Author Archives: YourStyle Financial

Your Heart Can Affect Your Income

Protect Your HeartAn article recently published by Sheryl Ubelacker, The Canadian Press, provides insight into the result of a study in the Canadian Medical Association Journal on the effects of heart and stroke episodes and its impact on income. Some of the statistics are quite staggering.

The study shows one-third of heart attacks, a quarter of strokes and 40 per cent of cardiac arrests occur in working people under 65. These medical issues are occurring during prime income earning years and are leaving some with physical or cognitive disabilities. In comparing two years of earnings prior to the health event and three years afterwards with their unaffected equals, it became evident those who were affected by cardiovascular events were less likely to be working and therefore less likely earning. The reductions ranged from 8 to 31 percent in lost earnings.

Those who suffered a stroke, suffered the most significant loss of income at 31 percent, representing a third of their income. As strokes affect brain cells, the likelihood of physical limitations is increased compared to a heart related event. While labourers immediately come to mind as those most likely unable to continue in their role, the limitation of using your hand and arm can prevent one from being able to operate a computer.

In conjunction with the person’s own inability to continue earning, members of their family may also be affected. If the family consists of younger children, the spouse who is now the main bread-winner may be required to spend more time with the family and less at work thereby further affecting their income. Should it be a parent whom is affected, the adult children may be required to take time away from work to attend to their medical care or appointments.

The positive outcome to this study is the attention it will bring to those who require additional resources to manage the after-effects of the medical event, which is long overdue. With government bodies, change takes time – which you and your loved ones may not have. However, there are options for helping yourself.

Critical Illness Insurance pays a lump sum benefit if you are diagnosed with a dreaded disease such as Multiple Sclerosis, Alzheimer’s, Cancer or Parkinson’s Disease. Other conditions covered may include coma, stroke, heart attack, and kidney failure. Benefits are paid for the first occurrence and may be used to pay medical expenses, modify your home or even take a vacation. In May, we shared a real-life story of the benefits of this insurance in the blog Money Can’t Buy You Love. By purchasing Critical Illness Insurance, this family was able to spend the last bit of time they had with their loved one without affecting their financial situation. When a situation such as this arises, that is all we can ever ask for.

Planning for tomorrow is a key aspect to financial planning, so is planning for the unknown and unexpected. Medical circumstances are never convenient and rarely scheduled. If you’d like to prepare yourself, we’d like to help.

I Can Make Money by Saving Money?

I CAN MAKE MONEY BY SAVING MONEY_It seems like a polar opposite philosophy: “Spend Money to Make Money”, but it’s true. Gone are the days of 8 – 10% deposit interest. Now you’re lucky if you make pennies on a thousand dollars, especially with the penny now obsolete.

If you have cash in the bank, there are options for investing beyond RRSPs and GICs. In 2009, the TFSA or Tax-Free Savings Account was introduced. The initial contribution limit was $5000 per annum, growing to $5,500 for a number of years. The inflationary increase in 2018 was high enough to push the maximum annual contribution to $6000. An added feature of the TFSA is that the annual contribution room accumulates so $63,500 can now be contributed overall.

There are a number of reasons why a TFSA may be the right choice for you. The first is the fact they truly are tax-free. Any income or gains from the accumulated funds are tax-free for life. Funds can also be withdrawn without penalty or taxes at any time. Because of this status, TFSA withdrawals do not negatively affect any other benefits available to you such as Old Age Security (OAS). If the account is set up correctly, in the tragic event of a loss of the primary account holder, the successor annuitant would receive the full value of the TFSA without going through the estate.

Age is not a factor. Other options such as RRSPs require the contributor to be under a certain age and be earning income. Anyone over the age of 18 can contribute to a TFSA. They are a popular choice for those in their Golden Years because they allow for continued tax-sheltering of money even after age 71. There are no forced withdrawals or tax consequences when amounts are withdrawn.

The flexibility offered with the TFSA allows for withdrawals to be recontributed in the following year without reducing the contribution amount. Meaning, if you withdrew $1000 in 2018 you are able to contribute the $6000 for 2019 and top it up with the $1000 withdrawn the prior year.

If you are an investor with money, maximizing your RRSP and TFSA would make the most sense. For those who don’t have a lot of money to spare but want to save for an event in their life such as a home or car, a TFSA offers a great way to protect, invest and grow your funds.

There are many options available when it comes to savings and long-term planning and the information available may become overwhelming. This is why working with a Certified Financial Planner (CFP) and having the RIGHT plan in place can make all the difference.

The Time to Invest in Your Future is Now. Not Next Year.

RRSP AdviceAs 2018 becomes a shadow of the past and 2019 shines its opportunity upon us, it brings us closer to “that time of year”. Tax time. If you’ve ever seen The Lion King, saying tax time is like whispering Mufasa and watching the Hyena’s shiver. Now is the time where talk turns to deductions and retirement investments before the February cut-off for contributions.

Now the shadow of 2018 is rearing its ugly head as it’s there to remind you that you had all year. You’re not alone. Millions of Canadians wait until Spring to start thinking about their RRSPs, and with a heavy heart they sigh and think “I’ll do better next year”. However, next year is already this year and it’s unlikely any signification changes have been made. Life has gotten back to normal after the holidays and lives have become a whirlwind of school, work, sports, family and just trying to manage life. Soon it will be summer and Manitoba will do it’s typical slow down where cottages become priority. Then school starts again and before you know it, it’s already the holiday season again. After which, you’ll sigh and say “I’ll do better next year”. Continue reading

Do you need a professional in your corner?

Life Events

Let me tell you a story.  This story is about a client, who was experiencing an exciting life event.  He had been with the same employer for over 10 years when he decided to pursue a new opportunity.  He handed in his notice and received a stack of termination papers with what he thought was all he needed.  Having had a close relationship over the years, this client knew that I am a Certified Financial Planner (CFP), so he asked me to take a look to make sure everything was in order.  To my surprise, I noticed that there was no information regarding his pension.  I double checked with him whether the company offered a pension and he confirmed that the company pension was a matching plan where the employer contributes and the employee matches.  Astonishingly, there was no record of any pension being deducted from his pay cheques, despite him being eligible after two years of employment. Turns out, the employer had simply over looked (or neglected??) to deduct his pension contribution.  On his behalf, I checked with the Human Resources office of his former employer, who confirmed that he was indeed eligible for a pension pay out – so where was it?

I negotiated with the company to ensure that he received the retirement funds to which he was entitled.  This was no insignificant amount!  Had my client not had the foresight to have me review his termination package, it is unlikely this error would have been uncovered. He was mighty happy to have me in his corner!

Are you experiencing a life event, or do you know someone who is getting married, having a child, divorced, retiring, starting a new job or going back to school??  It can never hurt to discuss life changing events with a Financial Planner.  Likely, all will be fine; however, having a professional in YOUR corner could ensure that nothing gets left behind.

The Gift is in the Giving. Responsibly.

Budgeting for ChristmasThe sleigh bells are ringing, chestnuts are roasting and Rudolph is working out to prepare for a long night of making children’s dreams come true. The holidays are a time for goodwill, good memories and family fun.

If you’re dealing with debt or trying to stick to a financial plan, Christmas can become a time of financial burden more than a time to be merry. Everyone wants to feel the euphoria of watching someone open that perfectly selected gift, but sometimes you have to find that joy in the intangibles. “The best of all gifts around any Christmas tree: the presence of a happy family all wrapped up in each other.” Burton Hills. Continue reading