Managing For Retirement Income - David Gorveatte · 2019-05-27 · Managing For Retirement Income...

Managing For Retirement Income

David Gorveatte CFP CPCAFinancial Advisor

Certified Financial Planner318 Main Street

Fredericton, New BrunswickE3A 1E5

Web www.davidgorveatte.comEmail [email protected]

http://www.davidgorveatte.com/

mailto:[email protected]

TERMINOLOGYIf the terms don’t make sense, just ask…!

David Gorveatte CFP CPCA 2


What some people think of Financial Planning!

You can ask questions as we go through this session or you can save them till the end.

Just to let you know, I love questions as I consider them a compliment!Thank you,

RETIREMENT PLANNING True / False

1. ____ A Registered Retirement Income Fund ( RRIF ) is used to save for your retirement. 2. ____ A Net Worth statement is a picture, expressed in dollars, of how much you are worth

and does not include what you owe. 3. ____ RRSP's must be closed and transferred to a RRIF or Annuity by your 71st Birthday. 4. ____ The best time to take money out of your Registered Retirement Savings Plan (RRSP) is

when you are in your lowest tax bracket as opposed to waiting until age 71. 5. ____ A RRIF allows you to draw money until the age of 90 or until the money runs out,

whichever comes first. 6. ____ An Annuity will generally pay more per month to a female. 7. ____ Severance pay or Retiring Allowance is taxable when it is received. 8. ____ Mutual Funds are covered by the Government's Canadian Deposit Insurance up to

$ 100,000.00 in Value. 9. ____ You must have 10% of your RRSPs in a HIGH RISK investment. 10.____ The purchaser of a Spousal RRSP is also the owner . 11.____ Once you reach age 65, your income tax rate goes down no matter

much income you receive.


Some useful Web links

David Gorveatte Web Site: http://www.davidgorveatte.com Then use the Calculators for retirement planning.

Globe and Mail Web Site for Comparing Mutual Funds: http://www.globefund.com/Then use the filter tab to select Fund Companies and Funds.

CPP Changes https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-enhancement.html

CPP Survivor benefit explained:http://www.advisor.ca/tax/tax-news/shedding-light-on-the-cpp-survivor-benefit-241094

Government of Canada On-line Tools and Calculators: https://www.canada.ca/en/services/finance/tools.html

What is a Financial Advisor:https://vimeo.com/238093634/586a59b9a2


http://www.davidgorveatte.com/

http://www.globefund.com/

https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-enhancement.html

http://www.advisor.ca/tax/tax-news/shedding-light-on-the-cpp-survivor-benefit-241094

https://www.canada.ca/en/services/finance/tools.html

https://vimeo.com/238093634/586a59b9a2

Cont.

Education Savings Grant Site: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/registered-education-savings-plans-resps/canada-education-savings-programs-cesp.html

Good Financial Links: http://www.theglobeandmail.com/http://www.fool.com/

Canadian Retirement Income Calculator:https://srv111.services.gc.ca/GeneralInformation/Index

Helpful information link:Canada.ca/seniors

STOCK MARKET LINKS: Toronto Stock Exchange New York Stock Exchange Dow Jones Exchange http://www.tsx.com/ http://www.nyse.com/ http://www.dowjones.com/

Disclaimer All of these sites were working as of May 2, 2019David Gorveatte and Investia Financial Services Inc. do not make any representation that the information in any linked site is accurate and will not accept any responsibility or liability for any inaccuracies in the information not maintained by them, such as linked sites. Any opinion or advice expressed in a linked site should not be construed as the opinion or advice of David Gorveatte or Investia Financial Services Inc. The information in this communication is subject to change without notice.


https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/registered-education-savings-plans-resps/canada-education-savings-programs-cesp.html

http://www.theglobeandmail.com/

http://www.fool.com/

https://srv111.services.gc.ca/GeneralInformation/Index

http://www.tsx.com/

http://www.nyse.com/

http://www.dowjones.com/

TYPES OF RRSP’S AVAILABLE

A. GUARANTEED PRODUCTS - Low Risk- variable rate (Savings Accounts) - fixed rate (GIC’s, Term Deposits)

B. MUTUAL FUNDS - Moderate to Higher Risk - ultra conservative, i.e. money market funds - conservative, i.e. mortgage or bond funds - moderate, i.e. preferred stock funds - high, i.e. common stock funds

C. SELF-ADMINISTERED - Varying Risk - can contain anything from conservative products like GIC’s

all the way up to High Risk speculative investments

Source: Canada Revenue Agency



How to allocate your investments


Percentage allocation

_____%

______%

_____%

__________________

____________________________________

HI

MED

LOW

Time period for investing

1 to 3 yrs.

3 to 7 yrs.

7 plus yrs.


RISK

Low

Med

Hi

0

45 scale

5% Down 20% Down 50% Drop

Risk is measured as Standard Deviation in our industry and goes from 0 to 45


How to look at risk

Imagine a 45 foot high ladder straight up in the air and each rung is a foot high. If you fall off the ladder at 5 feet it will hurt your pride, but at 30+ feet it will break bones!!!This is how I explain RISK.

RRSP Contribution Limits 18% of earned income from the prior year to a maximum of:

YEAR Maximum deposit.2010 $ 22,000 2018 $26,2302011 $ 22,450 2019 $26,5002012 $ 22,9702013 $ 23,8202014 $ 24,720 2015 $ 24,720 2016 $ 25,370 2017 $ 26,010


New Brunswick Tax tableCombined Federal and Provincial Tax 2019

TAXABLE INCOME (for over age 65, see *NOTE) Lower Upper Interest and Limit Limit Regular Income

$ 0.00 to $ 10,264 0.00% $ 10,265 to $ 12,069 9.86% $ 12,070 to $ 42,592 * 24.68% $ 42,593 to $ 47,630 29.82% $ 47,631 to $ 85,184 * 35.32% $ 85,185 to $ 95,259 37.02% $ 95,260 to $138,491 42.52% $138,492 to $147,667 43.84% $147,668 to $157,778 46.84% $157,779 to $210,371 49.30% $210,372 and over 53.30%

* Additional clawback taxes for income thresholds over $37,790 and $77,580 based on 2019 Tables. See Federal Tax Worksheet for details. Source: CRA


Tax Consequences of a WithdrawalFrom a Registered Product

Lump sums withdrawn % Tax Withheld from an RRSP or RRIF: at source:*

$ 0.00 to $ 5,000 10% $ 5,001 to $15,000 20%$15,001 and over 30%

*These withheld taxes are applied to the total taxes you will be required to pay when you file your return.


SEVERANCE OR RETIRING ALLOWANCE ROLLOVER INTO RRSP

BEFORE 1988 SERVICE $2,000 for every year of vested RPP service

$3,500 for every other year of service

AFTER 1988 SERVICE $2,000 for every year of service

AFTER 1995 SERVICE No further accumulation of years of service

Most people have already dealt with this issue.Source: Canada Revenue Agency

TD2 Form "Tax Deduction Waiver in Respect of Funds to be Transferred”



CONTRIBUTION TO AN R.R.S.P. IN RESPECT OF A RETIRING ALLOWANCE or SEVERANCE PAY

Identification: Name: ________________________Address: _________________________________________________Social Insurance Number: ____ ____ ____Details Of Contribution For Which Tax Receipts Will Be Issued Enclosed is a cheque(s) for $ ____________which is to be deposited as follows: 1. To Personal RRSP #________ the amount of $____________which qualifies under paragraph 60(j.1) of the Income Tax Act as

the eligible portion of a retiring allowance. This amount which is not being transferred under paragraph 60 (j.1) is to be applied as follows: 2. $_______________ which was subject to withholding tax at source (unless exempted from withholding by a letter from

Canada Revenue Agency). 3. Please Defer $ __________to Jan. 2/20___ {Please check with your HR Dept as there are different rules based on employer’s

Retiring Allowance guidelines.} Deposit Information

Personal Plan # _______________ $____________________ Spousal Plan # _______________ $____________________ From (Name of Employer): _____________________________Name or Plan Issuer: _____________________________Address of Plan Issuer: ________________________________________________________________________________

Certification: I certify that the issuer of the receiving plan has advised me that the plan is registered, or that the issuer of the recipient retirement savings plan will apply to register the plan under the Income Tax Act. Date ____/____/_____ Individual's Signature ____________________________

I certify that the transfer of the amount stated above will be made directly to the issuer of the receiving plan, and that the amount transferred will be reported on a T 4A Supplementary, Statement of Pension, Retirement Annuity, and Other Income. Date ____/____/____ Employers Signature ____________________________

ATTRIBUTION RULES – SPOUSAL RRSP

• Bill C-23 – law on December 19, 1986 – change the wording of the Income Tax Act.

• This allowed CRA to extend the period of attribution from 2yrs to 3yrs.

• If you buy a Spousal RRSP you have to make sure that no deposits are made in the last 3yrs prior to a withdrawal or they will be charged back to the contributor!


https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/making-withdrawals/withdrawing-spousal-common-law-partner-rrsps.html

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/making-withdrawals/withdrawing-spousal-common-law-partner-rrsps.html

Which is Better? Getting a better return or saving more money?

• Lets look at saving $ 50.00 a month at 8%(Compounded annually) versus saving $100.00 a month at 4% (compounded Annually) from age 25 to 65.

• $50x40yrs = $24,000 vs $100x40yrs =$48,000 • Which amount will be worth more by age 65.• Show of hands for the $50 vs the $100.• Now lets take a look at the results.



Invested $ 50 @ 8%Years Contribution Gained

interestsAccumulated

balance Years Contribution Gained interests

Accumulated balance

0 0 0 0 0 0 0 0

1 600 26 626 1 1,200 26 1,226

2 600 76 1,301 2 1,200 75 2,501

3 600 130 2,031 3 1,200 126 3,827

4 600 188 2,819 4 1,200 179 5,206

5 600 251 3,671 5 1,200 234 6,640

6 600 319 4,590 6 1,200 291 8,131

7 600 393 5,583 7 1,200 351 9,682

8 600 472 6,655 8 1,200 413 11,295

9 600 558 7,813 9 1,200 478 12,973

10 600 651 9,064 10 1,200 545 14,718

11 600 751 10,415 11 1,200 615 16,532

12 600 859 11,874 12 1,200 687 18,419

13 600 976 13,449 13 1,200 763 20,382

14 600 1,102 15,151 14 1,200 841 22,423

15 600 1,238 16,989 15 1,200 923 24,546

Invested $ 100 @ 4%


16 600 1,385 18,974 16 1,200 1,008 26,753

17 600 1,544 21,117 17 1,200 1,096 29,049

18 600 1,715 23,432 18 1,200 1,188 31,437

19 600 1,900 25,933 19 1,200 1,283 33,921

20 600 2,100 28,633 20 1,200 1,383 36,503

21 600 2,316 31,549 21 1,200 1,486 39,189

22 600 2,550 34,699 22 1,200 1,593 41,983

23 600 2,802 38,101 23 1,200 1,705 44,888

24 600 3,074 41,774 24 1,200 1,821 47,909

25 600 3,368 45,742 25 1,200 1,942 51,051

26 600 3,685 50,027 26 1,200 2,068 54,319

27 600 4,028 54,655 27 1,200 2,199 57,718

28 600 4,398 59,653 28 1,200 2,335 61,252

29 600 4,798 65,051 29 1,200 2,476 64,928

30 600 5,230 70,881 30 1,200 2,623 68,751

• Imagine saving $100 mth at 8% = $324,180


31 600 5,696 77,177 31 1,200 2,776 72,727

32 600 6,200 83,977 32 1,200 2,935 76,862

33 600 6,744 91,320 33 1,200 3,100 81,163

34 600 7,331 99,252 34 1,200 3,272 85,635

35 600 7,966 107,818 35 1,200 3,451 90,286

36 600 8,651 117,069 36 1,200 3,637 95,123

37 600 9,391 127,060 37 1,200 3,831 100,154

38 600 10,190 137,850 38 1,200 4,032 105,386

39 600 11,054 149,504 39 1,200 4,241 110,828

40 600 11,986 162,090 40 1,200 4,459 116,48624,000 138,090 48,000 68,486


And the winner is!

40yrs at 8% $162,090 vs

40yrs at 4% $ 116,486

PENSION SPLITTING

You can split your pension income up to a Maximum of 50% of your qualified pension amount.This can save you money but you have to be cautious that you split the correct amount, and keep an eye on the medical expenses and tax brackets you are in to get the maximum benefit.We will now look at an actual case that I worked on to illustrate this point.


The first slide is what the tax return looked like with NO pension split.Person A made : Person B made :

CPP $ 6,900.00 CPP $ 8,300.00Other $ 34,632.00 Pension $ 57,977.00Total $ 41,532.00 Total $ 66,277.00 Deductions $ 3,500.00 Deductions $ 5,500.00Net Income $ 38,032.00 Net Income $ 60,777.00

Medical Expenses were $ 6,000.00 Deductible Expense for A = $ 6,000.00 less 3% of $ 38,032.00 = ($ 38,032.00 x .03 = $ 1,140.96) so $ 6,000.00 - $ 1,140.96 = $ 4,859.04

Refund Due for A = $ 2,085.00 Tax due for B = $ 1,677.00 Total = $ 408.00 Refund!


PENSION SPLITTING


PENSION SPLITTINGIf you take the pension of person B and transfer ½ to Person A, this is what it would look like: $57,977.00/2 = $28,988.50 ½ of the pension.

Person A Made Person B MadeCPP $ 6,900.00 CPP $ 8,300.00Other $ 34,632.00 Pension $ 57,977.00Split Pension +$ 28,988.50 Split Pension -$ 28,988.50Total $ 70,520.50 Total $ 37,288.50 Deductions $ 3,500.00 Deductions $ 5,500.00Net Income $ 67,020.50 Net Income $ 31,788.50Medical Expenses were $6,000.00 Deductible Expense for B = $6,000.00 less 3% of $31,788.50 = ($31,788.50 x .03 = $ 953.66) so $6,000.00 - $953.66 = $5,046.34

Tax Due for A = $3,269.00 Refund for B = $3,455.00 Total = $186.00 Refund!Loss of $ 222.00


PENSION SPLITTINGReallocation of income at optimal pension splitting. Person A Person BCPP $ 6,900.00 CPP $ 8,300.00Other $ 34,632.00 Pension $ 57,977.00Split Pension +$ 2,460.00 Split Pension -$ 2,460.00Total $ 43,992.00 Total $ 63,817.00 Deductions $ 3,500.00 Deductions $ 5,500.00Net Income $ 40,492.50 Net Income $ 58,317.00Medical Expenses were $6,000.00

Deductible Expense for A = $6,000.00 less 3% of $40,492.00 = ($40,492.00 x .03 = $ 1,214.76) so $6,000.00 - $1,214.76 = $4,785.24

Refund for A = $1,856.00 Tax Due for B = $ 808.00 Total = $1,048.00 Refund!Gain of $ 862.00


Tax Free Savings AccountsThis product allows you to save money in an investment account that does not attract any tax.The Government has, in my opinion, mislabeled this product; it should be called the TAX FREE INVESTMENT PLAN to reflect the true nature of this product. You can put any investment in this plan that you can put in your RRSP, and like an RRSP, you can name a beneficiary or a successor holder. Some people even suggest that this new product will replace the RRSP as a long-term savings plan for investors. Previous contribution room will be tracked and carried forward by Revenue Canada.Tax Free Savings Accounts were set up by the Federal Government to help people save money in a better environment free from tax.The plan was implemented in the 2008 Federal Budget to be effective Jan 1 2009.


Tax Free Savings AccountsTo use this plan you have to set up a separate account with your Financial Institution or Investment Firm to track the contributions and subsequent Deposits or Withdrawals.Once open, the Government will inform you of your unused contribution amount annually, similar to RRSP limits.Common misconceptions:• You have to buy one at a Bank.• You can only have a Savings account type of Investment.• You can only earn interest on the account.• The rates are very low.• Why bother as banks don’t send us interest slips for under $100.• I will get to it when I have lots of money.


Tax Free Savings AccountsTo deposit money into a TFSA you have cumulative predetermined limits set by the Federal Government annually. The current maximum deposit is $ 63,500.00 and can be done all at once.Contribution Limits:* 2009 - 2012 = $5,000/year 2019 = $ 6,000.00* 2013 - 2014 = $5,500/year* 2015 = $10,000/year* 2016 - 2018 = $5,500/yearFor more information, click on the links below.TFSA: http://www.fcac-acfc.gc.ca/eng/resources/publications/savings/Pages/Thinking-Vouspens.aspx

TFSA vs RRSP calculator:http://www.taxtips.ca/calculators/tfsavsrrsp/tfsavsrrspcalculator.htm

http://www.fcac-acfc.gc.ca/eng/resources/publications/savings/Pages/Thinking-Vouspens.aspx

http://www.taxtips.ca/calculators/tfsavsrrsp/tfsavsrrspcalculator.htm


MAXIMIZE YOUR RRSP DEPOSITS: The biggest tip is to maximize your deduction with all the tools available. Know what tax bracket you are in so you can get the best return from the deduction you will be claiming. Also, consider Spousal RRSPs if the conditions warrant. You can use the Tax Deduction at Source link below to get the rebate up front for your RRSP deduction and compound the amount of saving:

$ 100.00 deposited in an RRSP will save about 30% in taxes. So $ 100.00 + $ 30.00 = $ 130.00 @ 30% = $ 39.00 dollars saved So $ 139.00 less $ 39.00 dollars saved in taxes = $ 100.00 out of pocket. See web link for form: Tax deduction at source forms: http://www.cra-arc.gc.ca/E/pbg/tf/t1213/README.html

http://www.cra-arc.gc.ca/E/pbg/tf/t1213/README.html


SOME QUESTIONS YOU SHOULD BE ABLE TO ANSWER BEFORE

YOU RETIRE!

• Where will the income I need come from?• What cash will be available to supplement my income

or meet any financial emergencies?• Do I have enough cash to retire ?• How much tax will I have to pay?• Is my money SAFE???

- In the right place for me?- Safe from excessive taxes?- Safe from excessive losses?


CREATING YOUR PERSONAL RETIREMENT

PORTFOLIO

Step 1. What are your retirement resources?

Step 2. What are your retirement priorities?

Step 3. What is your retirement strategy?



RETIREMENT RESOURCES1. Pension from Employment

2. Retirement Allowance

3. R.R.S.P.

4. Non Registered Savings

5. TFSA

6. Fixed Assets

7. C.P.P. - (Canada Pension Plan)

8. O.A.S. - (Old Age Security)


THE ABC's OF MANAGING FORRETIREMENT INCOME

These will give you an understanding of the new options within your reach.

A. SETTING YOUR RETIREMENTPORTFOLIO OBJECTIVES.

• Maintain your income. • Keep pace with inflation. • Preserve your estate. • Control depletion of capital. • Plan spending of capital.



Some peoples ideas of how they plan to retire!


Some of your investment risk can be offset by starting early!




B. CREATE YOUR PERSONAL RETIREMENT PORTFOLIO.

• Recognize your objectives. • Balance your short and long-term needs. • Achieve safety through diversification. • Maintain portfolio flexibility.




C. REVIEW YOUR RRSP RETIREMENT OPTIONS.• Life Annuities.• Term Certain Annuities.• GMWBs (Guaranteed Minimum Withdrawal Benefit)• RRIF - (Registered Retirement Income Funds)• Take it out in cash and pay the taxes.( Not a good option!)


Taking it all in cash does have its drawback such as Excessive Tax!

Hard to sleep on a lumpy bed as well!


REVIEW YOUR RRSPRETIREMENT OPTIONS

When choosing a retirement income strategy that will maximize your resources, you are faced with a wide variety of investment possibilities. Consider the following:


LIFE ANNUITIES There are four types of Life Annuities:

1. STRAIGHT LIFE -Highest rate of return, but payments cease at death. Similar to Old Age Securitypayments.

2. MINIMUM GUARANTEED TERM -If death occurs before a specified period, for example 10 years, the value of the remaining payments will go to your estate or beneficiaries.

3. JOINT AND LAST SURVIVOR -Annuity payments are guaranteed for the lifetime of two individuals, ensuring thesecurity of the surviving partner. Similar to C.P.P. or Q.P.P. payments.

4. INSTALLMENT REFUND -Same as straight life, but benefits will continue until all the remaining principal ispaid to your beneficiary.

These all provide a regular payment over a person's lifetime.


TERM CERTAIN ANNUITY This is not gender specific and it is simply a product to pay back both your principal and any earned interest on the account from the date of purchase to when the person reaches age 90. Upon death, either your estate will receive the commuted value of the plan, or payments will continue to your beneficiary for the period remaining.

Term Certain to age 90 annuities provide the security of long-term income with the attraction of higher monthly payments than a life annuity purchase with the same funds. Term certain annuities can be purchased for a term of 10,15 or 20 years, or to age 90.

Term Certain to age 90 Age 60 Age 65 Age 71 Premium $ 50,000.00 $181.22 $201.33 $251.25

Source RBC Financial “Rates Subject to change”


ANNUITY RATE QUOTATIONS PREMIUM $50,000

Quote rate as of May 2nd, 2019 Male Age 60 Age 65 Age 71 LIFE 5 $204.62 $242.29 $285.89 LIFE 10 $204.03 $240.93 $287.67 LIFE 15 $200.84 $233.80 $269.63

Female Age 60 Age 65 Age 71LIFE 5 $191.63 $221.50 $261.59 LIFE 10 $191.54 $221.42 $265.81 LIFE 15 $189.32 $216.58 $253.21

Joint & Last Survivor Age 60 Age 65 Age 71 J&L 5 $169.68 $197.86 $226.77J&L 10 $170.72 $200.14 $236.20J&L 15 $170.78 $199.86 $233.83

Source Sun Life Financial “Rates Subject to change”


GMWB“Guaranteed Minimum Withdrawal Benefit”

GMWB’s CAN HELP PROVIDE: • Predictable income guaranteed not to decrease, no matter how investments perform

• Sustainable income that will last for your life and the life of your spouse

• Guaranteed lifetime income available as early as age 55, with higher payout percentages at older ages if income is deferred

• Potentially increasing guaranteed income to help keep pace with inflation

• Benefits that help ensure the smooth transition of your estate

• Potential creditor protectionExceeding the withdrawal thresholds and/or withdrawals taken prior to the Election of LWA (Lifetime Withdrawal Amount) may have a negative impact on future income payments. The LWA becomes available on January 1st of the year the annuitant or the younger of the annuitant and the Joint Life (if applicable) turns age 55. The Joint Life must be the spouse or common-law partner (as defined by the Income Tax Act (Canada)) of the annuitant. Once named, the Joint Life may not be changed. Other conditions may apply.


REGISTERED RETIREMENT INCOME FUND

This product is simply an investment vehicle which allows you to roll over your maturing RRSP's, up to the end of the calendar year you turn 71. The Government has a pre-determined minimum payment schedule which specifies the least amount you can withdraw each year after age 71. This does not limit you to that amount as you can take any amount in excess of the "minimum“ amount, but a withholding tax, at source, will apply. The major benefit of the RRIF is that it allows any remaining capital in the RRIF to be transferred to your spousal beneficiary’s RRSP or RRIF TAX DEFERED or transferred to your estate and subject to tax. I have found in my practice this is the go to fund for 99% of my customers due to its flexibility.


RRIF PAYMENT CALCULATOR Based on an initial investment amount of $25,000, an interest rate of 6.00% and starting at age 55 the following table will illustrate how the minimum payment is calculated:If you draw the minimum payment required, your first year’s payment is zero and the next years payment would be $779.10. Thereafter, your payments will depend on your age and the remaining balance in the account. This illustration assumes your payments do not begin until the start of the year following the year of purchase. You can start your RRIF at 71 and take your first years payment at age 72 for maximum deferral.


RRIF Payment Schedule

Age Beginning RRIF Capital RRIF Minimum% Annual Payout 55 $25,000.00 0.00% 0.00 56 $26,500.00 2.94% $ 779.10 57 $27,310.90 3.03% $ 827.52 58 $28,122.03 3.13% $ 880.22 59 $28,929.14 3.23% $ 934.41 60 $29,730.47 3.33% $ 990.02 61 $30,524.28 3.45% $1,053.09 62 $31,302.65 3.57% $1,117.50 63 $32,063.30 3.70% $1,186.34 64 $32,800.76 3.85% $1,262.83 65 $33,505.97 4.00% $1,340.24 66 $34,176.09 4.17% $1,425.14 67 $34,801.51 4.35% $1,513.87 68 $35,375.74 4.55% $1,609.60 69 $35,888.69 4.76% $1,708.30 70 $36,333.71 5.00% $1,816.69 71 $36,697.04 5.28% $1,937.60 72 $36,961.26 5.40% $1,995.91


73 $37,183.03 5.53% $2,056.22 74 $37,357.79 5.67% $2,118.19 75 $37,481.07 5.82% $2,181.4076 $37,548.54 5.99% $2,249.16 77 $37,552.29 6.17% $2,316.98 78 $37,488.45 6.36% $2,384.27 79 $37,353.49 6.58% $2,457.86 80 $37,136.84 6.82% $2,532.73 81 $36,832.32 7.08% $2,607.73 82 $36,434.53 7.38% $2,688.87 83 $35,931.74 7.71% $2,770.34 84 $35.317.30 8.08% $2,853.64 85 $34,582.70 8.51% $2,942.99 86 $33,714.68 8.99% $3,030.95 87 $32,706.61 9.55% $3,123.48 88 $31,545.52 10.21% $3,220.80 89 $30,217.46 10.99% $3,320.90 90 $28,709.61 11.92% $3,422.19


Age Beginning RRIF Capital RRIF Minimum% Annual Payout


91 $27,010.00 13.06% $3,527.51 92 $25,103.09 14.49% $3,637.44 93 $22,971.84 16.34% $3,753.60 94 $20,596.55 18.76% $3.870.09 95&over $17,962.25 20.00% $3,592.45

Information and interactive calculators are made available to you as self-help tools for your independent use. We cannot and do not guarantee their accuracy or their applicability to your circumstances. We encourage you to seek personalized advice from qualified professionals regarding all personal financial issues. Updated March 2nd. 2018 with new rates

Calculations were provided by "KJE Computer Solutions, LLC"


Age Beginning RRIF Capital RRIF Minimum% Annual Payout


Questions I get asked a lot at these sessions!I would now like to cover some questions I have been asked a lot over the years and give you my thoughts on them.

Life insurance: Should I have it and what type to buy?

Reverse Mortgage: What is it and how does it work?

What can a Financial Planner can do for you?See video link for explanation!https://vimeo.com/238093634/586a59b9a2

How do you find a good Financial Planner? This is a common question I get asked as most people have travelled here to attend this presentation and want to find a good advisor when they get home.

I also get, What do they cost? I always say the right one is PRICELESS!

https://vimeo.com/238093634/586a59b9a2


Life Insurance

Life Insurance can be broken down into 2 categories:If I Die: Term Ins. & Group Ins.When I Die: Universal Life Ins. & Whole Life Ins.When you buy insurance you are doing it to fill a void in your financial Plan.If you had lots of money, your insurance need would be less than if you were young and had a family that was counting on you to help support them. Its basically to provide the cash you don’t have when you die early.We will now discuss how insurance works and which type will work best in your situation.


Life InsuranceIf I Die: Term Ins. & Group Ins.If you look at all insurances, they are calculated on the RISK of having to pay out the policy face value or coverage. This means if there is a low chance they will have to pay, then the premiums will be low. Lets look at the math behind this decision made by Actuaries who calculate mortality in the back rooms of Life Ins Companies to get the cost.

Chance of Dying

100%

0%30 40 50 60 AGE 70 80 90 100

Actuarially Mature!X

Term Insurance rates keep rising as you get older.

________


Life InsuranceWhen I Die: Universal Life Ins. & Whole Life Ins.This is where you pay the same premium amount for the life of the contract or shorter if you buy a paid up policy. The premiums are higher but there is a cash value attached to that overfunding amount.

Chance of Dying

100%

0%30 40 50 60 AGE 70 80 90 100

Actuarially Mature!X

_________

_______________________________________________________________Whole life Premiums


Reverse MortgagesThis is a product that is widely advertised and can be a good fit for someone living in Toronto or Vancouver where house prices keep rising at ridiculous rates. In New Brunswick, the case is not as strong.Here is a breakdown of the cost to set one up.


Reverse Mortgage

It should also be noted that costs and fees for setting this up are very similar to the alternatives out there. For more on this, see this link:https://www.reversemortgagepros.ca/reverse-mortgage/alternatives-to-a-reverse-mortgage/

Most people are usually considering a Home Equity Line Of Credit –which comes with almost identical set-up costs (minus the administrative fee – although some lenders do charge set-up fees). Here are some articles comparing this to a HELOC and other factors, like higher interest rates charged on the Reverse Mortgage vs a HELOC or regular Mortgagehttps://www.reversemortgagepros.ca/reverse-mortgage/reverse-mortgage-vs-heloc/https://www.reversemortgagepros.ca/reverse-mortgage/reverse-mortgage-rates-penalties/#more-2162

https://www.reversemortgagepros.ca/reverse-mortgage/alternatives-to-a-reverse-mortgage/

https://www.reversemortgagepros.ca/reverse-mortgage/reverse-mortgage-vs-heloc/

https://www.reversemortgagepros.ca/reverse-mortgage/reverse-mortgage-rates-penalties/#more-2162


Reverse Mortgage

If the interest cost is greater than the growth value of your home, then you will have a point that the value of your home will be less than the debt against it. These issues are covered in the attached Link:

Pros and Cons of a reverse Mortgage:https://www.reversemortgagepros.ca/reverse-mortgage-canada/cons-of-a-reverse-mortgage/

Please keep in mind, like all things, these are not one size fits all.

https://www.reversemortgagepros.ca/reverse-mortgage-canada/cons-of-a-reverse-mortgage/


How do you find a good Financial Planner?

This is always a good question to ask as not all of us are created equal.There are several types of Advisors and they each come with certain skill sets. I would look for someone who has had some training and education and is backed by credential like a CFP or CLU® as they are very good ones. Also, how does the person get paid is very important so please ask!I want someone who gets paid based on how well I do versus a person who just gets a salary and has no benefit if I make money or penalty if I lose it.Here is one search engine to find a good Financial planner in your area.http://www.fpsc.ca/find-a-planner-certificantThere have been some great articles written and here is one.http://www.moneysense.ca/save/financial-planning/finding-your-ideal-financial-advisor/

http://www.fpsc.ca/find-a-planner-certificant

http://www.moneysense.ca/save/financial-planning/finding-your-ideal-financial-advisor/


THANK YOU! Have a Happy Retirement

David Gorveatte CFP CPCA Certified Financial Planner

318 Main Street Fredericton, New Brunswick

E3A 1E5 506-474-0010

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Mutual funds products are offered through Investia Financial Services Inc. Insurance products provided through multiple insurance carriers.


Does anybody have any questions!



Date post:	01-Feb-2020
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Managing For Retirement Income - David Gorveatte · 2019-05-27 · Managing For Retirement Income...

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