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Financial Planning for Retirees

At 68 years old, Adriana is a retired business owner who recently sold her successful company and has finally decided to enjoy retirement.

While she continues to do a bit of consulting on the side, she and her husband Rick (also retired) are looking to simplify their life, do a bit of travelling and spend more time with their grandchildren. They keep in great shape, stay active, and live a healthy lifestyle.

While Adriana is a prime example of someone we will have worked together with for many years, we also have individuals with successful careers and a healthy nest egg come to us closer to their retirement years. After a lifetime of saving, business owners like Adriana have ideally maximized their corporate investments, leaving substantial funds that will provide the necessary cash flow.

The retirement plans we build for our clients include detailed retirement income projections that map out several factors including rates of inflation, investment return, CPP, and OAS. Without fear of outliving their savings, a couple like Adriana and Rick can focus on being able to give to their grandchildren and supporting the charities they love, both of which we can help them do tax efficiently and cost effectively.

The only other splurge Adriana and Rick want to allow themselves is the purchase of a $140,000 Aston Martin convertible for the road trips they planned on taking.  What Adriana wants to know is how best to pay for the car without incurring too much tax.

After speaking with her accountant, he informed her that she would declare a $140,000 taxable dividend (on top of her $50,000 of consulting income) to pay for the car.  She would have to pay approximately $30,000 in tax for this $140,000 dividend.

Our clients will often seek our advice before major purchases such as this to see if there is another option, and we are always happy to take a closer look. .For a business owner who saved corporately, a review of their corporate tax returns might reveal a corporate dividend account balance.  In the case of someone like Adriana, it could be as much as $200,000.

Working closely with Adriana’s accountant, we’d arrange for her to declare a capital dividend in the amount of $200,000 – $140,000 to pay for the car the other $60,000 could be a credit to their shareholder loan account – allowing them to purchase the car of their dreams without attracting any tax.

We care about helping our clients reach their goals, and the attention we place on the financial details are how we both earn and return the trust that’s been placed in us.

This situation is hypothetical, does not represent any actual clients, and is not to be viewed as a guarantee of investment performance.