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If you have ever purchased a home or applied for a loan, you may be familiar with Mortgage Insurance. This is the insurance the bank is obligated to encourage you to take in the event you die or become disabled. It is intended to protect your loved ones from being stuck with the mortgage in the event life takes a wrong turn ie. death.   Sounds like a no brainer right? Wrong! There are MANY pitfalls with Mortgage Insurance that put the bank’s best interest ahead of yours for a price that’s not worth it. Read more

How to safeguard your retirement…

Have you ever been scuba diving? With scuba diving, you need to plan your dive, how long, what depth, do you have the right gear, etc. If you make a big mistake there are no do overs, it could cost you your life. Retirement planning is similar, you only get one shot at it and the difficulty is, people will only do it once in their lifetime. Fortunately, as a planner we get to experience retirement many times over as we walk alongside our clients.

For people that are in the building phase (ages 30-55) and those that are in their final approach to retirement (ages 55-65), it is crucial to make sure that certain key elements have been looked at. Read more

For most Millennials, the thought of retirement can seem like light years away.  While a lot can and will happen between now and then, ignoring it or putting a plan on the back burner is a major mistake.  In a constantly evolving society, Generation Y faces unique challenges compared to those faced by previous generations. For this age group (18- to 34-year-olds), gaining an understanding of their financial situation and potential hurdles is critical.

When it comes to the question of being able to retire one day, the biggest advantage Millennials have on their side is time. They are generally considered to be anywhere from 30 to 45 years away from retirement. The most important benefit to their age bracket is the opportunity to take advantage of compound interest.  Defined as interest on top of interest or earnings on earnings, compound interest is in direct correlation with time, and understanding its power is key for Millennials hoping to retire one day.  In other words, when it comes to saving money, the sooner the better.

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Do you remember the Got Milk ads and t-shirts that reminded everyone to drink your milk regularly? I think we should create a “Got a Will?” campaign. A will should be a standard document that every Canadian has in place but yet only around 30% have an up-to-date legal will*. That’s unbelievable! Read more

Know What You’re Getting From Your Financial Advisor

Do you know how much you are paying your financial advisor? Are they doing a good job for you? Those both seem like reasonable questions, but most people cannot answer them. Can you?

One of the services that financial advisors provide is to manage your investments. When it comes to the world of investments, there are many different types you can choose from as well as many different people that offer them. So it’s no wonder that it can leave consumers with their head spinning. Here’s some information to help you make sure that you are receiving the best service for your situation. Read more

The Latte Factor…
No matter how much money one makes you can always find a way to spend it. Does your income keep going up but yet there is no extra money at the end of the month? Do you know where your money has gone? What happens in retirement once your income is fixed? Read more

Planning On Selling Your Business…

Are you approaching retirement and planning on selling your business?
As an entrepreneur, you dreamed of building your own successful business. After all those years of hard work, you plan to reap the rewards in the form of a successful business sale. Sounds like a great plan! But, making the sale is not as easy as it may appear. Read more

Not knowing could cost you thousands!
Did you purchase the coverage offered to you by your lender? Most people have a mortgage in Canada and it is typically the largest debt most Canadians will ever assume. Before buying a house people will research and compare to find the best mortgage rates and terms but not necessarily the best insurance coverage. Read more

How technology has made a difference…
Remember that great invention, the magic eight ball? You ask it a question, shake it and then turn it over to reveal the answer. If only all of life’s difficult questions could be answered so easily!

When it comes to retirement planning, people have a lot of questions but often times they do not know how to address them. Our goal is to help our clients have a clear understanding of where they are at financially, where they want to be in the future and how to get there. Sounds simple and yet so many Canadians are not prepared for retirement. Read more

Four Tips For An Executor
Have you said yes to be an executor for someone’s will? Do you know what the role entails? If you talk with someone that has performed the duties it can be a lot more work than you might first think. Here are some tips to help prepare you for the task.

If you are asking yourself, what is an executor, here goes. An executor is the person named in a will to carry out the requests and estate distribution of the deceased. Read more

It’s Not That Much Anymore…
Is a million enough? It used to be that having a million dollars was a big deal, right? You were set for life with no cares or worries financially. When did that change?

Have you ever made any statements such as; I remember when gas was only 25 cents per litre. As my kids remind me, yes I am getting older but it also means that inflation is slowly affecting the cost of living.

If you had a million dollars saved to provide for retirement, how much income would you have? Read more

What Are Your Options?
What is the best investment plan to use to save for retirement? It used to be fairly simple; the answer was maximizing your RRSP. Do you know what is the best strategy for your situation? Do you know what your options are?

Here is a basic overview:
1. Save – The first rule of thumb to be concerned about is that you are saving money for your future. Too many Canadians are spending all of what they earn and not putting away any money for their future. A good place to start is to aim at putting away 10% of what you make.

2. Tax Efficient – Ever since the launch of the TFSA, there has been a debate by financial professionals over which investment plan is more tax efficient to use, the RRSP or TFSA? My opinion is that it depends on your situation both now and in the future and should be looked at on a case-by-case basis to see what fits best. I would be cautious if a financial advisor is always only promoting one plan type over the other, both have their benefits. (For more info on TFSAs, see my article from Sept 2013 – http://jaybrecknell.ca/demystifying-tfsa/)

3. Business Owner – If you are a business owner the question can get even more complex as you have more options. Should you use your RRSP, TFSA or instead save your retirement funds in a holding company? Since corporate tax rates are at an all time low in Canada more business owners are saving corporately versus in a RRSP or TFSA. There can be many benefits to saving corporately as it can provide flexibility to the business owner. As this can be complex it needs to be put together by a professional that understands your corporate structure and the tax and legal rules that are involved.

As with any financial strategy we would recommend ensuring that you have your personal situation reviewed by a professional to make sure that is done in the best way possible. If you have any questions or would like your plan reviewed feel free to contact us.

 

Questions?

The Most Overlooked Risk
What is your biggest asset? Most people might answer your house, boat, car, or investments. When in fact it is your income and your ability to earn a living.

When I review a person’s financial situation, one of the most common areas that is overlooked is to protect their ability to earn a living. Disability insurance is a critical part of a person’s risk management plan. When you think about all of the things that people have insurance for, cars, houses, electronics, death, etc. Unfortunately if you do not have an income all of these other areas fall apart.

When it comes to managing risk, a financial planner looks at two main factors:
1. Risk – what is the chance of this happening?
2. Impact – If it does happen, what is the potential damage?

As an example, the risk of a house fire is low but the damage it can cause financially is extreme. Hence why people buy home insurance.

The Risk Is High:
Did you know that 1 in 3 people, on average, will be disabled for 90 days or more at least once before they reach age 65?*

The Impact Can Be Severe:
How long could you survive for without your income? Most families could last maybe 4 to 6 months before they would have to start selling other assets such as investments or their home. How would you survive till age 65 and then into retirement?

The main way to manage this risk is to have long term disability insurance to protect yourself in case of an illness or injury.

Possible Options:
1. Canada Pension Plan – This will only pay for the most severe disabilities and the amount is small.
2. Worker Compensation – This only covers you if it is a work related injury.
3. Group Plan – This is how most Canadians are covered. IMPORTANT! You should have your coverage reviewed to make sure you are properly protected.
4. Individual Plan – You can purchase this through the major insurance carriers.

Key Facts:
• If you are an executive or earn over $80,000 per year and you have group coverage you should have it reviewed, as you may not be fully protected.
• If you have group coverage your plan definition typically will change after 2 years of being disabled. This can allow the insurance company to decline your coverage if your disability is not severe enough. This is done to keep your rates lower for your group plan. You can get individual insurance to protect against this.
• The definition of a disability policy is critical.
• Most disability insurance is designed to cover you till age 65; some may have only a 5-year benefit period.

As with any financial strategy we would recommend ensuring that you have your personal situation reviewed by a professional to make sure that is done in the best way possible. If you have any questions or would like your plan reviewed feel free to contact us.

 

Questions?

*Source – “A guide to disability insurance”. Canadian Life & Health Insurance Association