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

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

6 3 Key Issues to Consider 1)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 Financial Comfort Basis of financial comfort during retirement > Income CPP/OASCompany Pension RSP/RIF TFSAOpen Acct

8 8 Magic Formula… 1)Income Goal 2)Savings today age 42 Retire at age 67

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

10 Difference $25,000 $20,000 Financial Comfort Basis of financial comfort during retirement > Income CPP/OASCompany Pension RSP/RIF TFSAOpen Acct

11 $45,000 per yr or $20,000 (age 67-90) 1)Income Goal 2)Savings today age 42 Retire at age 67 At age 67 need $282,955!

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

13 Financial Plans …

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

15 We are Living Longer!

16 Financial Comfort Basis of financial comfort during retirement > Income CPP/OASCompany Pension RSP/RIF TFSAOpen 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 Financial Comfort Basis of financial comfort during retirement > Income CPP/OASCompany Pension RSP/RIF TFSAOpen Acct

21 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 TFSA

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

23 3 Key Issues to Consider 1)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 sickness/disability Protection of Income and business interruption

25 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? Job A / Job B

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

27 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 % Getting insurance for things less likely to happen

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 The above example is for illustration purposes only. Situations may vary according to specific circumstances. Withdraw RSP to pay expenses.. Net RRSP Withdrawal + Your Marginal tax rate Gross RRSP withdrawal Marginal tax rate $50,000$75,000$100,000$150,000$200,000$250,000$300,000 30%$35,000$52,500$70,000$105,000$140,000$175,000$210,000 35%$32,500$48,750$65,000$97,500$130,000$162,500$195,000 40%$30,000$45,000$60,000$90,000$120,000$150,000$180,000 45%$27,500$41,250$55,000$82,500$110,000$137,500$165,000 50%$25,000$37,500$50,000$75,000$100,000$125,000$150,000

32 Closing thought’s on Critical Illness 1)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 sickness/disability If I cannot work, will my family and I be okay?

34 3 Key Issues to Consider 1)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: A)Term Insurance Or B) Combination of Term Insurance + Permanent Insurance Later in Life On death of 2 nd 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 Market Value Original Cost RRIF, beneficiary son $475,000$350,000 Non- registered Assets $66,000$50,000 Bank Account $6,000 Townhome $220,000$150,000 purchas e price Taxable Income on the Terminal return Explanation RRIF, beneficiary son $475,000 Non- registered assets $8,000 $66,000-$50,000 = $50% = $8,000 Bank Account $0 Townhome $0 Terminal Income Tax! $483,000 45% MTR = $217,350 tax owing !

41 3 Key Issues to Consider 1)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?