Author Archives: Brian Poncelet

Do You Have Enough Life Insurance?

How old are your children?

On the off chance that you have little children, your extra security needs appear to be extremely unique from somebody with more seasoned young people. On the off chance that you pass on and leave your life partner with a 1-year-old and 3-year-old, he or she has almost two decades to overcome without your salary — also school costs. The more youthful your youngsters, the more scope you’ll need.

Has your pay changed?

When you purchased disaster protection initially, you may have been 10 years more youthful and profiting. Now that you’re more seasoned and further up the profession step, you’re most likely winning all the more, so the general dependable guideline — that you purchase 10 to 12 times your wage in extra security — may work out to be a higher number at this point.

In case you’re a stay-at-home parent, you may not procure a paycheck, but rather if your youngsters are little, it would cost cash to cover the care you give. Notwithstanding when your kids are in school, you’d likely need afterschool care or sitters, so this would be a continuous cost until the point when your kids are more established and independent. Consider what that would cost every year and how long you may require it.

What do despite everything you owe?

Rundown the costs throughout your life that are continuous — contract, auto installments and any enormous charge card adjusts or private understudy advances. Obligation doesn’t vanish when you kick the bucket, and your companion will have less pay with which to make installments. Some obligation, for example, charge card obligation, might be excused, in a manner of speaking, if the domain doesn’t have enough advantages for pay the adjust — yet in the event that a mate was a shared service holder, she’ll be at risk. You might need to have enough disaster protection to pay off the real obligations, or if nothing else to make it workable for your companion to make installments for a long time, if essential.

Do you intend to cover school?

Regardless of how old your kids are, whether they’re probably going to go to school, that is a gigantic future expense. Notwithstanding purchasing scope at a different of your pay, you might need to include additional for expected school costs. Consider knocking up your life coverage by $100,000 for every kid’s school subsidize. In the event that you have two children, that is $200,000.

Shouldn’t something be said about burial service costs?

The regular burial service now costs $7,000 to $10,000, which is a major bill to cover if a salary worker has simply kicked the bucket. On the off chance that you considered this into your unique aggregate, that is fine. On the off chance that you would not, you may like to expand your numbers to take care of this expense.

CPP benefit entitlements

Even if you don’t retire at age 60 you are eligible to collect CPP, but you and your employer will still be required to make CPP contributions until age 65. If you are still working between ages 65 and 70 you are no longer required to contribute (whether you are collecting CPP or not), though you may choose to, thereby increasing your CPP benefits.

CPP benefit entitlements

It’s also important to understand how much CPP benefit you are entitled to before you decide the optimum time to collect.

As of 2017 the maximum benefit is $1,114.17 per month, but you might not qualify for the maximum. It all depends on how much you contributed over the course of your working life. According to the Government of Canada website the average amount new beneficiaries received at age 65 was $642.92 in 2017. If you would like to know how much you can expect to receive, you can request a statement of Contributions through your Service Canada account.

CPP is part of a bigger plan

Ultimately the decision on when to apply for CPP should be part of a larger retirement plan. It’s important to develop as clear a snapshot of your retirement income and expenses as possible. Do you plan to travel or are you likely to be more of a homebody? Will you be joining a golf club, or buying season tickets for your city’s sports team or theatre company? Do you foresee downsizing your home? If not, will you be mortgage free? What about vehicles? Will you and your partner downsize to one vehicle? Are there health concerns that may need accommodating? Will you want assistance, such as cleaning services and lawn care, to help maintain your home? The questions you need to consider are as varied and numerous as are retirement lifestyles.

Once you have a clearer picture of your possible expenses, you can stack those against your projected income sources. Aside from RSPs, pensions, non-registered investments, stocks, TFSAs, OAS, and CPP, perhaps you intend to work part-time as a consultant in your past profession, or step out into something completely new.

It’s essential to determine if there is a gap between the money you will need and the money you will have.

The sooner you discover that gap, the sooner you can start finding ways to close it. If that sounds overwhelming, there is no need to do this on your own. A money coach can help you create a plan that supports the future you desire.

Should I take CPP at age 60?

The long summer evenings are over. The kids are back at school; homework, lessons and sports practice have begun to fill the family calendar again. Summer holidays and backyard BBQs are now just photo memories on our phones and social media accounts. But that’s OK. September brings its own “fresh start” energy. It’s a time to look toward new challenges at work, winter vacations and even plans for next summer. Because, really, what is all our hard work for, if not, at least in part, to afford time with friends and family?

In fact, as you ease into a busier fall schedule, it’s a great opportunity to pause and remember why you work hard, and to recommit to your life goals—including your important retirement goals. Who doesn’t dream of the day when all four seasons are theirs to shape and enjoy?

But retirement looks very different to everyone, and one of the most important things to consider when planning yours, is the optimal time to apply for Canada Pension Plan (CPP) benefits. All it takes is a bit of calculated foresight, to make the decision that will best suit your circumstances.

Here’s a look at some basics:

Canada Pension Plan benefits can be drawn as early as age 60 (reduced 0.6% for each month before 65) or as late as age 70 (increased 0.7% for each month after 65).

The average life expectancy for Canadians is age 80 for men and 84 for women. Statistics Canada predicts a continued rise in life expectancy of roughly two years over the next 15 years.

Things to consider:

Life expectancy

Contemplating your mortality may feel uncomfortable, but your health and whether or not longevity is a family trait, are things to consider when making your decision.

If you take your CPP starting at age 60, your breakeven point with someone who waits until age 65 is when you both turn 74. Confused? Let me put it another way; if Mary takes her CPP at 60 and Brenda takes hers at 65, Mary’s monthly CPP payment will be 36% lower than Brenda’s, but she will collect five years longer. They will be 74 when Brenda pulls ahead of Mary for overall amount collected.

CPP Breakeven Point Chart 

2016-04-18_1142Working and collecting CPP

If you believe good genes are on your side and there is a strong chance you’ll be collecting CPP into your 80s, it may be beneficial to wait until age 70, but only if you can afford to do so. How much cash flow you have from other sources is as important a consideration as your health. If you are living on a restricted income it may be better to take CPP sooner and enjoy an improved quality of life while you are best able to appreciate it.

Even if you don’t retire at age 60 you are eligible to collect CPP, but you and your employer will still be required to make CPP contributions until age 65. If you are still working between ages 65 and 70 you are no longer required to contribute (whether you are collecting CPP or not), though you may choose to, thereby increasing your CPP benefits.

60 through 70: At what age should you start taking CPP?

The standard age for starting Canada Pension Plan retirement benefits is 65. However, you can take a reduced benefit as early as age 60 or receive larger benefits by waiting as long as age 70.This calculator offers a rough estimate of whether to it makes sense to take CPP early, at 65 or delay. A lot has to do with your expected lifespan. Consider your own health, your family history and try one or two of the many online lifespan calculators available. Also, this calculator relies on the latest estimate of your CPP entitlement. Your actual CPP retirement benefit could vary, depending on when you retire and whether your earnings between now and your retirement date rise or fall.

retirement calculator

What is the monthly maximum CPP retirement benefit in 2018?

$1,134.17 is the maximum for someone starting their CPP at age 65, or $13,610 per year.

What is the average monthly CPP benefit?

$641.63 for people starting their CPP payments at age 65 as of last October, or $7,699.56 per year.

Why the big differential between the average and the maximum?

Doug Runchey of DR Pensions Consulting said it’s because some people aren’t working for enough years or their earnings through their career are too low.

Can you get CPP if you have never been in the workforce?

To qualify, you must have worked and contributed to the CPP.

How are CPP payments adjusted for inflation?

Benefits are adjusted every year in January based on changes in the inflation rate as tracked by Statistics Canada’s consumer price index.

How do I find out how much CPP I am entitled to receive?

Request a copy of your CPP Statement of Contributions (SOC) from Service Canada at 1-800-277-9914, or online at My Service Canada Account.

How are benefits calculated?

If you take the CPP at 65 and older, your retirement benefit is calculated using your highest 39 years of earnings from age 18 to present, ignoring other factors (see below). At age 60, your best 34.8 years are used.

What caveats are there about estimates of CPP entitlement?

Mr. Runchey said the SOC estimates “pretend” that you’re age 60 or 65 right now, which has the same effect as projecting your current lifetime average earnings until those ages. If you get laid off or start working part time in the years before retirement, you could have less of a retirement benefit. Conversely, an increase in earnings could leave you with a higher than projected benefit. “If you’re 58 now, the age 60 estimate is going to be fairly accurate,” Mr. Runchey said.

What are maximum annual pensionable earnings, and what does this term mean?

The maximum for 2018 is $55,900. You must contribute to the CPP on earnings from employment up to the maximum, and you cannot contribute on earnings above that level. The maximum will rise to an in the years ahead as a result of CPP enhancements announced in 2016.

How does the child-rearing dropout provision work?

If you were primary caregiver for your children under age seven, the period of time where you were raising your kids may be excluded from the calculations of your retirement benefit. Basically, years of zero or minimal earnings will not drag down your higher earning years.

What if I was out of the workforce for a few years, or in a low-paying job?

There is a general dropout provision that allows everyone to drop out the lowest 17 per cent of their contributory years. If taking their CPP at age 65, this works out to eight years.

What is the CPP post-retirement benefit, and how much could it add to my monthly CPP income?

A post-retirement benefit (PRB) is payable if you have earnings and make CPP contributions after you start receiving your CPP retirement pension. In 2018, the maximum monthly PRB payable to a 65-year-old from a single year of contributions is $28.35. That’s in addition to the maximum $1,134.17 for a 65-year-old this year.

How does the CPP survivor’s benefit work?

The survivor’s pension is paid to the legal spouse or common-law partner of a deceased CPP contributor. The amount depends on several factors, including your age, whether you are receiving CPP benefits yourself and the contributions the deceased spouse made to the CPP. The maximum CPP survivor’s benefit for 2018 at age 65 is $680.50, and the average amount for new beneficiaries at age 65 and older as of last October was $308.66. The money is normally paid for life.

What is the process for applying to start receiving a CPP retirement benefit before, at and after age 65?

You do not automatically receive CPP. Instead, you must apply online or by mail. To apply, you must be at least a month past your 59th birthday, have worked in Canada and made at least one valid contribution to the CPP and want your CPP retirement benefits to begin within 12 months.

What documentation do you need to apply?

For online applications, you’ll need banking information to set up direct deposit of your benefits and the date you would like your pension to start. For paper, you’ll need your social insurance number as well.

What is the typical period of time between application for benefits and the start of benefits?

Online applicants should receive a written confirmation of entitlement within a month that lists a start date for benefits and the amount to be paid. With written applications, you should contact the CPP if you have not received a confirmation notice within three months of your requested start date.

Do recipients have the option of paper cheques and direct deposit?

Yes, but 96.8 per cent of CPP retirement benefits are paid by direct deposit

What are the payment dates for CPP benefits?

Dates vary, but they’re generally in the last week of the month. Specific dates for 2018 can be found here (for print: at

If you procrastinate on applying for CPP, can you claim benefits retroactively to a certain date (say, your 65th birthday)?

Mr. Runchey said there is no retroactivity if under age 65. Over age 65, you can claim payments back as far as 11 months prior to the month you apply.

How confident should you be that the CPP will be around to pay the benefits you expect?

“Very confident.” – Alexandra Macqueen, co-author of Pensionize Your Nest Egg and a certified financial planner (CFP).

“While there will be times where ‘fine tuning’ is required, I am very comfortable with the solvency of the program and the way things are now managed by the CPP.” – Daryl Diamond, CFP and author of Your Retirement Blueprint.

Choosing between mortgage, life or disability insurance

Q: My better half is 57 and I am 45. I am as of now a homemaker to a 12-year old with extreme introvertedness. We have life and handicap protection on our home loan. My better half never again meets all requirements for basic sickness through our bank as he is 57.

He additionally has here and now and long haul benefits through his manager.

Would it be advisable for us to change to term protection through a private insurance agency for our protection as opposed to paying $292 every other week for contract life and incapacity? Would we be able to try and get inability protection through a private insurance agency? Additionally, would it be advisable for me to keep this protection since I am not utilized?

An: Insurance can be somewhat of a torment. It can be costly and frequently, it’s essentially a sunk cost.

Be that as it may, when you require it, protection is extremely vital. What’s more, with regards to overseeing money related hazard, it is basic for most youthful families.

Your significant other, likely has a genuine requirement forever and incapacity protection. On the off chance that you and your child would be in monetary trouble in the event that he kicked the bucket, he needs extra security. What’s more, if you three would be in budgetary trouble in the event that he couldn’t work because of an incapacity, he needs inability protection.

Given he’s as yet working and you have a home loan, I will figure that you folks require protection. What amount is exceedingly reliant on individual factors and can be surveyed with the assistance of an expert.

Your home loan protection is likely costly however. It’s a regular extra when you apply for your home loan that you won’t not ponder before you consent to it. Your home loan master is certainly pondering it, since they are repaid pleasantly to pitch it to you.

Basic disease protection could be a decent choice for you to consider for yourself, given that if you somehow managed to build up a basic ailment, the family may truly require the money. You can’t get handicap protection as a homemaker, since you don’t have a pay to supplant. In any case, you unquestionably have an occupation to supplant and your family could have a colossal monetary cost on the off chance that you couldn’t deal with your child.