Why More Canadians Are Retiring With Debt and What It Means

As Canadians, we live in a country where certain rights and freedoms are expected, hoped for and, some might say, taken for granted. The freedom to retire early is one many of us begin grappling with as we approach middle age. Ironically, many Canadians won’t be ready to retire until they are significantly older.

The reason? Debt.

Unfortunately, too many retired people – 34% — over 55 years old still carry consumer debt, according to Statistics Canada. In fact, a recent Equifax Canada report found that the debt load of seniors is outpacing that of their younger counterparts.

It’s not as though Canadians have always carried a heavy debt burden. In 2012, 42.5% of people over 65 still had debt, a jump of 55% when compared to seniors in 1999.

A number of economic, social and cultural factors are to blame, say experts. They point to divorce, illness and large mortgages as some of the culprits. Experts also explain that children, grandchildren and other family members may also be at fault, as they often look to their parents and grandparents to lend them hand. In fact, a 2015 survey showed that 18% of first-time home buyers are gifted their down payments thanks to relatives, typically parents.

But, children can’t shoulder all of the blame.

Low interest rates have made debt much more attractive. Further, cottages, pricey vacations, fancy cars and other expensive toys may be out of reach for the average pensioner. Paring down and cutting back in your sixties may not seem fair. After all, you’ve worked decades, aren’t you entitled to a little luxury? Your fixed retirement income simply may not support your lifestyle any more. Perhaps it’s time to downsize and sell your 3,000 square-foot home?

If selling isn’t an option, many house-rich, cash-poor seniors can look to their houses for equity. Often by the time a person retires, he or she has either paid off their mortgage or is only owing a small amount. Because house values have increased in recent years, in some markets quite significantly, tapping into a home’s equity may be something to consider.

Still, as a borrower, you need to be aware of how you are intending to pay back the loan. Is it possible to make monthly payments or would you prefer to have your estate pay off the loan after you die?

No matter how the money is borrowed, the process should be well planned out. Know what you need it for. Have a repayment plan in place. Don’t borrow more than you need – that often leads to trouble.

Dwayne Rettinger

Executive Financial Consultant

Investors Group Financial Services Inc.

Rettinger & Associates Private Wealth Management


This is a general source of information only. It is not intended to provide personalized tax, legal or investment advice, and is not intended as a solicitation to purchase securities. Dwayne Rettinger is solely responsible for its content. For more information on this topic or any other financial matter, please contact an Investors Group Consultant.

Finding a Solution for ‘Unbankability’ through Blockchain

TORONTOFeb. 28, 2018 /CNW/ – A Change.org petition has been launched by Toronto’s Bo Zou as a means of securing buy-in and, ultimately, funding to counter an issue that plays a significant role in global poverty: a lack of access to banking services.

“Financial inclusion is critical in order to reduce poverty,” says Bo Zou, a specialist in customer experience strategy and design who has worked extensively in financial services. “This shouldn’t be happening in the 21st century. But technology may pave the way to effecting change.”

Lack of access to banking services puts the gap between the world’s haves and have-nots in sharp distinction, Zou points out. Most adults (94 percent) in OECD high income countries have bank accounts, but only 54 percent in developing countries do, with the lowest proportion in the Middle East at 14 percent, according to World Bank data.

The outcome is a reduced capacity for saving to create a cushion to help finance an education, business or home.

Read the full press release HERE.

TFSA or RRSP? Cutting through the Confusion

When it comes to choosing between a Tax-Free Savings Account (TFSA) and a Registered Retirement Savings Plan (RRSP), there are plenty of details to keep you up at night. It’s important to look at the pros and cons of each plan, so you can develop a financial plan that’s right for you.

Your personal Financial Plan should include the income per year you will need after you retire to have the retirement lifestyle you want. Your Plan should also calculate the amount you will need to contribute to TFSA or RRSP per year to achieve this.

This will help you determine the difference between your current tax bracket and the tax bracket you will experience after you retire. It’s easy to assume your income will be less, so your tax bracket will be less, but that is not necessarily accurate. Many government income programs allow clawback provisions that put many seniors in shockingly high tax brackets!

Clawbacks are just like a tax and they can be an unexpected cost. If you look at the breakdown of the three most common clawbacks, you can see the difference between having a TFSA or an RRSP. Here’s how the three clawbacks break down:

1.      Low income (less than $20,000) – 50% clawback on GIS

2.      Middle income ($35,000-$85,000) – 15% clawback on the age credit

3.      High income ($75,000-$120,000) – 15% clawback on OAS

You can own the same investments in your TFSA as your RRSP. The main difference is that RRSP contributions and withdrawals have tax consequences, while TFSA contributions and withdrawals don’t.

Therefore, the answer to TFSA vs. RRSP is primarily based on your marginal tax bracket today compared to when you withdraw after you retire.

Rule of Thumb

RRSP is better if:

  • You will be in a lower marginal tax bracket during retirement. Example: Today you’re making $100,000 and you will receive $35,000 during retirement, you can get a tax refund of 43% on your current deposits and pay only 20% tax on your retirement withdrawals, giving you a gain on the actual value of your RRSP of 23%.

TFSA is better if:

  • You will be in a higher marginal tax bracket during retirement. Example: Today you’re making $40,000 and you will receive $20,000 during retirement, you can get a tax refund of 20% on your current deposits and pay out 70% when you make retirement withdrawals. This figure includes lost GIS from the clawback. This saves you a 50% loss on your entire RRSP.

You can choose either an RRSP or a TFSA if:

  • You will be in the same marginal tax bracket during retirement.

Other Details to Consider

If you are still unsure if an RRSP or a TFSA is right for you, answer these two important questions:

1.      How will I use my tax refund?

  • TFSA is best if you plan on spending your RRSP tax refunds. Example: if you deposit $10,000 to either a TFSA or an RRSP and then spend the refund, the TFSA will give you a higher retirement income. You need to reinvest your tax refund for RRSPs to provide you the same after-tax retirement income as TFSAs.

2.      Is the withdrawal flexibility from my TFSA a pro or a con?

  • Flexibility is good, but if you are tempted to withdraw before retirement, RRSP might be a better choice.

Sound Financial Planning

It is advisable to plan on retiring with a taxable income in the low-to-mid level tax brackets. Since the cash that you live on can vary from your taxable income, it’s important to remember that TFSA withdrawals that are non-taxable. They can give you cash income that is not taxable income. Other tax deductions must be factored in to figure out the tax bracket you will be in.

Example: Basic government pensions are $20,000. OAS is $7,000 maximum, based on your number of years residing in Canada. CPP can range from $0 to $13,000, depending on how much you’ve deposited in the past. From here, calculate your income from your RRSP and TFSA and any other investments. You can generally withdraw 3-4% (depending on how you invest) of your RRSP or TFSA each year and have it last as long as you live.

This should help you determine which plan is right for you. You can plan to be in the right tax bracket. If you currently earn $80,000 and will retire with $50,000, you may be tempted to think TFSA is best since you will get a refund of 31% today but will pay 34% at withdrawal. However, with only $5,000 per year from non-taxed TFSA, your taxable amount is down to $45,000 which puts you in the 23% category, so RRSP is actually better. In this example, you need enough TFSA for the $5,000 per year but the rest should go into RRSP.

Important Note

Don’t forget to adjust for inflation! All of your retirement calculations need to factor in inflation. It will roughly double your cost of living in 20 or 25 years.

Forgetting to include inflation is the most common error many people and advisors make in estimating retirement income and how large of a nest egg you will need.

What about non-registered investments?

In some cases, non-registered investments may actually be better. Just maximizing TFSA and RRSP is not always the best answer. If your taxable income in retirement will be in a higher tax bracket than now, non-registered investments might be a smarter choice. If using your TFSA to the maximum will still leave you in higher tax brackets, non-registered investments will give you more cash at lower tax brackets than RRSP.

Example: Currently you make $80,000 and you plan to retire with $80,000, you get a 31% refund now but will have to pay as much as 44% when you withdraw because of the OAS clawback. Upon retirement, you can only get $45,000 at lower tax bracket rates than your current tax bracket.

If you plan on getting $20,000 from government pension, then you need to plan now for enough RRSP to give you $25,000 income. The rest should be in TFSAs. However, that won’t be enough. You will still need $35,000 more. That’s when non-registered investments might pan out better for you than RRSPs.

But don’t forget the taxes. Non-registered investments are not always tax free, depending on how they are invested, and the interest is always taxable. Capital gains, however, are only half taxable. Dividends are given preferred tax rates but they also get higher clawbacks because the income for determining clawbacks is the “grossed-up dividend”, which is 38% more than the dividend.

Let’s look at a worst-case scenario for non-registered investments: a senior making $20,000 gets a dividend of $1,000 which has a clawback of $690 (50% of $1,380). In this case, there is no income tax, but you still lose $690 out of the $1,000 in reduced GIS income.

If you sell a bit of your non-registered investments each month, you can get a nice, low tax rate on the cash. My term for this is “self-made dividends.” Since your cash income is made up of your capital gains and your original investment, the tax is very low, often only 10% of your withdrawal.

Bottom Line

1.      RRSP –

  • medium working income $50-80,000 and modest retirement savings
  • high working income over $90,000

2.      TFSA –

  • low working income under $45,000
  • medium to high working income with no retirement savings
  • medium to high working income with large retirement portfolio

How much should I save?

Generally speaking, a modest savings would be $500,000-$700,000 when you retire. Factoring in inflation, this would amount to approximately $1 million to $1.4 million if you plan to retire in two decades.

Plan in Place

Now is the time to prepare a Financial Plan that will help you sift through the options while understanding all the details such as tax brackets, clawbacks and inflation. In my experience, when my retired clients have a portfolio consisting of a good RRSP or pension, a strong TFSA and some non-registered investments, we can come up with a good plan for how much they can withdraw annually while minimizing the amount of taxes that are required.

With a mix of fully-taxed, low taxed and non-taxed sources of income, we can plan effectively for you to receive the cash for the retirement you want, while remaining in lower tax brackets.

A sound financial plan that cuts through the confusion of TFSAs and RRSPs set you up for a comfortable and worry-free retirement. It will have the optimal strategies that are right for you.

6 Ways To Save Money In Your Monthly Budget

Money makes the world go around, and we always seem to need more.  Saving money is the ongoing financial dream, but sometimes it is hard to know where to start.  The demands of your everyday life and the pressures of work are often just about all our minds can handle, and saving money continuously gets pushed to the side.  

Make a point to do better, and read through a few excellent ways to save money in your monthly budget.  You may quickly find that your money-saving goals are more than feasible.  

Reevaluate your insurance plans

We carry insurance for many different emergencies in life, but there may be some wiggle room in pricing.  Optimize your insurance plans, whether its accident insurance, life insurance, renters insurance, or some other form of insurance.  

Things change in your life, and those changes often affect the stipulations of your insurance coverage.  Make sure to keep up with these things, or you could be paying more than necessary for your contract.  

Cut down on those monthly subscriptions

The average American household pays more than $100 per month in subscriptions.  Between apps like Pandora, YouTube, Hulu, and Netflix, your wallet may be feeling the stress.  

It is time to have a serious conversation with the family about what is absolutely necessary.  You may not want to cut out all entertainment, but subscriptions that serve similar purposes could be minimized to save money.  

Pay the yearly price instead

If cutting down on subscriptions and reformatting your insurance policies seems like too much work, try simply paying the yearly price instead of the monthly.  You will always save money by paying the one-time yearly payment rather than the monthly subscription price.  

Use half of what you normally consume

This suggestion is not meant for every part of your life, but when it comes to toothpaste and shampoo, you could probably cut your usage in half.  Purchasing essential items like toilet paper, paper towels, and toothpaste can occur half as often by simply cutting back on your portion sizes.  

Carpool bike or walk whenever possible

It costs a considerable amount of money to maintain a vehicle.  Driving your car every day probably costs you far more than you think.  Carpool, bike, or walk to your destination whenever possible.  Not are these alternatives good for your wallet, they are good for your health.  

Drink more water and less soft drinks

All your body really needs to drink is water.  Paying money for unhealthy sodas and other flavored drinks takes your money and your health.  It makes much more sense to spend twenty bucks on a water filter for your faucet than to spend twenty a week on sodas.

Understanding the Differences Between Financial Advisors and Brokers

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Advisors Channel

As a fee-only financial advisor, I am surely biased to this type of advisor. I do think everyday investors are much better off if they have someone in their corner who is recommending a particular investment product because it actually is the best product for them, given their circumstances and life stage. Not because there’s a commission on the sale at the end of the day.

That doesn’t mean, though, that you shouldn’t be mindful of possible issues – and that’s for any financial advisor, whether fee-based or full-service brokers. For that matter, you also should be mindful of potential drawbacks to other options that may seem (superficially, at least) appealing.

Let’s look at the options.

Fee-only financial advisors are considered advantageous because there’s no inherent conflict of interest as there can be with full-service or commission-based brokers. Brokers often recommend investments owned by their company, which is an inherent conflict.  You simply have to consider whether the products recommended are going to be best for your personal financial goals.

What you pay for is financial guidance, planning and assistance. This may be a flat fee. Some advisors charge a percentage of your account’s assets. You may be able to negotiate the amount. But, the fees you pay do not fluctuate according to the type of investments that are being recommended. What you get with this approach is objectivity and investment advice that’s unbiased. Your interests and your advisor’s are aligned.

The commission-based approach to financial advisory services is less the norm today than in the past. You open an account or buy a stock or bond and your advisor gets a percentage. Recurrent trading may also be encouraged – which may not be good for investors with a longer-term perspective. This all can pose a conflict with your best interests and goals.

And on the do-it-yourself front? Well, as attractive as this might sound on the surface, consider the relevance of the saying about the attorney who represents himself. For investment purposes, you might find good information online, but it’s just as likely you’ll find speculative information, if not real fake news. Investing is a risky business; if you don’t have the time or the expertise to do an adequate job of qualifying research, get a professional to help. Your future – financial and otherwise – depends on it.

Speaking of your financial future, it’s never too early to start planning for it. That means Millennials – and even the oldest Generation Zs who are just entering the workforce – should be putting money aside as they think about their long-term financial goals. It’s a challenge, of course, especially for those who are still trying to pay off college. Retirement is maybe too much to think about, right?

With that said, I’ve developed a service package to make it less painless. My new Robo-Advisor Professional service package is specifically targeted to the needs of Millennials and utilizes an in-depth financial data collection sheet, as well as a plan discussion with myself, to collect essential information about your financial background and goals.  This provides a strong base of understanding for clients to invest in ETFs through WealthSimple with a superior portfolio manager with a track record of beating the index.

ETFs are ideal for those with more limited resources, as a “wrapper” around a group of securities. They have a cost advantage over individual stocks and can be traded commission free. They’re similar to mutual funds, but with more flexibility as they can be traded throughout the day, not just once.

The Mortgage Broker

The Mortgage Broker
The Mortgage Broker – Canadian Mortgage Broker – Mortgage Broker Canada

Make save and preserve more of your money with The Mortgage Broker. Home of the “Best Rate Around”. The independent mortgage broker in Canada is usually allies with a national brokerage to get better and lower rates by volume. Join your local mortgage broker to get the best rates. MONEY often refers Canadian financial consumers to licensed and reputable mortgage brokers and not to big banks directly in order to save you more and get better information, benefits and privileges. Learn more for a direct referral for your mortgage and real estate needs with professionals that know and understand that price and service rule the day. Call us toll free 1-800-789-1011 x101 to know more and get more value for service.

Mutual Fund Newsletter

Mutual Funds Newsletter Canada

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Mutual Funds Newsletter Canada – Canadian Mutual Funds

Mutual Funds Newsletter is proud to join some of Canada’s top investment and finance professionals as a regular writer for MUTUALFUND.CA and the electronic and industry trade publication called ‘Mutual Fund Magazine’ that is an RRSP Season favorite for mutual fund dealers, representatives and advisors.

Mutual Funds Newsletter is at the top positions of yahoo, google, bing and youtube. The monthly Canadian Mutual Funds Newsletter is available in part online and is primarily sent with CASL approved email newsletter systems. The Mutual Fund Newsletter is the one and only premium communique that is completely free of charge. MutualFund.ca the keyword website that best defines Mutual Funds and the mutual fund industry at large. The entire portal of mutual fund sites protects the interest and sentiment of mutual funds and capital markets in Canada with respect to investors, advisors and product manufacturers.

The Mutual Fund Industry is worth well over 1 trillion dollars of Canadians hard earned capital. A concentration of assets under management worth considering in general and investigating further your place in it. Enjoy the monthly Mutual Fund Review the entire mutual fund market at a glance with winners and losers by sector and by category.

Mutual fund companies, dealers, representatives, advisors and managers are welcome to participate with news, stories, information, data and more. Make the Mutual Fund Newsletter better with your love and support for the sake of Canadian Financial Literacy and the promotion of mutual fund education.

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MONEY.CA News – info@moneyca – 416-360-0000

Money Saving Tips for All the Parts of Your Life

When it comes to saving money, you want to do as absolutely much as is possible. And that means saving money in all of the various aspects of your life. If you save money in one part of your life, but are not so frugal in another, then you’re not going to see the same type of savings that you would if you manage to spread out all of your focus.

So, some money-saving tips for all-around your life include saving on your small business pursuits, saving on your subscriptions, using apps to save with investments, saving on interest rates for various loans, and saving when it comes to utilizing your credit card.

Small Business Savings

If you own a small business, or are involved in small business ownership somehow, then you know that there are money-saving tips all over the place for you to follow. Many of these have to deal with understanding the intricacies of small business management, so before you start cutting corners on things, it’s better to understand how to make things more efficient first. Then follow those tips to the letter.

Subscription Savings

Chances are fairly likely that you have a lot of subscriptions that you’re paying for every month. These can be things like music subscriptions, cloud service subscriptions, or TV and entertainment subscription services. If you want to save money, figure out which subscription you use the least, and simply cancel it. You will hardly know the difference, and over the long-term, you can save a ton of money not having these monthly costs that will bog you down eventually with respect to your budget.

Investment Savings

There are money-saving apps you can install as well that are quite interesting. Some of these ask to send money directly to your bank account, whereas others will put them in some sort of investment fund. The best part of these is you don’t even feel it happening. Most of them are set up to discreetly put small amounts of money in accounts every day or every week, so you don’t notice the missing, but all that money shows up in greater form later in your bank.

Interest Rate Savings

In order to save money on interest rates, the only real way for you to pursue this is by paying more on your principal. If you have an old loan from school, or perhaps for a car purchase or home loan, then you want to put as much money as possible on those every month. The sooner you pay off principle, the more money you save. This is a direct equation.

Credit Card Savings

And finally, there are a few different ways to save money on credit cards. If you have an outstanding balance somewhere, you can typically move that entire amount onto a new interest-free card for a one-year period; this sort of movement among credit cards can be a great way for you save money, as long as you intend on paying them back as soon as possible in each case.

How To Save Money When It Comes To Your Vision

The two eyes you have are the only ones you’ve got, and if you’re lucky to have a pair of peepers that works you better do what you can to take care of them. People who are born blind or become blind often have other senses that are heightened, which help them to do things, but don’t waste your sight if you still have it.

As you age so do the parts of your eyes and you can suffer from eye health issues like cataracts and macular degeneration. Your eye doctor is there to help with early detection of such things, which will help you have better eyesight throughout your life.

Eye care isn’t always a cheap venture, but it’s one that helps keep your eyes healthy, making it worth the expense. Here are some things that could help you save some money when it comes to protecting your vision.

Get Your Eyes Examined

When was the last time you went to the eye doctor? If if you don’t already wear glasses or contacts you still need to go in for regular eye exams. It’s the only way for early detections of eye health issues, and early detection can save you money when it comes to correcting the problems.

A yearly eye exam doesn’t have to cost an arm and a leg, even if you don’t have insurance. Shop around for the best prices where you live. Make sure you look into reviews of your chosen place to ensure you’ll get good service and your eyes will be cared for.

Shop Smart For Frames, Lenses, And Contacts

The most expensive part of having regular eye exams for those people that need a prescription are the cost of frames, lenses, and/or contacts. Many places carry frames at an affordable price, often as low as twenty dollars a piece. However, if you want the best lenses, even single vision, you’re adding another hundred or more dollars to your bill (but it’s worth it to have lenses made of polycarbonate that is shatterproof and coatings that can protect your sight).

Frames and contact lenses can often be found online at steep discounts. When it comes to frames, though, you want something that fits your face, so trying them on in a shop first is wise. Also, never buy contact lenses without a fitting first. Not all of them are created equal and you could damage your eyes with the wrong ones.

Consider Surgery

You could also consider getting Lasik surgery done to correct your vision. You’ll still need regular eye exams for eye health, but it could correct the need for contacts or glasses, which will save money over some time!

If you watch the videos, it looks pretty scary. But it’s a fairly easy and painless procedure, and many people have gotten it done.

Better Budgeting And Saving Tips For Your Family

Budgeting is important if you want to act like an adult. Having a budget helps you make sure you have money for your wants and your needs while ensuring you’re taking care of your needs first. Budgeting takes into account the expenses you have in your household and the money you have coming in.

Your budget will likely be something that you right down someplace, and you may keep it in an area where you keep your bills. Of course, these days many people don’t get paper bills in the mail anymore. No matter how your budgeting, here are some tips to help you do it better and to make sure that you’re having more money coming in and available for the things that you do need.

Cut Down On Open Credit

The more loans you have out there and credit cards that you have that have balances on them, the worse your credit is going to look. You could get a new card to pay off a lump of older cards or loans.  If you do have bad credit or a somewhat low credit score you may need a little help getting a new credit card to do this with.

Don’t cancel any of your credit cards unless all of them are paid off. This is just a big no-no and can hurt your credit even more.

Get Out Of Debt

Credit card and loan debt aren’t the only kinds of debt that are out there. If you want to have better control over your money you need to make sure that you are dealing with any debts that you have. That could be college debt, medical debt, or even debt to family members that have loaned you money.

For debts that aren’t owed to an individual, you may want to consider debt consolidation. It’s a great way to get debt under control and sum everything up into one monthly payment.

Know What’s Coming In Compared To What’s Going Out

Before you can even write out a budget you need to know where your money is going and where it’s coming from. Take a look at your income, and any other income coming in your house from other individuals that are part of your family. Compare that to the money that’s going out.

Money that’s going out will be what you used to pay your bills, like your utilities and cell phones. It can also include your grocery expenses, clothing expenses, and other such things. Income can come from your normal job and even side jobs or selling things you own online.

Start Saving

Don’t live paycheck-to-paycheck. Yes, that’s easier said than done, but it’s something that you should strive toward even if you are currently living that way. The first step is to start a savings account.

In the long run, your savings account should have three to six months worth of income saved, which will be enough to cover any bills in the case of job loss or injury. You want to have money saved up in case of an emergency, which can happen at any time.