<Date>
Compliments of:
Prepared for:
<Client Name>
<Client Address>
Personal & Confidential
<Advisor Name>
<IPC Investment Corporation>
or
<IPC Securities Corporation>
<Advisor Address>
<Advisor Phone>
<Advisor Email>
Website: www.ipcc.ca
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
Agenda
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Retirement Myths and Realities
Typical Needs in Retirement
Retirement Income Planning
What are Your Goals?
Estimating Your Living Expenses
Identifying Your Income Sources
Surplus or Shortfall?
Building an Income Management Program
“Investing isn’t just about making money.
It’s a way of reaching your personal goals…”
-- Peter Lynch
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
Retirement Myths
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I will “slow down” in retirement.
My house is my retirement.
The government will look after me.
I have a pension that should be more than enough.
My kids will look after me.
I’ll make it up later (after paying down the mortgage, kid’s
education).
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
Retirement Realities
Many Canadians:
• may need 60% to 70% of current earnings in retirement
• do not have a company pension plan
• will need their retirement income to keep pace with inflation to pay
for the rising cost of living and longer retirements
• face some of the highest tax rates in the world
• may require nursing care at some point
• may be penalized for having assets (clawbacks reduce government
assistance)
• will find income from government sources too low
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
Retirement Income Planning
Our process has six major steps:
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2.
3.
4.
5.
6.
Determine your retirement goals
Estimate your living expenses
Identify your income sources
Compare expenses and income
Build an income management program
Monitor and review your plan
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
1. What Are Your Retirement Goals?
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What age will you retire at? Your spouse?
Where will you live?
Will you travel?
Will you work part time? Volunteer?
Involvement with grandchildren? Hobbies?
Do you have a vision for the succession of a business?
Do you wish to leave a legacy or inheritance to beneficiaries?
Are there any constraints for us to be aware of?
– Health
– Financial obligations
– U.S. property/assets
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
Dream Journal
• Completing the Dream Journal will help you outline your retirement
goals and constraints, as well as your net worth:
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
2. Estimating Your Living Expenses
• It is important to estimate what your living expenses will be when
you retire, including both essentials (must-haves) and discretionary
(nice-to-haves)
Essential Expenses
Discretionary Expenses
Estimated Annual
Expenses
Estimated Annual
Expenses
Rent/Mortgage
$
Weekly Cash
$
Property Taxes
$
Dining Out
$
Utilities
$
Travel
$
Groceries
$
Gifts to Family
$
Health (prescriptions
physio, etc.)
$
Memberships (golf,
health, country club)
$
Phone/TV Services
$
Vacation Home
$
Transportation
Home Renovations
TOTAL
$
TOTAL
$
$
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
3. Identifying Your Income Sources
$___________ income/year?
INCOME STREAMS
Government
CPP, OAS, GIS
Pension, LIF,
LRIF
RRIF, Annuity
Non-Reg., TFSA
Home?
Part-time Work?
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
Government Benefits
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Old Age Security (OAS) provides monthly payments
beginning at age 65, but is clawed back once your
income reaches certain levels
You can begin to draw from Canada Pension Plan (CPP)
as early as age 60 and as late as 70.
A Guaranteed Income Supplement (GIS) is available to
low-income individuals.
Possible considerations:
• Split CPP or other pension income with spouse
• Delay taking CPP benefits (also increases pension by
0.5% per month of delay over age 60)
• Take only RRIF minimum payments (supplement with
Tax Free Savings Accounts)
• Maximize OAS by reducing income where possible
• RRSP contribution opportunity?
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
Company Pension Plans
• You may or may not have a company pension, which can provide a
specified income for life
Possible Considerations:
• Review your pension statement
• Opportunity to split income with spouse?
• Defined benefit?
• Defined contribution?
– How is it invested?
– Estimated commuted value?
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
RRIFs
• On retirement, or upon turning age 71, many people choose to
convert some or all of their RRSPs to a Registered Retirement
Income Fund (RRIF).
Possible Considerations:
• Income will depend on how it is invested
• Base RRIF payments on younger spouse’s age
• Use TFSA income and assets first
• Take payments annually, at end of year
(maximizes tax-deferred growth)
• Estate planning considerations – RRIF assets
fully taxable in year of death
– Beneficiary designation
– Insurance planning opportunities
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
LIFs/LRIFs
• Life Income Funds (LIFs) and Life Retirement
Income Funds (LRIFs) are created from assets in a
LRSP/LIRA (the commuted value of company
pension plans)
• Pay out your corporate pension funds in retirement
• Minimum and maximum annual withdrawal limits
Possible Considerations:
• Use the minimum – but move the difference
between maximum and minimum withdrawal to an
RRSP or RRIF each year
– Allows more control of assets (“unlocks” assets)
– Keeps assets tax-deferred
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
TFSA and Non-RRSP
• Tax-Free Savings Account is ideal as a retirement
income source – never subject to tax
• Non-registered investments can also provide taxefficient income (to supplement RRIF withdrawals)
Possible Considerations:
• Do you have a TFSA?
– You can provide funds for a spouse to invest
– Income does not affect government income programs
• Maximize income through tax-efficient investing
– Income splitting opportunities
– Dividend income from non-registered accounts increases
net income, and can reduce OAS benefits
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
Annuities and Insurance
• Annuities can control market risk and deliver
guaranteed income for a specified period or for life
– Purchase usually through insurance company
– Monthly payments consist of capital and income
• Insurance proceeds are tax-free on death and
bypass probate to named beneficiaries
Possible Considerations:
• Annuities may have no estate value or liquidity
• Many features to consider
• Higher insurance costs for older individuals;
opportunity for estate planning and family
discussion
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
Reverse Mortgages
• Allows you to borrow up to 45% of the value of your
home (if paid off) to generate income
• Home is then held as collateral by lender
• At death, estate pays off the outstanding balance of
reverse mortgage and any remaining equity goes to
your estate
Considerations:
• Terms and conditions; consider potential drawbacks
• Interest rates higher than regular mortgage or home
equity line of credit
• Income is taxable and may impact OAS eligibility
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
• We can help you estimate the income you expect to have from
government programs, company pension plans, personal savings,
real estate and other assets
Income Sources
Estimated Annual
Income
Canada Pension Plan
$
Old Age Security
$
Company Pension Plan
$
RSP Savings/RRIF
$
Non-Registered Savings
$
Real Estate
$
TFSA/Other
$
TOTAL $
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
4. Comparing Expenses and Income
• Next, we’ll compare your estimated living expenses with your
estimated income to determine:
– first, whether your pensions and government benefits can cover your
essential expenses. If not, what portion can they cover?
– second, if there is income remaining after essential expenses to cover
your discretionary expenses?
– In short, we’ll help you answer the question: Do I have enough?
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
Covering the Essentials
• In planning for your retirement, we recommend you use the income
that’s steady and dependable to pay for your must-haves, such as
food and shelter.
Covering the Essentials
Estimated Annual Essential Expenses
Estimated Annual Income from
Reliable Sources
$
$
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
Covering the Rest
• Any reliable income remaining, plus income from your investment
assets, can be used to cover your discretionary expenses – the
nice-to-haves, such as travel or a vacation home.
Covering the Rest
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Estimated Annual
Discretionary
Expenses
Remaining Annual
Income from Reliable
Sources (once basics
are covered)
Income from
Investment Assets
$
$
$
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
Surplus or Shortfall?
• If it looks as if you won’t be able to generate enough income in
retirement to cover your estimated expenses, we can help you
explore other options:
Examples:
– adding more equities for higher growth potential, depending on your
risk tolerance
– working for a few more years
– saving more in pre-retirement
– working part-time during retirement
– downsizing your residence
– cutting expenses before/during retirement
– RRSP loan
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
5. Build an Income Management Program
• One potential solution to supplement your reliable income is to
convert your investment capital into an Income Management
Program
Benefits:
• Aligns your capital to help:
– Maximize potential growth
– Create a regular flow of income
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
Income Management Program
How it works:
• We can generally arrange your investment accounts into three
“buckets”
– Short term, which will always have three years’ worth of income in
investments that are safe and liquid
– Mid term, which will still be conservative but will produce income
– Long term, which will be more growth oriented to help you stay ahead
of inflation and make your money last as long as possible
• Every year, your short-term portfolio is refurbished by income from
the mid-term and long-term portfolios
• As part of the program, we can help you defer taking money out of
RRIFs where possible
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
Income Management Program
Short Term
1- 3 Years Income
Money Market or other liquid investments which you
draw from to pay expenses
Mid Term
3 - 7 Years
Example:
60% Income Portfolio (50% Bonds and 50% Dividends)
40% Conservative portfolio (60% Bonds and 40%
Global Equities)
Long Term
7 years+
Example:
50% Income Portfolio (50% Bonds and 50% Dividends)
50% Balanced Portfolio (40% Bonds and 60% Global
Equities)
Income
Income
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
Income Management Program
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2.
3.
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
6. Monitoring and Reviewing Your Plan
• Our team will meet with you regularly to monitor your income
management program
• Each year, or when there is a significant change in your life, we will
review your plan and make any necessary adjustments to keep you
on track to meet your goals
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
How We Can Help
• We can help you live your dream by:
– guiding you through our retirement income planning process
– helping you create and manage the portfolios that will fund the
retirement lifestyle you desire
– monitoring your progress against your retirement income plan
<Client name’s Retirement Income Plan prepared by the Advisor name Team>
Trademarks owned by Investment Planning Counsel Inc. and licensed
to its subsidiary corporations. Investment Planning Counsel, is a fully
integrated Wealth Management Company. Mortgage broker services
provided by IPC Save Inc. (Ontario Lic. #10227). Mutual Funds
available through IPC Investment Corporation and IPC Securities
Corporation. Securities available through IPC Securities Corporation, a
member of CIPF. Insurance products available through IPC Estate
Services Inc.
<Client name’s Retirement Income Plan prepared by the Advisor name Team>