What are the Key Risks to Your Retirement Income?

Retirement is your reward for working all of your life. Savings have been delegated to your retirement funds over the years to cover you when you are no longer earning a salary, but will it be enough to sustain a retirement lifestyle? Here are five key risks that may affect your retirement income.

Life Expectancy

Modern medicine has made it possible for people to live happy healthy lives well into their senior years. However glorious and rewarding this may be, it also can prove to be financially crippling. In Canada, the general retirement age is around 65 years old, and people continue to live healthy and full lives long after retirement age hits. People can expect to live well into their 80s even 90s, which is a wonderful life expectancy, however is there going to be enough money in your retirement savings to supplement 30+ years of retired living?

Inflation

The value of a dollar is always decreasing due to inflation. Things in life are constantly growing a larger price tag to the point of it being difficult to sustain a household without an increase in salary. How is your retirement income going to stand up next to inflation? With the cost of everything on the rise, there is concern that retirement funds will not be enough.

Poor Investments

Investing your retirement income is not always a guarantee of success. A poor investment will not yield you a return that will keep you afloat in the growing economy. Safer investments, such as GICs, retain their value, but they do not increase in value and do not generate a steady income.

Overspending

If retirement celebrations last a little too long and a few too many vacations are taken, the retirement fund can start to rapidly deplete. It is extremely important to stay on top of your investments and be very aware of how much money you have allotted to spend so as to stay out of an overspending trap. With income not coming in at the same pace it once was, replenishing the retirement fund will not be possible.

Unexpected Expenses

Life is unpredictable. As we age, medical issues and other unexpected complications bring with them more expensive challenges. Medical expenses can quickly eat up portions of a retirement fund.

Retirement is meant to be a time of enjoyment and reward for a lifetime of hard work. Be sure your retirement income is properly managed and that it will be enough to sustain the lifestyle of your choosing upon retirement. Consult your retirement planning advisor from The Beacon Group of Assante Financial Management Ltd.

How to Reign in Retirement Savings Anxiety

After working and raising a family for twenty years, retirement is probably something you are looking forward to and dream about regularly. With people living longer and longer with each passing generation, it’s easy to be worried about how you will be able to save for 25 to 30 years of retirement. You don’t want to compromise your desired lifestyle. You don’t want to be worrying about money. You want to be able to travel the world.

The best way to alleviate your retirement savings worries is to get a handle on your finances. Here are some tips you can use to help plan for your retirement, worry-free.

Choose your retirement age

The first step is to pick the year in which you wish to retire. The average age of retirement (between the years 2009 and 2013) was 63 for private sector employees, and 61 for the public sector. If you own your own business, the average age of retirement is 66.[1] You can use these statistics as a guideline, but choosing your retirement year is a choice specific to your unique situation. The main question to ask yourself is: how much time do you need to save enough to retire with your desired lifestyle?

Estimate your retirement nest egg

 The best way to get an accurate estimate of how much money you need to save is to speak to a financial advisor. The retirement planning specialists at The Beacon Group of Assante Financial Management, Ltd. can help you determine the right savings goal for your situation. When you meet with them, they go over your desired monthly budget, your vacation plans and other planned retirement endeavours with you. Using that knowledge, they can give an accurate retirement savings goal and prepare a plan to help you reach it.

Retirement Savings Strategies

If you are worried that you could outlive your savings, a financial advisor can help you build a dependable income source that will cover your basic lifestyle needs. Some examples of a dependable income source include life annuities and government pension benefits. To help fund long-term needs, you may be advised to invest a healthy portion of your savings for growth.

The best way to alleviate retirement savings anxiety is to have a plan in place. If you have concerns about your plan’s ability to meet your retirement goals, you should contact a retirement planning specialist at The Beacon Group of Assante Financial Management, Ltd.


[1] Statistics Canada CANSIM, Table 282-0051.

Small Business Insurance and Why You Need It

Growth and increasing revenue are two positives of a successful small business. As both increase, it’s important to look at your big picture. As the business develops and your responsibilities grow, it becomes important to protect your assets. Protection can be obtained through insurance policies. Here are a few areas where you should consider having insurance coverage.

Insurance on Your Biggest Asset: You

If your small business relies heavily on you and would not be able to survive should you be unable to work due to death or critical accident, there should be a personal life insurance policy and a disability insurance policy set in place to cover you, should disaster strike. This will ensure your beneficiaries are financially taken care of if you are no longer able to earn an income from your small business.

Insurance on Your Tangible Property

As your company grows, so will its assets. Every computer, printer, vehicle, and even the building out of which you operate all account as part of your company and should be insured against accidents and misfortune. One small fire is enough to destroy many of the assets held by your company and without insurance it can be detrimental to recover.

Liability Insurance

Depending on the type of business you have, there may be a certain amount of liability involved in doing the work you do. If there is any chance that you could cause harm to your clients either physically or business-wise it is imperative that you obtain liability insurance. A single lawsuit can be enough to sink even the most stable of businesses. It’s best to have full coverage in case the need arises.

Health Insurance

Being a company that offers health insurance to its staff is a big draw for employees. Employees need to know that their personal insurance needs can be met, so having a health insurance plan is a great way to show your staff that their needs matter.

Although paying into insurance can seem unappealing when there are other ways to invest those funds and help the business prosper, it really is essential to ensuring the longevity of your company. There are no guarantees in life and having a stable insurance plan in place for every necessary avenue is the best way to guarantee your company can survive anything the world throws at it. For more information on the types of insurance your company might need, feel free to connect with us at The Beacon Group of Assante Financial Management Ltd.

How RRSP/RRIF Designations Can Protect Your Family

Naming beneficiaries for your RRSP and RRIF investments is not an easy process. There are many different options, each with their own benefits and tax implications. Beneficiary designations for these accounts are an important part of the estate planning process. Possible beneficiaries for your RRSP and RRIFs include your current spouse or your children/grandchildren. In this article, we will go over each choice in detail and outline their individual benefits and tax implications.

Naming your spouse as beneficiary

 Naming your surviving spouse as the sole beneficiary to your RRSP gives them the option to roll over the investment as long as it is all transferred into an RRSP/RRIF/Annuity in their name. This option is available everywhere but Quebec and as long as it’s done before the end of the year following the year of death.

If the spouse is not the sole beneficiary, it’s best to designate the estate as the RRSP beneficiary and the will should then specify that the spouse must consent to receive the funds as a refund of premium or just the after-tax value of the RRSP. Without this specification, the spouse could opt to take the value of the RRSP in cash, which will leave the estate to pay the taxes.

For RRIF accounts, similar rollover options are available, with some difference. The spouse has the option of rolling the RRIF funds into a registered plan in their name with the minimum payment being taxable to the estate.

If the spouse is designated as the successor to receive annuities, they can be named on the policy in place of the deceased and continue receiving RRIF installments.

Naming your children as beneficiaries

 You can defer taxes if your registered plans are transferred to a term-to-18 annuity of a dependent minor child. Any withdrawals will be taxable to the child. If your RRSP is highly valued, a testamentary trust should be considered instead of a transfer.

Transferring your plan to a financially dependent disabled child is also possible. You can transfer to their RRSP, RRIF, RDSP or term annuity. Registered Disability Savings Plans (RDSPs) are subject to a $200,000 limit and aren’t eligible for the Canada Disability Savings Grant. RRIF withdrawals are taxable to the beneficiary.

 There are many things to consider when planning your estate, each with their own financial pros and cons. For help with your estate planning, contact The Beacon Group of Assante Financial Management, Ltd. Our financial advisors and estate planning specialists are ready to answer your questions and help you make the right choices for your unique situation.

 

How to Combat Job Stress

Stress. It’s that five-letter word that is more powerful than most of us realize. It can impact our lives in the blink of an eye, completely catching us off guard and manifesting its way into our lives in so many ways. Today, our world has becoming an increasingly demanding place  – one that expects more than ever, often with little time left for those crucial moments of relaxation and leisure. If you’re feeling weighed down from job-related stress, here are a few essential steps for you to take in order to combat it.

Make Time for Yourself, No Matter What

Just as if you were scheduling an appointment or important meeting, at least every week, set an evening aside where you can relax and regroup. This appointment takes priority over everything else and cannot be moved or cancelled.  Making time for yourself is as important for your overall health as anything – so don’t take this lightly. Go on a date, meet up with friends, have a laugh, or pair a glass of wine with a good book. Whatever you choose, find a way to take your mind off of work for at least the evening.

Take Your Lunch Break

If you’re one of those people who tend to skip lunch or eat at your desk instead of taking an actual break – stop it! It’s important to break up the day. Even if you have a “to-do” list that is a mile high, taking a half hour to step away from the office and eat your lunch somewhere else – like on a bench in the sunshine – can work absolute wonders for boosting your mood, energy and clarity. Take in some vitamin D and allow your body and mind a reprieve. You’ll be amazed at just how much more productive you can be when you get back to the office.

Exercise

We’ve all heard it countless times before, but exercise truly is one of the best ways for combating stress. It may not always be practical to find the time or the energy to exercise, but it doesn’t have to involve running on a treadmill or lifting weights at the gym. Try joining an early morning yoga class before work, or even a few times in the evening so you can feel relaxed before bed. Alternatively, if that’s not your thing, look for a nearby swimming pool you can use to go for evening swims. These are great ways to incorporate exercise while mellowing out your mind and body.

In order for you to combat stress, your personal time needs to become a priority. If you’re finding that life is becoming a tad overwhelming, it’s time to do something about it. Carve out time for yourself to take your mind and body off of your work by having a weekly night out with friends, utilizing your lunch breaks and finding a way to incorporate some exercise into your days. Your body and mind will thank you.

A Guide to Helping Your Parents Financially

There may come a day (if it hasn’t happened already) where you will need to start taking care of your parents. This will include staying on top of their financial situation, which may include estate planning, taxes, and even their day-to-day budgeting. Some parents are very open to receiving help from their children, while others may be more stubborn. Either way, the first step to helping your parents with their finances is initiating a conversation. We will go over the best way to do so, along with figuring out their financial situation and how you can help them.

Starting the conversation

 Some parents may not be open to the idea of sharing financial matters with their children. In these cases, it is best to ease them into the conversation by bringing up a small financial discussion every now and then. You can do that by first talking about your own finances. You can tell them that you just updated your will and use that topic to lead into a question about their own will. The next time, you can talk to them about your decision about power of attorney for your estate. You can share this effort with your siblings if you have any.

Digging into their finances

 Once your parents have become comfortable with talking about their finances, the next step is to gather enough information to draw an accurate picture. Is their retirement income covering all of their expenses? Do they have the resources to handle possible future health care needs? Do they have life or long-term care insurance coverage? Do they have an estate plan in place to protect themselves, their loved ones, and their assets?

How you can help

 Now that you have gathered your parents’ financial information, you can determine where you need to help them. You may determine that you need to help them with their day-to-day banking, or that you may need to pinch in with money of your own. In order to properly help them, you will need to know the contact information for their doctor, lawyer, financial advisor, and accountant. If you are named executor of their will, you will need to know where the will is physically kept along with important items like a safety deposit box. If you have brothers or sisters, you should encourage your parents to talk to them all about their plans for distributing the inheritance. This can help avoid conflict once they pass, and make your life as executor much easier.

Don’t wait until your parents are overwhelmed. Start the conversation with them today to make the lives of your loved ones easier. For any advice about helping your parents with their finances, contact The Beacon Group of Assante Financial Management, Ltd. today.