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Blog
When Should You Consider An Early RRSP Withdrawal?
Read this great piece in the Globe and Mail last week, that discusses the consideration of withdrawing early from your RRSP.
According to Profssor Moshe Milevsky, the No. 1 reason for determining whether people should take money out of their RRSP before retirement is their marginal tax rate. In years when one’s income is low, drawing from an RRSP can be done at a lower tax rate. He recommends putting that Registered Retirement Savings Plan money in a Tax Free Savings Account, or a “tax efficient” investment. When one is within a high income tax bracket, he suggests to make the RRSP contribution and take the deduction.
There are other situations when one might consider an early withdrawal. BMO’s Marlena Pospiech shares another scenario in the piece, when it can be appropriate. When one is leaving the workforce for a period of time, such as women staying home with children.
Read the full piece here: http://www.theglobeandmail.com/globe-investor/personal-finance/retirement-rrsps/when-should-you-consider-an-early-rrsp-withdrawal/article8710985/
Questions? Contact us or request a consultation.
What We Can Take From Google’s Employee Benefits
We’ve all heard of the fabled perks and amenities of employees at Google. The search giant is widely considered one of the best places on earth to work. The American tech sector is renowned for this kind of thing, but Google is different. They’re unique in their approach to attracting and retaining key talent, and their commitment to the well being of their employees is impressive to say the least.
Here’s an example. When a Google employee dies, the surviving spouse will continue to receive half of the deceased’s salary for 10 years, a benefit that has may in the tech sector wondering why Google would offer a perk that does nothing to support happiness or productivity for living, and working, employees. But it’s just one of the many incredible benefits that Googlers enjoy, including five months of maternity leave for new mothers, with full pay and full benefits, a benefit that is unmet by any other company in the United States. Google cares about virtually everything that makes their employees happy.
What can we draw from the example Google sets? How can small business benefit from taking a page from this book? There’s a pretty common strategy behind all of these great benefits: perks can be one of the best recruiting tools out there. Also – perks and benefits keep people in companies. The U.S. tech sector is a highly competitive talent pool of personnel that go onto to create world class products and services, all amidst a supremely competitive and innovative community that measures in the billions of dollars and has singlehandedly changed how we all communicate in the last 10 years. Companies like Google, Microsoft, and Facebook are keen to keep people and teams happy and thriving. It leads to technological innovation and supercharged company cultures – where individuals take a tremendous amount of pride and emotional equity in all that they do.
Does this mean that a small 10 employee bakery or accounting practice should be emulating these kinds of methods? Of course not, but the greater point is that uniquely crafted benefits and convenient perks can be employed to reduce turnover, inspire employees, and facilitate the development of companies that grow and innovate in their fields. Employers and business owners should consider creating environments where people not only want to come to work, but where they take a personal stake in what they’re doing and remain as keen as the business owner on seeing the company succeed.
Check out this great infographic on how some of the world’s top companies are creatively keep their talent.
http://bostinno.com/2011/07/29/workplace-perks-how-are-companies-keeping-their-talent-infographic/
Questions? Contact us or request a consultation.
How Life Insurance Helps
Came across this great article at The Huffington Post that shares the personal story of Deborah Nixon. Deborah’s husband passed away at a young age, and her experience with having life insurance coverage is shared here in a very personal and poignant way. Deborah’s husband was diagnosed with cancer at 26 years old, and the piece delves into the challenges they had with getting coverage with a policy after the diagnosis. Very much worth a read.
Check out the article here: http://www.huffingtonpost.ca/deborah-nixon/life-insurance-cancer_b_2689533.html
TFSA vs. RRSP
Read this great piece by Gordon Pape in the Star about considerations in using a Tax Free Savings Account as opposed to a conventional RRSP for the purpose of “saving”. It goes on to point out that it’s not an easy answer to which vehicle to use and that there’s variables to consider. He advocates using a simple 5 test method in determining what your best bet is. They include tests that cover age consideration, pension, goals, support, and income.
Individuals ultimately have different things they want to accomplish, and while both a TFSA and a RRSP are useful financial products to accomplish financial goals, one is more ideal than the other in certain instances.
Check out the piece here: http://www.thestar.com/business/personal_finance/2013/02/17/tfsa_or_rrsp_try_these_five_tests.html
Political Deadlock in U.S. Brings Deep Budget Cuts Into Reality
Barack Obama signed an order on Friday that puts into effect deep across-the-board budget cuts, after the White House and congressional leaders failed to find an alternative budget plan. The cuts, known in the U.S. as the “sequester,” will take $85 billion from the US federal budget between Saturday and October 1 – a sizeable amount of money that will affect hundreds of thousands of jobs. The Pentagon will be forced to slice 13 percent of its budget between now and September 30.
The sequester was agreed upon in 2011 as part of a deal to lift the federal debt ceiling. It was designed as a device so punishing that battling legislators would be forced to find a better compromise to cut the deficit. In essence, it was devised a pit that both Republicans and Democrats would have wanted to avoid.
Republicans strongly dislike the president’s insistence on increasing tax revenue as part of any plan for attacking the country’s $11.7 trillion debt. Obama’s pledge that the rich “pay their fair share” is the main bone of contention between both parties, and something that congressional Republicans bitterly oppose.
Finance Minister Jim Flaherty went on record with his concern about the situation Friday. This political issue in the U.S. will undoubtedly have an impact on the trade relationship between Canada and the United States. U.S. homeland security chief Janet Napolitano anticipates the cuts could affect about 5,000 border patrol agent positions, many on the Canada-U.S. border. As well, the equivalent of 2,750 inspectors is on the chopping block. The U.S. Customs and Border Protection agency estimates the cuts could result in waits for as long as five hours at larger ports of entry, most of them in Ontario, Quebec and British Columbia.
What do you think of this development? Share your thoughts.
Promote A Healthy Lifestyle In The Office
In Canada and the United States, there have been alarming increases of hypertension, diabetes and obesity. Between 1994 and 2005, the rates of arterial hypertension among Canadians increased by 77%, diabetes by 45% and obesity by 18%, affecting people of every ageAddressing employee absenteeism and rising insurance premiums for group plans is no small task, but business owners are getting creative in their effort to promote healthy lifestyles in the office – officially referred to as ” Employee Wellness Programs”. There is a great article by Fabian Loszach about this at Benefits Canada. You can find it here:
According to the piece – over the last 20 years, employee health and wellness have been rapidly declining. Even more concerning is that hypertension rates among Canadians aged 35 to 49 rose 127% during the same period, and almost doubled among young people over the last 15 years (CBC News).
The piece goes on to emphasize the long term savings associated with the use of a wellness program and how to successfully implement a program into your business.
Questions? Contact us or request a consultation.
Stephen A. Jarislowsky Retires
Big news in the business world last month. Stephen Jarislowsky retired as chief executive of Jarislowsky Fraser Ltd, the company he founded 57 years ago, and which is one of Canada’s top asset management firms.
Jarislowsky is one of Canada’s richest people with net worth of about $1.5 billion. He is well known for both his conservative investing and for his outspoken criticism of corporate governance practices. In 2002, he co-founded the Canadian Coalition for Good Governance, a group of prominent pension and mutual funds that lobbied for governance changes, such as its push for the TSX to begin using special stock symbols to identify companies with multiple-class voting shares. He was a Director of the influential C.D. Howe Institute and is a companion of the Order of Canada.
Jarislowsky correctly predicted 2008′s recession in the United States and it’s eventual global reverberation in a series of publications prior to the activity. In a 2008 CBC interview, he predicted the recession would last at least two to five years and would last much longer if corrective measures were not taken by governments and the public. He argued that immediate government spending was required to stimulate the economy and was a proponent of TARP.
The Fiscal Cliff In The United States….
Came across this interesting piece in the Washington Post about the so called “Fiscal Cliff” in the United States. It’s interesting to hear this term thrown around, especially in light of President Obama being re-elected. It’s not actually a fiscal cliff at all. It’s hard automatic austerity measures that are designed to kick in in the event that Democrats and Republicans can’t agree on what to do to tackle the historically high U.S. debt and deficit.
President Obama’s in an interesting position, especially with having handily won the election, as well as all of the battleground states. According to the piece, The “fiscal cliff” measures are going to save the American government about 720 billion dollars in 2013 alone. The die hard conservatives who’ve been clamoring for major spending reductions, this is a dream come true. The down side – the measures are so extreme – it will undoubtedly bring about a recession in the United States. December 31st is not that far away….
You can read the piece at the Post here:
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The Federal Budget 2012 and the OAS
Finance Minister Jim Flaherty released the federal budget last week amidst some applause and some disappointment. One of the most important items on the budget’s agenda was the change to the Old Age Security pension eligibility from 65 to 67 – a move that affects low income seniors in a significant way.
Delaying OAS eligibility by two years is more than a modest change for seniors who are in the lower portion of the income bracket. It will cost them the $540 a month OAS payment, and they will not receive the Guaranteed Income Supplement, a program that exists only to help those with meagre incomes. It provides a further $732 a month. Without those two sources of income, seniors of limited means will be hard pressed to retire comfortably. They will have a full Canada Pension of $986 a month – a sum that for most is difficult to retire on.
Many criticized this change as heartless and unnecessary, but in order to have a full appreciation of the issue, it’s good to know the facts when it comes to the system and it’s inner machinations. Here’s some interesting statistics from a piece by Phil McColeman at Brant News. The number of Canadians over age 65 will double in the next 20 years (from 4.7 million to 9.3 million). During that time, the cost of Canada’s OAS program is set to triple, from $36 billion to $108 billion annually. On the current path, OAS payments will account for more than 25 per cent of all government expenditures by 2030.
You can read the full article here: http://www.brantnews.com/opinion/mp-perspective/
The importance of a diverse strategy in planning your retirement becomes clear here. What do you think of the changes to the OAS in the 2012 budget? Comment or share your thoughts.
Insurance Realities For Seniors
Lee Mosley was featured in a recent article at Advisor.ca concerning the realities of insurance and retirement for senior citizens. In it, Lee talks about how more seniors are retiring with debt and how term and permanent insurance have become useful elements in retirement portfolios.
“In today’s environment—not like our parents environment—there are a lot of people retiring with a mortgage or perhaps a long line of credit or they’ve signed for their kids to get their house,” says Lee Mosley, president of Ottawa-based Lee Mosley & Associates and 29-year veteran of insurance brokerage. “There are a lot of reasons today for seniors to be worried. They don’t have a debt free environment anymore.”
Read the full article here: http://www.advisor.ca/insurance/life/insuring-seniors-costly-but-worth-it-74492
Questions? Contact us or request a consultation.