Archive for the ‘Retirement’ Category

Retirement Planning – Be Future Ready!

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Contrary to popular belief, retirement planning should begin as soon as you start working. However, even if you are middle-aged or older, it’s never too late to start taking control of this important planning.

2020 is a sobering reminder of how unsettling not being prepared can feel. While we cannot prepare for everything life throws at us, there is much that is in our control. Retirement planning is a good example.

Here are some simple, yet important, questions to think about now as you plan for your retirement:

What is your retirement vision? Have you set goals?

  • What will you do with your new freedom?  Have you thought of short-term or long-term goals? Do you have a dream list? 
  • If you want to semi-retire, what part-time work makes sense for you? How much extra income would you like, or need, to make?
  • What post-retirement responsibilities will you have? Will you be supporting children, aging parents, or other family members?

Now for the elephant in the room: “How much money will you need?”

  • Consider your current lifestyle. What are your ACTUAL expenses monthly and annually? If you’re uncertain, start tracking them now – you may be surprised.
  • When budgeting, don’t forget the details – everything from vacations, to car purchases, to clothing.
  • Factor in inflation. 2020 is a good example of how prices rise each year.
  • Scope out big family events – upcoming weddings, anniversaries, etc.
  • Plan for unexpected costs, such as dental work, home and car repair, etc.
  • How is your present health? How long do you expect to live?

What will be your sources of income?

  • Consider whether you will be eligible for CPP, OAS, or employer-sponsored pension.
  • Review your existing investment portfolio such as RRSP/RRIF, TFSA, non-registered investment accounts and personal savings. Maximize savings now by investing early to take advantage of compound earnings.
  • If you are a business owner, how long will you be able to draw salaries or dividends from your corporation?

Tax planning questions

  • How can you minimize taxes during your retirement? Are your investments and other sources of income structured in the most tax-efficient manner?
  • Do you understand the differences between an RRSP, RRIF and TFSA, as well as their tax treatment in retirement?
  • When should you apply for benefits under CPP and OAS? Keep in mind, the age you start to receive CPP benefits will impact the amount of payment you will receive.
  • Are there specialized tax credits or tax planning available upon retirement?  For example, depending on your situation, you may be able to share CPP and split pension income with your spouse.

Wondering where to start, or how to move forward?

Feeling confused is totally understandable! During this COVID crisis investment portfolios were severely impacted, but then bounced back strongly. Many who had plans to retire may have decided to postpone their plan, while others were forced into retirement due to layoffs. Other Canadians are simply not ready because of large debts, or insufficient savings. Even Canadians who have been diligent savers simply don’t know where to begin when it comes to retirement planning.

Have no fear – SYC is here! We have been providing retirement planning services for years. So if your goal is to be “future ready”, don’t delay! Call one of our team members and take the first step.

Seniors – The Good, The Bad, and The Blogs

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So, you’ve finally entered your “golden years”. It’s a time to enjoy the perks of turning 65 – senior’s days, passes and discounts. You now have more time to spend either with your family, in your garden, or mastering what was once only a hobby. To be realistic though, it’s not all golden.

Among other things, changes in health, technology and finances can add an element of stress that can easily tarnish your golden years. For example, financial predators prey on the trusting nature of seniors and view them as easy targets. Also, declining health coupled with rising healthcare costs can impact your retirement budget. These and other challenges can lead to frustration and stress – something we’d all like to minimize!

How can you minimize health care costs, keep up with technology risks, and keep one step ahead of financial predators? At Scarrow Yurman & Co., we empathize with your struggles and regularly provide timely support for seniors’ issues in our monthly blogs. Below are some of our past blogs that you may remember.

Disability Tax Credit – Are You Eligible?

Travel Expenses for Medical Expense

Medical Expenses

Fraud – It’s Rampant

Passwords Made Easy

CRA / IFRS Fraud Alert – Part 1

CRA / IFRS Fraud Alert – Part 2

Cyberattacks – Are You at Risk

We appreciate our seniors and benefit greatly from their wisdom and experience. To continue to give back to our senior community, we invite you tell us what other related topics you’d like us to blog about. Proactively keeping informed can help minimize stress and puts you in a good position to enjoy your retirement. So let us help you, and go for the gold!

TFSAs – Do You Have Room?

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In November 2016, we blogged about Tax Free Savings Accounts. Since inception, CRA has been auditing TFSA accounts and this has resulted in penalties to taxpayers who have unknowingly over-contributed. How can you be sure you have room for your TFSA contributions? Here are some tips.

Understand TFSA Withdrawals

Let’s say you’ve withdrawn funds from your TFSA. This has left room to re-contribute later, right? Not necessarily. If you withdraw funds from your TFSA, you must remember that this does not create corresponding contribution room until the next calendar year. If you contribute sooner – you could be penalized.

Ensure TFSA Transfers Are Done Correctly

If you wish to transfer funds from one TFSA to another, the transaction should be processed as a “direct transfer” by your financial institution. Otherwise, it could be viewed as a “funds withdrawn” and “funds contributed” scenario. When the latter happens, contribution room for the withdrawal will not be reinstated until the next calendar year. So, when funds are not transferred correctly, and you contribute too soon – penalties may also apply.

Keep Up-to-date with Changing TFSA Room Limits

You can have more than one TFSA at any given time, but the total amount you contribute to all your TFSAs cannot be more than your available TFSA contribution room for that year or you could get dinged with a penalty. It’s good to check each year to see if the annual limit has changed:

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account/contributions.html.

Always Be Aware of Your TFSA Balance

CRA has made it easy to ensure that we don’t over-contribute. Before you contribute, log into CRA’s My Account for Individuals  >  Click RRSP and TFSA tab  >  Contribution Room  >  Next.

This takes you to your TFSA page where you can find out your contribution room as of the current taxation year.

Following these simple tips can help you save money without worrying about unexpected penalties. Happy saving!

 

Why Your Retirement Plan Needs a “Checkup”

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Let’s face it, your annual physical may not be your idea of a good time. However, regular visits to a GP can help you assess your health, review what’s happening in your life, and guide you in making healthy choices and lifestyle changes with the goal of being as healthy as possible.

What about the health of your Retirement Plan? Can the same principles for physical checkups hold true? We think so. Here are some reasons why.

Why a check-up is necessary

Sometimes underlying medical conditions are not always evident. Similarly, your retirement plan may have some flaws that you’re not aware of. Just as early diagnosis of a medical condition can even be reversible with proper treatment, a professional assessment of your retirement plan can help pinpoint areas of concern that can be tweaked and/or revised to ensure you stay on track and reach your retirement goal.

Navigating the winds of change

Good or bad, life changes equal stress. As bad as stress can be for our health, it can also wreak havoc on your financial plan. For example, while starting a family, purchasing a home or moving are all exciting milestones, they could bring financial repercussions you may not be aware of. A financial advisor can help you navigate the road of change and prepare you for the effects to your retirement plan.

Expect the unexpected

Just as an unexpected event like an accident, natural disaster or sudden allergy can affect our health, unexpected changes in tax laws, interest rates and the housing market can all have an impact on your retirement plan. A financial professional is up-to-date with these changes and can keep you in the know. Being supported through these changes can go a long way in helping you move forward.

Search engine overload

So, we’ve all done it. Had a physical symptom and “Googled” our diagnosis only to find an overwhelming sea of information. Admittedly, search engines are great tools, but following advice on the Internet is not without risk. How many hours have you spent researching the best retirement strategies? Is it current information? What if you miss something important? Financial professionals have the software, publications and experience necessary to guide you through this information age with a minimal investment of your time and energy.

Whether it’s physical or financial health, we believe that “prevention is the best medicine”. We would be happy to sit down with you to assess the overall health of your retirement plan, review what’s happening in your life, and assist you to make the right choices to ensure your financial plan is on track. A little investment of your time and energy now can reap great rewards later. Call us today!

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