How to weather the transition from saving to spending in retirement

February 19, 2017Robert T. Anderson

Create a retirement plan that will adapt as the financial winds change

You’ve worked hard to save for retirement – prioritizing your goals along the way. You’re tiptoeing towards retirement and you’ve earned your “me time” – now, create a plan for how you’ll spend it.

Approaching retirement after years of hard work can be an exciting time, but it can also trigger feelings of uncertainty about how sunny your financial forecast may be. How long you’ll live is an important factor that impacts how long your money needs to last. The fact is, Canadians are living longer than before, which means you’ll likely need more to be able to support your retirement dreams.

Make the most out of your retirement by working with an advisor.

As you begin to shift your mindset from saving to spending, you may be asking yourself, “Am I going to be OK?” You’re not alone. It can be difficult to envision exactly how you would like the next 20, 30 or even 40 years to look – and creating a plan to support your vision can seem daunting. Don’t fret – I can help.

It’s important to have a retirement income strategy that sets the stage for a long and fulfilling retirement. Part of creating a plan that works for you involves setting realistic expectations about your saving and spending habits. Working with me will help you stay focused on the things that matter, rather than the checks and balances of financing your retirement.

Remember, tomorrow can be sunny – and it can come sooner than you think

Do you think your spending will decrease in retirement? Canadians need to be wary of that assumption because spending actually stays more or less the same – and may even increase. To help position you for a bright future, you can take the following steps as you move closer to retirement.

Three to five years before retirement

Estimate how much guaranteed income you’ll receive from the government and your employers.
Estimate your living expenses and lifestyle needs.
Review your investment portfolio with me to find out if you are on the right financial track toward your retirement goals.

One year before retirement

Verify eligibility and amounts of retirement income from all sources.
Review estate planning.
Work with me to put the finishing touches on your customized retirement program.

Six months out

Update your beneficiary information.
Apply for government benefits.
Apply for retirement income from your workplace plan.

Stop asking, “Will I be OK?” Make the most out of your retirement by working with an advisor who can help you better understand and manage your potential sources of income. I can help you develop a retirement strategy that can help set you up for fair weather, while also providing you with a financial umbrella – just in case the wind shifts.

Helpful tips for first-time life insurance buyers

February 19, 2017Robert T. Anderson

Buying life insurance doesn’t have to be difficult

Buying life insurance for the first time can seem daunting. It’s a big decision, there are many options to consider and it can be stressful to think about what might happen if you’re no longer there to support your loved ones.

Getting insurance coverage that’s right for you is one of the most important ways you can financially protect those you care for from the unexpected. Buying life insurance is essential at any age and there are key advantages to starting early.

Here are some helpful tips to make the whole process easier for you.

Remember why you need insurance

Insurance can help financially protect those you care about when you’re no longer there to support them. It means there could be money available when it’s needed the most, so your loved ones can spend more time helping each other through a difficult time, and less time focused on how to pay the bills.

Life insurance can help:

Cover everyday living expenses
Settle debts
Keep the family home
Continue plans you’ve made for your loved ones, like an education fund

Once you know what type of life insurance you want, you’ll then want to determine how much your family will need to continue their lifestyle after you’re gone.

Life insurance that’s right for your needs and budget

There are two kinds of life insurance:

Term life insurance – temporary, lower-cost insurance coverage (at least initially) which you buy for a set period of time. When that time’s up, your coverage can be renewed or you can convert to permanent, lifelong, coverage without having to answer further health questions.

Permanent life insurance – typically costs more, but lasts a lifetime and includes features that can grow money inside your policy over time (called cash value). You can access this money while you’re still alive or leave a larger legacy for those you care about.

Once you know what type of life insurance you want, you’ll then want to determine how much your family will need to continue their lifestyle after you’re gone.

To start, calculate:

Monthly household expenses – groceries, bills, mortgage, loan payments, etc
Planned expenses – RRSP or contributions to your children’s education, for example
Expected one-time costs – for instance, funeral expenses

You should figure out how much these expenses will cost for a full year, then how many years your loved ones would need to rely on this income. It’s a good starting point, so you have an idea of your insurance needs, which you can finalize with the help from me.

Don’t forget to insure your health

Did you know you’re much more likely to experience a serious illness or injury before you retire than you are to die? Ask yourself: if you were too sick or injured and couldn’t work for a month, six months or even a year, would you need an income source (that’s not your own) to support yourself and your family? If your answer is yes, critical illness and disability insurance may be valuable additions to your financial security plan that can protect what you’ve planned for and help ensure your loved ones are taken care of.

Consult a financial professional

I can help you create a plan – including life, critical illness and disability insurance – to help protect yourself and your family from any financial or non-financial issues that might come up.

Tips to help make the most of your Canada child benefit

October 29, 2016Robert T. Anderson

If you’re a parent, you know that raising kids is costly from day one. It can be hard to think about putting money aside for their future, or your own, when daily expenses pile up.

As of July 2016, the government introduced the non-taxable Canada child benefit (CCB) to help eligible families offset the expenses of raising children under 18. The CCB replaces the Canada child tax benefit, the national child benefit supplement and the universal child care benefit.

The amount you receive is based on a number of factors including the number and ages of your children, your adjusted Canada Child Benefit family net income and your child’s eligibility for the child disability benefit. An additional amount for the child disability benefit and related provincial or territorial programs might also be included.

After determining eligibility, Canadian parents can apply online and must file income taxes every year – regardless of employment status – to receive the benefit. For full eligibility and application details, visit the Canada Revenue Agency website.

With the rising costs of education and everyday expenses, setting aside a portion of your benefit amount for your child’s financial future could give them a welcome head start. Depending on your situation, here are a few ideas to consider to help you make the most of your monthly CCB cheque.

Make an RESP contribution

Opening a registered education savings plan (RESP) is an important investment in your child’s future. This tax-advantaged savings vehicle is designed to help you save for your child’s post-secondary education and related expenses, such as housing, food, books, technology and travel. There’s no limit to how much you can contribute each year, but there’s a lifetime maximum of $50,000 per child. As a bonus, the government will help you save through the Canada education savings grant (CESG), which provides 20 per cent on the first $2,500 you put into an RESP each year, to a lifetime limit of $7,200. Some provinces may also provide additional grants.

Start a savings account

With the ever-rising cost of living and uncertain job markets, setting aside a small amount of money for your child beyond their education costs could help to ease future financial burdens. Alternatively, you could contribute a portion of the benefit to your own savings account. This money could be used as an emergency account or to fund unexpected family expenses. If you’re worried about spending your CCB cheque as soon as it arrives, consider setting up automatic transfers that will divert it to your account. Once your emergency reserve is fulfilled, you might consider transferring additional funds to a longer-term investment, like a registered retirement savings plan (RRSP) or tax-free savings account (TFSA).

Consider a life insurance policy

When you buy a permanent life insurance policy for your child early, it means they’ll be insured for life, regardless of any future health problems. Permanent life insurance includes features that can grow money inside your policy over time (called cash value). This money can be accessed during your child’s lifetime.* When your child reaches the age of 25, the policy can be transferred to them tax-free. Later in life, your child could have the option to access the policy’s cash value to contribute to things like supplementing their retirement income or establishing a financial legacy of their own.*

^* If money is withdrawn from the cash value of a policy, it may be subject to tax.

Did your lender talk to you about Mortgage Insurance?

October 1, 2016Robert T. Anderson

Protect what matters most, not just your house

When you buy a home, you need a way to help protect yourself and your family financially, no matter what happens.

Your bank/lending institution probably talked to you about mortgage insurance (also called creditor insurance) when you bought your house. It means if you die, your mortgage is paid off.

Mortgage Insurance vs. Individual Life Insurance:

But is mortgage insurance the best option for you?

If you want to protect more than just your home, individual insurance may better suit your needs. Individual insurance generally provides more control, options and benefits to help you financially protect what matters most.

By comparing mortgage and individual life insurance, you ensure you’re giving yourself and your family the type of insurance protection that meets your needs.

I’m a trusted professional who can help you build a financial security plan to help protect your mortgage and what matters most in your life.

Your guaranteed paycheque in retirement

October 1, 2016Robert T. Anderson

After spending years working, you’re now closer to retirement and might be thinking about what that means to you. For most people, retirement is a time of mixed emotions. Along with the excitement of entering this new phase of life comes the nervousness stemming from the absence of a paycheque or steady income. As you approach retirement, you could be asking yourself:

What will my spending look like in retirement?
Will my money last?
Do I need to worry about interest rates?
How will market fluctuations affect my finances?

Do you have a plan in place for addressing these concerns? What if there was a way to help you feel confident about your finances in retirement?

Challenges in retirement

It is well-documented that Canadians are living longer. Statistics show retirees now need to plan for as long as 20 to 30 years in retirement¹. This makes it critical to secure a part of your nest egg in a way that can provide you with guaranteed income – similar to a paycheque – for the rest of your life.

Income annuities – a steady paycheque throughout your retirement

Fortunately, there is a way for you to receive guaranteed income for life – with an income annuity. Securing a part of your retirement nest egg with an income annuity can help you cover most of your basic living expenses throughout retirement. Then the other portion of your money can be invested in funds that have the potential to grow.

Income annuities – other perspectives

Not only are annuities a great way to receive a steady income throughout retirement, there are other factors that make income annuities even more attractive in retirement. They provide excellent value even in low interest rate environments, provide a predictable income regardless of whether markets are up or down and can also help with estate transfer.

Watch this animated video about how income annuities can be your personal paycheque in retirement.

To find out more about how annuities work, exclusive annuity features and options and how income annuities may fit into your plans for retirement, speak to me.

¹Issues related to increasing the “retirement age”, Canadian Institute of Actuaries, 2013. http://www.cia-ica.ca/docs/default-source/2013/213038e.pdf

Group benefits are an investment in your company and employees’ well-being

October 1, 2016Robert T. Anderson

As a small business owner, you rely on your employees to help build your business. You have a great team behind you, so how do you protect your employees and build employee satisfaction and loyalty?

Offering wellness programs may be one way to retain employees, but over the long term may not be seen as important. Giving your employees a pay increase is another option, but is it the most cost-effective compensation method?

Group benefits are an investment in your company and employees’ well-being.

Consider a group benefits plan – an attractive overall compensation package. Health care and dental care benefits within your plan can help your employees bridge the gap between provincial health insurance and the coverage they Group Benefits to Attract and Retain Employees need.

Group benefits are an investment in your company and employees’ well-being. At any time, employees may be dealing with mental health concerns, serious illnesses, and physical ailments or finding the right work-life balance. These issues can lead to reduced productivity, growing absenteeism, disability, rising costs, and workplace accidents. Group benefits are a key element to building employee satisfaction, improving morale and can help support the physical, mental and financial needs of your organization and your employees.

According to a 2015 Sanofi Canada Healthcare survey, 77 per cent of respondents say they would not move to a job that did not include health benefits¹.

Attract valuable employees

An employee benefits plan can help you maintain a competitive position in the marketplace by helping you retain good employees and attract new ones.

A group benefits plan is an important part of your business’s financial security plan. Flexible and innovative benefits plans – featuring benefits like health care, dental care, disability and employee and family assistance plans – can be tailored to fit the specific needs of your company, whether it’s large or small.

Talk to me about the options available and how you can add value to your business.

A stronger, better you: Why it’s important to look after your financial health

October 1, 2016Robert T. Anderson

We all know how important it is to take care of our physical health – it keeps us strong and helps ensure we’ll be around for years to come. But what about looking after our financial health? It’s just as important but often doesn’t receive the attention it deserves.

Even if it seems like you don’t have enough money to invest or buy insurance, it doesn’t take much. If you cut down on extra lattes or meals out, you could set yourself up with a plan for a successful financial future.

Build your personal road map

When it comes to financial security planning, it pays to start small. If you change your spending habits, even just a little bit, the long-term results could be big.

For example, let’s say you made your morning coffee at home instead of picking it up on the way to work. It may not seem like much but the amount you save could be enough for a $500,000 life insurance policy.¹

If you cut down on your dining-out expenses by even $20 a week and invested that money, it could grow to almost $37,000 over a 20-year period.²

No matter what you’re saving for, you’re on the road to achieve your future goals.

Other savings ideas:

Leave the car at home, carpool, use public transit or ride your bike
Shop around for better auto and home insurance rates
Install LED light bulbs to reduce energy costs
Go to the movies on “cheap Tuesdays”
Clip coupons for groceries or buy in bulk
Cook at home instead of dining out

With those savings each month, you could:

Invest and watch it grow

A small but regular contribution into something like a tax-free savings account (TFSA) or registered retirement savings plan (RRSP) could grow substantially, if it’s invested wisely and given enough time to grow. Use this money to help fund your retirement or perhaps go on the dream vacation you’ve always wanted.

Protect your family

What would your family do if something happened to you? Insurance is a flexible and cost-effective way to protect yourself and your loved ones financially. It can help pay down your mortgage, cover outstanding debt or fund education or retirement plans.

How we can help

Spending money feels good, but knowing you’re not only protecting yourself and loved ones – but unlocking future potential – feels even better.

I can help you build a customized financial security plan to help you achieve your goals.

¹Cost of coffee based on $1.70 per cup. Assumes 30 cups a month. This comparison is based on London Life term 10 life insurance, male and female, up to age 45, non-smokers, standard risk, monthly premium payments. Monthly premium depends on your age, amount of coverage and general health information. Life insurance coverage amounts represent the policy’s death benefit. Rates as of December 2015. Term 10 life insurance premiums increase on renewal after 10 years. The example provided is not complete without the London Life illustration, including the cover page, reduced example and product features pages all having the same date. Read each page carefully as they contain important information about the policy.

²Assumes $80 is invested in a balanced mutual fund portfolio on a monthly basis with a six per cent annual rate of return. Rates of return are hypothetical and provided for illustrative purposes only. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated. Unit values and investment returns will fluctuate.

Four things to consider before accepting your first job

October 1, 2016Robert T. Anderson

As a new graduate, navigating the job market can be a challenge. After the often lengthy search and application process, you might feel accepting your first offer is the only choice. While taking the first position you’re offered may be the right option for you, there are several factors worth considering when evaluating a job offer.

Workload and work-life balance

Throughout the interview process, it’s important to ask questions that will help you evaluate the day-to-day responsibilities of the position. You’ll also want to determine the company’s policies on work-life balance.

Four things to consider before accepting your first job

Is this a position that requires you to be connected 24/7 and available at a moment’s notice? Will the stress-level and hours of work be compatible will your lifestyle and personal commitments? What’s the company’s position on flexible working hours? While there may be an element of ‘paying your dues’ associated with your first job, make sure the workload and corporate philosophy on work-life balance is right for you.

Culture and fit

Workplace culture is a key consideration for many millennials who want to feel their work is meaningful and not just a nine-to-five destination. If you fit that profile, it’s a good idea to inquire about things like teamwork, philanthropy and social events.

Does the organization encourage collaboration or will you be working on your own? Does the company participate in charitable giving or give back to the community in other ways? Will there be organized events to socialize with your colleagues to encourage engagement? Remember that determining the right fit is a two-way street. If you don’t gel with your prospective boss or team members, it might be worth continuing your job search.

Establishing good financial habits early in your professional career can help you stay on track for years to come.

Development and progression

While it’s generally accepted that millenials will change jobs more often than previous generations, considering progression opportunities within an organization is an important factor that can impact your future success. You’ll likely also want to consider the organization’s stance on personal and professional development.

It shows initiative to ask about your potential growth trajectory within the company during the interview process. If you see yourself in a leadership role in the future, for example, ask about the potential for in-house leadership workshops, mentorship opportunities or tuition reimbursement to help you get there.

Compensation and benefits

While salary and benefits are top of mind for most job seekers, there may be a gap in reality vs. expectations for recent graduates. In most cases, entry-level salaries aren’t very negotiable and reflect limited experience. If you know you can provide some advanced level of expertise, you may want to consider negotiating for a better offer.

If you feel you’re in a position to negotiate, make sure you can present a strong case as to what you’ll bring to the company. Non-financial compensation including vacation, benefits or bonuses are other elements that can, in some cases, be more flexible than salary. In any negotiation, make your genuine interest in the job known when asking for an increase in salary or benefits. If the offer is firm, consider asking about the frequency of performance appraisals and salary reviews.

Entering the workforce after graduation can be challenging and exciting, both emotionally and financially. When beginning your first professional job, it’s a great time to develop a financial plan that can adapt as your needs change. It’s important to consider how you’ll afford your everyday expenses while setting enough aside for the future. I can help you plan for your financial future and offer you valuable tips about topics like budgeting, saving, investing and the power of compound interest. Establishing good financial habits early in your professional career can help you stay on track for years to come.

Your roadmap to a student debt-free future

May 20, 2016Robert T. Anderson

You’ve got the diploma, but now you have to deal with your student debt. Depending on the size of your loans, this could take months, years or decades to repay. With road blocks like changing interest rates and unexpected expenses, imagining yourself student debt-free may seem like something in the distant future – but it doesn’t have to be.

There are many ways you can shorten your path to becoming debt-free. Follow these tips and a student debt-free future could become your reality much sooner than you think.

Starting off – where are you now?

Whether you’re a new grad or you’ve been in the working world for a while, you’ll eventually have to begin your journey to repay your student debts. Like a road trip with friends or a hike into the wilderness, it’s best to start by assessing where you stand. Take inventory of your student debt from all institutions and your available finances. Having a clear picture where you stand today is an important first step when looking towards the future.

It can seem like a long trip, but with the proper planning and financial guidance, you can reach your debt-free destination sooner than you think.

Planning – create your repayment roadmap

Now that you know where you stand and where you want to go, it’s time to start the planning process. It’s a great idea to use a loan repayment estimator to map out how much you owe and make a monthly repayment plan that works for you. As soon as you can, you should establish a concrete plan for repaying your loans and pay as much as you can, as often as you can.

There are some things you should consider when you’re finalizing your plan:

What’s your interest rate? Your interest rate is perhaps the most important factor when it comes to creating your repayment roadmap. A higher interest rate means you should try as hard as possible to pay your loan off faster to avoid needlessly paying interest. For example, if you take 10 years to pay off a loan of $10,000 at 3.5 per cent, you’ll have paid $4,878 in interest. Compare this with an interest rate of 7.5 per cent on the same $10,000, on which you’ll pay $7,565 over the same amount of time. That’s a difference of $2,687.
How much income are you currently bringing in? Bringing in more cash means you can make higher payments on your loan – simple as that. Figure out what your current income is from all sources and how much of it you can safely put towards your student loans.
Do you have other debt at a higher interest rate? If you do, it’s wiser to pay this off before putting everything you can into your student loan. Financially, it’s smarter to pay off $1,000 in credit card debt at a 19 per cent interest rate before putting all of your available money into your student loan at 3.5 per cent.
Do you have student loans from the government? If your loan is from the government (federal, provincial, or territorial), a non-refundable tax credit is available for the interest paid on the loans each year. You may be eligible to claim this amount for the year the interest was paid, or preceding five years. Unfortunately, this tax credit does not apply to interest payments made on student loans held with private lenders, such as banks. Regardless, this is a great bonus – you can put the money you receive from your tax return directly towards repaying your student loan.

Setting off – repaying your loans

You’ve assessed your situation; you’ve planned your journey, now it’s time to hit the road. Your first step will be to set up loan repayments with your financial institution. This can be done in several ways – from weekly, bi-weekly, to monthly. Bi-weekly is often considered a smart option, but can be tougher to manage due to the higher frequency of payment withdrawals.

Once you’re set up and making payments, your trip shouldn’t end there. Instead of coasting until you’re debt free, consider shifting gears on your plan if your financial situation changes over the course of your repayment period. Get a promotion? Inherit some extra cash? Win the lottery? Take that windfall and increase the amount you’re repaying.

There’s one more important thing to know – you don’t have to take this trip alone. I can help make your journey more bearable. I can help you design your debt repayment roadmap, help sort out possible roadblocks, and potentially help you find ways to repay your debt faster. It can seem like a long trip, but with the proper planning and financial guidance, you can reach your debt-free destination sooner than you think.

Wedding costs to consider when planning your big day

May 20, 2016May 24, 2016Robert T. Anderson

In 2014, the average Canadian wedding cost a whopping $31,685. But that doesn’t mean you need to break the bank on your big day. Here are some ideas to keep costs in check before you tie the knot.

What’s the plan?

Newly engaged? Sit down with your partner early and talk about your hopes and dreams for the day. Make a list of what you’d like to do and be sure to keep it handy. This can help keep your plans rooted in reality when you get the urge to splurge. Ultimately, weddings can be expensive, so make sure this conversation is also about money. You and your partner may have very different ideas about what you want to spend.

Go big, where necessary

It’s okay to splurge on the things that are important to you and your partner. You can always find savings elsewhere. If Wedding Planning you’re not a big foodie, splurge on the cost of a photographer and consider serving hors d’oeuvres rather than an entree. Have a dream venue in mind, but feel flexible on the day of the week? Venues often charge less to have a wedding on a Friday or Sunday rather than a Saturday.

Focusing your budget on the things that matter most can help you keep expectations in check and ensure your special day is all that you dreamed about.

Watch that guest list

Do you plan on having 30 guests or 150? Will your meal cost $50 or $100 per person? This can make all the difference on the final bill. Often, couples feel pressure to invite all of their family, friends and coworkers, but that doesn’t need to be the case.

Sit down with your partner and create a realistic guest list that works with your budget. Be sure to do this before you start sharing your wedding plans with your family and social circle because it will help manage guest expectations.

Be sure you have a conversation with your partner about your wedding day hopes, dreams and expectations.

Honeymoon – now or later?

As you plan your special day, you may find your costs ballooning beyond your budget. One way to balance these extra costs is to reconsider how or when you take your honeymoon.

Can you live without an extravagant getaway following your wedding? There are a number of ways you can save when considering a postnuptial vacation. Here are a few ways to make the most of your travel savings.

Waiting to take your honeymoon could give you more time to save for your dream trip, help balance your time off work and save on child, house or pet care costs. This extra time to plan and save could also make for a more relaxing (and therefore romantic) experience for you and your partner.

Ask for help

Remember, family, bridesmaids and groomsmen are here to help. This could mean having them run around to pick up decorations or making invites or centrepieces. Remember, your closest friends and family members are a part of your big day because you love them and they love you. Many are willing to lend a hand, so be sure to delegate if that’s possible.

If you’re still not sure where to start, I can help you stay on budget.