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Lunch and Learn
- 1. “THINK AHEAD” ▶ YOUR GUIDE TO FINANCIAL PLANNING/INDEPENDENCE FOR THE FUTURE _1
- 3. The longer we wait the steeper the climb…
- 4. Life Events
- 5. Priorities of the average Canadian taxpayer
- 8. DID YOU KNOW? ▶ 52 % OF WOMEN TODAY BETWEEN THE AGE OF 60-65 LIVES ON LESS $ 17,000 ▶ AVERAGE AGE FOR A WIDOW IS 56 ▶ 52% OF MEN DIE WITHOUT A WILL ▶ 2 OUT OF 5 CANADIAN WOMEN MARRIED TODAY WILL BE DIVORCED BY THEIR 50TH BIRTHDAY ▶ 30% MAKE INSURANCE DECISIONS
- 11. The Will ▶ Heart of estate planning ▶ Only 50% of Canadians have a will ▶ No will? • Government will write one for you • Your wishes do not count
- 12. What If I die Without a Will ▶ Estate - $ 200,000 – One Child ▶ Half to the spouse, half to child ▶ Estate - $ 200,000 – 2 or more children ▶ One third to spouse – two third amongst children
- 13. Probate Fees in Ontario ▶ Probate fees are highest in Ontario ▶ $ 5 per thousand on the first $ 50,000 estate value/assets ▶ 15$ per thousand over $ 50,000 ▶ For example: $ 500,000 estate - $ 7,000 in probate fees ▶ Assets are also subject to probate on the second spouse’s death
- 14. ASSETS EXEMPT – ONTARIO PROBATE Insurance policies payable to a named beneficiary Segregated funds (reg/non reg) payable to a named beneficiary – creditor proof Real Estate outside of Ontario
- 15. Protection Needs Final expenses Payoff mortgage, credit cards, loans Income replacement (2 spouses working) Income tax – probate fees Maintaining same lifestyle Children’s education funds
- 16. It Always Happens to Others ▶ Lifetime probability of suffering from cancer: 1 in 3 (1) ▶ 70,000 heart attacks each year in Canada(2) ▶ 75% of cerebral vascular accidents will survive their first attack(2) (1) Statistics Canada 1999; (2) heart foundation 2003
- 17. Financial Implications ▶ Mortgage/other debts ▶ Maintain business ▶ Leave of absence/no income ▶ Family time ▶ Domestic help ▶ Caregiver ▶ 37% of mortgage foreclosures inability to make payments because unexpected illness and cannot work
- 18. How would you maintain your lifestyle?
- 19. Of Course Perhaps we will never suffer from a life threatening illness or need to use a home/facility health care but… Desjardins Financial Security independent Network/ 2010
- 20. Long Term Care ▶ In 2007, 1 person in 4 was providing home care to a weak aging person ▶ In 2007, 385,000 seniors were living in facility care establishments ▶ Aging population • Next 20 years – 65+ will triple • 43% of health care costs Statistics Canada
- 21. Accumulation Needs Children’s post secondary education Supporting/caring for elderly parents Savings – down-payment on a home/cottage Savings to take a leave of absence Savings to start a business Savings to reduce debts
- 22. Retirement Needs Maintain pre-retirement lifestyle Travel money Funds for grandchildren Funds to maintain financial independence Funds for charity Funds to transfer business ownership
- 23. Benefits Of RRSP’s ▶ TAX DEDUCTIBLE CONTRIBUTIONS ▶ LOWER TAX BRACKET WHEN FUNDS ARE WITHDRAWN ▶ MAXIMUM CONTRIBUTION LIMITS FOR 2016 ($ 25,370) ▶ LIFETIME OVER CONTRIBUTIONS $ 2,000 ▶ TRANSFERS FROM OTHER FINANCIAL INSTITUIONS PERMITTED
- 24. Investing in an RRSP is a winning proposition
- 25. THANK YOU FOR YOUR ATTENTION QUESTIONS?
Editor's Notes
- Purchasing a home/moving Having children and funding for children’s post secondary education Caring for elderly parents Changing careers Starting a business Planning for retirement Planning financially for unexpected illness or accident
- Emergency fund Protection fund (long term disability, critical illness) Registered Retirement Savings Plan Elimination of non tax deductible debts Investment plan
- Safe – will, power of attorney, debt elimination, emergency fund, insurance Safe – home, RRSP, Canada savings bond, annuities, term deposits Low/medium risk – mutual funds, mortgages, stocks High risk – commodities, gold, gems, drilling funds.
- Safe – will, power of attorney, debt elimination, emergency fund, insurance Safe – home, RRSP, Canada savings bond, annuities, term deposits Low/medium risk – mutual funds, mortgages, stocks High risk – commodities, gold, gems, drilling funds.
- Built on 3 types of assets:
- Need to save first – lack of discipline Unexpected illness wipe out years of accumulation Inflation
- Liquid cash – unexpected illness and accident Final expenses – estate planning Paying off a mortgage Paying off credit cards and other personal debts Replacing a spouse ‘s income No employee benefits – dental/prescription drugs expenses No pension contribution at work – savings for long term
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- Lump sum to reduce your debts ( mortgage, credit card etc) If you are self employed – maintain your business Allow a family member to take a leave of absence to help your recover Spend more time with your family Receive assistance by hiring a domestic help Hire a caregiver for the children during the recovery period
- Read
- Sufficient annual income to maintain lifestyle Sufficient cash to travel Funds to help grandchildren Funds to pay off the mortgage Cash available in case of unexpected illness or accident Paid up insurance to pay for final expenses Long Term care Costs paid: $80/day for 5 years = $165,000
- Contributions are tax deductible and the portfolio grows tax sheltered Withdraw funds when in a lower tax bracker Maximum contribution limit for 2006 - $18,000.00 Lifetime allowance of $2,000.00 for over contributions Free to transfer amounts from rrsp’s between financial institutions at any time without being subject to tax.
- A 40 year old invests $1,200/year to age 65 at 4%. His RRSP balance at 65 will be $55,301 against $44,943 in a conventional taxable vehicle which would be taxed at 35%. This is a difference of $10,358. More importantly, when the RRSP is converted into a RRIF, although each withdrawal is taxable, the balance continues to accumulate tax-free.