Pre-Retirement

Developing Viable Retirement Strategies

Time to look for an answer to that big question: How much do you need to retire?

Most feel that they will need 70-80% of their working income. No more commute and parking costs, expensive work clothes or tools, lunches out. But other costs might go up – travelling the world is not cheap and neither are pricey hobbies like golfing. Whatever your retirement plans, crunch those numbers. How much money you'll need in retirement depends on what you plan on doing. When do you want to retire? What kind of lifestyle are you after?

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Believe it or not, this is the best time to accelerate your savings. Many of your biggest expenses are out of the way and you may be in your peak earning years. If you've been building your nest egg, keep going – there's no such thing as saving too much. And if you've fallen behind, now's the time to get a solid, achievable financial plan back on track. But your investment strategies should be changing as you near retirement.

After living through recessions, real estate booms and busts, bull and bear markets – it's obvious to you that markets fluctuate and roller coasters aren't for you anymore. Time is less of an asset now. For your investments, this means gradually moving to a more conservative portfolio. You need to be sure that you can draw from your investments at any time, in both up and down markets, but how do you do this without losing money? You need our experienced advice.

It's a fact that only one-third of family owned businesses survive the transition to the next generation. You've spent many years and enormous amounts of effort to build your business, and whether your children succeed you or you sell your business to others, you want to make sure your business continues. This is most likely your single largest asset but it also represents a major source of self-esteem and personal worth and it's easy to put off thinking about the day when you will no longer be running the business. But taking steps now to preserve and enhance the value of the business makes sense.

If you have the option of leaving the business to children, how do you pick one child as a successor while being fair to all of the children? Treating your family fairly doesn't necessarily mean treating them equally when it comes to your business. Splitting shares of the family business equally among children who have varying degrees of involvement can cause problems rather than solve them.

If you prefer to sell your business, how do you get the most value? For many business owners, the investment in the business will have a high value and a low tax cost, and consequently a significant tax liability. How do you manage the inevitable taxation? Should you consider an estate freeze, allowing you to retain control of the company while deferring taxes and locking in the tax liability? Will a shareholder agreement be necessary and how do you come up with one?

Some easy steps to take both before and during retirement may include maximizing your RSP contributions, paying yourself a retirement allowance, setting up an Individual Pension Plan, (IPP), using dividend paying shares to provide income in retirement, or selling freeze shares for the same purpose.

A balance between your succession plan and your estate plan are critical. Insurance can be a powerful tool when used alongside an estate freeze and can create an "instant" estate to equalize for the children not involved in your business. It can also provide cash to the corporation for share redemption or buyouts.

You have been successful with your business for many years but this is an area that may be completely out of your experience and most definitely requires lots of thought and input from professionals. Seek advice and look on it as a process rather than an event. It takes time to address these very personal and individual issues. There isn't any one approach that will work for all situations. We will act as your coordinator for all legal, tax, and accounting issues.

Pre-Retirements Retirement Planning