I want to do something different with my life and want to make sure it won’t create a negative impact on my family.
A long time client met with me and said he was tired of his job and current career and wanted to quit and start a business he was really passionate about. He realized his income would drop dramatically and he wouldn’t be able to continue contributing to the financial plan we put in place. He could not move forward until he felt comfortable starting the business and decreasing or stopping investments wouldn’t impact the financial security of his family.
We first clarified his and his spouses’ life goals and they realized he would be happier working at something he loved even if he had to work past his original retirement date. We put together a long term cash flow plan, assessed the financial risks, came up with strategies to minimize those risks, and came up with an amount he needed to invest, (which decreased significantly as he planned to work longer) to achieve his long term financial goals. He was able to quit his job and start the business he remains passionate about to this day.
I’m thinking of retiring early and working part time.
A client couple decided they wanted to retire early. They needed to be assured the income from their wealth would last their lifetimes. We completed a comprehensive plan including their future revised incomes, current living expenses, both non-discretionary wants and discretionary needs, present and future. We made sure we included the impact of inflation and potential risks such as poor health or helping out their children. Impact of taxes, government pensions and downsizing strategies were included and conservative returns on their investments were projected.
We also made sure they had the right life insurance and suggested how they could decrease it as their assets increased. The result was an accurate long term cash flow plan that confirmed they could retire and work part time assured their income would continue and increase with inflation for the rest of their lives. We recommended how their investment portfolio would have to change from an accumulation to income portfolio the closer they came to withdrawing the funds. Our service included updating this plan annually so any short term changes could be addressed and the plan modified if necessary.
I have a small and successful business but want to start planning how I can work less and eventually retire.
A couple were referred to me who had a small manufacturing business which employed 10 people. It was quite successful and their earnings were healthy but they really didn’t have a long term plan. They were a blended family with two older children from the first marriage and two younger children from their union, and with one set of parents with modest incomes who would need some support. We spent some time understanding what they wanted for their children, their parents and themselves. We helped them define clearly their financial goals in terms of a time frame and dollar value. After introductions to one of the accounting firms we work with, we were able to help structure their business so they could income split between their older children and parents, covering education costs and needs and lowering taxes. We put in place appropriate life, disability and critical illness insurance. We made recommendations on how much they should save to achieve their goals and how they should do that to best tax advantage. Finally we recommended an appropriate portfolio and helped them implement the overall plan. We meet annually with and without their accountant to ensure we are all aware of what is happening and can make appropriate on-going recommendations.
I just don’t know when we could possibly retire.
Another of our clients both grew up in a home with parents earning modest incomes. They remembered doing without as children and found that when they started their careers they denied themselves little. Although having saved close to $500,000 by their early 50’s they were still in debt and began to be concerned about when they could retire. Although they realized they would eventually have to draw an income from their investments which would have to last a lifetime, they had no idea what that number should be or what to do to get there. We started by having them clearly define their financial goals: when they wanted to retire, how much they wanted to help with their children’s education, and their debt repayment goals. We completed a comprehensive plan including their incomes, current living expenses, both non-discretionary wants and discretionary needs, present and future.
We included the impact of inflation and potential risks such as poor health, one time lump sum costs and helping out their children. Impact of taxes, government pensions and downsizing strategies were included and conservative returns on their investments were projected. We also made sure they had the right life insurance and suggested how they could decrease it as their assets increased. We calculate the amount they would have to save to achieve their retirement and education funding goals. We proposed a debt repayment strategy that made sense given low interest rates. We were able to show them some tax strategies which freed up funds for saving, how to best stick to a simple ‘spending plan’ and eventually save what they needed for retirement. We recommended an appropriate accumulation portfolio and showed them how it would achieve their goals. As we work together we update their plan and show them with customized reporting how close they are to achieving their goals.
I’m a consultant and wondering if I should incorporate.
One of our clients was leaving his employer and planning to take a contract as a consultant. The income was significantly higher but the costs of life insurance, disability, healthcare, pension contributions and risk all had to be considered. After reviewing the numbers and the families financial position, we were able to show how incorporating, despite the additional costs, still saved considerable tax through income splitting with dividends and allowed the creation of a larger retirement fund within the corporation. We showed him how to invest by dividing investments between his registered and corporate investment accounts. We adjusted his portfolio to take into account the tax implications of registered and non-registered investments. We created a long term plan including how he would draw income from his corporation over the long term. As we continue to work together we continually review all aspects of his financial life.
My parents are not well and I need to help them manage their investments.
Some parents allow their children to help them take over the management of their affairs and some simply resist it. Our clients’ parents resisted the “intrusion” despite the attempt by our clients to help. This can be a very difficult and emotional period for both parents and children. The first thing we encouraged was a conversation asking what the parents would want should something happen. Over a number of weeks and months a verbal “plan” emerged. We also encouraged that the most important task was for the parents to put in place a valid and up to date Will and Powers of Attorney for both health and property while they are healthy and considered capable. Although they thought they had valid Wills, there were incorrect and outdated names for trustees and alternates.We arranged for a lawyer to complete the documents at their residence.
We arranged to complete the tax returns for the parents and discovered a number of tax strategies not effectively employed – such as use of the Disability Tax Credit and Tax Free Savings Accounts. After a number of more months it was apparent the parents could not manage their investments as cash was not being effectively invested and investments were in multiple institutions and becoming unmanageable. Our clients led busy lives and along with helping their parents had their own children and careers. Managing their parents’ assets along with all the rest became a burden. We were able to show how these investments could be managed by my clients on behalf of their parents, lower their parents’ taxable income and receive additional tax refunds.
I’ve just separated and am concerned about my retirement.
A long time client couple separated and had to divide their assets. The original plan had to be completely rewritten with each having to cover additional expenses on a single income. Given the emotions involved, this took some time but we were able to create a new plan which clearly described what needed to be done and how long it would take. The division of assets pushed out the retirement date for each but confirmed they would both achieve an acceptable level of financial security – leaving the prospect of another partner a possibility – but not a necessity!