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:
the individual will receive the benefit of the CESG which is only payable for the first $2500
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
the funds in the TFSA can be used for non-educational
purposes such as a down-payment on a home
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 Unexpected
If
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.