Guiding the way to the Lifetime Income Plan Including Effective Estate and Gifting Planning
by Laura-Lee Locheed, FMA
The life choices available to people from age 60 to 90 now are dramatically different from the more limited choices of 50 years ago. Surveys show that the Canadian “Baby Boomer” population now totals 9.6 million people. People are living longer, and often remaining active and productive well into their ‘70’s and ‘80’s. Consequently, here are some questions commonly heard by Financial Planners these days. Will I outlive my money? Am I getting all of the tax credits for which I am eligible? Have we planned adequately for the financial changes that will occur upon the death of the first person in the marriage? Will my Estate actually end up being distributed according to my exact wishes, with minimum fees and taxes? How can I best support my favorite Charities, without negatively affecting both my long-term income needs, and my plans for the inheritances to my family?
These important questions, and many others around B. C.’s Probate fees, Retirement Income Funds ( RRIF’s ) and Investment Portfolio risk management, can be addressed by structuring a “Lifetime Income Plan”. The first step in this process is to tally up all assets comprising one’s total net worth. Then, the income tax position of each asset, now and in the foreseeable future, is analyzed. The complete picture emerges when all sources of income, and the use of specific investment and insurance products, mesh to cover both the person’s financial needs through ALL stages of their life, with the growth investment risk tolerance and guaranteed income parts meshing comfortably.
A big difference in one’s “financial mindset” can occur when the “Asset Accumulation Years“shift over into the requirements of the “Payout Years”. It is not uncommon for steady savers to miss out on many opportunities for increased income in their active retiree years. Assessments, using solid and conservative projections, prepared by a specialized Financial Planner sometimes reveal surprising numbers, often more positive than expected, for Retirees. Also, to be able to plan one’s inheritance gifting, while still present to have the “presents” appreciated, can be very gratifying! Professionals working in the Estate Planning field all too often see Estates that were intended to be evenly divided amongst family member Beneficiaries not ending up in that position, because the AFTER-TAX treatment of various designated asset classes resulted in uneven amounts, or correct Beneficiary designations were not placed on investment accounts and insurance polices precisely. Another great advantage to having a Lifetime Income Plan crafted is that, when sea-storms inevitably appear in our life’s voyage, having a specific Plan in place provides a calm island upon which to retreat, view the situation, and change course, instead of being wildly tossed about in the waves. Finally, having a well-crafted Plan in place allows for real peace of mind with regard to Estate Planning, as thorough assessment and completion has been handled. The most common and useful structures for Planned Giving to Registered Charities will be covered in the next article. THIS ARTICLE IS PROVIDED BY LAURA-LEE LOCHEED, A WELLESTABLISHED FINANCIAL MANAGEMENT ADVISOR WHO HAS ENJOYED OVER 30 YEARS OF PROVIDING SPECIALIZED FINANCIAL SERVICES TO OKANAGAN SENIORS.