Q: I’m planning my retirement and my biggest concern is running out of money before I run out of living.

– Melanie M.

A: That’s a common concern. Fifty years ago, life expectancy meant planning for a retirement that was about 10 years long. Now we’re planning retirements that may be 25 years or longer! There are a number of financial strategies that are ideal for you. Perhaps the most important involves asset allocation, maybe adding a growth component to your portfolio. You can invest a portion of your holdings in equities for potentially superior long-term returns that can help keep you ahead of inflation. There are also products available now that can only offer inflation protection but they also guarantee your income for life.

Q: My husband and I have built up a nice retirement fund, but we’re worried about losing it to inflation.

– Susan G.

A: We all worry about that! In today’s economy, traditional income-producing investments such as bonds, GICs and annuities pay rates of interest that barely keep up with inflation. Once you factor in the tax on the income generated by these investments, these apparently safe investments may actually be costing you money. There are products available now that not only offer inflation protection but they also guarantee your income for life.

Q: I’m so confused. What is this Retirement Risk Zone I’m hearing about? It sounds so scary!

– Robert S.

A: It doesn’t have to be. That’s an industry term we use to describe the 5 to 10 years before and just after you retire. That’s the point at which your investments can be most affected by a volatile market. Poor market returns early in retirement can significantly reduce your ability to withdraw income. Your best choice may be a financial product that can offer a sustainable, predictable income stream while potentially increasing income to offset inflation. That’s the kind of thing that’s designed to help you navigate the Retirement Risk Zone.

Q: My wife and I have been saving toward our retirement and we’ve built up a nice nest egg, but we’re concerned about recent market trends and how they’re going to affect our retirement plans.

– Tom Z.

A: Market trends can be a source of concern, especially if you’re just entering the retirement phase of your life. Losing money because of market volatility is particularly stressful because once you’re retired, it’s not always easy to replace that money. But there is a way to guarantee your retirement income and protect your retirement investments against market risk. There are financial products available that can help protect you against market volatility and provide income for life.

Q: I converted my RRSPs to an RRIF a couple years ago and I’m making annual withdrawals. I find I’ve got around $10,000 left each year. What’s the best way to invest that money?

– Lucy A.

A: As you know, you are required to withdraw a minimum amount from your RRIF each year, and pay the applicable tax. But there is a strategy for more aggressive investors that will create a tax deduction that offsets this discretionary RRIF income. At the same time, you can potentially increase the value of your non-registered investments. If you take out an investment loan and use the RRIF withdrawals to pay the interest, you can create an interest deduction equal to the amount of the RRIF income. You will also enjoy the benefit of investing a large lump sum that gets working right way. It’s important to assess and understand the risks of leveraging to see if it’s appropriate for you before you get started with this strategy. Talk to your financial advisor, or give me a call.

Q: My husband and I own a small construction business, and until last year, we were doing fine. But with the recent slowdown in building starts, we’re struggling a little. I really want to make sure the personal savings and mutual funds we’ve built together over the past 15 years are protected.

– Maria L.

A: That’s a really smart move! It’s important for small business owners to plan for tough times. There are some simple, cost-effective investment products available for you. First, I’m going to suggest that you consider segregated funds. Segregated fund investments offer some additional benefits that aren’t available with mutual funds. So if your business is forced to declare bankruptcy, your personal assets have the potential to be protected from creditors. And segregated funds can offer the same growth potential as the investments you already own.

Q: I hear there’s now a way that I can help out my favourite charities, and also help out myself!   

– Nancy D.

A: Nice to see someone giving back. And you’re right, by borrowing to invest, not only will you be helping those less fortunate, but the government will reward you with a tax credit – and it’s all legal! You take discretionary cash flow that you might otherwise use to fund an annual charitable donation, and instead use those proceeds to pay the interest on money you have borrowed to invest. The interest payments on that loan are tax deductible and you can use the tax savings to pay the tax on any investment income earned in the year. The remaining amounts can then be donated to the charity. You now have a large lump sum invested that takes advantage of compounding, so you can make a significant donation in the future.

Q: As much as I hate to admit it, I just turned 50, and I’m starting to think a lot about my retirement. I own a small business, so there’s no pension, and while it seems I’ve been contributing to my RRSPs forever, they don’t seem to be growing quickly enough for me!   

– Janet R.

A: Wow, you have a lot on your mind. But there’s a great retirement savings plan that could be perfect for you. It’s an Individual Pension Plan (IPP). It’s typically established for an individual business owner. An IPP can provide for higher pension benefits for qualified individuals and higher levels of tax deferrals too. And for someone over age 50, the annual maximum IPP contribution is at least $6,000 higher than for an RRSP. And the concept works even better for owner/employee situations such as your husband or wife as an employee. It’s easy to get started, but you will need to talk to a financial advisor.

Q: My wife and I are retired, and we’re enjoying life and our three grown kids. But we’re a little worried about what’s going to happen to our youngest when we’re gone. He’s a bit of a “free spirit” and not very good with money. We would hate to see his inheritance frittered away. We’ve worked too hard to make sure that we’re leaving something for our kids.

– Greg P.

A: That’s not as uncommon as you might think; a lot of families have a “free spirit.” There are plans that can help. For example, there’s an Annuity Settlement Option with segregated fund contracts that could help put your fears to rest. When you die, your son’s share of your segregated fund investment is automatically transferred into an annuity that will then make gradual income payments to him. And the rest of your estate can be paid as a lump sum to your other children. Best of all, you won’t incur the costs associated with setting up a formal trust.

Q: One of my co-workers just went through a bout with cancer. He’s going to be okay, but it really took a financial toll on him and his wife and, they almost lost their house. It got me wondering if there’s something my husband and I should do to prepare for something like this.

– Heather O.

A: Absolutely. You can invest in Critical Illness Insurance. It’s a unique kind of insurance that’s not just about peace of mind, it’s about recovery. If you can’t work, or pay for a nurse, or even pay your mortgage, Critical Illness Insurance kicks in and covers a specific list of conditions that pose the greatest threat to your health. And it provides a cash benefit – money in your hands when you need it most. Some plans even include a program that can help locate the best doctor or treatment facility for your condition. There are a number of different coverage options and programs. Why don’t you come in and we can talk about what works best for you and your family?