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Shifting Gears – A 40 Minute Lifestyle Seminar

‘Shifting Gears’ is a 40 minute presentation that helps retirees make the transition from years of saving and accumulating to the new life of spending and enjoying! In retirement in addition to managing money wisely, retires also need to use their money wisely. Sometimes we forget that money is only a utility – and it is only useful when it is used to help us achieve our goals. If retirees don’t have a plan to use their capital wisely they lose an opportunity for greater enjoyment, and even worse, the larger estate that is left behind may cause more grief than happiness for their heirs. In the seminar the following issues are addressed. • How to shift gears from growing wealth to using wealth. • How to clarify financial, lifestyle and estate goals. • How to determine what is essential capital and what is surplus capital. • The pros and cons of five options for dealing with surplus capital. • Six reasons why you might want to give heirs an ‘advance’ on their inheritance. • Why the study at Harvard of 4,000 millionaires concluded that it was best if the parents gave the money away – so their children could make their own money. • How philanthropy can increase happiness for both parents and children. • How family meetings reduce the possibility of a dispute over the estate. • Knowing the risk and the cost of trying to protect against all unlikely events. • How to make big decisions that involve both financial and emotional elements. • Why retirees should ‘treat themselves’ to a reliable source of happiness. •...

These Recent Retirees Have Substantial Assets But No Real Game Plan

After long and successful sales careers, Mark and Marlene decided in 2017 to retire from the working world early. He is 56, she is 58. Now Mark wonders whether he will have to go back to work to support their goals, which include “significant travel” and leaving an inheritance for their two children, who are in their 20s. Marlene and Mark have amassed substantial assets thanks to hard work, “being conscientious savers” and some successful real estate transactions. Neither has a work pension. Mark is a “do-it-yourself” investor who is beginning to worry a bit about the responsibility. “My performance has been mixed at best,” he writes in an e-mail. “I get lured into buying high-flying growth stocks or [exchange-traded funds] without a proper plan of allocation and diversification.” With low interest rates and “the markets seemingly near the end of a bull run, I have become uncomfortable that we may not have enough saved to stay retired,” Mark adds. He’s thinking about hiring a discretionary investment firm “so I can reduce the amount of time I spend in front of the TV watching BNN [Bloomberg] and CNBC, like I have been lately.” Mark is becoming keenly aware that he will have to draw up a comprehensive financial plan to determine if they have enough money, whether it is invested properly and how to draw on it in the most tax-efficient way. Their spending goal is $85,000 a year after tax. We asked Warren MacKenzie, head of financial planning at Optimize Wealth Management in Toronto, to look at Mark and Marlene’s situation. Mr. MacKenzie’s most recent book is The Philanthropic...

4 Key Tips to Ensure Your Bank is Giving You a Deal

People are often quite loyal to their financial institutions – they usually decide to have all of their credit cards and financial products under the same bank. Initially it seems like the most convenient option, but you may not be acquiring the best deal. Shop around and keep the following in mind: 1. Be Mindful of the Hidden Fees Banks offer a plethora of information online and in physical documentation regarding their fees. Make yourself aware of those fees. Some banks charge $2 to get a statement by mail. There is a dormant fee (when the account has remained inactive for so long). The idea is to find a bank that doesn’t take on so many fees or offers free services. For example, a free checking account that includes bill payments, email money transfers, debit purchases, etc. may be something to consider. You can access the bank to withdraw money, cash a check that doesn’t include a long hold, etc. 2. Start looking elsewhere If you notice your bank consistently raises its fees or your fees, you may want to do some shopping around to find a financial institution that offers a lower rate. If you do find a better rate than what your bank is offering you, bring it to them and see if they can match it. Give them an ultimatum, and if they can’t match it, then leave. Too often, people go to a bank and accept the offers they are presented with without taking the time to really look at them. People need to do some research about their rewards programs, monthly fees, review customer...

3 Red Flags That Could Affect You Living Comfortably During Retirement

Retirement… your plan may be well-thought out, but there could always be an unforeseen event that could derail your journey. You could live a lot longer than you anticipate, have more financial health problems or suffer from a rise in inflation. But, there are certain measures you can take to ensure your money outlasts you. Know when to Downsize Retirees who did not save enough and want to live in their home may need to consider their reality. If it costs more to stay in your home than you can afford, you may need to be honest with yourself and make the hard decision to downsize. Your home is an asset, but if it’s too much, it could become a liability and ultimately a financial burden. An overly large home isn’t a necessity in retirement, but money is. Helping Your Children Way Too Often All parents want to help their children, but many of them give them way too much money too quickly. This can hurt their only financial affairs. It’s a good idea to set up an estate that you can dip into when needed, but should you not, your children can benefit later on. Overspending If you spend an excessive amount of money in the early part of your retirement, you won’t have enough to live on as you age. Be cautious of focusing all of your money into saving vehicles like GICs and cash. Whilst it may seem like the safest option, you may be missing out on opportunities and even lose money after you pay taxes and factor in inflation. This, along with overspending, means you’ll...

Welcoming Industry Veteran and contributor to The Globe and Mail, Warren MacKenzie as our new Head of Financial Planning

We are pleased to announce that Warren MacKenzie has joined Optimize Wealth Management as our new Head of Financial Planning. Warren brings with him over thirty years of experience in the financial services industry. Warren is well known for his advocacy for investor education and his fixation on bringing transparency and objectivity to the financial planning industry. An educator at heart, in 2004, Warren launched Weigh House Investor Services where he provided unbiased investment advice to his clients, which focused on uncovering hidden investment costs while still optimizing their specific financial picture. Warren is the author of The Unbiased Advisor, Zen and The Art of Wealth, and co-author of the New Rules of Retirement and The C.A.R.P. Financial Planning Guide. He is a regular contributor to various media publications such as The Financial Facelift in the Globe and Mail as well as the Money Saver magazine. Warren is a Chartered Accountant, a Chartered Professional Accountant and also holds the Certified Investment Management Analyst Designation (CIMA), and the Chartered Investment Manager Designation (CIM). Warren has always been passionate about delivering advice rooted in sound investment principles to help clients achieve their specific financial goals and looks forward to continuing this tradition at Optimize. In this role, Warren will continue to work directly with clients and their financial planning needs in addition to being in charge of the overall financial planning direction which Optimize Wealth Management takes. With Warren’s passion and dedication to always do the right thing for his clients along with the Full Suite of Financial services and solutions that Optimize Wealth Management offers we will continue to ensure...

5 Strategies to Retain Financial Health

With the summer now officially over, I thought it would be a good idea to get back to the basics of saving and compile a list of techniques that, when used diligently over time, will reward your wallet and bank account. Prioritize Spending The first and most important thing is to determine what you consider necessary. What is most sought after? Do you want to eat out and spend time with friends? Would you rather buy a vehicle or own a home? Whatever is essential to your quality of life, focus on them and cut out any unnecessary purchases that don’t fulfill you. Work Together on Finances When it comes to household finances, both parties should be involved in the process. In many cases, one person is left to do it all, totally absolving the other from any responsibility. This can lead to problems when things are not monitored closely, or the person holding that responsibility can feel resentful about having to take care of it all. Collaborating and regularly talking about finances can alleviate stress in a relationship, stabilizing any bad spending habits. Early Retirement Isn’t Likely Many people would love to retire early from work which is attainable, but you need to save for a long time and make some sacrifices. Make sure to add 10 or more years into your working life and realize that the more money you add to the savings, the less years you’ll spend using it to live. Avoid Using Credit for Back-Up Plans Credit cards and a line of credit should only be used in cases of emergencies. It may help...

TFSA, RRSP or Mortgage: Where Should Your Money Go?

What would you do if you suddenly won the lottery? Would you save the money? Would you spend it on the things you desire? The most basic option is to spend it, pay your debt, give the money away or invest it. However, there are even more ways in which you can use the money available to you – you can pay down a mortgage, contribute to a retirement savings plan or a tax-free savings account. Mortgage or RRSP People often wonder if they need to pay their mortgage down or increase their RRSP savings. The method commonly used is to increase the RRSP, which promotes some tax savings, usually in the form of a tax refund. This refund can then be applied to your mortgage. It’s a win-win. Paying the mortgage down will ensure savings while there is no guarantee of a favorable return from an RRSP. It’s also wise to pay off the mortgage before your children are ready for college as it’ll be easier to pay university fees. You should always pay high-interest debt and credit cards off before you contribute money to an RRSP. TFSA or RRSP The marginal tax rate (MTR) today and the possible MTR rate you may get in retirement is what you need to consider when deciding between a TFSA or an RRSP. If the MTR is higher now than you feel it’ll be in retirement, it’s time to contribute to the RRSP. This will allow you to benefit from the tax savings at the high rate now and pay at a reduced rate later on when you need to make...

4 Tips to Help You Attain Financial Freedom

Did you have any financial gains or losses so far this year? If so, what lessons did you learn from them? It’s important when talking about finances to consider what you gain from an experience and how you can better prepare yourself for when an opportunity arises or a misfortune develops. Make the Right Big Purchases Buying the little things to keep you going throughout the day such as a morning coffee or grabbing lunch at your favorite regular is totally fine once it’s factored in to your budget and well within your means. The acquisitions you really need to be wary of are fancy cars and/or expensive houses. While you may think you’re happy with your purchase now, buyer’s remorse may soon set in when you come to realize that your financial freedom felt better than the item you’ve obtained. Minimize Your Credit Card Usage If you have credit cards, consider not keeping them in your wallet and leave them at home so you’re not tempted to use them. Yes, credit cards are an important part to your financial health, but think of the interest that they can accumulate. With a good credit score, you can reduce your borrowing costs. Use those cards wisely. Save for Your Retirement Everybody wants to save for retirement and see out the rest of their lives comfortably. Don’t think of saving as a chore, but rather a necessary duty that will reward you later on in life. Saving for the future means ensuring yourself solid financial footing.  Financial freedom comes in the form of saving, not buying. Realize Where You’re at Financially...

4 Ways You Can Use Your Inheritance Money Wisely

Has a loved one recently died and left you with a plethora of money? If so, you may be wondering what you can do with it. It’s amazing how much wealth a person can accumulate in a lifetime, and their family members have no real clue about it. If you’re lucky enough to find yourself in that situation, here’s how you can use it wisely: Pay Down Your Debt If you have received an inheritance and are saddled down with debt, consider using that money to pay down your debt. You’ll sleep better knowing your financial obligations is being taken care of or is now fully paid off. Investments If you’ve had difficulty saving for your retirement, you could use that inheritance for investments – even if you’re dealing with debt. Use the inheritance to make up for lost time, so that when you return to it you can live on something rather than nothing. Of course, any decision you make in regards to your inheritance should take into consideration your income. If it’s unstable or relatively low, and you don’t have an ideal retirement plan, investing the money can help. Help Others with the Inheritance Sometimes, it’s better and feels good to help others. This is especially true if your debt and retirement are already in good financial shape. When giving away the inheritance, there are two options. 1/ Give it to family and/or friends 2/ Charity You can also help your family out as well. Consider paying for your child’s education or putting the money toward a down payment on a home. If you go with the...

6 Considerations Prospective Homeowners Need to Remember for the Negotiation Table

After years of frugality, you’ve saved enough money up to put a down payment on a house. Perhaps a congratulations is in order since you’re about to become a homeowner! Well, not quite yet… You see, you may have enough for a down payment, but you still need at least 80% to purchase a home. That means you need to be approved for a mortgage. However, how can you be sure you get a deal that’s the best for your financial situation? You can haggle for your mortgage, it’s just a little different. 1/You can Negotiate the Rate According to RateSpy founder Rob McLister, posted rates are not final rates. In fact, there are very few lenders that have inflexible rates. And, even these lenders will bend the rules for those who demonstrate themselves financially stable. 2/Rates are Not the Be-All and End-All While you do save money on a low mortgage interest rate, there are also hidden costs in a contract. With lenders posting rates on websites, prospective borrowers are far more likely to check out the advertised rate. This has resulted in many lenders adding clauses to their contract. For instance, a lender may demand that a mortgage must be completed within 30 years or the borrower may be subjected to penalty fees. Prospective borrowers need to look at the rate of each institution to realize what they’re getting into. 3/Extend Negotiations Beyond The Rate The rate isn’t the only thing to contend with in a mortgage. You must also address transfer fees, discharge fees, deed fees, appraisal fees and legal fees. There is a host of fees...

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