Many people look forward to their retirement days with much anticipation.  They have hopes and dreams of visiting the grandchildren, downsizing the house and holidays in warmer climates.  After many years of hard work, these are all things to look forward to and appreciate.

For those of us who have the retirement badge of honor, the bliss of retirement can get tiresome.  It is my observation that many men, as opposed to women, have more difficulty with the concept of retirement, especially after the first year or two. 

It is perhaps better to look at one’s senior years as a time of transition as opposed to retirement.  I have read the Bible five times in the last 6 years and have never seen any word or phrase that mentions the “R” word.  In conversations with people that are familiar with other religions and worldviews, such as Islam, Buddhism, Hinduism and Judaism, there is also no word for retirement. 

So, what should one do with this dilemma?  It is perhaps best to use the phase, “what can I do to be of service to my family and friends in my community?”  This question gives you permission to get into a “side hustle” where you can be useful in the marketplace. 

People who have a sense of purpose are simply more content and happier than those who spend their time twiddling their thumbs.  If you can earn some money, even better!  When inflation is running at over 12%, why not earn some extra money to make up the difference lost to the increased cost of living?

Attached is a link from Tim Cestnick of the “Globe and Mail”.  I hope you find this of value! 

When I was in business, I used the services of two different business coaches.  My first coach, Peter Neufeldt of Peak Performance Consulting (www.peakperformanceconsulting.ca)  provided me insight about my self-limiting beliefs. His services helped me to think differently about what might be possible in my business life.

Many of the concepts and ideas that I had early in my business were mostly good but lacked refinement and sophistication.  Peter’s guidance helped me to grow my business because my confidence in myself and my services, grew significantly.

My second coach, Russell Schmidt from the business coaching organization, The Strategic Coach (https://now.strategiccoach.com) was also excellent.  This program was different from Peter’s, in that we met as a cohort of around 25 to 30 other entrepreneurs every 90 days.  We got the benefit of Russ’s wisdom along with the business experience of all the other business owners.  Some of us were relatively small businesses whereas others were much larger with several hundred employees. 

The journey that I went through with the two coaching programs was very beneficial for me, my employees, and my customers.  For me, the main benefit was increased confidence in myself and my processes.  My employees benefitted through increased job security because I learned to delegate work to them so that I could keep doing what the good Lord gifted me with.  This resulted in more and better business resulting in more profits!  The customers benefitted because they had a team of competent people that could solve problems with energy and creativity.

The other morning at our weekly Rotary meeting, my friend, Roger Brown shared these words of wisdom called “Credibility Habits”.  These four points were provided by both of my coaches.  Thanks to Peter, Russell and Roger for sharing these words of wisdom from the Unknown Author!

Confidence About Credibility

No one gets taken seriously in this world

Unless he or she has credibility.

Not credibility about brilliant ideas or heroic deeds

But credibility about daily habits and performance.

The 4 Credibility Habits are:

1.  Show up on time.
2. Do what you say you are going to do.
3. Finish what you start. 
4. Say Please and Thank You!

These simple habits may seem self evident but are rarely done consistently.  By implementing these 4 habits, your personal and business lives will improve significantly!

I have been working toward getting another designation to complement my Certified Financial Planner (CFP) credentials.  This next designation will allow me to work with people struggling through separation and divorce.  Once I complete my Certified Financial Divorce Specialist designation, my business services will be broadened.

I came across an interesting article in a recent edition of the Financial Post.  While trying to save money is always good, it can be dangerous to create a “kitchen table deal”, especially when negotiating complex details.  Click on the attachment and hopefully you will gain some benefit.

https://financialpost.com/personal-finance/kitchen-table-separation-agreements-binding-right-circumstances

Best wishes and keep smiling!

A

I recently came across an interesting article in the Financial Post that illuminated some truths that lie behind common wisdom.  The adage, “if it seems to be good to be true in appearance, it probably is to good to be true in reality.”  My advice, in today’s blog, is to be a lifelong learner.  Common marketplace wisdom is often good, but in the words attributed to Ronald Reagan, the 40^th President of the United States, it is good to “Trust but Verify”.  President Reagan was taught the phrase by a Russian historian, Suzzanne Massie.  Ms. Massie, a consultant to the President, explained it this way: “Doveryai, no proveryai” or “trust but verify” is a Russian proverb that means that a responsible person always verifies everything before committing themselves to a common business with anyone, even if the other party seems completely trustworthy.  In the Bible, Acts 17: 10-12, there was a group of Christians from the city of Beroea, that “examined the Scriptures daily to see if the things that Paul and Silas preached were true”.  The Berean Christians understood that their futures depended upon believing and acting on the information being provided by the early church leaders because they knew there were many “wolves in sheep’s clothing”.

There are many people that offer advice and guidance in the market place every day.  I have attached this article, by Jason Heath, from the May 26 edition of the Financial Post to give you pause to 4 common myths that thrive in the Canadian marketplace.  If you don’t believe me, just read them!

https://financialpost.com/personal-finance/big-money-myths-cost-you

Best wishes for a terrific week!

Al

Over my 30 years as a Certified Financial Planner, many people asked me what type of behavioral things people can make that will make a big difference to one’s financial future.  Today’s blog features a real story about how a nasty divorce has a very bad outcome for everyone concerned, except for the legal types and the inevitable personal counselors!

What to avoid in a divorce to prevent financial harm

MARIYA POSTELNYAK

PUBLISHED APRIL 30, 2023UPDATED MAY 1, 2023

The tone of divorce proceedings runs the gamut from cordial to downright cruel. But while feelings of anger are common, attempts to inflict financial harm on a spouse will backfire – and can prove very costly for those who try, lawyers say.

“People will sometimes fail to disclose assets, they’ll try to hide them and play games with the value, or they’ll hide money offshore,” says Andrew Feldstein, a lawyer at Feldstein Family Law Group. “T

here’s always an element of power and control that takes place between former spouses and finances is the element that bleeds into power.”

In April, a couple in Australia made the news for finalizing their 11-year-long divorce after both spouses consistently refused to provide a complete picture of their finances. And there’s no shortage of infamously difficult divorces in Canada. Take the case of Bruce McConville, an Ottawa man who claimed he burned about $1-million in savings to avoid giving it to his spouse amid divorce proceedings.

Lawyers say cases where a spouse hides or diverts funds are far from uncommon. “I have a case right now where the opposing side earns an income of close to $300k, and on review of financials it was uncovered that he hasn’t been depositing the entirety of his pay into joint funds,” says Laura Paris, associate lawyer at Shulman & Partners LLP. “We’ve been unable to trace where the funds could be.”

Ms. Paris cautions against using such questionable methods. “When there’s no viable reason that the money is being transferred, the court will err on the side of assuming that it was being done for precarious purposes,” Ms. Paris says. Under such circumstances, it would be justified to make a claim for an unequal division of family property, she says.

Why some couples stay married for the benefits

And when a spouse is found to be hiding or deceiving the court about their finances, they’ll end up on the hook for the person’s costs and for the cost of the proceedings, Ms. Paris says. In one case she had, there was a 17-day trial and it was not until representatives from the bank provided statements that she found over $1.5-million that was never disclosed over five years of litigation. Ms. Paris won the case and her client’s spouse was ordered to pay over $400,000 in costs, including her client’s legal fees.

Despite the risks, some spouses will ask lawyers for help in inflicting financial damage on their partners. That’s come up for Ms. Paris, who says she avoids such cases. “If clients are asking us to deliberately try and hide money or advise us that their intention is to hide money or avoid their obligations, pursuant to our code, those are not clients we should take on.”

In Canada, couples seeking a divorce are legally required to disclose their financial assets. “Under the Family Law Act, you have to provide a financial statement whenever you start a court application that deals with property,” Mr. Feldstein says.

In Mantella v. Mantella, the court ordered a husband to pay more than $2,000 every day after he failed to disclose finances in a bitter divorce battle. “Ultimately, that fine got to six figures,” Mr. Feldstein says. “When you play these games of what I call, ‘Catch me if you can,’ things become long and expensive.”

Judges can also penalize parties for what they see as egregious behaviour. “If one or both parties are trying to attack one another, adverse inferences can be drawn against people in litigation,” says Zack Liquornik of Liquornik Family Law.

The verdict: acting out of spite will not be in anyone’s best interest. “As far as money issues go, both parties need to be honest,” Mr. Liquornik says. Being transparent about finances will not only help litigants avoid being penalized in court, it will also ensure that cases don’t drag out longer than they need to.

My last blog spoke to the actuarial probability of living a long life.  It is often assumed that with long life is excellent health.   Recently, I attended a funeral for a dear friend who passed away at age 92.  She had a long life, but she suffered with a variety of ailments including osteoarthritis, high blood pressure and for the last 10 years, the creeping in of dementia.  This morning, at another community event, I visited with another elderly friend, who at age 81, was on the wait list for a knee replacement.  His wife was in care with Alzheimer’s disease.  A relative of mine commented recently that having one’s cataracts removed is now considered a “badge of honor” because it speaks to one’s longevity!

Frank Vettese, former chief actuary of Morneau Shepell, wrote 2 articles in the Globe and Mail (April 4 and April 11, 2023), that focused on the probably of contracting a serious or critical illness.  For the purposes of definition, there are 14 classifications of these illness’s listed in the Canadian Pensioner’s Mortality (CPM) Table.  The major critical illnesses are heart attacks, life-threatening cancers, stroke, and Alzheimer’s disease.   

Of 1,000 women aged 65:

173 or 17% will still be alive and in good health at 90.

357 or 36% will have a critical illness at age 90.

9 or 0.90% will make it to 100 without contracting a critical illness.

Of 1,000 men aged 65:

500 +/- will survive until age 90.

961 or 96% will have contracted a critical illness or serious illness by age 90.

100% of all men alive at age 100 will have suffered a critical illness.

 In a conversation with Rhiannon Tutty, Sun Life advisor in Invermere, B.C., she commented that 80% of the claims that she has dealt with were due to heart attack, stroke, life threatening cancer and bypass surgery.  For a complete list of illnesses covered, please reach out to your life insurance agent, or contact Rhiannon Tutty at [email protected].

Here is list of most illnesses covered by most insurers.  They include life threatening cancers, stroke, coronary bypass surgery, dementia/Alzheimer disease, multiple sclerosis, kidney failure, Parkinson’s disease, paralysis, major organ transplant, bacterial meningitis, coma, heart valve replacement/repair, deafness, and motor neuron disease.

So, what should we do with information?  It has been my observation that it is very expensive to get and stay sick.  Be prudent in your retirement planning to have a “health account” as part of your planning.  Also, many financial planners offer Long Term Care Insurance and Critical Illness Insurance as part of their offering.  The premiums for these plans are quite reasonable if you are under age 60 and healthy.  Pre-existing conditions like diabetes, high blood pressure and smoking will be taken into consideration when applying for these types of coverages, but when one considers the probability of a claim, before age 90, wise people should at least investigate this type of coverage. 

Recently, I have been studying a course that featured a discussion on the probability of how long people, within a group, can expect to live.  Often these conversations are misconstrued as to when a person will pass away which, if taken seriously, may result in bad decisions being made.

Life expectancy depends on many factors, including gender, income, diet, geography, and general health to name but four issues that can impact longevity.*  No one knows how long any specific person will live, but if you have a large enough group, patterns will emerge.

According to the Canadian Mortality rates, published in the “Canadian Pensioners” Mortality 2014 table with improvement to 2023” show the following:

Of 1,000 women living at age 65, we can expect 929 still living 10 years later. 

By age 90, more than half are still alive.

The last survivor is expected to die between 109 and 115.

Of 1,000 men living at age 65, we can expect 918 can expect to still be around at age 75.

By age 89, just over 500 men will still be alive.

The last survivor is expected to pass away between 108 and 110.

So, what does this mean?  When we compare these current mortality rates with those when the present Canadian system was first created, Canadian men and women are now living much longer.  Consider this:  most people enter the work force between 20 and 30.  If they retire at the present standard age of 65, it is highly probable that Canadians will spend more time consuming their investments and savings rather than accumulating wealth.   That is a recipe for becoming poor when one’s health becomes most fragile.

In conclusion, my recommendation is for people to challenge the concept that retirement will be the “golden years”.  As a self-employed person, I am presently retraining myself to continue being valuable in the marketplace.  I will be announcing my new specialty in the weeks to come.  Stay tuned!

*Frank Vettese, Special to The Globe and Mail 13-03-2023 and 15-03-2023.

*Ed Burrows, FCA, President of Pension Valuators of Canada, Video Lecture on Basics of Pension Division for the Chartered Financial Divorce Specialist Designation course, January 2023.

From time to time, Rob Carrick of the Globe and Mail, posts something interesting and worth while.  We have all witnessed the steady rise of interest rates over the past year.  For those with debt, there are now extra challenges because of increased costs.  For those with savings, there is higher no-risk returns.

I am posting Mr. Carrick’s article below.  It is a pretty good read and I have made some comments at the bottom of the blog.

The emphasis when reporting on high interest rates is usually put on borrowers rather than savers, and that’s a correct approach.

The financial burden of higher mortgage, line of credit and loan payments is felt more deeply than the lift people get when their savings accounts and guaranteed investment certificates pay more. Who among us can absorb hundreds of dollars in extra borrowing costs per month and not have to make painful adjustments?

In a recent Carrick on Money survey, just over 50 per cent of the 2,148 participants described the impact of higher rates as catastrophic, harsh but manageable or mildly negative. Seventeen per cent said high rates had a neutral effect on their finances, while 31 per cent said high rates had either a mildly positive or quite good effect.

THE GLOBE AND MAIL

The survey results highlight the two-pronged effect of higher rates. Some people suffer, others see a windfall.

About 22 per cent of survey participants said they were missing out on high rates because they have nothing left to save. Forty-six per cent said they’re able to save at least a little, and 32 per cent said they’re saving lots. Three in 10 said further rate hikes would be a win for them because it would mean higher returns on savings, while 40 per cent said higher rates would be a setback or disaster. The rest said higher rates would have little to no impact.

Comments from survey participants with debts attest to the pain of rising rates for borrowers. Here’s a sample:

• We have literally nothing left to put food on our plate forget savings or buying even new clothes for our family.
• My small business loan has gone from 6 per cent to 9.25 pert cent. I am currently seeking out angel lenders who can lend me at 5 per cent so I can save on interest costs.
• HELOC [home equity line of credit] interest costs are squeezing monthly budget.
• Feeling the full brunt of increased rates. Any more increases will result in some very difficult decisions. May also need a significant increase in pay to maintain existing lifestyle and debt load.
• [Use of a] HELOC for a renovation could mean an additional year of work before retiring.

In previous blogs and Facebook posts, we have discussed the merits of being free of consumer debt.  If you are still in debt, consider a “side hustle”  to eliminate the burden.  We cannot predict the future, however, it seems clear that interest rates are going to continue to go up.  For those of you without debt, you are going to be getting a raise that you did not have to work for.

Have a great week!

It is the middle of February and my wife and I are in Cancun, Mexico.  Today is February 15, 2023, and the temperature is 28 degrees Celsius.  We arrived at the resort at 5 pm on February 4^th.  Once checked in, we started the process of winding down at this all-inclusive resort.

The room that we have overlooks the Caribbean and when we open the doors to the deck, we can hear the waves splashing onto the sandy beach.  The warm salty ocean air feels very healthy on our skin and the humidity works wonders on our skin and hair.  Once we changed from our “airplane” clothes, we found food at the buffet.

We have been to Mexico eleven times over the years.  The first time we went to Mexico was as a family, with Nancy’s parents, sisters, brothers-in-law, and young toddlers.  The resort that we tested was in Manzanillo, on the Pacific side.  We were there for 10 days and by day 7, we had gotten our fill of that resort.  The time there was terrific, but the food offering was rather limited and became predictable by the 4^th day.  We have not been back there since, but the best thing about that trip was that the beach was sandy, and the waves of the ocean were quite good to play in. 

The next trips to Mexico included resorts in Puerto Vallarta.  PV is a great place to have a warm vacation that has the added bonus of a large city that was easily accessible for those of us who liked to walk.  The all-inclusive that we stayed at is downtown and makes the old town easily accessible.  When we go back to Puerto Vallarta, we will stay downtown so that we can walk the Malecon.  The Malecon is a boardwalk that shows off the old market, including local arts and crafts.  Another terrific tour was of the distillery at the Agave plantation.  Blue Agave is the plant from which tequila is distilled.  These are but two local enterprises that everyone should experience if you are in Puerto Vallarta.  The last time we were in PV we took a bus tour into the mountains where we toured an old silver mining town.  The tour took us to Jalisco, where in the late 1600’s mines were dug into the Sierra Madre’s by Spanish explorers to extract silver, gold, and lead.

Another terrific city we holidayed at was the city of Mazatlán.  We went as a family again to this tourist city and this time we stayed at a rented condominium for a week.  The condominium was on the ocean and each day after breakfast, we played on the beach and in the water.  The sand was outstanding and the swells of the Pacific Ocean were fun to play in.  Each day, we bought our food at the Mazatlán Malecon market and cooked our dinners and breakfasts at our condominium.    One memory that I will always remember was early one morning when walking on the beach, several military helicopters flew over us.  They were so low, that I could see soldiers tethered at the open door with their automatic weapons at the ready.  We learned later that day that Joaquin Guzman, the leader of the Sinaloa Cartel, was captured several miles away from our condominium.  It was rather unnerving to know that we were so close to that major event in Mexican history.

We have been to the Caribbean side of Mexico several times as well, including 2 times on convention trips.  In my opinion, we prefer the weather and the gentleness of the ocean in and around Cancun and Playa del Carmen.  The flight from Western Canada is longer than going to Mazatlán or Puerto Vallarta by several hours, but that is one of costs we have chosen to pay for if coming here.  The resort that we are at this time is called Sensira.  Sensira is about halfway between Cancun and Playa del Carmen.  This resort is rather isolated from the city and therefore, if we want to go to the city, we have to arrange an expensive taxi service for transportation.

This resort is not large compared to some places, yet the food and service has not disappointed us for the two times we have been here.  There are many diversions to take advantage of if you want to go off site and the concierge staff are excellent to work with if you wish to take advantage of what the Mexican Riviera has to offer.  On this holiday, we have chosen to stay mostly on site to exercise, suntan and read.

We fly home on February 18 after which we will engage with the end of the Canadian winter back home in Cranbrook.

In my experience as a Certified Financial Planner, most of my conversations have been with clients who were wealthier than most.  These clients usually worked with an accountant as well as me so that they could find every legal advantage within the Canadian Federal and Provincial tax regimes.  From time to time, I would run across a question that would stump me because a challenge would come into a client’s life for a variety of reasons.  This past week, I got a question from a client that resulted in the need to clarify the difference between a tax credit and a tax deduction.  Simply put, a tax credit reduces the amount of taxes a person must pay whereas, a tax deduction reduces the amount of taxable income on which you must pay tax.

We are presently within the annual Canadian ritual called the “RRSP Season”.  Technically, RRSP season is always on, but due to our Canadian way of life, we usually use the first 60 days of each new year to either top up our Registered Retirement Savings Plans (RRSP) or make the total contribution in one lump sum.  These calculations are not always cut and dried because each person’s situation is unique.  The best place to start when trying to determine one’s RRSP maximum contribution is to understand the basic formula:

Income from the previous tax year X 18%

From this formula, things can get more complicated in a hurry.  I won’t get into all the different scenarios because I have not experienced the many different issues people have.  The best advice I can give you is to find 5 different pieces of information.  The first is to understand your last year’s income tax return, secondly, find and read the Notice of Assessment that you got from the Canada Revenue Agency (CRA).  The third piece of advice is to register on-line with CRA, fourth, know CRA’s toll free phone number – !-800-959-8281 and last, but not least, get to know an accountant or a favorite tax preparer well.  The more you invest into knowing these processes and experts, the better off you will become.

For most employees, Retirement Savings Plans are your only tax deductions.  Those of you who are sole proprietors will have business deductions that can lower your taxable income.  If you do earn your living as an unincorporated business operator, make sure that you maintain meticulous record keeping.  This is because the “revenuers” always reserve the right to confirm your expenses and you don’t want to be on the wrong side of their audit.

Once you get your income and deductions determined, you will want to maximize your tax credits.  There are many tax credits available for Canadians.  I will focus on the main one which is the charitable tax credit.  Most of my clients are very charitable and give generously to great organizations such as the church they worship at, social groups that provides health and welfare to the needy, health research to name but three.  In the case that I was consulted on this past week, we confirmed that there is a tax-credit for their eligible dependant who is over age 18 years of age.

My blog cannot be all-inclusive in advice.  The best that I can do, is to encourage each of you to network with many experts and to pay for the advice you receive.  I know too many people get                             their advice from fellow workers, radio talk-show hosts or smarmy people looking to make a quick buck from an easy mark.  It is good to have “free” things, however, your financial future is too important to put into the hands of amateurs or  fly-by-night hucksters.

Al’s Nuggets

1.  Learn the Art of Leverage:  Use and pay for the skills of experts in areas in which you are not proficient.
2. Understand your unique gifts and invest in yourself to become the best at your craft, trade, or profession.
3. The Canadian Tax Code is complex.  Don’t try to be an expert in this area against the timeline of April 30^th each year!

References:  FastnEasy Tax   www.fastneasytax.com/ca/canada-income-tax-credit-and-deduction/