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Category Archives: Retirement Planning

Anthony Sabti

2017 Financial Planning Checklist

Until the end of the year, we’ll be deviating from the usual “weekly brief” format. We believe it is a good time to take a final stock – pardon the pun – of your overall financial planning situation. Below is a checklist of some of the items we try to cover with you at your meeting. If you want to confirm an item on this list has been addressed, please do not hesitate to contact us. Our office will remain open during the holidays.

Investing

  • Portfolio mix. Different investments are taxed at different tax rates. If you invest in both registered and non-registered accounts, ensure you optimize your portfolio mix to ensure maximum tax-efficiency
  • The amount added to the TFSA room on January 1st, 2018 will be $5,500. This will bring the lifetime amount to $57,500. Consider putting funds into your TFSA to the extent you can make contributions (or via a transfer from your non-registered account). Ensure you don’t exceed your contribution room due to the significant penalty on over-contributions. If you have authorized us for CRA access, we can confirm your TFSA limit.
  • If you were planning on withdrawing from your TFSA, do so by the end of the year. The amount you withdraw will be added to your TFSA room at the start of 2018. If you withdraw in January 2018, you won’t get the room back until January 2019.
  • If you have investments in a non-registered account in a capital loss position, consider triggering the capital loss to offset capital gains realized during the year.
  • For non-registered accounts, delay purchases until January 2018 to minimize your allocation of taxable income for 2017 (after year-end distributions). For similar reasons, consider selling your mutual fund in a non-registered account before year-end as well (prior to year end-distributions).

Taxes

  • Any donations you want to claim on your 2017 tax return must be made by December 31, 2017.  Donations must be made to a registered charity. Contributions above $200 result in a 29% federal tax credit. Keep the donation receipts! The CRA was more aggressive in requesting documentation to prove the donations were actually made.
  • If you are a first-time donor, you can claim an additional 25% credit on up to $1,000 of donations made after March 20, 2013.  2017 is the final year in which this credit can be claimed.
  • Public transit tax credit. This credit will be eliminated following the 2017 tax year. You can claim on your 2017 income tax return, only the cost pertaining of monthly passes for transit services for the period January 1 to June 30, 2017.
  • If you are over 65 with no private pension, consider withdrawing $2,000 from a RRIF account to trigger the $2,000 pension credit.
  • Home accessibility tax credits. If you incur eligible expenses of up to $10,000 to increase the mobility or safety of a senior, you will be able to claim the federal home accessibility home credit and BC senior’s home renovation tax credit.

RRSP

  • The deadline to make an RRSP contribution for the 2017 tax year is March 1, 2018. If you have authorized us for CRA access, we can confirm your RRSP limit, factoring in any contributions you’ve made with us. An RRSP contribution has a tax savings potential of anywhere between 20%-47.7% for BC residents.
  • If you turned 71 this year, this is the final year you can contribute to an RRSP. Consider making an RRSP contribution in December of the year you turned 71 if your income in 2017 is higher than what you expect in later years.
    • If you turned 71 this year, you must wind up your RRSP by the end of the year. For most people, this means a conversion to a RRIF account with minimum annual withdrawals starting the following year.
  • Consider withdrawing funds from your RRSP if you have low income for the year.

Self-Employment / Business / Corporations

  • Consider 2017 income splitting opportunities (spouse, children, parents, etc.) as the rule changes that are likely to come for corporations in 2018 may eliminate this strategy moving forward.
  • The new rules will grandfather any existing passive investment income currently held in a corporation.  They will also allow passive income of up to $50,000 not subject to higher taxation. This means that under the new regime, you could add $1,000,000 (in addition to any grandfathered assets) generating income of 5% a year and be exempt.
  • If you are self-employed, consider purchasing capital assets before year-end. If the asset is available for use before the end of the year, you can claim one-half of the usual tax amortization for the year.
  • Consider paying a salary or bonus from your corporation to yourself in December. Usually, the payroll tax for this is due by January 15th (may be sooner depending on your remitter type).

Children

  • If you have an RESP and your child has turned 17 in 2017, this is the final year of his/her grant eligibility.  If you have grant room remaining, you can contribute up to $5,000 in the final year, generating a $1,000 grant.
  • Pay child-care expenses for 2017 by December 31st, 2017 and get a receipt. Remember that boarding school and camp fees qualify for the child care deduction.
  • If your child qualifies for the disability tax credit, and if RDSP assets or income will not disqualify him/her from receiving provincial income support, consider setting up an RDSP to qualify for the Canada Disability Savings Bond (CDSB – lifetime maximum of $20,000 per child). Contributions to an RDSP qualify for the Canada Disability Savings Grant (CDSG – lifetime maximum of $70,000 per child)
  • Children’s fitness and art credit. Sadly, these tax credits have been completely phased out, and you won’t receive a credit for these costs on your 2017 return.

Other

  • Note that MSP premiums will be cut in half for all taxpayers in 2018. The provincial government intends to eliminate all MSP premiums within four years.
Terry Broaders

Weekly Update June 23 2017

“Well Begun Is Half Done” – Aristotle

 

TSX Rallies On Resource Stocks

Canada’s main stock index rallied on the strength of resource stocks, but shares in BlackBerry plunged after its first-quarter sales failed to meet expectations. The S&P/TSX composite index advanced 99.66 points to 15,319.56, with the base metals and gold sectors leading the way. Blackberry shares dropped more than 12% after the company announced a profit of US$671 million in its latest quarter, despite revenue falling to US$235 million compared with US$400 million a year ago. In New York, the Dow Jones industrial average shed 2.53 points to 21,394.76. The S&P 500 edged up 3.80 points to 2,438.30, while the Nasdaq composite gained 28.56 points at 6,265.25. The Canadian dollar was trading 0.15 of a U.S. cent lower to an average price of US75.37¢. The August crude contract was up US27¢ at US$43.01 per barrel and the July natural gas contract advanced US4¢ at US$2.93 per mmBTU. The August gold contract gained US$7 at US$1,256.40 an ounce and the July copper contract added US3¢ at US$2.62 a pound.

 

Canada’s Most ‘Emotional’ Investors Revealed 

Do you ever wonder why some people seem more prone to making rash or emotional investment decisions? Well, a new survey reveals which groups are most likely to buy stocks based on headlines and hype. Conducted by Hennick Wealth Management, the survey of Canadian investors found that higher income earners ($75K – $150K+) were more likely to make an investment decision based on a ‘hunch’ or a tip from a friend. 11.8% of high income earners said they would buy a stock solely on a friend’s recommendation compared with just 5.3% of low-to-mid income earners ($0K-74K.)

Men (13.7%) were twice as likely to make emotional investments and buy stocks based on a hunch than women (7.5%). Men (34.2%) were also much more like to buy a stock based on the recommendation of a friend compared with women (27.8%). “Men seem particularly influenced by ‘insider advice’ from other males when investing,” said Adam Hennick of Hennick Wealth Management.  “If you do take investment advice for a friend, try to do it from your friends that have been successful in investing. This seems obvious, but sometimes our desire to act on a hot tip can overwhelm our logic. Ask yourself, is this a person who’s actually done financially well in investing, or someone who just talks a good game.”

All savvy investors know that making decisions based on emotions is a recipe for disaster, so it should come as no surprise that 22.7% of Canadians said they have regretted an investment decision they made that was based on emotion. A staggering 69.2% of men with a high income regretted making an investment decision based on a hunch or gut instinct.

Sources: Bloomberg; Investment Executive; advisor.ca

Odette Morin

Fear Not, You Too Can Live The Dream

Most of us dream one day of having a leisure life and kissing goodbye to the grueling 5 days a week work schedule.  How nice will it feel to be able to sleep in, go for long walks, travel and live the good life.  This dream however is very costly.  You need a lot of money to fund retirement for 30-40 years. A 2016 study by RBC, shows that 56% of non-retired Canadians were worried that they would not be able to enjoy the lifestyle to which they were currently accustomed.

What’s the solution?  Face reality, get the facts on your situation and fear not.

A new Leger poll for Mackenzie Investments finds that 42% of Canadians currently have a financial advisor, while 57% do not. Older Canadians are significantly more likely to have an advisor, Leger says, which may account for their more positive sentiment towards RRSP season than those who are younger. Leger also found most Canadians (68%) say their mood for the approaching RRSP deadline is “indifferent.”
About a quarter of Canadians (26%) say they feel “confident” or “excited” heading into RRSP season. For Canadian respondents who use a financial advisor, that figure jumps to 40%. Leger surveyed 1,522 Canadians online between January 2 to 5, 2017.

So, get help to gain clarity on the future and save as much as you can to ensure a comfortable, stress free retirement!

Odette Morin
Odette Morin

How bright is the future really?

I walked by a bank the other day. In the window was a cheery poster of a boomer on the golf course. The headline asked if you were ready for retirement. A positive image, but so misleading.

The reality is that we’re living longer. That means your savings will have to carry you for 20, 30, even 40 years. For many, not having enough money to play golf will be the least of our concerns.

The outlook isn’t sunny, but it can be. Before I give you the good news though, we need to face facts. From a report, released last year by the Broadbent Institute:

  • Half of Canadian couples between the ages of 55 and 64 have no employer pension.
  • Of those, less than 20% of middle-income families have enough saved to adequately supplement government benefits and pension plans.
  • A large percentage of working Canadians are heading into retirement without adequate savings to keep them out of poverty.
  • Income trends suggest the percentage of Canadian seniors living in poverty will increase in the coming years, especially for single women who already face a higher than average rate.
  • The poverty rate for seniors will climb at the same time as a sharply rising number of Canadians hit retirement age in the next two decades; more than 20 per cent of the population will be older than 65 within 10 years.

What’s more, people over 40 years old are using credit to pay for exotic vacations, bigger homes and other non-essentials. Imagine being in your 40’s and working on your debt instead of your retirement saving?

The good news is that you have the power to change how your future unfolds and you don’t have to do it alone. See your financial advisor! Book regular planning meetings and take control over your future.

Did you know that 57% of Canadians don’t have a financial advisor? People take their cars to specialists, but they don’t think to bring their financial future to experts.  Mon Dieu!

Okay, okay, I’ll spare you my rant. But do let me leave you with this – if you don’t get expert help to spend efficiently, maximize your retirement savings and defer taxes – funding your golf hobby will be the least of your concerns. Retirement can be freeing or devastating. How you experience it, is up to you.

Odette Morin

OAS restored to age 65

Trudeau oas

 

Justin Trudeau announced yesterday that next week’s federal budget will restore eligibility for Old Age Security to age 65 from age 67.

“We are keeping the old retirement age at 65,” Mr. Trudeau told the room of journalists and businesspeople. “How we care for our most vulnerable in society is really important.”

He said his predecessor, Stephen Harper, was wrong to move the Old Age Security eligibility to 67 from 65. Mr. Harper raised the age in the 2012 budget, making it effective for 2023.

“We think that was a mistake,” Mr. Trudeau said.

We are delighted by this news for all our younger clients born after 1958. The benefit is currently $570 per month indexed quarterly.

We will have a summary of the 2016 budget highlights on Tuesday. Stay tuned!