It is no surprise that our health and well being is at the forefront of conversations these days. Covid has brought mental health and the need for disability insurance to top of mind.

Most often when we think about disability, we think of someone who engages in risky behaviour like heli or back country skiing, driving erratically and without care, or a deep-sea scuba diver or one with bad lifestyle habits like smoking or drinking excessively. However, less than 10% of disabilities are caused by accident, including workplace accidents or motor vehicle accidents.

Statistics Canada states 1 in 7 Canadians have a disability. The most common ailments may surprise you. Mental health being the leader in claims for disability followed by musculoskeletal (i.e., arthritis), then cancer and heart disease. Age does not matter, when 1 in 6 individual disability claims are made by someone under 40. And records show, more than 30% of all people who are between the ages of 35 and 65 will suffer a disability lasting longer than 90 days and about 1 in 6 can expect to become disabled for more than 5 years.

Disability insurance is about protecting your income, making sure you can cover your bills should you become sick or injured. How would your finances fair should something happen to you?  During the early part of Covid last spring, many businesses were forced to shut their doors; the realisation of no income for several months was devasting for some.  An injury or illness for several months or years too can become a real financial hardship for many to overcome.

As anyone who has been off work for an extended period will tell you, the financial cost associated with that circumstance is unfathomable. Consider a cancer patient who has been off work for nearly a year with surgery, treatments, and physical and emotional recovery or someone who has been in a motor vehicle accident and requires ongoing rehab. Some costs may be covered, and while some expenses may drop off (e.g. travel, hobbies, dining out), you are likely to incur many new ones. Some of these may be covered by employee extended health benefits, MSP or ICBC but typically you will be responsible for the majority of them. Ongoing business expenses are not covered by any government or group program. While you are likely familiar with typical rehab expenses like chiropractic treatment, physiotherapy and massage, a long-term disability can bring unexpected additional expenses such as house cleaning, help with shopping, childcare expenses and meal preparation.

When applying for disability insurance, or any insurance for that matter, remember, not all policies are created equal. If you need to claim on the policy, making sure you’ve invested in a good one can make all the difference. Some plans offer very restrictive definitions and/or broad exclusions and are not underwritten until claim time. As a result, they may not pay out as you had hoped. Being surprised at a vulnerable time, when you need protection the most, can be very upsetting so you should know the terms and benefits of your contract before you buy the insurance. This will help give you peace of mind that your insurance will pay out when you need it most.

There has also been some confusion about how the COVID vaccine will affect your benefits which by the Canadian Life and Health Insurance Association, “Getting the vaccine will not affect your insurance coverage. No one should be afraid and choose to not protect themselves from COVID-19 because they are worried about it affecting their benefits. All of Canada’s life and health insurers are supportive of Canadians receiving government approved vaccinations to protect themselves from serious illness and death.”

COVID-19 vaccinations have been approved by and are being administered through Health Canada. These vaccines have no impact on the application or claims practices of insurance policies.

While it may be tempting to view disability insurance as an additional expense, the cost of not having a plan in place can be devasting to your financial future. Pricing is influenced by a number of factors including, disability claims statistics, health, age, sex and benefit amount. The younger and healthier you are, the cheaper the insurance. We have not seen a change in insurance premiums due to Covid yet, but we may see rate increases in the future depending on how this global pandemic affects claims. Therefore, exploring your options sooner may allow you to lock in premium rates.

Comprehensive professional plans have guaranteed premiums, are non cancellable by the insurance company and provide protection for your working years right up to age 65. A layered approach or hybrid type of plan, with short term and long-term disability can adequately protect your income and help you financially survive a disability.

This article has been provided by Sindy Billan, SB Wealth Solutions* and Saskia Vermeulen, Southlands Financial is for informational purposes only. It is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon for providing such advice. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by Sindy Billan or Saskia Vermeulen as to its accuracy, completeness or correctness. *SBILLAN Wealth Solutions Inc. doing business as SB Wealth Solutions E&O/E 2021

As a Naturopathic Doctor, you’re used to taking care of other people. You help your patients improve their health so they can enjoy their lives. But, what about yourself? Who will take care of you as you age?

This past year has shown us all that even the best laid plans can go awry and that we never know for sure what will happen in the future. When you’ve decided to stop working, you might already have ideas of how you’d like to enjoy your retirement. Maybe you would like to travel, renovate your home or pick up a new hobby. The possibilities are endless, and it can be a lot of fun to plan. But, what if your health doesn’t cooperate? If you need care, do you have the savings to pay for it?

Should you need long-term care, the BC government has some public care homes that are partially subsidized. However, these can have long waiting lists and take a while to get into. This can be stressful if you only apply as the need arises. As BC’s population ages and people from the “baby boomer” generation start to access these residences, those wait times will only grow. Another option is private facilities, which can cost anywhere from a few thousand dollars to well over $10,000 per month. And what if you want to stay in your home and bring care in? That can be extremely expensive as well. So how can you protect yourself and make sure you can afford the care you may need?

A good retirement savings plan is a solid start, but expensive care can still derail your retirement plans. Long-term care insurance was invented to help address a short fall triggered by the need for assisted living. Long-term care (LTC) plans are designed to give you peace of mind and security. Many of them allow you to stay in your home and receive care there if that is your preference. The financial benefit helps keep you in control so you can live with dignity. LTC insurance protects you from having to deplete the savings you’ve worked so hard for to cover the costs associated with care. It also enables you to remain financially independent, rather than needing to rely on family and friends for help.

When is the best time to purchase long term care? The younger you are, the less expensive your premiums will be and the easier it is to medically qualify for the insurance. However, some plans currently available accept enrolment up to age 80.

Not all plans are created equal. When choosing a long-term care plan there are a number of factors to consider:

1. Under what circumstance would you like your plan to pay out? Many of the plans currently on the market will pay out if you are unable to do two of six of the activities of daily living (bathing, dressing, toileting, transferring, continence, feeding) or are cognitively impaired.
2. What would you like the benefit to pay for? Some benefits will pay for home care, while others will require you to move to a facility. You may need to produce receipts to be reimbursed for claims. Other plans will pay you your monthly benefit as long as you’ve met the terms to claim.
3. When would you like the benefit to start? Benefits may pay out as soon as you meet the claim terms, or only after you reach a certain age. You will also get to choose a waiting period (how long you will wait to start receiving benefits after you meet the claim terms). The longer the waiting period, the less expensive the premium.
4. How long would you like the benefit to pay out for? You can choose to have a set maximum period the benefit will pay out for, or set it for the rest of your life.
5. How much would you like to receive each month? You can set the benefit amount between a predetermined minimum and maximum.

Long-term care is something we all hope we will not need. However, since the future is impossible to predict, it is important to find a plan that fits your needs. If you have questions or would like more information about long-term care plans, your independent broker can help you explore the options that are currently available.

This article has been provided by Saskia Vermeulen, Southlands Financial and Sindy Billan, SB Wealth Solutions* is for informational purposes only. It is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon for providing such advice. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by Sindy Billan or Saskia Vermeulen as to its accuracy, completeness or correctness. *SBILLAN Wealth Solutions Inc. doing business as SB Wealth Solutions E&O/E 2020

The financial future for millennials is vastly different from that of previous generations,” said Martin Joyce, partner and national leader of human and social services at KPMG, in a press release. “They face unique challenges when it comes to building wealth despite having more education and income, primarily because of housing unaffordability.”

Relying on government programs to fund your retirement is risky. Given your many professional and personal demands, you may wonder how you’ll ever be able to save for a new home, new baby, pay down your student loan debt and mortgage, and put enough money aside for retirement.

A survey by Blackrock Canada reveals that 62% of non-retired respondents are generally confident that they have planned well for retirement. But only 59% of these people actually have a plan. And fewer than half of Canadians who have saved less than $100,000 for retirement have a plan—even though they are, arguably, the group that needs it most. As self- employed professionals, you must consider where the income will come from when you are no longer working.

All or part of your retirement funding may come from government sources; Canada Pension Plan (CPP), Old Age Security (OAS), guaranteed Income Supplement (GIS )and the Registered Disability Savings Plan (RDSP).

CPP was designed in 1965 to help Canadians save more for retirement and prevent seniors from poverty. At the time of introduction, life expectancy for females was 73 and males 66.  Life expectancy today is 84 for women and 80 for men. It will cost a lot more to fund a retirement. When all things considered; a decade of a low interest rates, market volatility, inflation and the future economic impact from Covid, the ability to stretch your dollar even more becomes challenging.  While some may still dream of an early retirement, the world where freedom 55 seemed like a genuine possibility is no longer the world we live in today.

To receive the maximum CPP payment, you would have to contribute the max CPP contribution each year for many years. As of 2020, the maximum benefit amount is $1175.83 /month, however, the average CPP for 2019 was a much lower $679.16 per month. This is because not all individuals have contributed enough to receive the full CPP payment. The CPP was intended to supplement a person’s retirement plan, not to be the only plan. Unlike today, in 1965 the majority of working people had work pensions.

As times have changed, is the government doing more to help with retirement? There are several initiatives the government is taking to improve retirement security for Canadians. The Government has implemented in a number of key reforms, such as indexing for cost of living, increasing the disability pension and offering their pension management infrastructure to assist public and private sector employers with a multi-employer retirement savings program.  However, this still leaves a large gap in resources when it comes to serving the small business owner and self-employed individual to save for retirement.

OAS was also designed to supplement retirement income when you turn 65. In 2020 the full monthly benefit is $613.53.  You are eligible to receive a benefit if you are a Canadian citizen or legal resident, have lived in Canada after the age of 18 for 10 years or more (different criteria for Canadians or legal residents not living in Canada).  If your net world income exceeds the threshold amount $79,054 for 2020,  you have to repay part or your entire OAS pension.  If you earn $128,137, you will be required to pay back the entire OAS benefit.

It is important to note that neither of these benefits is paid out automatically; you must apply for each one in order to begin receiving benefits.

Guaranteed Income Supplement (GIS) is for low income seniors. It is available for individuals earning less than $18,600 annually. Planning and implementing an effective retirement strategy early on, during your working years, can prevent you from depending on GIS to live.

Have you heard of the Registered Disability Savings plan (RDSP)? If you or a loved one has a disability, Canada’s RDSP can be a great way to secure a solid future. The plan became available in 2008.  This very lucrative federal program can go a long way to ensure someone with a disability can be cared for financially and thrive. An RDSP functions similarly to an RRSP but receives government funding in addition to personal contributions. It’s unfortunate, despite this tool’s ability to improve the lives of people with disabilities, just over 10% of the 500,000+ eligible Canadians have opened an RDSP since the program’s inception.

To be eligible, you must qualify for the Disability Tax Credit, be under the age of 60, and be a Canadian resident with a SIN. The plan offers a matching grant  up to 300%, depending on the beneficiary’s family income and contribution. Not all investment companies or financial institutions offer the RDSP, mostly because of its administrative cost and cumbersome paperwork.

On the first $500 you contribute, the Government will deposit $3 for every $1 you put into the plan, that’s 300% = $1,500 a year.  The next $1,000 you contribute each year, the Government will deposit $2 for every $1 you put into the plan, up to an additional $2,000 a year. That’s $3,500 per year of grant money, with a limit of $70,000 grant money. Grants can only be received up to the age of 49. Total lifetime contribution is $200,000.

Contributions and grants are tax sheltered and can grow tax free while invested.

Because the RDSP was designed to encourage long term savings and to protect those who may be at risk, complicated rules and stringent guidelines, prevented many from opening a RDSP.  For example, if a person was no longer eligible for the disability tax credit, the plan had to be closed.  Another barrier was accessing funds from the plan. The ten-year rule meant if a grant was received, no portion of the funds could be withdrawn until 10 years after the last grant was paid. This made it unreasonable for some to open a plan because of the nature of their disability, 10 years may be too long as life expectancy was uncertain. As of March 2019, under proposed changes for 2021, the existing time limitation on the period that an RDSP may remain open after a beneficiary becomes ineligible for the disability tax credit (DTC) will be removed.  The rules and guidelines have changed since the inception of the RDSP. If you are eligible or have a loved one who may be eligible, we recommend you consider the RDSP and speak with a qualified advisor.

Regardless of how you plan your retirement, it is important you do just that – plan. The sooner you start saving, the easier it will be to comfortably retire. The government benefits are a nice supplement to your income but as a self-employed professional you’ll need to make sure you’re setting aside money to pay yourself in retirement. As a starting point, the BCNA offers a group retirement savings plan to help you reach your goals.

Published in the BCNA Bulletin, Fall 2020 

This article has been provided by Sindy Billan, SB Wealth Solutions* and Saskia Vermeulen, Southlands Financial and is for informational purposes only.

It is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon for providing such advice. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by Sindy Billan or Saskia Vermeulen as to its accuracy, completeness or correctness.

*SBILLAN Wealth Solutions Inc. doing business as SB Wealth Solutions E&O/E 2020

 Many people know they should have life insurance but put off getting it because they feel overwhelmed. How much should you get and how do you know which type to buy? A good financial/ insurance advisor’s job is to help you answer those questions. Often people spend more time planning their vacations than they do their financial future despite the importance of the latter. Premature death or disability can derail your personal and retirement objectives if not planned for in advance. 

In general, there are two types of insurance – term (you rent it) and permanent (you own it). Much like real estate, there are pros and cons to both. As with rent, term insurance premiums increase over time and will often become too expensive in the future. Insurance is priced based on the level of risk the insurance company is taking on. As you age, the risk increases as do the premiums. Therefore, if you need insurance in the short-term (for 10 years for example), term insurance will be much less expensive — because the insurance company is assuming it is a lower risk for something to happen to you in that time. Conversely, permanent insurance will have to pay out eventually because the mortality rate for all of us is 100%. 

Permanent insurance is an asset that you own. Depending on how it is set up, the premium will stay the same regardless of how old you are (its based on your age at the time the policy is issued) but the death benefit may increase. This helps to offset inflation as your purchasing power will likely be reduced by the time your dependents are making a claim (think about groceries costing more now than they did 20 years ago). There is also a provision in many policies where the policy accumulates what is known as a cash value. Depending on the terms of the policy, this will likely allow you to access some of the cash value of the policy during your lifetime. 

When you’re deciding what kind of insurance to get, a good starting point is to ask yourself what the insurance is intended to do. Do you need it to last your lifetime or only a specific time (e.g., to cover a 20 year mortgage), will you need it to cover off other debts, replace your income, send your children to university, cover final expenses including your funeral, etc.? 

Consider Carol and John. They have three kids, a home, a cottage which has appreciated in value since they bought it and various investments. All children are under the age of 15. Carol and John want to ensure that their mortgage is paid off if one of them dies p r e m a turely. They also want their kids to inherit their cottage without having to pay a large tax bill. They would like to fund their children’s post-secondary education in the event they are not around to pay for it. It is important to them that the survivor can meet their current financial obligations in the case one of their incomes ceases due to death. 

 The mortgage and schooling are both short-term expenses. Eventually, Carol and John will not need the insurance anymore as the mortgage will be paid off and the kids will have finished their schooling. Therefore, term insurance would likely be the appropriate choice to cover these expenses. 

Regardless of how long they live, their cottage will trigger a taxable event upon the second death. The tax will be equal to the capital gains rate (currently 50%) multiplied by the increase in value since they purchased the property. For example, if the cottage was purchased for $200,000 and is valued at $400,000 at the time of death, this would trigger a $100,000 tax bill. Their funeral expenses will also apply regardless of age. Income replacement to help pay bills in the event one of them outlives the other will continue regardless of when death occurs but the amount needed will change depending on how far into their working career or retirement they are. For these reasons, permanent insurance would likely be used for these items. The income replacement may be a combination of term and permanent insurance. 

Regardless of the combination of insurance Carol and John’s advisor helps them select, meeting their immediate and long-term needs is easy with one application. 

Throughout your lifetime, your needs and obligations will change. For this reason, it is important to review your plan on a regular basis and update it as needed. You should meet with your advisor for an annual review or as you experience a life change (i.e. you get married or divorced, have a child, change your job etc.). As Lewis Carroll said, “If you don’t know where you’re going, any road will get you there.” In order to get where you would like to go, creating an intentional roadmap is vital. A sound financial plan reviewed regularly with the help of a competent financial advisor will help you stay on track to reach your goals with peace of mind. 

Published in the BCNA Bulletin, Spring 2020 

This article has been provided by Saskia Vermeulen, Southlands Financial and Sindy Billan, SB Wealth Solutions* and is for informational purposes only. It is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon for providing such advice. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by Sindy Billan or Saskia Vermeulen as to its accuracy, completeness or correctness. 

*SBILLAN Wealth Solutions Inc. doing business as SB Wealth Solutions E&O/E 2019

“I have been saving for just over a year, & I’ve already saved >$14,000. Sindy helped me set up an RRSP & a TFSA. It’s automatically taken out of my account each week, so that I don’t even have to think about it. I’m able to easily access it & make changes to my contributions as needed. Easy peezy! I’m so relieved that I finally started saving for retirement!”

Investors who work with an advisor have been shown to have almost 4 times the assets of investors who don’t work with an advisor over a 15-year period. And, despite the prevailing opinion that advisors only work with the wealthy, many Canadian investors had investable assets of under $25,000 at the beginning of the advisory relationship.

What does an advisor do for you? They can provide a detailed step by step, financial plan that is tailored to your individual financial goals and situation. Your plan will be monitored and updated regularly so it grows with you throughout your career and in retirement. An advisor can offer financial solutions for your investment portfolio, education to help you understand and gain confidence in your plan as well as guidance and support to instill good savings habits.

A good advisor will poke and prod the way a doctor does. Just as doctors listen to their patients regarding symptoms and ask questions to gain a better picture of their physical health, an advisor will ask questions to gain a better understanding of one’s financial health. A professional advisor looks at the whole picture to ensure your plan is comprehensive and will help you achieve your objectives. Services such as insurance protection and tax and estate planning go hand in hand with retirement planning. While an advisor will make suggestions based on your situation, you are the one who will ultimately decide what works best for you.

The BCNA is constantly evolving to better serve its members. In September 2013, they launched their group retirement savings plan. This plan allows members to save for their retirement and other life events by offering RRSPs and TFSAs. Since it is structured as a group plan, there are several benefits offered to you which are not available to many individual investors:

1. Lower management fees – range from 1.86% -2.0% – which means more money in your pocket. As the BCNA plan continues to grow, the fee may be further reduced and
2. Investors with over $25,000- fee will reduce “proportionately” over time as the account value grows
3. Education and guidance- information and support, online plan information, tools and calculators designed to help you plan ahead
4. Top of class investments- pension style investing with professionally managed portfolios
5. Death benefit guarantee on the book value of your investment
6. Personalized consultations – advisors who can help guide you through the process: how much should you save and into what accounts? What is the most tax-efficient way to structure your investments? As a member of the BCNA plan, this service is complimentary for you.

What could $25,000 have done for you, if invested in the BCNA Group Retirement Savings Plan? Since its inception in 2013, members who deposited $25,000 at the start of the plan and continued contributing $500 at the beginning of every month, would have accumulated between $72,700 – $80,400. This range is dependant on risk tolerance and consequently, which portfolio was selected. There are many investment options ranging from portfolios designed for the very conservative investor to those who are seeking aggressive growth. Regardless of which is chosen, the composition in your portfolio automatically changes as you approach retirement. This is another benefit available to the BCNA Group Retirement Savings Plan members. Over time, investments become more conservative to protect your investments when you are nearing retirement.

Those who set up an automatic debit for $1000 per month into the Melodia Maximum Growth Fund now have close to $89,255. Investors who took it one step further and invested their tax refund of approximately $3600 into their plan, have over $116,300+, in just 6 short years!**

Investment returns are important but saving on a regular basis is equally important when it comes to reaching your financial goals.

“Sindy and Saskia have helped me navigate the daunting world of insurance, investing, and retirement planning. Retirement planning especially is complicated and full of emotion. They explain everything so clearly and are always there to answer my questions and support me, which takes all the fear right out of it. I’ve been working with Sindy for a decade now and refer to her any chance I get and there’s a reason for that!”

Greater peace of mind comes with knowing you have set yourself up for success in your retirement. This allows you to choose if and when you would like to slow down your practice while being confident that you will be comfortable in your retirement. According to the 2019 Sun Life Barometer, people who work with a financial advisor feel more secure in retirement. In fact, 62% of Canadians with an advisor are satisfied with how much they saved for retirement, compared with 37% of those without an advisor. Investing in the BCNA’s Group Retirement Savings Plan allows you to save to secure your future and encourage and support your fellow colleagues for the same success.

With online access, online enrollment, online or telephone communication and personalised advise, makes it easy to get started.

“I have been working with Sindy since graduation from Naturopthic College. With her help saving for my future has been one area of my complicated professional life that I know is taken care of. From day 1, and ongoing, I feel like she has my best interest in mind.”

“Being self-employed and therefore not having a pension or employee retirement fund, thinking about the future can be somewhat stressful. Investing in the BCNA Group Retirement Plan has provided me with an excellent way to put money aside for retirement. Given that I’m not “investment-savvy”, I very much appreciate the time Sindy spent with me prior to my committing, educating me on the plan and its profile, and that I can communicate with her on a yearly basis to review my plan.”

For more information on this plan, please contact

Sindy Billan at sbillan@telus.net or

Saskia Vermeulen at saskia@southlandsfinancial.com  604-862-7891

*Past performance does not indicate future returns. Returns will be determined by the investments chosen and the markets and timing of deposits.

Assumptions: Melodia Moderate Growth fund, Melodia Maximum Growth fund Annual rate of return, net of fees, over a 5-year period, 4.07 and 6.34% respectively. Marginal tax rate of 30%.

Source: The Gamma Factor and the value of Financial Advice, Claude Montmarquette, Natalie Viennot-Briot, 2016

Source: Canadian Investors’ Perceptions of Mutual Funds and the Mutual Fund Industry, Pollara 2016.

This article has been provided by Sindy Billan, SB Wealth Solutions* and Saskia Vermeulen, Southlands Financial and is for informational purposes only. It is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon for providing such advice. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by Sindy Billan or Saskia Vermeulen as to its accuracy, completeness or correctness. *SBILLAN Wealth Solutions Inc. doing business as SB Wealth Solutions E&O/E 2019

After graduating and attaining certification as a naturopath, there are plenty of expenses to be thinking about. You’ll have the costs associated with setting up a new practice, the cost of living, and before you know it, it’s time to start paying off your student debt. On top of that, you know you’re supposed to be saving for retirement. So, what’s the best approach? Should you pay off your student loans as fast as possible, and then then begin to save that same amount for retirement? Or is it more efficient to pay off the loans slightly slower, but make a small contribution to your RRSP every month, increasing that amount once you are officially debt-free?

Let’s a take a look at a sample scenario to see how it plays out.

Dr. Brittany Carter and Dr. Nicole Armstrong are both naturopathic doctors in Vancouver, BC. They met in school and have been practicing for 40 years. This year, they are both hoping to transition out of their practices and as a result, are evaluating whether they are financially prepared for retirement.

Both doctors graduated from their naturopathic programs in 1978 and opened their practices the same year. They each graduated with $100,000 of student loans and their earnings over the last 4 decades have been fairly similar. Both doctors started repaying their loans 6 months after they graduated and had 15-year terms on the loan with 6% interest (a realistic estimate given that the historic rate of return of the S&P500 for the past 40 years has been 13%). The suggested monthly payment to meet the 15-year term was $843.86.

Dr. Carter’s goal was to get rid of her student loans as fast as possible, so she paid $1000/month in an effort to pay them off sooner. She paid off her loan in 11 years and 7 months. Then, she began making $1000 monthly payments into her RRSP, where she averaged 6% interest.

Dr. Armstrong wanted to pay off her student loans, but she also wanted to start saving for retirement, recognizing that it can take a while to build up capital. She contributed the recommended $843.86 to her student loans, plus an additional $150/month to her RRSP. Each year, she got a tax deduction of $540, and she paid off her loan in 15 years. After repaying her loans, Dr. Armstrong also put $1000/month into her RRSP.

In the above example, both doctors have paid out the same amount of money, roughly $1000/month for 40 years. Both have paid off their student loans and saved for retirement. Dr. Armstrong received a tax deduction of $540/year during her loan repayments, which Dr. Carter did not get until her loans were paid in full. This enabled her to save $540 in taxes which was helpful in the early years of her practice where her earnings weren’t as high. Both women received a $3,600 tax deduction in the years that they invested the full $1000/month in their RRSP.*

Dr. Carter paid off her loan 3 years and 5 months before Dr. Armstrong. She therefore contributed the full $1000/month to her RRSP for much longer. In the end, however, Dr. Armstrong’s $150/month contribution during her loan repayment term helped her enter retirement with $740,300 while Dr. Carter had $696,459. By saving something each month in addition to her loan repayment, Dr. Armstrong was able to amass an additional $43,841 even though both doctors contributed the same amount.

Each situation will be different, and the above numbers are hypothetical and used to illustrate the importance of starting to save early. When starting out as a naturopath, most doctors have a high level of student debt, and it may feel like it’s not feasible to save anything for retirement in the early years of your career. In reality, student loans are an investment in yourself.

As a self-employed person, you are completely responsible for your retirement. If you aren’t saving, there is no safety net and no employer contribution helping to prepare you for your exit from the workforce.

If a large contribution isn’t realistic now, don’t be disheartened—a smaller regular contribution now can still make a significant difference down the road. The BCNA Group Retirement Savings Plan is an excellent way to start. With low fees, carefully managed funds, and a portfolio specifically tailored to the needs of naturopathic doctors, it’s a great benefit of being a member of the BCNA.

To learn more about saving for retirement, find out if you’re ready, or set up a customized plan to help you prepare in a way that works for you, speak to a financial advisor.

* It is worth noting that while the interest paid on student loans is tax deductible, for the sake of this example it has not been factored in for the sake of simplicity.

This article has been provided by Sindy Billan, SB Wealth Solutions* and Saskia Vermeulen, Southlands Financial and is for informational purposes only. It is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon for providing such advice. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by Sindy Billan or Saskia Vermeulen as to its accuracy, completeness or correctness.

*SBILLAN Wealth Solutions Inc. doing business as SB Wealth Solutions E&O/E 2019

At the beginning of the 20th century few Canadians could expect to live past 55. Retirement was not a cause for worry. Today, the situation is different. Now, a woman who retires at age 55 can expect to live, on average, another 30 years and a man, 26 years. All that retirement time has a price attached to it.

Retirement has become more complex. In this article, “Are you ready for Retirement?” part 1 of a 2-part series, we will look at sources of income, tax considerations and longevity. Part 11 will be published in the BCNA Spring Bulletin 2018 and will cover wills, estate planning and tax & cost saving strategies.

For most, the idea of freedom 55 is not reality. Many have financial and family obligations and may also choose to continue to work. Brenda, age 65 and Gary, age 60, are a married couple have been contributing to their Registered Retirement Savings Plan (RRSP) for years and they now want to retire. They have considered their expected income from Canada Pension Plan (CPP), Old Age Security (OAS) and Brenda’s work pension. They are a little confused about the three options they have for their RRSP and want to make sure they make the right decision for their situation.

The first option they have is to cash out their RRSPs. In this case, the government demands all the deferred tax be paid in a lump sum.  In most cases that would be a 50% tax bite out of your savings.  Lump sum withdrawals do not qualify for any pension tax credits and can only be made up to age 71. Consequently, this is this least beneficial idea and Brenda and Gary would be very unlikely to choose this option.

Their second possibility is to convert the RRSP to a Registered Retirement Income Fund (RRIF). RRIF money can continue to be held in the same types of investment products as the RRSP and are therefore exposed to the market fluctuations and risk associated with the investment choice. RRIFs can start at any age, but an RRSP must be converted to a RRIF no later than the end of the year in which the taxpayer turns 71.  Minimum withdrawals are required and based on a formula which gradually increases up to age 95.   RRIF minimums are based on the age of the taxpayer.  However, Brenda could elect to use Gary’s age, as he is the younger spouse. This will reduce the minimum amount the couple will be required to withdraw and lower the tax Brenda will owe on her retirement income. It is important to note all RRIF withdrawals are taxable. Minimum payments are not subject to withholding tax and it may be a good idea to have tax remittances set up by your financial institution to avoid any big surprise on April 30th.

The third option is to buy an annuity with the RRSP money. An annuity functions similarly to a defined benefit pension plan. The monthly payout is fixed and guaranteed for life. It can also be purchased with an indexed benefit to keep up with inflation. Annuity payments are considered taxable income.  Usually, they will pay out for a minimum period regardless of whether the owner is still alive.  If Brenda were to choose an annuity, she must understand that no changes can be made once the contract is signed. An annuity can provide security that Brenda will not outlive her money. Both RRIF and annuities qualify for pension tax credits and pension income sharing.

Brenda and Gary are also concerned with the impact of an unexpected illness and how it could affect their retirement plan. Brenda, having been the primary care giver for both aging parents, has witnessed the emotional stress and financial toll a dependent family member had upon herself and her siblings.

Over the next 30 years the largest segment of our population, the baby boomers, will retire. As a result, our health care system will feel the pressure from longevity. Based on the current Canada Health Transfer (CHT), it’s projected that in 25 years, healthcare expenditures by provinces and territories will account for 97% of total available revenues.*  To protect their retirement plan and avoid transferring a burden to their children, Brenda and Gary may consider a long-term care insurance plan as an integral part of their retirement planning.

One of the biggest concerns for many Canadians is running out of money in retirement. As medical advances continue, and health improves, this will continue to be a problem for many retirees. When choosing what to do with their retirement income, Brenda and Gary should consider their health with respect to life expectancy, the lifestyle they are hoping to enjoy early in retirement, factor in the cost of inflation and account for adjustments in the later years. They will need to balance these factors with the level of income they will be able to generate for and during retirement.

It is important to note that Brenda and Gary do not have to choose only one option for their RRSP. They could also use a combination of the three. To make the most informed decision and address their questions about long-term care insurance, they may want to see a financial advisor to ensure they are on the right track.

 *Source: Sustainability of the Canadian Health Care System and Impact of the 2014 Revision to the Canada Health Transfer, Canadian Institute of Actuaries and Society  of Actuaries, 2013

This article has been provided by Sindy Billan, SB Wealth Solutions** and Saskia Vermeulen, Southlands Financial and is for informational purposes only. It is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon for providing such advice. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by Sindy Billan or Saskia Vermeulen as to its accuracy, completeness or correctness.

**SBILLAN Wealth Solutions Inc. doing business as SB Wealth Solutions E&O/E 2019

Adam is invincible. He is 31, engaged and practices as a chiropractic doctor. Tiffany, his fiancé, is 30 and a well qualified legal assistant for a major law firm in Vancouver. She is also invincible. Both Adam and Tiffany live life to the fullest. They love to travel, cycle in the summer, hike the Grouse Grind on weekends and ski in Whistler during the winter season. Adam has no life insurance, no disability, no long-term care insurance or critical illness. Tiffany has some benefits offered through her work employee plan. Too much to review here so let’s look at critical illness benefits, especially in light of the recent news Adams’ colleague has learned. Susan, also a chiropractic doctor, is 36 years old. She normally joins Adam on the Grouse Grind every Saturday; however, she was recently diagnosed with thyroid cancer and is unable to hike the grind. Susan has asked Adam to locum for her while she undergoes surgery and chemotherapy.

Let’s consider some of the latest predictions from the Canadian Cancer Society, 1 in 2 Canadians will be diagnosed with cancer in their lifetime and 1 in 4 will die from the disease. This is due to the growing and ageing population. Adam felt invincible up until now. He always thought those from his parents’ generation were more likely to be affected by a critical illness. Information about cancer rates show the fastest growing range is those between 19 to 39.

Just this summer, a member of our family was diagnosed with colon cancer, stage 1V. She is 35 years old. Her treatment includes partial removal of the colon, lymph nodes and 3 months of chemotherapy.

The current information from the Canadian Heart & Stroke Foundation is 1 in 4 Canadians will contract some sort of heart disease and more than one third of those affected are under the age of 65 and that number is growing.

Dr. Richard, my optometrist, follows a fit and healthy lifestyle. He is a marathon runner, eats clean, non-smoker and non-drinker. He had a heart attack at age 58, just this last spring.

Who hasn’t been affected by a critical illness within their circle of family or friends?

Anyone who has been off work for an extended period will tell you, the financial cost associated with that circumstance are almost unfathomable. Consider a cancer survivor who is off work for nearly a year with surgery, treatments and physical and emotional recovery. Some costs drop, but there are many more that start and easily fill the short-term void and then some. Even with short term or long-term disability benefits from work, most people don’t recognise there will be many expenses that will follow along with their illness.

Adam and Tiffany have been saving to buy a condo or townhouse in the not too distant future. Interesting, lenders report that more than 50% of foreclosures or re possession are due to an injury or illness. About 45% of RRSP withdrawals are made to cover costs related to an illness. Not an ideal situation as this may create more of a tax burden and additional financial stress.

Let’s consider some of the “sneaky” items: numerous taxi rides, non-traditional treatments beyond the scope of employee benefits, help with shopping, caring for children, babysitter, nannies, help with household chores such as cleaning, meal preparation, costs for toileting and bathing appliances, to name just a few.

There is additional cost of a spouse or family caregiver taking time off work and lost opportunity to save for retirement when stopping RSP contributions.

While nothing can replace the emotional, mental and physical losses experienced in such cases as this, there is something that can be done to protect the financial loss – Critical Illness Insurance.

Critical Illness Insurance provides a lump sum of tax free cash to use at your discretion. Most polices cover 24 illnesses. A few of the most common claims are for heart attack, stroke, cancer, MS and coronary bypass and have been paid out for some as young as 25 and as old as 78. Some polices offer additional benefits as well; locating a general practitioner, a second opinion on test results and recommended treatments, nutritional guidance service and counselling service.

Considering critical illness?

Adam realised he needed some protection in place. He opted for the low cost, affordable plan for $30 per month. His plan is $100,000 of tax free benefit if he becomes critically ill with one of the 24 covered illnesses. It is guaranteed to renew in 10 years without having to provide medicals, however, at the current premium rate at the time. Tiffany decided to make her plan as part of savings strategy and lock in the premium rates with a guarantee. She chose the Term75 with a return of premium at age 65 or upon death. This plan allows for a lump sum benefit of $100,000 for a critical illness or if she does not become sick, she is rewarded her money back. Starting at age 65, she could choose to cancel her insurance and receive cash back, about $32,700. A win win situation. The cost of her plan is $85 per month.

Strongly consider the purchase of even a nominal amount of critical illness insurance while you are healthy. The tax free benefit is paid to you, normally within 30 days after a diagnosis for one of the covered illnesses or accidents.

And remember no-one is invincible – we are all exposed to the same risks.

This article has been provided by Sindy Billan, SB Wealth Solutions** and Saskia Vermeulen, Southlands Financial and is for informational purposes only. It is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon for providing such advice. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by Sindy Billan or Saskia Vermeulen as to its accuracy, completeness or correctness.

**SBILLAN Wealth Solutions Inc. doing business as SB Wealth Solutions E&O/E 2019