Savers versus spenders – the great divide

Five tips to help couples bridge the gap on their financial attitudes

We’re all different when it comes to our perspectives on spending. Some people have no problem saving all their extra pennies, and some people spend what they have without thinking about the future. While differences make the world go round, conflicting thoughts on money matters can lead to tension in relationships. If you and your partner find yourselves at opposite ends of the saving versus spending spectrum, these tips can help you meet in the middle.

1. Understand each other’s differences

You’re buying a new car together. The spender wants all the upgrades, while the saver is just fine with the base model. When emotions run high, it can be difficult to see where your partner is coming from. The truth is, our Budgeting with Partnerattitudes about money are deeply rooted. Perhaps you or your partner is stingier with spending because there was less to go around growing up. Perhaps the person who is free with money gets an emotional reward from spending. Try to take a step back and discuss the reasoning behind your behaviour. It’s always easier to negotiate when you try to validate each other’s feelings, instead of assigning blame.

2. Set goals you can agree on

As a saver, it can seem irritating if your partner is constantly making purchases you deem frivolous. Creating a spending plan as a couple – with shared goals in mind – can help bring you together around common values. For example, say you agree that taking a trip overseas or buying a home is your biggest priority. You may want to consider how much you’ll need for that expense and factor how long it will take you to save that amount. With that savings goal in mind, it will probably be a whole lot easier to pass up unnecessary indulgences.

It is possible for partners with different spending styles to find a middle ground.

3. Establish a system for bill payment

When your bills roll in each month, avoid the last-minute scramble by setting parameters on who will pay each bill if you manage your finances using separate accounts. Perhaps you each cover half of your mortgage or rent, one of you pays the auto insurance and the other covers hydro. Since these expenses are generally fixed, setting up a system for handling bills up-front gives you one less thing to worry (fight) about.

4. Set a threshold for joint purchases

Every couple has a different way of structuring their finances, and sometimes, it takes a bit of trial and error. Some people keep separate accounts and split everything down the middle, while others pool all their resources. Other couples have four accounts between them: one joint for savings, one joint for everyday expenses and two individual accounts for whatever’s left (fun money). Whichever system you decide is best for you, you may want to consider setting a limit on the amount you can spend on a joint purchase without consulting each other. Discussing big-ticket purchases with your partner before you take the plunge is an easy way to avoid a disagreement.

5. Call for backup

Sometimes, reaching out to an impartial third party is the best way to solve financial disputes. I can help by talking to you about your goals and determining the best way to structure your finances to suit your needs. With a customized financial plan in tow, you’ll have a solid foundation for the decisions you make about your money.

With a common vision for your future and the right financial action plan, it’s possible for partners with different spending styles to find a middle ground.

How to weather the transition from saving to spending in retirement

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 Retirement Incomecreating 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.

Your guaranteed paycheque in retirement

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?Guaranteed Retirement Income
  • 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

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

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.

Five important money matters to discuss with your partner

When it comes to choosing a partner, everyone has a list of qualities they just can’t live without. A recent poll, revealed that having a financially responsible partner is a priority for both millennial (88 per cent) and Discuss Finances with Partnerbaby boomer (92 per cent) survey participants.

Despite the desire for financial compatibility in relationships, money can be a source of friction for both new and established couples. While it’s best to understand your partner’s financial picture before joining accounts, engaging in regular conversation about your finances is always beneficial.

Open communication and setting clear goals for your future can help you avoid conflict on the topic, but it can be overwhelming to start the conversation if you’re not sure where to begin. Here are five fundamental money matters you may want to address with your partner.

A recent poll, revealed that having a financially responsible partner is a priority for both millennial (88 per cent) and baby boomer (92 per cent) survey participants.

1. Discuss your assets

Having a grasp on your total combined assets (including salary, savings, investments, insurance and property) is important to making financial decisions as a couple. This simple discussion is an essential starting point in making a realistic plan for savings, spending and future goals.

2. Understand your debts

Managing debt effectively is a key aspect of wealth building. It’s important to know the total amount of your partner’s debt (such as credit card, line of credit, mortgage and student loan debt), discuss whether the debt will become a joint responsibility, and determine how it will affect your budget. It’s also a good idea to discuss your partner’s credit score, as it will affect your ability to get credit as a couple.

3. Set a spending plan

Creating a joint spending plan may shine a light on any differences between spending styles – perhaps you’re a saver, but your partner opens their wallet a bit more freely. Taking account of your individual and combined monthly expenses can start a realistic discussion about how to allocate any surplus – even if it involves some compromise.

4. Strategize your savings

Defining your individual and joint savings priorities is another essential part of building your budget, and ensuring that you’re well positioned to meet your goals. It’s also important to discuss which type of savings vehicle will best suit your needs; consider factors such as your tolerance for fluctuations in the value of your investments, and the amount of time you have to invest.

5. Plan for your future

Is travel a priority for you and your partner? Perhaps you’re dreaming of buying that cottage you always wanted, or you just want to make sure you can retire comfortably. If you don’t discuss your goals for the future then it’s hard to make them happen. While your dreams may differ, starting a dialogue can help you compromise so you can set your plans in motion.

Get a second opinion

As you consider these factors with your partner, I can provide a professional opinion on the best approach to help you achieve your financial goals. I can provide a holistic assessment of your joint financial picture, and offer a variety of planning services including cash-flow planning and investment analysis.

Freedom from winter – buying a second home down south

Do you dream of becoming a snowbird, flying south every winter? Owning a second home in the American sunbelt is a central part of many Canadians’ retirement dreams – it’s the warm, beckoning light on the horizon.

In recent years, declining U.S. real estate prices have resulted in a wave of Canadians buying winter homes in states like Florida, Texas, Arizona, California and Hawaii. In Florida alone, Canadians spent $2.55 billion on homes between July 2013 and June 2014.1

Buying a non-principal house abroad can create many issues that financial security planning can help resolve. I can help provide invaluable counsel through this process, from financing options to life insurance to estate planning. You should also consult a U.S. tax professional.

Buying a non-principal house abroad can create many issues that proper financial security planning can help resolve.

Things to consider when shopping for a home in the U.S.

The first step is working with your family to figure out what kind of home you want. How many bedrooms? Waterfront or desert? Condo or house? What region?

Condos offer a turnkey lifestyle, meaning you’re not responsible for general maintenance. This could save Second Home Buyingyou money on professional caretakers for the months the place is empty.

Listings are online, so start surfing. Once you narrow your choices to a certain area, visit it and explore the neighbourhood. Local real estate agents will be happy to offer you a no-strings-attached tour.

If you plan to rent the property for part of the year, you may also want to meet with property managers to go over fees and other considerations. It’s also a good idea to check in with an accountant to discuss tax issues.

What to keep in mind when building a budget

When you create your budget, include all annual costs – such as property taxes, utilities, maintenance, condo fees and buying and insuring a vehicle.

Next, you may want to get quotes in writing for house insurance. Coverage may be expensive and hard to secure in areas prone to hurricanes and flooding. Also, make it clear to potential insurers if house will sit empty for several months a year. For vacant properties, some insurance policies may require weekly visits, which will be costly if you have to use a professional service.

If you plan to spend an extended amount of time there, you’ll also need to get quotes for health insurance.

Getting a mortgage in the U.S.

It’s not simple for Canadians to get a regular mortgage in the U.S., though it can be done. Keep in mind that, if you’re paying with Canadian dollars, a fluctuating exchange rate can create uncertainty.

Only eight per cent of Canadians buying in Florida opted for local financing between July 2013 and June 2014.1 If you need to borrow to buy, a flexible, reasonably priced option is to use a home equity line of credit from a Canadian lender. While this option can be a simple and effective way to borrow, it is important to work with me to ensure you fully understand how your home equity line of credit is working for you.

I can help you create a budget and, with the help of a London Life mortgage planning specialist, assist you in determining the preferred way for you to pay for your home. You should consult a lawyer for assistance in determining how to structure the ownership. For example, if you plan to rent the property for part of the year, one option may be to structure the ownership as a limited liability partnership.

Buying and selling south of the border

The process is very similar to Canada. Generally, a U.S. lawyer is hired to do title searches and handle the transaction. In many states, the real estate services sector caters to Canadians.

As for estate planning, you’ll want to provide for disposition of the property through a will that is valid where the property is situated and consult a U.S. tax accountant with respect to taxes payable on death of the property owner.

When selling a property, Canadians or their estates will pay capital gains tax in Canada. I can work with you to look at ways to effectively manage these taxes.

Mind the taxman

Canadians are currently allowed to reside in the U.S. for an average of 120 days per year over a three-year period before they may be considered a U.S. resident for tax purposes by the U.S. Internal Revenue Service (IRS).2 The maximum duration of time snowbirds can spend across the border is 182 days per year. Legislation extending this limit is currently being considered.

People living part of the year in the U.S. should file a “Form 8840 – Closer Connection Exception Statement for Aliens.” It tells the IRS that you’re a Canadian citizen and could help you avoid being considered as a U.S. resident. Consult with a tax professional who works with U.S. taxes.

Other considerations

Organizations that represent snowbirds strongly urge Canadians to hire a U.S. lawyer to construct separate powers of attorney and living wills. This will help prevent any hassles during a medical emergency that takes place while you’re stateside.

Canadian financial institutions offer bank accounts and credit cards in U.S. dollars that avoid high foreign exchange fees. If you have a home in the U.S., you can easily open a local bank account to use for everyday expenses and bill payments.

Buying a home in the southern sun is a big decision, and may be a key objective in your financial security plan. Or perhaps it’s a late addition to your list of things to do. Either way, I can play an invaluable role in helping ensure your financial independence while you make your dream a reality.

Steps to Help Ensure Your Financial Success in Retirement

You’ve got a nice nest egg saved up, but want to make it last (and grow!) so you can bring your retirement dreams to life. As you move closer to your retirement date, take time to evaluate the factors that could impact your retirement income. Use this quick checklist to stay on track.

Summarize all your retirement income sources. These can include personal savings and investments, company retirement plans and government benefits, such as Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) and Old Age Security (OAS). To verify your eligibility for CPP/QPP and OAS, contact Service Canada1 (or contact the Quebec Pension Plan2). For workplace plans, contact your benefits administrator when you’d like to start receiving retirement income.

There are many steps to consider when nearing retirement. Print this checklist to help prepare.

Estimate your living expenses.Track your current spending and use this information to project how much retirement income you’ll need. Factor in any lifestyle changes that may occur upon your retirement – you’ll want to consider wellness, travel, part-time work or downsizing your home.Retirement Ready

Review your investment portfolio.Work with me to revisit your investment strategy and consider shifting to lower-risk options to slowly and safely grow your money.

Update your beneficiary information. Ensure your company benefit/pension plan(s), personal savings plans and insurance have updated beneficiary information.

Ensure your estate plan is up to date. Now is the time for the important task of reviewing your will and powers of attorney.

Timeline to Retirement and Financial Success

Three to five years to go:

Estimate how much guaranteed income you’ll receive from the government and employers

Project your living expenses and lifestyle needs

Review your investment portfolio with me

One year to go:

Lock down eligibility and amount of retirement income from all sources

Review your estate plan

Work with me to put the final touches on your retirement plan

Six months to go:

Update your beneficiary information

Apply for government benefits

Apply for retirement income from your workplace plans

Now switch off your alarm – yes, permanently. Well, except when you have an early tee time.

Top Ten Questions to Consider for Retirement

You’ve saved well, invested wisely and built a sizeable nest egg. Retirement is within your grasp – or so you think. Here are 10 thought-provoking questions to help you determine your readiness to retire (whatever retirement means to you).

1. When do you want to retire? In a year? Six months? At a particular age?

In retirement, you’ll experience a fundamental shift – from saving to spending. The timing of your retirement is crucial to building your retirement nest egg and assessing how long it will need to last.

These 10 questions can be your roadmap to becoming retirement ready.

2. What percentage of your current income do you expect to need in retirement?

The amount of your current income you’ll need in retirement depends on how much you plan to spend in retirement. Plot out your current budget, then create a projected retirement budget and see where the gaps are.Retirement Checklist

3. How do you plan to spend your money in retirement?

Think about your current spending habits. Are you a penny-pincher or a lover of luxury? These habits will be amplified in retirement, so make sure your savings reflect this. Don’t forget to plan for events that may be out of your control.

4. Have you considered your lifestyle needs in retirement?

Travel lovers, take heed. Your lifestyle needs in retirement play a big part in how you save. For example, buying a condominium and being saddled with condo fees may not be the best idea if you plan on travelling extensively.

5. What guaranteed sources of income can you count on in retirement?

Calculate how much guaranteed income you’ll receive during retirement – such as Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and Old Age Security (OAS) payments. Then, determine how much additional income you’ll need and where this will come from. While investment income is a nice bonus, you shouldn’t rely on it to pay for necessities.

6. Do you plan to work part-time or full-time in retirement?

Perhaps you want to continue using your existing work skills or explore new career opportunities. Debt and family matters may also influence your decision.

7. How do health and wellness factor into your retirement plan?

Retirement is the perfect time to focus on your mental and physical fitness. Leave room in your budget for activities that exercise your mind and body – the good news is that many of them are free!

8. Are you ready for the unexpected events in life?

When you consider retirement planning, make sure to account for unpredictable events – both financial and personal. Check if your retirement savings are strong enough to support you through a future economic downturn, a rise in the cost of living and a long life.

9. How will you keep your money working in retirement?

Think about how you’ll keep your money growing. Talk to me about investment solutions for retirees.

10. Do you plan to leave a legacy?

You might want to leave an inheritance to your family or favourite charity. Once again, I can help you put this in place.

The answers to these questions can help form a dependable roadmap for your retirement. While you can’t predict the future, you can plan for it.

Good Savings Habits Lead to Financial Independence

Regardless of what you’re saving for – a down payment on a home, a dream vacation, a child’s education or your eventual retirement – developing good saving habits can definitely pay off. Even relatively small but regular contributions can quickly gain momentum thanks to the power of compounding, or making interest on your interest.

Most people can rationalize buying new bedroom furniture or a better and more reliable car by using small monthly payments spread over several years. However, you can also use this strategy to build hefty savings.

For some, saving is instinctive. Chipmunks know they must save enough nuts and seeds to get them through the winter. They even build storage rooms in their burrows.

But it’s important everyone – even humans – realize the importance of saving.

Good Savings Habits

Deciding on your goals for the future

The first step is determining an investment strategy and that means carefully evaluating your financial goals. After all, saving for a down payment on a house or a new car requires a different approach than long-term retirement planning.

So, ask yourself this: what do you want to do with your money?

Crunching the numbers

Next, set up a spending plan to help you determine how much you can afford to put away each month. Plenty of online tools can help you.

Start by going over your chequing and savings accounts and credit card statements, including ATM withdrawals. Make sure to include everything – even those pricey takeout lunches. This exercise can help you trim excessive spending.

  • Setting up a regular, automatic savings plan is an essential part of anyone’s financial health.

Once you have a better understanding of your income and expenses, determine your savings “payment.” Be bold, as you can always dial it back a bit later on. Or better yet, keep the amount steady and reduce your overall spending. Then, as your income grows, continue to raise the amount you put away each week.

Choosing the right investment solution

I can help you choose the right mix of investments and help you achieve your unique savings goals. Find out more about the features and benefits of various investment solutions.

Why it’s crucial to start saving now

Setting up a regular, automatic savings plan is an essential part of anyone’s financial health. The sooner you start, the better off you’ll be and the sooner you’ll achieve your goals.