How to be financially secure in your business & personal life

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?