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How to be financially secure in your business & personal life

Discover the keys to financial success in both your business and personal finances. Learn how to create a solid plan, build equity, and work with professionals to secure your future. Understand the importance of retirement savings, income goals, and navigating changes in programs like CPP and OAS. Explore how to protect your income in case of disability, critical illness, or business interruption. Plan for the unexpected by considering estate planning and the impact of leaving a legacy for your loved ones. Take control of your financial future now!

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How to be financially secure in your business & personal life

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  1. How to be financially secure in your business & personal life Philip Boland, CIM, CFP, CLU, FCSI Director, Private Client Group Financial Advisor Mike Busby, CFP, Associate Financial Advisor

  2. Overview • 3 Keys to Success • Issues to Consider

  3. #1 Success – Have a Plan • Plan for your business • Plan for your personal finances • Review and Update your plan • Those without plans, plan to fail

  4. #2 Success – Build Equity • Build personal + business equity • Prudent borrowing • Pay down debt

  5. #3 Success – Work with Professionals • Assemble a team • Help get you there

  6. 3 Key Issues to Consider • Am I going to be okay? • 2) If I cannot work, will my family and I be okay? • 3) If I am no longer around, will my loved ones be okay?

  7. Basis of financial comfort during retirement > Income Financial Comfort CPP/OAS Company Pension RSP/RIF TFSA Open Acct

  8. Magic Formula… • Income Goal • Savings today Today @ age 42 Retire at age 67

  9. Mike and Angela age 42 • Retire at age 67 • Require Annual Income $45,000 • 23 years of income (90-67) • Inflation 2%+ 4.5% annual return

  10. Basis of financial comfort during retirement > Income Difference $25,000$20,000 Financial Comfort CPP/OAS Company Pension RSP/RIF TFSA Open Acct

  11. $45,000 per yr or $20,000 (age 67-90) • Income Goal • Savings today Today @ age 42 Retire at age 67 At age 67 need $282,955!

  12. Mike and Angela… Retire at age 67 Today @ age 42 $60,000 What do I need to save today? Age 42-67 At age 67 need $282,955!

  13. Financial Plans …

  14. Need to save $2,302 per yr…. Retire at age 67 Today @ age 42 $60,000 $2,302 year or $191/mth At age 67 need $282,955!

  15. We are Living Longer!

  16. Basis of financial comfort during retirement > Income Financial Comfort CPP/OAS Company Pension RSP/RIF TFSA Open Acct

  17. CPP Changes : Early CPP, lower benefits Later CPP, higher benefits • 2012 you can continue to work and also start drawing CPP • If you do this, you’ll be required to make further contributions until 65 (voluntary thereafter) • If you work past 65 and keep contributing, your employer is obligated to kick in its share too! • In past, took at age 60, 30% less than you took it at age 65 • By, 2016, take at age 60, 36% less than you take it at age 65 • Take CPP after age 65 > 0.7% per month vs old 0.5% per month

  18. CPP Estimate Sheet Request

  19. OAS Changes • Raising qualification from age 65 > 67 • Born March 1958 or earlier – You do not need to worry! • Born Apr 1958 > Jan 1962 – Eligible between ages 65 > 67 • Born Feb 1962 or after – Eligible age 67 • Can defer OAS now – (7.2% increase every yr or by age 70 > 36% increase) • 2014, Full OAS is about $6,612 annually or $551 month

  20. Basis of financial comfort during retirement > Income Financial Comfort CPP/OAS Company Pension RSP/RIF TFSA Open Acct

  21. TFSA • Tax sheltered • Withdrawals are not taxed • Money you take out won’t effect your Federal income-tested benefits like OAS, GST, Canada Child Tax Benefit • Estate Planning purposes

  22. Am I going to be okay? • Level of Contribution • 2)Time • 3) Return (%)

  23. 3 Key Issues to Consider • Am I going to be okay? • 2) If I cannot work, will my family and I be okay? • 3) If I am no longer around, will my loved ones be okay?

  24. Protection of Income and business interruption • sickness/disability

  25. Job A / Job B • Consider two job Opportunities? HealthySick or injured Job A: $120,000/yr$0 Job B: $116,000/yr$60,000/yr tax free If offered, what would you choose?

  26. Disability Protect your Income Loss of driving force of the leader > lose momentum

  27. Getting insurance for things less likely to happen • Chances of your house burning down 0.08% • Chances of being involved in an auto accident 4% • Chances of developing a critical illness before 65 35% • Chances of developing a critical illness before you are 81 65-70%

  28. The impact of suffering a critical illness…

  29. Causes of Critical Illness insurance claims paid in Canada (up to 2012)

  30. $16,000,000 in claims up to 2013!

  31. Withdraw RSP to pay expenses.. Net RRSP Withdrawal + Your Marginal tax rate The above example is for illustration purposes only. Situations may vary according to specific circumstances.

  32. Closing thought’s on Critical Illness • Do you know of anyone who in the last few years has suffered from cancer, heart disease, or a life threatening illness? • If Yes > Did that event have an impact on their lifestyle and finances? • If Yes > Would a lump sum benefit have helped?

  33. If I cannot work, will my family and I be okay? • sickness/disability

  34. 3 Key Issues to Consider • Am I going to be okay? • 2) If I cannot work, will my family and I be okay? • 3) If I am no longer around, will my loved ones be okay?

  35. Don’t leave a mess for your family… • POA – Personal Care • POA - Property • Estate Directory • Will

  36. Do you have a Will? • No Will • “Intestate” > arbitrary formula • Court will appoint a “Personal Representative” • Take longer for estate to be distributed to beneficiaries • Higher cost of administering your estate

  37. “Talking to your customers about wills, estates and Joint ownership” • “Keep costs down through preparation and forethought. You can reduce 50% of legal costs if everything/all appropriate information is packaged together properly” • Arthur Fish, Borden Ladner Gervais LLP

  38. Purpose for Life Insurance: Early and Later in Life • Early in Life • Protection for surviving dependents • Replace earnings • Future Education costs • Solution: • Term Insurance • Or B) Combination of Term Insurance + Permanent Insurance • Later in Life • On death of 2nd spouse… • Insurance to assist in funding your estate’s eventual tax liability • Solution: • A) Permanent Insurance

  39. Priority of the Estate Distribution

  40. Terminal Tax Return > Deceased Female, single 76 $483,000 @ 45% MTR = $217,350 tax owing!

  41. 3 Key Issues to Consider • Am I going to be okay? • 2) If I cannot work, will my family and I be okay? • 3) If I am no longer around, will my loved ones be okay?

  42. How to be financially secure in your business and personal life • Build a plan/work with people you can trust • Supported by Hollis Wealth Advisory

  43. Questions?

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