ZLC Private Investment Management Inc., is pleased to welcome Jon McKinney, B.Comm., C.A., CIM as President and Portfolio Manager.

Jon will be the Chief Portfolio Manager and hold overall responsibility for client relations, business development and administration.  He brings with him nearly 30 years of financial sector experience in both portfolio management and accounting.

Previously Jon held the dual role of Portfolio Manager with Scotia Asset Management working with the Vancouver Scotia Private Client Group, and Vice President of Investor Services with Scotia subsidiary, Dundee Wealth Investment Counsel.  Jon’s focus was designing optimal portfolios tailored to individual client circumstances and market conditions.

Jon is well versed in independent investment management having previously represented Duncan Ross Associates as President, overseeing all aspects of the operations from compliance and administration to client service and portfolio management.

Jon completed his Bachelor of Commerce Degree at the University of British Columbia, and holds the Canadian Investment Manager (CIM) and Chartered Accountant Designations.

Most companies offer a 10 year and 20 year renewable term policy. So how do you decide which one is right for you? If you have a young family you probably would wish to cover the acute dependency period until the children are out of school (including post secondary) as a minimum. If you have a mortgage, you would want to insure it for an appropriate amount while it is outstanding. Remember the average Canadian purchases more than one home during his or her lifetime, so there usually is some outstanding mortgage over future years. Specific needs such as other debts, education funds, etc. will have a time frame that they should be insured until your assets increase to a point where insurance might be no longer required.

In other words, the longer the need will persist, the longer the term of the coverage should be to insure it. Some needs will persist for your entire life (estate liquidity, taxes at death) and those can be provided for by Term to age 100, Whole Life, or any other permanent life insurance plan. The rest can be covered by a combination of 10 year or 20 year term, below are some key points for consideration:

• If it can be avoided, never let term insurance policies renew. If you can pass a medical, do so and rewrite the policy for considerable savings over the renewal premium. The optimum time to do this is a year before the current policy renews;

• Try to match your need with the length of term coverage. If you are going to need a significant amount of coverage beyond 10 years use 20 year term or permanent;

• If you and your spouse require term insurance to cover a mortgage, consider using joint first to die coverage to save money. This type of policy will insure you both for the amount of the mortgage and will pay out when either one of you dies;

• Make sure the company you are using for your term insurance has good, competitive permanent life products that you can convert to without a medical for situations where your temporary need for coverage becomes permanent.

Programming the proper amount of coverage and the proper term period can be a confusing exercise. Done properly it could save you considerable premium dollars over your life time while providing your beneficiaries with financial security. Call me if you think you might benefit from a review of your current coverage.

Generally, there are two ways to reduce the taxes that we pay in Canada. First of all, practise good financial planning to ensure that all legitimate means of reducing income are used for the income tax year in question.  Secondly, make sure you properly complete and file your income tax return and that all your eligible deductions are used on your T1 form.

REDUCING YOUR TAXABLE INCOME

The following is a list of some of the more common methods and vehicles used in reducing your taxable income:

• Registered Retirement Savings Plans. Assuming you are not a member of a company sponsored pension plan, you can contribute up to 18% of your previous year’s net income to a maximum of $22,970 for the 2012 tax year.  This amount can be increased by any unused RRSP contribution room from previous years.  Your 2011 Notice of Assessment will tell you what your carry-forward room is for 2012.  If you spouse is not employed, or earns less income, consider making a Spousal RRSP contribution.  Your tax deduction limit will remain the same, but future withdrawals, which are taxable as earned income, will be taxed at a lower rate.   http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/rrsps-eng.html

• Tax Free Savings Accounts.  TFSA’s were introduced by the Federal Government in 2009 and allow Canadian residents who are 18 years of age or older and who possess a valid Social Insurance Number to set aside money tax-free during their lifetime.  Although contributions are not tax deductible, $5,000 per year may be invested with the earnings accumulating free of income tax.  Funds can be withdrawn at any time without tax.  If you have not contributed in past years the unused contribution room can be used. For example, if you have never contributed to a TFSA you maximum contribution for 2012 tax year is $20,000.  http://www.cra-arc.gc.ca/tx/rgstrd/tfsa-celi/menu-eng.html

• Registered Educational Savings Plans.  If you are saving for your children’s post-secondary education, you should investigate an RESP.  Contributions are not tax-deductible but the funds grow tax free while they remain in the plan.  In addition, contributions are eligible for the Canada Savings Education Grant which is credited at a rate of 20% of the contribution to a maximum of $500 per year and a lifetime maximum of $7,200.  While there is no longer an annual contribution limit, the lifetime maximum contribution is $50,000.  Certain eligible children are also entitled to additional grants through provincial incentive programs and the Canada Learning Bond program.  http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/resp-reee/menu-eng.html

• Splitting Pension Income.  Since 2007, Canadian residents have the opportunity to split 50% of their eligible pension income with their spouse or common-law partner who is also a Canadian resident. Eligible pension income includes regular payments received from a Registered Pension Plan and, if you are 65 years or older, income received from a Registered Income Fund or an RSP annuity.  Payments not eligible include OAS, CPP/QPP and non-annuitized withdrawals from an RRSP.  http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/pnsn-splt/menu-eng.html

• Income Splitting.  If you are in a position to do so, investigate hiring your spouse or children to perform legitimate employment tasks.

• Tax Efficient Investment Strategies.  If you have contributed the maximum to your RRSP and TFSA, investigate using more tax efficient methods of investing.  For example, dividends are taxed, depending on your province of residence at a rate of approximately 32%. Capital Gains are taxed at an effective rate of approximately 22%.  In fact, consider investing for these types of gains outside of your RRSP (as all withdrawals from RRSP’s are taxed as income) and using highly taxed vehicles such as bonds and GIC;s for your RRSP investments.  Also investigate certain life insurance products whose cash values accumulate free of tax (until withdrawal during your lifetime, but are tax free at death) under Section 148 of the Income Tax Act.

• Practise Philanthropy.  Contributions made to registered charities are eligible for a non-refundable income tax credit for up to 75% of your net income (in year of death that is increased to 100%).  http://www.cra-arc.gc.ca/charities/

While the above is not an exhaustive list of all the income reducing strategies, these are the most common.

MAKE SURE YOU GET ALL YOUR ELIGIBLE DEDUCTIONS

After practicing good financial planning and utilizing the information above, it would be a real shame if you missed some of the deductions for which you are eligible when you file your return.  Again, this is not an exhaustive list but itemize those that you should be aware of:

• Business Related Expenses.  To quote the Canada Revenue Agency, “As a rule, you can deduct any reasonable current expense you paid or will have to pay to earn business income.”  This includes automobile, entertainment and home office expenses.  It is important, however, to acquaint yourself with the rules so as not to risk a reassessment or, heaven forbid, an audit.  For example, only 50% of the cost of business meals and entertainment is deductible.   http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/bsnssxpnss/menu-eng.html

• Child Care Expenses.  Generally, the maximum that may be claimed is $7,000 per child depending on the child’s age and is claimed by the lower income parent and subject to taxpayer’s income etc.  http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/214/menu-eng.html?=slnk

• Interest Expense.  If you have borrowed money that is used for business or investment purposes, the interest that is paid on that loan may be tax deductible.   http://www.cra-arc.gc.ca/E/pub/tp/it533/it533-e.html

• Trades-peoples Tool Expense.  If you are an employed tradesperson you can deduct up to $500 for the cost of eligible new tools which cost more than $1,095.

• Political Contributions.  A graduated tax credit is available for eligible political contributions made in the year.  The maximum credit allowed is $650 pear year.  It should be noted that as your contributions increase your tax credit decreases. http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns409-485/409-410-eng.html

• Medical Expenses.  While you cannot claim for any medical or dental expenses for which you were or may be reimbursed, a Federal Tax Credit is available for medical expenses which exceed the lesser of $2,109 and 3% of your net income for 2012.  Medical expenses include premiums paid to Private Health Plans and for supplementary coverage while outside of Canada.  http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/330/menu-eng.html

• Pension Income Amount.  You may be eligible to claim a credit for up to $2,000 of qualifying pension or annuity income.  This does not apply to CPP or OAS. Generally it applies to pension income for those aged 65 or over from lifetime annuity payments under a Registered Pension Plan, matured RRSP’s and payments from a RRIF.  If you are an employee aged 55 and older and are receiving pension income you are also eligible for the credit.  http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/314/menu-eng.html

• Education and Tuition.  Amounts paid for tuition and text books relating to an  invididual’s enrollment at a post secondary educational institution are eligible to receive tax credits.  These tax credits can be transferred to a parent, grandparent, or spouse to a total maximum of $5,000.  Proper tax documentation provided by the educational institution is required (T2202A).   http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/324-eng.html

• Family Caregiver Tax Credit.   New in 2012, if you care for a dependent with a mental or physical infirmity you can claim an amount of $2,000 which is eligible for tax credit treatment. http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/fmlcrgvr-eng.html

• Public Transit Pass.  You can claim the cost of public transit passes for monthly or longer durations for public transit in Canada.  It can be claimed by you for yourself, your spouse or dependent children under the age of 19.  http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns360-390/364/menu-eng.html

• Children’s Fitness and Arts Programs.  An amount of up to $500 both Fitness and Arts programs (total $1,000) may be claimed for any child aged 16 or younger.  http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns360-390/370/menu-eng.html

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns360-390/365/menu-eng.html

• First Time Home Buyers.    If you or your spouse is acquiring a home for the first time you may be eligible to claim a $5,000 deduction.  In order to qualify for this deduction you cannot have lived in a home owned by you or your spouse in the year of purchase or any of the preceding four years.  http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns360-390/369/menu-eng.html

Of course, there may be other deductions for which you are eligible for.  The important thing is to fully acquaint yourself for the rules regarding each of those that you are entitled to. The website of the Canada Revenue Agency is a great resource and, where available, I have provided links as shown.  I would also recommend you use a qualified professional to assist you in completing your return. If you use tax preparation computer software ensure you are using the most current edition.

In completing your return it is important to include ALL your income. The penalties you can incur if the CRA discovers you have missed a T4 or two, or concludes that you are purposely hiding income can be quite severe.   Good luck with your return and if I can be of any assistance please call me.

How many times as underwriters, after a client has been rated or declined for insurance, have we heard these types of comments.

“My doctor says there is nothing wrong with me and the insurance company does not know what they are talking about”.

Often the attending physician will write to the insurance company to disagree with the underwriting assessment or to request a conversation with the underwriter or medical director. The reason for the underwriting decision may be based on the insurer’s routine age and amount requirements, but many times is based on information submitted by that same attending physician. Where is the disconnect?

Much of this disagreement I would submit is caused by our traditional approach of how we communicate the reasons for our underwriting decisions. The communication is seldom done either verbally or in written form with the client or his agent. Instead, with the client’s permission, we send information to attending physicians asking them to explain the underwriting rationale to their patient. Unless decisions are based on fortuitous findings in the insurer’s routine requirements, we end up repeating back history the attending physician is aware of and presumably has already discussed with his patient. This is where the difference of opinion often begins. Consider these recent examples of actual cases.

1. Male age 65, PSA on insurance exam 7 ng/ml, free PSA 8%. Attending physician has reported historical PSA readings in the 4-6 ng/ml range, no free PSA done. DRE (digital rectal exam) and ultrasound of prostate within normal limits. The attending physician has decided on a watch and wait approach with his patient while reassuring him. The insurer has declined but would reconsider if the results of a biopsy become available. The attending physician does not regard his patient as uninsurable and has advised his patient not to be concerned.
2. Female age 50.  Attending physician has done a breast ultrasound based on history of breast lumps. Mother had breast cancer at age 48 but is alive and well at age 81. Ultrasound shows 3 cysts that appear benign but slightly atypical. Follow up in six months is recommended. Patient has been told follow up is routine, nothing to be concerned about. Insurer declines/postpones subject to the repeat ultrasound. Attending physician disagrees with underwriting decision and advises patient insurer is being unreasonable.
3. Male age 55. Consults attending physician complaining of chest pain. Only previous history is GERD. Resting ekg shows T wave inversion in leads 2,3 and AVF. No prior ekgs for comparison. No other risk factors. Physician reassures patient and tells him to be in touch if symptoms persist. Insurer declines/postpones subject to a cardiac workup. Does not define what is meant by cardiac workup. Physician advises patient nothing further needs to be done if he feels fine.
4. Female age 45. Blood work on insurance exam shows AST 95, ALT 84, GGT 100, Hep. screen negative. No reflex testing done. Client reports on application occasional wine with dinner. The attending physician report is unremarkable. Insurer offers at 200% mortality and sends blood test results to attending physician who repeats tests with similar results and does ultrasound on liver which is normal. Advises patient results are normal for her and insurer’s decision not correct.

Where is the disconnect? Who is correct, the insurance doctor or the attending physician. The answer is they are both correct with respect to how they approach medicine. The clinical practitioner is charged with diagnosis, treatment and reassurance of the patient. If the patient’s condition changes then the clinician can do more tests and consider other forms of treatment. If the patient adheres to his doctor’s advice then he can expect optimum outcomes. It becomes disconcerting, when in reaction to an insurance application, the insurer makes an adverse decision that may not only call into question an interpretation of an individual’s health but his doctor’s management of the patient. Inadvertently the insurer may have placed the attending physician in a defensive position with his patient and in an adversarial role, rather than a supportive role, with the insurer. When this happens it’s natural for the patient to align himself with his physician and view the insurer’s decision as at least suspect.

What then is the role of underwriters and their medical director. Underwriting is the art and science of examining and assessing various risk factors for an individual. Decisions are not made at that point to suggest life expectancy or mortality assumptions specific to that individual. Rather the underwriter’s role is to place that individual in a much larger risk group of people with similar risk factors. Actuarial science can then predict average life expectancies for that much larger risk group. Any individual within the group can over time demonstrate better or worse mortality assumptions. The insurer has no way of knowing at the time of policy issue if their client’s risk factors will improve or deteriorate. It is locked into a contract and does not have the benefit of being able to change the mortality assumptions used, if those assumptions become inadequate based on adverse health changes for the insured. The insured on the other hand can always request the insurer, subject to underwriting, to consider improving the pricing of his contract.

Our examples above suggest various risk factors for those individuals. The underwriting decision in each example is not meant to question how the attending physician is advising and treating the patient. It is not even to suggest for any individual what their specific mortality and life expectancy will be. It is only to say that actuarial studies have predictive value for sufficiently large risk groups with a commonality of risk factors and to assign the individual to the proper risk group.

Often information submitted by the attending physician can seem ambiguous and limited to symptoms and diagnosis, without benefit of accompanying test results which allow interpretation. It seldom includes more favourable information that allows the underwriter to differentiate similar risk factors for one client from another. These would include changes in life style, diet, exercise, compliance with doctor’s orders, etc. This information can improve underwriting decisions by moving the client into a better risk factor group. The application and examination process for insurance does not elicit this more favourable information, rather the questions are designed to find out what’s wrong with an individual. Questions prefaced by “Have you ever had any disease or disorder of….”. Those gaps can and should be filled by the insurance agent but many are reluctant to discuss with their client anything to do with health. The incorrect assumption is that all appropriate information will be provided through the insurance exam and the attending physician’s report. Opportunities for better underwriting decisions are lost because of incomplete information. This is the insurance agent’s opportunity, through better communication with the client, to write a covering letter to the insurance company  elaborating on health or other issues, from the client’s perspective.

When disagreement emerges in the communication process between insurance companies and attending physicians, insurance agents look for other means of improving underwriting decisions for their clients. This often results in applications being submitted to different insurance companies in the hope of obtaining a better result. Many times the result is exactly the same after wasting the agent’s time, the client’s time and resources within insurance companies, incurring additional expenses. Better outcomes can be achieved by packaging the case properly for one carrier by providing better information from all involved.

Letters to attending physicians, sent in an attempt to explain reasons for ratings or declines, are usually just a data dump of information, such as findings on an insurance exam, blood work, ekg results, or regurgitation of information submitted by the attending physician. This does not explain how an underwriter thinks or has arrived at a decision. Why then do we expect the physician to support and explain underwriting decisions to the patient? It would be very simple to include a paragraph in those letters defining the underwriting process, such as contained in this article.

Clinical medicine and insurance medicine can and should work together, if as underwriters we communicate better with the client, his physician and the agent.

After another harsh winter, many Canadians dream of joining the large number of Snowbirds who make their way to the dry warmth of California, Arizona and Florida each winter season.  If you are contemplating, or already are, becoming a Snowbird and whiling away the winter months in warmer climes south of the border it is important to understand how the new U.S. Tax laws apply under these circumstances. The last thing you would want is to find that the Internal Revenue Service considers you a US resident making you liable for U.S. income tax or subject to U.S. penalties or both.

There are many Canadians who have the long held belief that as long as they spend less than 183 days in the US there is no problem.  This is no longer the case as the IRS has introduced a complicated formula as part of their Substantial Presence Test under which you will be considered to be a U.S. resident if:

• The weighted total of the number of days you have spent in the U.S. over the last three years (as determined by the formula shown below) equals or exceeds 183 days, and:
• You have been in the U.S. for more than 30 days in the current year.

The Substantial Presence Test uses the following formula in determining U.S. Residency:

• Number of days in the U.S. this year,

PLUS

• 1/3 of the number of days in the U.S. last year,

PLUS

• 1/6 of the number of days in the U.S. the previous year.

If this formula returns the answer of 183 days or more, then you will be considered to be a resident of the United States making you subject to U.S. tax and filing requirements.  Under the calculations above, if you were to regularly spend 4 months a year in the U.S. you would be considered to be a U.S. resident.

It is also important to consider what the IRS considers to be a “day”.  Any portion of a day spent in the U.S. (for example, leaving in the early morning on a flight home) is considered a full day.  There are some exceptions to this, such as an inability to leave due to a medical condition that developed while in the U.S. or days in transit while en route to another country.

Should you be considered a U.S. resident there are two courses of action.  The first of these is to claim the closer connection exception allowed under the Internal Revenue Code.  To claim the closer connection exception and show that you have closer connections to Canada than the U.S. you must file IRS Form 8840 no later than June 15^th of the following year.  Some factors which indicate a closer connection with Canada include:

• Having a permanent residence in Canada;
• Having family in Canada;
• Banking in Canada;
• Carrying on a business in Canada;
• Having a Canadian driver’s licence;
• Voting in Canadian elections;
• Having personal belongings in Canada.

You are prevented from claiming this exception if you have spent more than 183 days in the U.S. in the current year or if you have or applied for a U.S. green card.  Also your request will be denied if you do not meet the June 15^th filing deadline.

The second course of action is to claim a treaty exemption.  This applies in situations where a Canadian cannot claim the closer connection exception and now is considered to be a dual resident of both Canada and the U.S. In this event there are “tie-breaker rules” under the U.S. – Canada Tax Treaty which would alleviate the requirement to pay income tax in the U.S. but would still require you to comply with filing requirements.

In those situations where the closer connection exception is being claimed, and even in the rarer situation where the tie breaker rules indicate a U.S. and not a Canadian residency, professional advice should be sought as the rules become more complicated.

Since many of us aspire to spend extended periods of time in the sun during our winter months, it is a good idea to be well acquainted with the U.S. rules governing residency when that day comes.

TAX FREE SAVINGS ACCOUNT 

• Any Canadian resident age 18 or over may open a TFSA. Contribution is not based on earned income.  There is no maximum age for contribution.
• Maximum contribution is $5,000 for each year from 2009 to 2012 and must be made by December 31^st of the year of contribution.  For 2013, due to indexing the maximum contribution is $5,500.
• There is carry forward room for each year in which the maximum contribution was not made.
• The deposit is not tax deductible, but the funds accumulate with no income tax payable on growth.
• Withdrawals may be made at any time on an income tax free basis.  Withdrawals create additional deposit room commencing in the year after withdrawal.

REGISTERED RETIREMENT SAVINGS PROGRAM

• No minimum age for contributing, but must have earned income sufficient to generate RRSP contribution room.
• Maximum contribution is 18% of earned income based on your previous year’s earnings to a maximum of $ 22,970. For 2013, the maximum will increase to $ 23,820 due to indexing.
• There are carry forward provisions for years not contributing.
• Contribution is tax deductible from earned income, and the funds accumulate on a tax deferred basis.
• All contributions are taxable at top marginal rate of income tax, based on earnings in year of withdrawal.
• RRSP ends in year contributor turns age 71, when the RRSP must be converted to a Registered Retirement Savings Plan or life annuity and taxable income taken.

Now that we have reviewed the provisions of each program, let’s try and analyze what program works best for us and in what proportion.

Both programs provide for no tax on the earnings on the contributions, no difference there. However, only the TFSA allows for withdrawals with no tax – EVER.  If you are not reinvesting the tax savings generated from your RRSP contribution, the only thing you gain is an increase in consumer spending created by the tax saved.  The truth is, however, that the tax deferred is really a loan from the government. Although, they don’t charge interest on this loan, the loan must be repaid at some point in the form of taxes on withdrawal.  And like most things in life, that point usually comes when you can least afford it, like when you quit working, or require funds for an emergency.

Be careful not to over value your RRSP balance.  It is important to remember that the balance will be reduced by the tax payable.  If you are certain that you will retire in a lower marginal tax bracket than you are now, then the RRSP makes some sense.

This is also true if you routinely reinvest the tax savings but otherwise, at the end of the day, there is no difference in the final results of the two programs.  This can be illustrated in the table below:

*marginal tax rate pre and post-retirement

Both programs lend themselves very well to each other.  If you refer to the features of each listed above, the RRSP’s have to be converted into income starting no later than the contributors age 71.  Assuming retirement at age 65 (yes, some people still do that), there are 6 years that bridge income will have to be provided, and what a better way than to have that income paid from a source that is completely free of tax (TFSA)?  At the same time, the requirement to pay tax on withdrawing from an RRSP helps to ensure that those funds will actually be saved for retirement.  RRSP’s were never designed to be a “rainy day fund”, but that purpose is well served by a TFSA.

 If you can contribute the maximum to both – GREAT! If not, you should still take advantage of both programs.  Try to establish a ratio of contribution that you are comfortable with and go with that. Remember, you can always change the ratio from one year to the next, and whatever plan you don’t maximize this year, your contribution room going forward will allow you to catch up later.

While the rules governing TFSA’s are relatively simple, this is not true with RRSP’s and is beyond the scope of this article. It is best to fully discuss the benefits and restrictions of each of these options before investing. Let’s talk and see what’s right for you.

Make your maximum contribution
Your RRSP contributions provide a deduction from your taxable income, which for most, results in a tax refund when you file your personal tax return.

For 2012, you can contribute a maximum of 18% of your earned income in 2011, to a maximum of $22,970.

This number will be adjusted if you are a member of pension plans and/or profit sharing plans, depending on the value of your benefits in the previous year.

Making the maximum contribution at the beginning of each year will add additional compounding power to your RRSP. The maximum RRSP contribution for 2013 is $23,820.

Consider a Spousal RRSP
Whether legally married or living common law, you can contribute all or part of your RRSP room to a Spousal RRSP and deduct the contribution from your taxable income. Even with the new income splitting rules, a Spousal RRSP can provide greater flexibility for retirement and tax planning.

Regular contributions
One strategy is to use a pre-authorized cheque (PAC), where an automatic withdrawal comes out of your bank account at set periods – for example every two weeks or monthly. This disciplined approach to saving is often called “paying yourself first”

For those who count on annual bonuses to make lump-sum contributions, it is still worthwhile to set up a smaller PAC throughout the year, and then use as much of the bonus as needed to maximize your RRSP contribution.

Regularly investing your contributions (versus making a lump sum contribution, or parking your money into savings or term deposits) is wisely referred to as ‘dollar cost averaging’ into the market. This proven strategy has been shown to reduce market risk by removing the temptation to make emotional decisions based on short term economic or market conditions.

Consider an RRSP loan
If you have a lot of unused RRSP contribution room from previous years, consider taking out a RRSP loan to catch up. Most RRSP loans are offered at extremely attractive rates and can be arranged on very short notice. If your balance is larger than you can repay in one year, consider a home equity line of credit.

Make a Contribution in Kind
If you hold securities outside your RRSP, consider transferring them to your RRSP. The market value of your investment on the day you transfer it into your RRSP will be the contribution value for tax purposes. Watch out if this triggers a capital loss though. While capital gains triggered on the transfer to your RRSP are taxable, any capital losses triggered are not deductible.

Carry Forward
If you can’t make your maximum contribution one year, you can carry the unused amount forward to a future year, and contribute it later. You may also choose to delay claiming your current year’s RRSP tax deduction to a future year when you expect to be in higher tax bracket. These can be useful strategies for those who do not have the funds or need the tax deduction now

Children
Remember to always file tax returns for children to start accumulating RRSP room, receiving HST/GST refunds (if 19 years old), reporting income that you’ve split, claiming tuition and education credits, claiming student loan interest and moving expenses.

“Safe” investments
Conventional wisdom says the older you are the more of your RRSP should be in cash, bonds, GICs, and other “safe” investments. Depending on your individual circumstances, this may not be the best strategy. With all time low interest rates, longer life expectancies, and retirements that can last 25 or 30 years, you need at least a portion of your RRSP invested in equities, in order to keep you ahead of inflation.

Make the most of foreign content
Markets move through their cycles at different times. Although Canadian equities have performed well since the financial crisis, this past year other markets have performed better. Given that 80% of the Canadian stock market is in financial services, resources and materials, foreign markets provide exposure to additional opportunities in both equities and fixed income, and can protect your portfolio.

As always, broad diversification and the right asset allocation, appropriate for your specific objectives and risk tolerance are key.

Home Buyer’s Plan (HBP)
The HBP allows you to borrow funds from your RRSP to purchase your first home. You and your spouse can each borrow up to $25,000 from your own RRSP, providing the funds have been on deposit at least 90 days before you withdraw them. At least 1/15th of the funds must be repaid each year, beginning two years after the funds are withdrawn.

Lifelong Learning Program (LLP)
The LLP allows you to pay for training or education with RRSP funds. You can withdraw up to $10,000 per calendar year to finance full time training or post secondary education. The student can be you or your spouse, but not your children. The total amount that can be withdrawn is $20,000, with withdrawals made over a maximum of four consecutive years. At least 10% of the amount borrowed must then be repaid each year, over maximum period of 10 years.

Both HBP and LLP loans should be considered carefully as monies withdrawn from your RRSP are no longer growing and compounding tax free so you can accomplish your retirement goals. This can have a major negative impact on your future plans.

Remember your 71st birthday
You have until December 31st of the year you reach the age of 71 to transfer your RRSP to a Registered Retirement Income Fund (RRIF), or buy an annuity. However, depending on your financial situation, waiting until age 71 may not be your best strategy. Depending on your other income and marginal tax rate, starting your RRIF income earlier may reduce your future taxes and increase your government entitlements.

If your spouse is in a lower tax bracket, and you are 65 or older, new income splitting rules allow you to allocate up to 50% of your RRIF income to your spouse on your tax return. This may reduce the overall tax you both pay, and entitle you to tax credits and benefits you might not otherwise be eligible for.

Seek professional help
Saving for your retirement doesn’t have to be complicated. But it does take some planning. To make sure you get the most out of your retirement, let’s discuss your personal financial situation and goals. Together, we can create a personal and customized retirement strategy for you.

Do you dream of travelling extensively during retirement but wonder whether you can afford it? It is possible: The key to efficient and frugal travel is finding ways to make the best use of your travel dollar without compromising on quality.

1. Consider house-sitting
Homeowners like having their homes taken care of while they’re away and many seniors like travelling to and living in new places — that’s a win-win recipe. Homeowners tend to prefer seniors as house-sitters because of their maturity level and sense of responsibility. House-sitting can be a great way to explore a new locale or enjoy experiences normally well beyond your means (such as a few weeks at a waterfront mansion). While short-term house-sitting is seldom paid, the accommodations are rent-free and in some cases you can negotiate for living expenses while you mind the house.

Long-term house-sitting can even provide a modest supplement to your income. Websites such as mindmyhouse.com and canadianhousesitters.com are a good resource for matching yourself with homeowners who need houses tended. Expect a sign-up fee in the range of $20 to $30.

Bright idea: If the homeowner you’re sitting for has pets, you may even be able to bring your own pet along.

2. Embrace off-peak and last-minute travel
Now that you’re free of your workplace shackles you can take advantage of off-peak travel pricing and last-minute deals. Travelling during off-peak times is not only cheaper but also less crowded. Having the freedom to pack up and ship out at potentially short notice can be exciting, and flash-sale travel discount sites aren’t just for web-savvy youngsters — they’re also a perfect way for you to stretch your travel dollar in retirement.

Bright idea: Mid-week flights are often cheaper than those on the weekend.

3. Get travel and health insurance
Besides budget, the other major factor affecting your travel potential is your health. Good travel insurance can save you a lot of money if you get into trouble. Foreign hospitals can sometimes command a small fortune to treat you and a myriad of factors could pop up before your departure date that could force you to cancel your trip, so being insured will give you real peace of mind. These days travel insurance can get pretty sophisticated, from covering flight cancellations to refunding boat rental fees for your fishing trip. Make sure you look carefully at the fine print and pick the cancellation/travel health policy that best fits your needs.

Bright idea: If you have any pre-existing health conditions, be sure your policy covers any complications or cancellations that could result from them.

4. Plan your medications and treatment options
Make sure you have extra amounts of any medication you’ll need and pre-pack pillboxes ahead of time. Research what kind of medical facilities are available nearby to your chosen vacation spot or, if you’re not planning to be particularly close to civilization on your trip, find out what emergency services are available, particularly if you have serious health issues.

If you know you need health care within reach, you can still travel: Consider a cruise or a specialty resort. Cruises always have their own medical staff on board, and certain resorts geared towards retirees will have full hospital facilities on site. Find out about your specific health-related limitations (such as altitude, humidity or exertion), and get your doctor’s okay to travel before you book.

Always keep your medication in your carry-on luggage, not your checked luggage, but be sure to comply with the rules about original packaging, liquids and gels. Check this out in advance so you don’t have an unpleasant surprise or delay at the airport.

Bright idea: Watch out for changing time zones and medication schedules so you don’t skip doses accidentally.

5. Keep your health information handy
If you have a non-trivial medical condition, bring your medical history with you as well as spare prescriptions for any crucial meds — bags can be stolen or lost so it pays to have a back-up plan. Doctors will have an easier time treating you when illness strikes if they have your information.

Bright idea: Notify resort staff of any serious health conditions you have so they can respond quickly and appropriately in case of emergency.

Wherever your travels take you, remember that you don’t have to give up adventure just because you’re retired — in fact, with a little planning, you can find more adventure than ever before!
Original Source: Top Five Retirement Travel Trips, by Brighter Life Solutions

©Sun Life Assurance Company of Canada, 2013

Rethink your marinade: Rather than drown meats in spices and high-fat oils, make fruit juice, vinegar, or wine the focus of your marinades. Going light on the oil but heavy on the spices and acids will add plenty of moist flavor to your grilled meats without all the extra calories. Plus, marinated meats produce far fewer carcinogenic by-products during high-heat cooking. (Related: Try this EatingWell recipe for tangy Lemon-Pepper Marinade.)

Make over your burgers: Might sound strange, but tart cherries make for juicier, tastier, more healthful burgers. Just mix one-third cup of chopped tart cherries into a pound of ground turkey or beef before forming your patties for the grill. Your burgers will not only have less fat but also produce 90 percent fewer heterocyclic aromatic amines (HAAs) – carcinogenic by-products that form during high-heat cooking. (Related: Here’s a spice that cuts back on those same by-products too.)

Turn down the grill: Here’s a more direct method for cutting down on those unhealthy grilling by-products: Turn down the heat. And cook the low-and-slow way. This helps curb the production of advanced glycation end products (AGEs), troublesome little compounds that can age you faster and shorten your lifespan. Use a thermometer to make sure you’ve cooked your meat to a safe internal temperature. (Related: Try these 10 tips for fighting aging.)

Ready to fire up the grill? Check out EatingWell‘s collection of healthy barbecue sauce, marinade, and spice rub recipes.