Retirement and Legacy

Living the Dream

You’ve spent years in the ‘savings’ mode — now it’s time to spend. You are at the point where you can set the date for retirement and it’s probably more frightening than you had thought it would be. This is a time of great transition. You are going to be giving up your regular paycheque and must now rely on your savings to pay the bills and finally enjoy the fruit of all of your hard work. All those budgeting skills have really paid off and will continue to be valuable through retirement.

Financial Services For: Retirement & Estate

Creating Income from Assets

Now that you have retired, you will most likely be getting income from several sources. You may have a pension from work which may also include a bridging benefit to age 65. You may be applying for Canada Pension Plan (CPP), or if you are 65, you may be getting Old Age Security, more commonly referred to as OAS. If you add up all of these amounts and find that you are falling short of your retirement income needs, you will also be taking an income from your investments. Where to draw the money from and how much to take are questions that are answered differently in every situation.

We will help you minimize risk and taxes both now and in the future, while simultaneously planning for an orderly estate transition. The new pension splitting rules have been a great addition to the options for tax planning, if applied properly, and is just one of many opportunities to save money.

More importantly, we can help with a smooth transition of income from one spouse or partner to another in the event of death. Many couples find that only one is really involved in the financial planning process, leaving the other very uninformed, and ill-equipped to deal with estate issues. We will look after the orderly transfer and help your family. No matter what level of investment and financial knowledge they have, we will help them make informed and appropriate decisions. You don’t have to work things through alone. We will help you through it.

Legacy Planning and Wealth Transfer

The whole purpose of legacy planning is to achieve the goals that you have for yourself and for your loved ones. Your Will should give voice to your opinions and wishes when you aren’t able to. Your must-haves for estate planning are: a Will, Power of Attorney (POA) for Personal Care, and Power of Attorney for Property.

A Will provides for an orderly distribution of your estate, specifying who you want to act on your behalf as executor, and designating who will take care of minor children or other dependents. Leaving no Will, or a poorly constructed one, can destroy a family. Take care to have it carefully thought out and drafted to help your loved ones through this most difficult and emotional event. We recommend having your Wills and Powers of Attorney professionally prepared, rather than using Will kits. Legislation changes and wording can make all the difference in case there is misunderstanding. In fact, we encourage our clients to have ‘The Family Meeting’ so questions can be asked and clarified. This may be uncomfortable but this could avert much greater stress later. A Will shouldn’t be set in stone since life always brings change, and you should be reviewing it regularly with us.

A Power of Attorney designates the people who will make financial and medical decisions on your behalf if you are incapacitated — and they may be different people. A Power of Attorney for Property can take care of your assets, pay bills, and file tax returns, whereas a Power of Attorney for Personal Care can give or withhold consent to treatment, and authorize admission to a medical facility. A well-crafted Power of Attorney for Personal Care can truly speak for you if and when you are not able, and greatly ease the pressure of having to make the right decisions for you. Both roles may require very different people with different skills, but even if they are the same person, remember that you need both types of attorney.

We sometimes find that our clients are open to gifting some of their assets to the next generation now. This helps cash-strapped adult children or grandchildren and can reduce somewhat the possible administrative costs on an estate. Some of our clients feel very passionately about charitable giving or establishing a foundation as part of their legacy or tax planning.

Settling an estate in a private manner is important to some, which is achieved by leaving assets to be passed on outside of the estate, whereby assets do not have to go through the probate process.

Our role as your planner is to help you think through issues to form a workable estate plan, one that will reflect your individual wishes and circumstances, while minimizing taxes and promoting family harmony. Our experience with estate planning can help you understand and address unexpected roadblocks. We are here for you and for your family.

Preservation of Capital

For most of our lives, preserving our capital is of great importance, and there are many tools to help with it.

Throughout the working years, it’s vital to make sure that our income, and ourselves as “income-earning assets,” are insured in case of a long-term disability or a life-altering illness. All too often we insure the “things” in our lives, such as cars, a home, cottage and other valuables, while not putting a value on our very ability to earn an income. After all, if we cannot work, none of the things we value would exist in our lives and therefore neither would the need to insure them. By budgeting in the cost of proper living benefits, like Long-Term Disability insurance (LTD) and Critical Illness insurance (CI), we can mitigate the financial hardships that can occur during times of illness, and focus on recovery, not the bank balance. Many living benefit plans come with a Return of Premium (ROP) option that refunds a percentage of the premiums paid after a certain number of years if the insured never needs to use the plan.

In our later years, staying financially independent and having the means to take care of our often higher costs of medical and other care costs becomes a priority. How do we make sure that we can stay in our home safely and with proper care, and have as many choices about our personal well-being for as long as possible? Of course, our savings and pension incomes can cover some or all of the costs. But what if we have not had the ability to save as much as is needed, or if the expenses outstrip our expectations? Help can be found in Long-Term Care insurance (LTCI), a form of living benefit that pays a tax-free stream of income. Often, this income can be spent in any way desired, such as on home care, medical devices, etc. Or the funds can be spent on reimbursing the expenses incurred with care. Experience shows that most of us want to stay at home for as long as possible, and having the extra funds can a long way to reach this goal.

Segregated funds are another way to ensure that our capital is preserved. These investment vehicles come with some guarantees, one of which is a death benefit guarantee. Depending on the features of the investment, up to 100% of the invested capital is insured to be there for a beneficiary in case of a market down turn at the time of a contract holder’s death.

As advisors, we work with our clients to establish ways to mitigate losses and preserve capital throughout the different stages of their lives. We implement strategies for clients who are using their savings to draw incomes to reduce the risk of “buying low and selling high” by putting “cash wedges” in place and by monitoring their portfolios.