Tag: retirement income

Categories
Brandon Blog Post

BUILDING AN EMERGENCY SAVINGS FUND: WE ALL NEED AN EMERGENCY FUND TO PROTECT OUR RETIREMENT

BUILDING AN EMERGENCY SAVINGS FUND 0
building an emergency savings fund

Building an emergency savings fund: Introduction

Many of us go about living our lives without giving any thought to building an emergency savings fund. After all, we live in the land of socialized medicine, so unlike our American neighbours, we won’t be ruined by medical expenses. If we need to come up with some cash for the plumber or car mechanic or roofer, there’s always a credit card, payday loan or retirement savings.

Building an emergency savings fund: Surviving a major life event

But what would happen if you lost your job, became disabled or got divorced? A credit card or payday loan can’t fix this kind of catastrophic situation. And, potentially, you could wipe out all of your retirement savings just trying to stay above water. How many ex-employees of Sears (and other companies like Sears) do you think are now living off their retirement savings?

Building an emergency savings fund: Canadians are not saving

Canadians are not saving. According to a Canadian Payroll Association survey:

  • Almost 50% Canadians are living paycheque to paycheque
  • 48% rely on payday to make ends meet
  • 25% couldn’t pay $2,000 bill if it popped up within the next 30 days

And a CIBC poll by Harris/Decima found that 45% of Canadians did not have an emergency savings fund at all.

Building an emergency savings fund: Protecting your retirement income

The lack of emergency savings can cause financial problems far beyond a short-term cash crunch, new research shows. Some people without cash reserves end up drawing on their retirement accounts, putting them at risk of shortfalls later in life, according to an analysis by the Pew Charitable Trusts.

Don’t think of an emergency fund as just a way to tap into some cash for an unexpected expense; think of it as a way to protect your retirement income.

Building an emergency savings fund: Some simple saving tips

Many people have said that they just can’t afford to save but saving doesn’t have to be large sums of money. Put away whatever you can afford, but do it regularly and diligently. If you still think you can’t afford to save, then drop an expense and save that money.

  • Bring your lunch to work
  • Stop buying designer coffee
  • Use public transit instead of your car
  • Put a limit on how much to spend on Christmas gifts or only buy for the children
  • If you smoke, stop now
  • Go out less to bars and restaurants

Building an emergency savings fund: Do you have more immediate financial problems?

Your retirement savings are not your emergency fund. Set up an emergency fund (if you don’t already have one) and commit to save. If you’re living paycheque to paycheque or already dipping into your retirement savings to make ends meet, give us a call today.

The Ira Smith Team has a successful track record of helping people just like you solve their financial problems and get back on track Starting Over, Starting Now.

Categories
Brandon Blog Post

AVERAGE HOUSEHOLD DEBT IN CANADA: CANADIANS LOVE TO MAKE IT CONTINUALLY RISE!

average household debt in canada, canadian household debt, household debt, mortgage debt, trustee, financial plan, retirement income, household debt in canada, ira smith trustee, consumer debt, credit card debt, canada, carney talks canada’s household debt, mark carney, finance, saving, savings, bankruptcy canda videos., bank of canada, national debt, canada's debt, talks canada household, canada's-public-debt, household debt has been, td bank" "household debt, and mail" debt "household, canada's household debt hits, canada's household debt risesWhat is average household debt in Canada?

Average household debt in Canada: the average of the amount of money that all Canadian adults in the household owe financial institutions.

Statistics Canada said that total household consumer debt, which includes consumer credit card and mortgage and non-mortgage loans, increased 1.2 per cent to $1.923 trillion at the end of last year. The total included $573.6 billion in consumer credit debt, including credit card debt, and $1.262 trillion in mortgage debt.

The growth helped drive the ratio of household debt to disposable income to a new peak of 165.4 per cent in the fourth quarter of 2015, up from 164.5 per cent in the third quarter.

It’s unbelievable but true – average household debt in Canada continues to rise! Unfortunately it seems that nothing has so far been able to stem this tide, particularly as already sky-high housing prices continue to reach new heights. We’ve reported on this very alarming situation in a series of blogs and the situation continues to worsen.

Video – Household Debt In Canada Crisis

How Binge Borrowing Raises Canada’s Household Debt Burden

Canadian Household Debt: We Seem To Love It!

Household Debt; Canadian Levels Sound Alarm Bells

How is it affecting Canadians?

According to a ManuLife Bank survey:

  • 33% of homeowners have been “caught short” at least once in the past year and didn’t have enough money to cover expenses
  • 60% lack confidence that they’ll have enough savings for retirement
  • Average mortgage debt increased to $181,000 since last fall
  • 25% of homeowners predict that their home equity will make up 80% or more of their household wealth when they retire

What are the options available to Canadian homeowners with limited retirement income?

  • Delay retirement and keep working as long as possible
  • Work part-time
  • Move to a less expensive home and use the money to fund retirement
  • Sell the home and use the money to fund retirement
  • Borrow against the home equity

What is the top financial priority for Canadian home owners?

More than anything, Canadian home owners want their average household debt in Canada at a manageable amount and ultimately zero; i.e. be debt free. If you’re like many Canadian home owners struggling with alarming levels of household debt, seek help as soon as possible. A professional trustee can help you deal with your debt problems, and believe me they are not insurmountable. With immediate action and the right financial plan the Ira Smith Team can help you realize your dream of living a debt free life Starting Over, Starting Now. We’re only a phone call away. Book your free consultation today.

Categories
Brandon Blog Post

BANKRUPTCY ALTERNATIVE, REALLY? EMBARRASSED TO ADMIT YOU HATE YOUR RRSP?

bankruptcy alternative, RRSP, RRSPs, retirement, retirement income, bankruptcy, bankruptcy alternatives, credit counselling, debt consolidation, consumer proposals, trusteeRaiding your RRSP is the worst bankruptcy alternative and in this blog you will see why. The federal government introduced the Registered Retirement Savings Plan (RRSP) in 1957 to encourage Canadians to save for retirement. For many Canadians, RRSPs will be their only source of retirement income, in addition to Old Age Security (OAS) and Canada Pension Plan. However, according to a recent BMO survey Canadians are raiding their RRSPs to make ends meet and this is not advisable survival plan or bankruptcy alternative.

What is an RRSP?

A RRSP is a personal savings plan registered with the Canadian federal government allowing you to save for the future on a tax-sheltered basis. It can contain a variety of investments including RRSP savings deposits, treasury bills, guaranteed investment certificates (GICs), mutual funds, exchange-traded funds (ETFs), bonds and equities. Your contributions are tax deductible and your investments inside the RRSP grow inside tax free. However, when you take money out of your RRSP, it’s taxed as if it was income earned that year.

Are Canadians really using their RRSPs as a bankruptcy alternative?

According to a new BMO survey:

  • 21% of Canadians have taken money out of their RRSP to cover living expenses or pay off debt
  • 15% took money out to cover costs after an emergency
  • 25% say they will likely never pay it back

So the results of the BMO survey show that rather than dealing with all of their debts once and for all using a proper bankruptcy alternative, they are creating a new, significant income tax debt by raiding their RRSPs to pay off some debt! Not a very sound strategy.

Why is taking money out of an RRSP not advisable?

  • There is a withholding tax of 10% – 30% depending on the amount withdrawn
  • The money taken out has to be declared as income, and taxed again (unless you’re making withdrawals to buy a first home under the Home Buyers Plan or covering education costs under the Life Long Learning Plan)
  • If the funds, net of income tax, does not solve your debt problems, then it really isn’t a bankruptcy alternative

In a valid bankruptcy alternative, such as a consumer proposal, and in bankruptcy itself, other than for any contributions to your RRSP made in the 12 months prior to filing, you cannot lose the balance of your RRSP. You will actually have more RRSP at the end of a successfully performed consumer proposal, than if you raid your RRSP to avoid a valid bankruptcy alternative!!!

What should I do so I don’t have to raid my RRSP?

If you’re in “survival mode” when it comes to your finances, instead of raiding your RRSPs, we’ve got much better options for you. Although many people believe that bankruptcy is the only way of out serious debt, that’s not always the case. Ira Smith Trustee & Receiver Inc. can discuss other bankruptcy alternatives with you which include credit counselling, debt consolidation and consumer proposals.

If we get to see you early enough, at the first sign of trouble, you can utilize and implement one of the bankruptcy alternatives, to free you from the burden of your company’s financial challenges to go on to be a productive, profitable employer allowing management to focus on business growth and not be plagued by debt problems.

People consider us bankruptcy experts because we wrote the eBook which is sold on Amazon.com, explaining the Canadian personal insolvency and bankruptcy system, specifically directed to the person stressed out with too much debt. Come in for a no obligation, no fee consultation and let us help you get back on track to living a debt free life Starting Over, Starting Now. Give us a call today.

Categories
Brandon Blog Post

ABLE TO RETIRE? CAN YOU AFFORD TO – OR WANT TO?

ABLE TO RETIRERetirement has become a hot issue with record numbers of Canadians reaching retirement age asking themselves if they will ever be able to retire. We first reported on this in a blog – Will You Ever Be Able To Retire? Many can’t afford to retire; others don’t want to. We’re living longer than previously anticipated and in many cases are outliving our incomes. According to Statistics Canada, a 65 year old man can expect to live to 83; a 65 year old woman can look forward to blowing out the candles on her 86th birthday. Moshe Milevsky, an associate professor of finance at Toronto’s Schulich School of Business at York University, says there is a 41% chance that at least one member of a 65 year old couple will live to 90. Who is going to finance this longevity?

A new survey from ING Direct reports:

This indicates that a significant number of Canadians are not able to retire when they thought they should.

I came across an interesting story about an 84 year old retired factory worker who thought he was able to retire but was now trying to support 3 generations of his family (11 members) on his retirement income. How could he have foreseen that in retirement he would be called upon to help his children, grandchildren and great-grandchildren?

What happens if you are not able to retire or just don’t want to retire? What if you know that you don’t have enough saved to retire comfortably and are therefore not able to retire; or you have no idea what to do with yourself for the next 30 years? Can you be forced into retirement? This very issue was brought before the Supreme Court of Canada by John Michael McCormick, an equity partner in a national law firm who didn’t want to retire at age 65 as the partnership agreement stipulates.

CITATION: McCormick v. Fasken Martineau DuMoulin LLP, 2014

Mr. McCormick took the matter to the B.C. Human Rights Tribunal as an age discrimination in the workplace case. The Supreme Court of Canada ruled that since Mr. McCormick was an equity partner and could be part of management, he wasn’t controlled by the firm and therefore could not be subject to a Code to prevent discrimination in the workplace by those in a control position. It now begs the question, how would the Supreme Court of Canada have ruled if Mr. McCormick was not an equity partner? Would he have won his age discrimination case? What do you think? I would love to hear your take on it in the comments section below.

If you’re like many Canadians who are struggling to pay the bills, living paycheque to paycheque and can’t even say the word retirement out loud, you need help from a professional, federally licensed trustee. Ira Smith Trustee & Receiver Inc. can help get your life back on track Starting Over, Starting Now. Contact us today.

Call a Trustee Now!