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Issue #73, June 2010
Quick LinksIf you would like tosubscribe to theDLD MONEY THOUGHTplease contactVisit our website at__________________________EDUCATION SAVINGS: CONSIDER INVESTING IN BOTH ANRESP & TFSA
To maximize the annual CESG of $500, parents can contribute $2500/yr and any additional funds of up to $5000/yr into a TFSA. Since a TFSA cannot be established for a minor, the parent will be the TFSA plan holder and could earmark some or all of the TFSA assets for the child's education savings.
Benefits of this strategy are:
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the individual will receive the benefit of the CESG which is only payable for the first $2500
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the additional funds contributed to the TFSA provide increased flexibility. The investment income and withdrawals from a TFSA are tax-free. Withdrawals from the TFSA create additional contribution room for the subsequent tax year
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the funds in the TFSA can be used for non-educational purposes such as a down-payment on a home
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when the child reaches 18 and begins to accumulate TFSA contribution room, the parent could choose to withdraw from their own TFSA to fund the child's TFSA. This allows the child to build up additional funds as well as provide the parent with more contribution room in the future.
Planning for the UnexpectedIf you dream it, you can do it." -Walt Disney
But what if something comes between you and your dream? Living benefits solutions can form an important part of a financial plan to help protect a client's investment goals and dreams.
A lump-sum benefit can be made available through a Critical Illness program and a monthly income replacement through a Disability Insurance program can help reduce the need to withdraw from savings. This keeps your hard-earned assets intact for its original purpose.
Planning for a "dream" involves more than just saving money; it involves planning for the unexpected.
Life insurance needs span many years and vary depending on your circumstances (e.g. dependents, debt, estate planning efforts, philanthropic goals). Life insurance is part of the foundation of a sound financial security plan and can play a variety of roles in helping provide financial security over a life time.
However, for the time frame leading up to retirement, it is important to consider the value of protecting your most valuable asset: YOU and your ability to earn an income in the event of a disability.
While you are working and building wealth for retirement, a critical illness may have a significant impact on preserving your retirement goals. With that in mind, after retiring, suffering a life-threatening critical illness may impact your retirement plans.
(Graph from Great-West Life)
How to plan for the unexpected:
Employment income helps shape your lifestyle by helping to:
-ensure daily living expenses are covered (e.g. mortgage, debt repayment, insurance premium, groceries), and
-save for specific goals (e.g. new home, children's education, vacations, retirement)
What happens when income stops coming in? It could have a significant impact on your ability to meet day to day financial responsibilities. A disability insurance plan can provide a monthly income benefit to replace a percentage of your income in the event of a disability.
How would your life change if you suffered a critical illness, such as a heart attack, stroke or life-threatening cancer?
The diagnosis of a serious and life-threatening illness may result in additional and unexpected expenses not related to:
-medical treatment or drug costs not covered by the health care system
-time off work (for you and for someone helping to provide your care- spouse, partner or another family member), and
-recovery (e.g. rehabilitation needs, extended time off with family).
This may create the need for additional funding over and above an income replacement plan. Critical illness protection can compliment the benefits available through a disability insurance plan. As well, the lump-sum benefit available through such a plan can reduce the need to draw from your savings which helps keep your hard-earned assets intact for their original purpose.Any Questions? Give us a call!Sincerely,Dave and Kelly
David Drummond Kelly Ho604.681.7185-