- 2 out of 3 Canadians will fail to achieve important life goals due to lack of financial planning - Seniors especially need proper planning to avoid outliving their money and making costly mistakes like withdrawing from RSPs too early - When getting financial advice, be wary of unqualified sources and those who only tell you what you want to hear rather than the reality - Products like TFSA and life insurance can be important planning tools, with TFSA allowing tax-free growth and life insurance providing death benefits and ways to equalize estates

1. Susan Creasy Financial Inc. Don’t Be Caught Unprepared

2. Emotions and Ignorance = Financial Illiteracy 2 out of 3 Canadians will fail to realize one or more of their important life goals because they have no financial plan Money is still a mystery…a taboo Greed and Fear lead to emotional financial planning Lack of knowledge leads to fear and mistakes For seniors it is critical that you have proper planning so you ensure you do not outlive your money

3. Costly Financial Mistakes Living on more than you make- Income reductions as senior vs. in your working years Buying newer, bigger and better than you can afford or need now Taking money from your RSP’s early if you are not yet retired No emergency fund No Savings Not having a budget that you stick to!

4. Seniors need help and sound advice Too many financial products and choices available today Drowning in financial information from a variety of sources – how can you stay on top of things Insurance and Investment issues and needs change as we age “problems with Term Life insurance” How do you determine what to believe and then what to do with that knowledge

5. Where are you getting your advice Many people are getting bad advice from un-educated and uniformed people who are not keeping their information current- Friends and media Some advisors tell clients what they want to hear not what is the reality Not using a well informed educated and designated advisor to assist you in your planning

6. When I was young, I thought I would live forever… Now I am afraid that I might!

7. Seniors issues Snowbirds- tax and medical needs Health issues- Sudden and chronic Possible long term care needs Estate planning- trillions of dollars in intergenerational transfer Outliving my money Emergency needs for cash Who gets the cottage? The business?

8. Loans to Family A recent study shows 64% of Canadians have loaned or borrowed more than $500.00 from friends or family Needs to be well documented in writing to avoid estate problems between other heirs.

9. Joint Ownership – Pros and Cons Pros No probate fees will be payable with respect to asset on death Ease of transfer their survivor will not experience any delay in receiving the asset on death The asset is removed from the scope of will Variation Act in British Columbia Cons Loss control over the asset Possible triggering of immediate tax consequences such as a capital gains or property transfer tax Possible future tax consequences if for example asset is a principle residence transferred to a child. Exposure of asset claims made against joint owner from creditors or even spouses on marriage breakdown

10. Tax-Free Savings Account Individual > @18 but not a trust Accumulated $5,000/yr contribution room. Excess contribution subject to 1% tax/mo. Non-deductible deposits versus RRSP’s. Contributions grow tax-free, no tax implications at withdrawal. May name a beneficiary if invested with a Life Insurance Company. May use various investments i.e.. GIC’s, Stocks, Bonds and Investment Funds Opportunity to transfer wealth between generations

11. Tax-Free Savings Account Individual > @18 but not a trust Accumulated $5,000/yr contribution room. Excess contribution subject to 1% tax/mo. Non-deductible deposits versus RRSP’s. Contributions grow tax-free, no tax implications at withdrawal. May name a beneficiary if invested with a Life Insurance Company. May use various investments i.e.. GIC’s, Stocks, Bonds and Investment Funds Opportunity to transfer wealth between generations

12. Tax-Free Savings Account Income, losses, gains, withdrawals not included in: income tax calculations determining income-tested benefits or credits OAS GIS (Guaranteed Income Supplement) Child Tax Credit GST credit Employment Insurance Benefits Age credit

13. Life Insurance – A Planning Tool! Joint Life, last to die plans are cost effective Pays income tax at death from disposition of an asset(e.g. family cottage/investments) To equalize an estate – if one child is left a property, business, farm, the other child can be treated equally with tax free death beneficiary from Life Insurance To pay income tax at death on a RRSP/RRIF if there is no spouse or minor children

14. Insured Annuity Provides an attractive alternative to today’s low, fixed income investments and GIC’s Tax efficient, lifetime income and preserves or increases the original capital for the estate. Prescribed annuity provides lifetime income A life insurance policy preserves the capital Maintenance free, no ongoing investment decisions are needed to maintain lifetime income With named beneficiaries, the capital passes directly to your heirs, without probate, legal fees or delay!

15. Example: Male and Female age 70 Non-Smoker $200,000 Joint Last Survivor Life Annuity $ 13,340 Taxable portion $ 2,977 Less tax @ 35% $ 1,041 Less premium for Life Insurance $ 3,750 NET Income for Life $ 8,549 Net Rate of Return 4.3% Equivalent Before Tax Rate of Return 5.8% (average 10 GIC rate 2.75%) At death $200,000 tax free is returned to your estate!

16. THANK YOU ! Susan Creasy Financial Inc.