal rate measure, it is only about $4000 per month. 

When we do cash flow analysis, we go beyond the simple 4 or 5% rule. We actually evaluate your personal tax rate, type of assets your hold and need for more or less cash flow now and later.  Our planning is personalize and quite in-depth. 

If you think that you can effectively wing it on your own simply because you have a large enough nest egg.  Think again.  Professional Planning is imperative to stay on track and keep your lifestyle alive as long as you will!

Yes!  If you retire between age 50 to 60, you are likely to live for another 40 years.  Are you ready financially and psychologically?

Take the test now.

Are you ready Financially?

Retirement Fund needed to produce $5000 net per month until at least age 90*

Age 50 $ 1,400,200
Age 55 $ 1,302,454
Age 60 $ 1,188,911
Age 65 $ 1,057,018


* using a 6% rate of return and a 3% inflation rate

As you can see above, depending on a number of factor, those without a private pension plan will need at least $1,000,000 to produce this kind of income.

Are you saving enough?  Regular studies show that Canadians do not save nearly enough.

With recovering markets, there is no better time to make a lump sum investment now or increase your monthly contribution to your RRSP, TFSA or non-registered account.  You may even consider an investment loan.

If you come to our annual review meeting, we will have prepared a personalized retirement analysis for you or call us anytime to further discuss your plan.

Are you on target and ready for the best 40 years of your life?  No one plans to fail, however, some fail to plan.  Make sure to visit us once a year for your financial check-up!

From February 12 to 28, 2010 Vancouver will be buzzing with people and excitement as our city welcomes the World for the 2010 Winter Olympics.  We are proud and enthusiastic about this event.  It sure will be a fun time to share our beautiful city and celebrate with athletes and visitors from around the Globe.

February is also traditionally, RRSP season.  This year, we will have no choice but to prepare ahead of time as it may be difficult for you to get to our office.  Though the streets around our office are indeed open part of the downtown area will be closed to vehicles and traffic is expected to be heavy.  Our office will remain open throughout the Olympics.

To make it easier for you, we ask, exceptionally this year, that you make early arrangements for your RRSP contribution.  We will be starting our pre-Olympic campaign soon and our staff will be inviting you to book an early time for a meeting this fall or in January.  You will also have the option of making your contribution by mail of course; though we would appreciate it by our pre-Olympic deadline of February 11, 2010 to make sure it gets processed on time no matter what happens to downtown office accessibility.

Be a Winner !  Mark your calendar now!  February 11 will be our own internal Pre-Olympic RRSP contribution deadline!!

Here is a link to a map outlining the downtown Vancouver Street restrictions during the Olympics.

Click here for map

The more you give, the more you have! That is my personal motto, one I repeat everyday which helps me be more generous.

When it comes to giving to charities, we often need that piece in the mail to remind us. The subject of charity is a highly personal one. One of the financial providers with whom I do business has developed a new program that offers many of the advantages of complex private charitable foundations to individuals. This program lets you recommend the charities you wish to support, and sets up a fund that provide an income stream to those charities for the long term. The difference between this fund and a private foundation, however, is that the administration is substantially simpler and the entry level is considerably more affordable.

The Mackenzie Charitable Giving Fund uses conservative, balanced mutual funds to achieve its goal. Each year, the Fund will distribute monies to charities that may be recommended by you. Over time, based on the performance of its investments, it can grow its capital base and therefore may make grants to your favourite charities for many years to come.  Your Fund can also provide you with a destination for your annual giving.

The Fund is based on a well-established model that is very popular in the US but only just starting to take hold in Canada. The provider, Mackenzie Investments, has been around since 1967 and is extremely well regarded in the investment industry.

If you are interested in learning more about this program, please give our office a call.  Here are a few basic key points about Charitable donation accounts.

Key Benefits:

· Creating a lasting legacy

· Ability to influence flow of donations rather than make a lump sum contribution

· Still get to receive the tax benefits of a lump sum donation

· Cost effective way to create a private foundation

· Flexibility of ensuring an income flow to multiple charities

· One account can be set up with multiple donors

Requirements :

· Minimum initial donation is $25,000

· Subsequent minimum donations of $5000

· Donor receives the full tax benefit of the gift immediately

· Donations are irrevocable

· Granting from the Foundation is determined by rules under the Income Tax Act.  The Foundation will determine each year how much granting is required usually 3% to 5%

· Donations are counted as “enduring property” and as such, 95% of the assets must be held in the foundation for not less than 10 years

· 1% Charitable Administration Fee charged (the Foundation is a non-profit charitable corporation registered as a public foundation with the CRA).

Giving back and sharing wealth with a Charitable Giving fund ensures that your legacy is managed professionally and keeps on giving!