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Financial Planning

Taking stock of your life and preparing for your future are on-going needs. You probably have one goal in common with most people, and that is to retire as early and as comfortably as possible. The sooner you start planning and taking action (and the more regularly you review your situation and options), the more likely you’ll achieve your ideal. Unfortunately, the majority of people prepare more for a vacation than their future.

Six steps to lead you through the Financial Planning Process:

  • Determine your goals and objectives, and prioritize them.
  • Gather the appropriate personal and financial data, analyze it, and apply reasonable and objective assumptions.
  • Identify financial issues affecting your short-term, pre-retirement, and post-retirement goals, including estate planning where required. If your needs are sufficiently complex, we can take the role of quarterbacking a team of professionals, or address specific financial issues and alternatives, including risk management guidance.
  • Prepare written alternatives and recommendations for your consideration, We can help you to anticipate roadblocks in your plan, and offer flexible solutions that leave room for adapting to future conditions.
  • You choose the appropriate solutions from those suggested, which may involve other financial services. Then we help you implement your plan.
  • Most importantly, it is essential to review your plan regularly, so that you can adapt to life’s changes, where appropriate!

Your Financial Planning Checklist:
» Click here to view and print out your financial planning checklist.

To see how we can help you reach your goals, let us know what services you are interested in. As a courtesy, we will provide you with a complimentary consultation in addition to a copy of Ralph’s new book.

Financial Planning by BestPlan Strategies to identify your issues and reach your goals

Insurance and Income Protection

Insurance and Income protection from BestPlan because money doesn't come with instructions
Why Bestplan?…Because Money Doesn’t Come With Instructions!

Life is full of constant changes, so pro-active financial planning involves addressing the whole financial picture. By establishing financial foundation blocks and creating a logical order, you can begin to prioritize and make effective choices as to where your money should be spent, or best invested to meet your goals. – Ralph Umansky

» Click here to view and print out your financial planning checklist.

BestPlan Insurance and Income protection, Life Insurance, Long Term Disability, Critical Illness and Long Term Care

The first level of the foundation involves adequate Life Insurance, Long Term Disability, Critical Illness and later Long Term Care. These programs should be designed to respond to life changes. When you accumulate the appropriate funds, you may decide to reduce or eliminate the insurance.

Holistic planning includes enjoyment of life, family and reduced stress. If the goal was to simply accumulate wealth for retirement, you may become richer, but will you be healthy enough to be able to enjoy your life later?

BestPlan Insurance and Income protection, Life Insurance, Long Term Disability, Critical Illness and Long Term Care
Life Insurance

Most forms of life insurance (term, group, whole life, universal life) pay a tax-free sum to a named beneficiary, upon the death of the life insured. However the similarity ends there. Some insurance is needed to cover the risk of “premature” death or disability, only until the children are grown and debts are paid. Another type of insurance should continue for life, to provide ongoing income, emergency funds, estimated estate taxation, and payment of funeral expenses.

Younger families with higher debts/mortgages and young children may need more life insurance in the first 20 years. It is important to determine lifelong Permanent insurance needs, as well as the amount needed only for a short Term (less than 25 years). Be aware that renewal rates for 5 to 10 year Term life insurance can increase as much as 300%-400% . You can create a proper modular insurance plan tailored to meet your needs that will not only offer you the best value, but also significantly lower your long-term costs.

Generally, your needs determine which plan is right for you. Term and group insurance could be used to top-up permanent plans. Start with term insurance (convertible to permanent) if money is tight, but remember that in future, permanent insurance rates will increase, based on your age at that time. A combination of term, group, and permanent life insurance could allow future flexibility. With this strategy, once the children are grown and debts are paid, you can reduce or eliminate the term insurance, leaving permanent insurance in place for your lifelong needs. Your plan should be reviewed and updated regularly, to reflect life-changing events, goals, inflation, and other factors. Life insurance policies are not all equal and the differences may be substantial. The same applies to insurance companies. Some offer far greater future options, and have better financial strengths than others.

The right insurance combination can offer value and lasting peace of mind, but the wrong insurance plan may prove very expensive in the long run.

Life Insurance, Long Term Disability, Critical Illness and Long Term Care financial strategies by BestPlan
Avoiding The Cost Of Misfortune: Critical Illness, Long-Term Disability & Long-Term Care

How would your family cope with the emotional and financial burdens of a serious accident or illness, and how long could you survive if your income stopped as a result of such misfortune? Your greatest asset is your ability to make money. A contract worker, business partner, professional or high income earner should have income insurance protection. Long-term disability, critical illness, and long term care insurance, along with life insurance, must be considered the foundations of an effective financial plan. Click here for a copy of Ralph’s new book.

Critical Illness

According to the Canadian Cancer Society, the Heart and Stroke Foundation of Canada and Statistics Canada:

  • One in three women and two in five men will develop some form of cancer over their lifetime.
  • One in every 2 Canadians will contract heart disease; half the victims of heart disease are younger than 65.
  • One in every 3 Canadians will develop some form of life-threatening illness; 40,000 to 50,000 new strokes are reported annually in Canada.

Critical illness insurance provides a lump sum payment after diagnosis and survival of a defined critical illness. The money is yours to use in any way you wish. Some companies offer fixed terms, and others, permanent coverage. A return-of-premium feature (if a claim is not made) is available from several companies.

Coverage varies from only a few diseases to a wide range, including;

  • heart attack,
  • coronary bypass surgery,
  • stroke,
  • cancers,
  • kidney failure,
  • paraplegia,
  • blindness,
  • deafness,
  • Multiple Sclerosis,
  • Alzheimer’s disease
  • coma, etc.

Good News: Your chances of survival are getting better!
Bad News: Without the right contingency plan, the cost of survival could bankrupt you.

BestPlan Insurance and Income protection, Life Insurance, Long Term Disability, Critical Illness and Long Term Care
Long Term Disability Insurance

The chances of a 35-year-old becoming disabled for at least 90 days before age 65 are 5 out of 9, according to an insurance company study. If the disability lasts longer than 90 days, the average duration could be 2.8 years. The same 35-year-old making $5,000 per month (with a 5% increase annually) would lose more than $2.8 million of income during their remaining working life. This amount exceeds the value of a home, car or other assets which we protect. Are you adequately insured for long-term disability? Of the many choices of policies available, some have numerous restrictions, while others offer rates guaranteed to age 65. A personal long-term disability plan provides many advantages over a group plan, especially to self-employed professionals, contract workers, and partners in business.

BestPlan Insurance and Income protection, Life Insurance, Long Term Disability, Critical Illness and Long Term Care
Long Term Care Insurance

Today’s rate for nursing home care can be greater than $110.00 per day. With Government subsidies being removed, this could be twice the amount of a regular home mortgage payment.

This new style of insurance, offered by a few Canadian insurance companies, addresses the enormous costs for both home care and nursing home care. As the life span of our population increases, we all may need assistance eventually. The aging process can prevent us from doing what we now take for granted. The insurance pays for both cognitive impairment (inability to think, perceive, reason or remember) or physical infirmities (inability to perform 2 of 5 activities of daily living – ADL’s which include: bathing, dressing, eating, toilet, or changing body positions). Will you be able to afford part or all of the costs of such services on a fixed retirement income? You may not qualify for some government benefits, as subsidies are predicated on income. Will your loved ones be required to leave their jobs to provide the necessary care? There are a number of factors and variations to consider with this insurance, so consult a knowledgeable and experienced professional. Click here for a copy of Ralph’s new book.

Failure to adequately protect your family’s financial security can lead to financial ruin and unravel all of your efforts to grow your wealth and complete your future plans.

Protect your life, your family, your business. Get Ralph’s book.

Investment and Risk

What is a safe risk?… What is too much risk?

Pay off your highest interest rate debts first – The interest on these charge cards and loans is ever growing and may have rates of 18% or greater. You pay your bills with after tax dollars, therefore you may need a constant 30% return in other investments to equal the amount you pay in after tax dollars at 18%!

There are risks associated with every type of investment. With effective planning, we can properly assess these risks and find the most suitable investments to meet your needs. A holistic financial planning approach, will outline your goals and help determine how much money is needed for each part of your foundation. Some of these goals may include: Mortgage, Education, Retirement, Estate Planning, Emergency Funds, Business etc. A solid financial plan will also address time horizons and personal risk tolerances. The plan combines many factors and considers many variables (interest rates, inflation, taxation, etc).

BestPlan Investment and Risk Management, as Warren Buffet said "If you find yourself in the hole, the best thing you can do is stop digging!"
A proper financial plan will make conservative assumptions to help determine the minimum acceptable rate of return necessary to effectively reach your goals.

Investors tend to make the mistake of simply picking an investment that looks good. Successful investors pick investments that look good and fit their financial plan. Tax-advantaged/deferred investing, balanced portfolios, value and growth investing, dollar cost averaging, laddering of bonds, capital gains strategies etc. are all individually designed to minimize downside risk. We look at management fees, loads, fund managers and investment styles.

For us, high risk in not defined as investing all in one hot stock tip. Rather high risk is defined as investing everything in blue chip equities, while low risk investments are Bonds, GIC’s and instruments that produce a fixed income stream.

Money locked into a GIC is at risk of earning a much lower interest rate, when re-invested (Ask anyone who is on a fixed income these days!). The risk of interest rate hikes, losses in the stock market or other ventures, not having liquidity when you need it most(i.e. Property), establishes the importance of the individual financial planning process.

We work hard to define long term plans that suit your investment style and philosophy. By minimizing downside risk, you reduce the possibility of your plan going severely off track. This strategy should make you less susceptible to market fluctuations.

After all, It’s not how much money you make…rather, how much you get to keep at the end of the day.

» Click here to view and print out your financial planning checklist.

Safe risk, too much risk? BestPlan will make conservative assumptions to help reach your financial goals

Retirement, Wealth and Estate

Spousal RRSP’s/Income Splitting

If there is a major difference in RRSP contribution room between a partner/spouse, where one partner is expected to have a much larger pension income, he/she will likely pay more taxes. With a spousal RRSP, one spouse can contribute to increase the pension of the lower income spouse, and still get the deduction.

BestPlan Retirement, Wealth and Estate services help you plan for Children, Grandchildren, Spouse, Pension Plan, Incorporation and Lump Sum Settlement Options
For young couples planning children, where one spouse plans to stay home:

The higher income spouse contributes to a Spousal RRSP plan, during the early years, and takes advantage of a higher tax bracket RRSP deduction. In the third calendar year from last contribution, the stay-at-home spouse could then remove the funds and pay less tax at their lower tax bracket. No further Spousal RRSP contributions are allowed in the current withdrawal year, or previous two taxation years (3 years total). Otherwise this income is taxed in the hands of the original contributor.

Start contributing early to your RRSP, but be aware of your tax bracket. If at the time of contribution you are in a low tax bracket, you may want to examine other alternatives. If you need to access the funds later, keep in mind that RRSP withdrawals will be added to your income, usually resulting in higher taxes.

  • Do you know what effect probate, taxation, legal and accounting fees will have on your estate? What about the projected costs for health care, assisted living, nursing and home care? How will the cost of each of these impact on your financial plan and drain your resources?
  • In the case of retirement, how long can we expect to live based on family history and how long after that will your spouse live? Do you want to retain assets for your heirs or deplete all of your assets during your lifetime?
Vested Company Pension Plans with Lump Sum Settlement Options

Fully vested company pension plans, after a certain number of years of service, are defined by the plan’s qualifying factor (QF). The spouse is usually entitled to 60% of the pension upon death of the vested employee (their spouse). At the death of the surviving spouse the children may get nothing because the balance of the pension reverts back to the company. You can usually commute the value of a lump sum pension to a LIRA (locked in retirement account). By doing this, you are able to control the investments and more importantly designate the beneficiaries and subsequent contingent beneficiaries, who will be entitled to 100 % of the balance (subject to taxation rules). However, we have to compare the anticipated rate of return of the commuted lump sum to the pension alternative to ensure comparable returns are achievable.

  • Consider possible incorporation if you are a high income earner and self-employed. Qualifying corporate income is taxed at a much lower rate than personal income. This may also enable you to limit personal liability.
  • Take advantage of legitimate in-home office expenses and income splitting opportunities, regardless of business form.
  • There is a $500,000 lifetime Capital Gains exemption for Qualified Canadian Small Business Corporations. With an effective strategy, you might be able to multiply this for each eligible family member.