The Planning Years
Focus on Wealth Accumulation While Maximizing Savings
If thinking about finances makes you anxious, you are not alone. You may not be precisely where you thought you’d be by now, for better or for worse, but you’ve learned a lot along the way. One of the things you’ve learned is that you can’t do it all, and anxiety about finances can be laid to rest with the addition of professional advice and guidance.
You are approaching or are now in your top earning years, and it’s time to make the most of every dollar that comes in.
As assets increase and families expand, tax planning plays an increasingly important role in financial affairs. A growing salary may be subject to higher taxes, which can be addressed with tax-effective savings and investments. Business owners may be able to take advantage of income splitting with a spouse or children. A Spousal RRSP can manage different tax brackets, giving you more money in your pocket rather than CRA’s, both now and in retirement. Smart planning before you see your tax preparer or accountant can save you a lot.
All income is not taxed equally and an experienced financial planner can set the stage for a great tax return each April.
You know all too well that things don’t always go according to plan, and that applies to both life and finances. Job changes. Family responsibilities. Difficult partings. Unexpected emergencies. Broken down engines. It’s ‘Murphy’s law’ that as soon as you have some extra in your bank account, something happens. With more at stake now, protecting yourself and your family against the unexpected is a more important part of a really comprehensive financial plan. But the options are even more varied and confusing. What’s the difference between ‘own occupation’ and ‘any occupation’? What is a critical illness? What types of events or conditions are really going to be covered? How do you know whether the benefits will be taxed or tax-free?
What would happen to your finances if you or your spouse/partner suffered from a critical illness such as cancer, heart attack or stroke? You would have to take time off work to recover or to help your spouse recover. Would you have to hire help or buy special medical equipment? And where would the money come from? Many people survive a critical illness, but their finances continue to suffer long after their recovery. We can help you plan to mitigate the financial stress if this were to happen to you or your spouse/partner.
From employee benefits to mortgage insurance, it’s important you understand what you have and that you aren’t over- or under-insured in any area. We can help.
You’re not expecting to check out anytime soon, but the bare minimum you should do in terms of advance planning is to update your Will and assign your powers of attorney – one for your finances and one for your personal care. Your Will should name an executor, identify guardians if you have minor children, and outline your wishes about the distribution of your assets. Without a Will, someone will have to apply to the court to be your executor, and your assets will be distributed according to the policy established by the provincial government. You may be surprised to learn that your estate will not automatically go to your spouse or partner.
Discuss your ideas with your financial planner before you make out your Will. You may think that leaving your estate to your 18-year-old is a good idea, but you may want to calculate how many red Corvettes it will end up funding first. There are many opportunities and pitfalls when it comes to Will planning.
Remember our fully comprehensive financial plans can be your safety net.