Posts from the ‘Retirement Planning’ Category

Jun 22

The OAS Pension Recovery Tax What To Do if the Clawback Ain’t For You (Part 2)

Introduction

Now that you know how the OAS pension clawback is applied and its actual effects on your bottom line in after-tax dollars, I want to pass along ways you can organize your affairs so that you can get (and keep!) as much of your Old Age Security Pension that is humanly possible. Since a lot (but not all) of these techniques focus on keeping your taxable income down, you might also save some income tax dollars, too, if you’re not careful.

Before diving in, I realized that there was one additional situation where I see seniors taking an unwanted sojourn into the clawback zone that merits comment: the curse of the saver. If you are one of those thrifty and savvy investors who actually grow their incomes during retirement, you could unwittingly end up in the clawback zone at some point. Even if you don’t become a regular inhabitant, you still may be an occasional visitor during years you report significant capital gains. Accordingly, this article is written for those of you as well in the hopes of keeping your visits to this unpopular destination as infrequent as possible.

May 26

The OAS Pension Recovery Tax: What To Do if the Claw back Ain’t For You

If you really want to light a fire in belly of most middle class retirees, I strongly suggest turning the conversation to how their OAS pensions are reduced if their taxable incomes top about $71,000 as of July, 2014. More specifically, they will lose $.15 for every dollar in taxable income they receive above that point until, if they make enough, their entire OAS pension of $6,618.48 (what most long-time Canadians receive if they take their pension as soon as possible as of May, 2014) is a thing of the past. I plan to use this and a subsequent article or two to explain how the claw back works and some steps you can take to minimize the impact. Today’s offering will set the stage and explain why dividends may not be as good as advertised when the claw back comes calling.

Mar 19

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Long Term Care and Retirement Health Assist (“Long Term Care Lite”): Keeping the “Me” in “Retirement”

Introduction

No matter how carefully I shop or slice and dice the components, there are far too many mystery meats among the ingredients of my retirement planning stew. Despite my best efforts, I can’t guarantee how long you’ll live, that your equities will earn at least 6% annually for life or that you’ll need precisely $60,000 per year in after-tax income for the rest of your life. Moreover, don’t even get me started about future tax and legal changes, exchange rate fluctuations or cost of living adjustments!

As a financial planner / lawyer / professional worrier, I see my job as a risk manager rather than a promise-maker. In other words, although life will always be full of surprises, I want most of them to be like finding extra Easter Eggs rather than parking tickets. This is where Long Term Care (“LTC”) and Retirement Health Assist (“RHA” or, as I call it, “LTC Lite”) come in.

In addition to assuming that you’ll live to an overly ripe old age and steering you towards boring, stable investments rather than sexy junior equities when you don’t need high returns to reach your goals, I encourage clients to hedge their healthcare bets. Although paying for insurance sucks, wishing you’d paid for it later when you need the protection sucks even more.

Mar 1

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Universal Life Insurance: The Basics – Part 1

Introduction

I describe permanent life insurance as a multipurpose jackknife that combines many useful tools into a single sleek package. Universal Life (“UL”) policies are the ultra-deluxe version that includes enough attachments to do anything from performing minor surgery or opening wine bottles. On the other hand, unless you are supremely confident in your surgical skills or don’t mind a little cork in your chardonnay, perhaps this mythical pocketknife isn’t always the best tool for the job.

Arguably, the same is true for UL insurance; although it is capable of many different uses, which is a wonderful thing, it isn’t always the ideal solution for every problem. All the same, since we don’t always know what to expect when wandering through the forest that is life, having something in our back pocket that can be useful in a variety of different scenarios is a very attractive option. On a similar note, UL may sometimes be a secondary tool you can use in conjunction with your preferred implement to improve your overall results. Of course, in other case, despite these cautions, maybe sometimes a UL policy is exactly what you need.