The debt treadmill is next to near impossible to get off unless you have a plan.

Most Canadians have heard the Bank of Canada continue to tell us how much debt we are in, and there is a debt crisis looming. But how can you get out of debt, without knowing what is necessary for you to do?

Bank of Canada lifts some forecasts, warns on debt; Reuters.ca

You can’t really rely on the Banks to give you good advice to get out of debt, because they are generally the ones who put you there in the first place. Sure they like to talk about consolidation loans to get rid of debt, but isn’t that just one more product they sell? Are you really getting out of debt by using a consolidation loan? The answer is no, not in the long term…

Once you clean up the debt in a nice clean consolidation loan, this free’s up money for you to continue to spend, and generally you are rewarded with better credit, and you become more attractive for lenders to start advertising more products to you. Then you get back into debt and now you have a consolidation loan too!

So how do you get out of debt? The answer is simple, first stop spending more than you make, and then second put a debt reduction plan in place. Sounds simple, but most people don’t know how to put a plan in place. This is where we can help.

We can help you by analyzing your debts, understanding how much the interest rate is on your individual debts, and how long you currently would have to pay based on your monthly contributions towards clearing your debt. Most people have never even thought about how long they would have to pay on their debt before it was actually cleared off. This is generally a scary number many, many years into the future.

Here is how it works, we need three pieces of information to help.

1. How much is the debt balance on each one of your debts, like mortgage, credit cards, line of credit and box store credit like Sears, Home Depot or FutureShop.

2. What is your Current Interest Rate on each one of those debts? It is likely that they all will have a different interest rate, so we need to know all of the rates.

3. What are you currently paying towards clearing that debt? If you only make the minimum monthly payments on your debt, then you will be surprised how long it will take to pay off the debt.

Once we have analyzed your outstanding debt together, we then use a debt repayment strategy called the “Debt-snoball Method”. This is a different debt reduction strategy than what you have been told in the past, but it works far better than any other debt reduction strategy we have seen so far. It is not based upon the old adage of paying your highest interest rate debt first, and this is why it is unique.

The Debt-snoball method does not require you to pay any more for your debt than you do today, but when structured properly will allow you to get out of debt years sooner, and supercharge your retirement portfolio.

How would you like to get out of debt years sooner than you ever could? How would you like to be mortgage free 30% faster than simply making over payments, or bi-weekly payments on your mortgage? All these things can be achieved by using the Debt-snoball method.

Once we know your particular situation, we use a very special software program to put a Debt-snoball plan in place. Once your debts are entered into the system, we will give you a written plan on how to tackle the debt in a logical and sensible way. You will be amazed on how simple it is to achieve and you will be encouraged throughout the entire process, because you will see your debts fall off one by one, until the last thing you are making power payments on will be your mortgage. Imagine being debt free and retirement supercharging 30% faster than the traditional repayment method your lender propose to you. There are no tricks, only Math…

You need to call our office or send an email and give us your particulars, and we will then provide you with a free no-obligation illustration of how it can work for you, in your own particular situation. It is our business and it is our pleasure, take just a few moments of your time, and start the path towards debt freedom, without a consolidation loan…

Steffen deGraaf

It all started in the summer of 2008 when bankers and government officials were secretly meeting behind closed doors to see how the world could handle the worst financial crisis since the great depression. It would come to be known as the Financial Meltdown of 2008, and in many cases nearly 4 years later, we still haven’t recovered from the meltdown. Accompany that with all the troubles in the EuroZone, combined with the rising price of oil and you have a lot of uncertainty in the Markets.

So this creates a sentiment from investors that they do not feel comfortable contributing to their future savings program, even though the Markets have always outperformed every other way to invest for your future. But if you are in your Retirement Risk zone, watching your portfolio of assets go up and down is not very comforting.

Your retirement risk zone is 10 years before and after your anticipated retirement date. So if you are between the ages of 50 and 70, this could be the solution you have been looking for.

It is called a GMWB, or a Guaranteed Minimum Withdrawal Benefit investment solution, and these are the benefits. A GMWB allows you to invest in the markets, but have the confidence that even if the market’s decline, you will get a Guaranteed Income Base bonus of 5% per year, or the Market value, whichever is higher. And since GIC rates hover between 1-3%, this is a great alternative which provides both a guaranteed return, and the safety of your principle.

GMWB’s were introduced by Manulife back in 2007 under the name of IncomePlus, and since then, Canadians have invested Tens of Billions of dollars into GMWB products. As investors flood this market for safety and security, many other Canadian Insurers have also introduced their own GMWB, so now the choices and selection available will satisfy any investor’s needs.

The second benefit to GMWB’s is the ability to turn your Savings account into an Income account, with the benefit of receiving Guaranteed Income for Life. This means that no matter how long you live, you will receive your Income; Guaranteed. In essence it is similar to a Life Annuity, but the balance of your account that you do not use within your lifetime goes to your beneficiary, and not the Insurance Company.

By using this strategy, you guarantee your financial future, whether you live to 80, 90 or even 100 you are always guaranteed your minimum payment every month. This is why we call it your personal pension.

There are many different options available for you as an investor, and there are good and bad products out there just like everything else, but by having a simple review you can uncover how a GMWB can give you the peace and security you need to have a sound financial future into retirement.

Call our office today to see how you can implement a GMWB into your retirement plan, or to receive the Free Report “Income Stability in an Unstable World”.

Steffen deGraaf

Has anybody ever taken the time to talk with you about Tax Sheltered & Guaranteed Tax Free Income for life? Probably not if you are only working with the bank to create your retirement Income.

Many of the clients we work with believe that if they have $1,000,000 in their RRSP at retirement they will be financially stable for the rest of their retirement years. But it is not only how much money you have, but how much of that money will you keep after paying the deferred taxes within your RRSP?

As we say, its not how much you have, but how much you get to keep.

So this article will focus on three hot topics on every retiree’s or future retiree’s minds, how much will I have, how much I will keep & how long will it last? These are the most important factors when you are trying to create a solid sustainable income for your retirement years.

The First Fundamental to understand is that people are living longer into retirement these days, and the fear of running out of money is one of the hottest topics around. Author and Associate Professor of Finance at York University Moshe A. Milevsky Ph.D  recently published a book Pensionize your Nest Egg, which addresses the fundamental need to create a pension out of your savings as opposed to just hoping it will not run out.

The Second Fundamental to a successful retirement is knowing how much money you will have at retirement, and how much of an income will be provided by that sum of money. It is shocking to us, that when we talk with many families who are saving for their retirement that most of them do not know exactly how much Income will be provided to them when they choose to turn their Savings into Income. This should be your foundation for savings, if you do not know how much you will have, how do you determine how much you need to save?

And the Third Fundamental is how much of that Income will you actually keep after the erosion of taxes upon your savings. In a typical RRSP account there is a substantial amount of taxes that have been deferred along the way. In fact even the interest you make inside your RRSP savings account will be taxed as well. So you not only pay taxes on the money that sits in there, but also the growth of that money over time. This alone can add up to Hundreds of Thousands of Deferred Tax Dollars sitting inside your ideal $1,000,000 portfolio…

So how can you create a sustainable Tax Friendly investment over your lifetime, where you know how much you will have (Exactly) and how much will you receive (Exactly) and how long will it last (Exactly). This is where today’s idea comes from.

Use a Tax Free Savings Account with a GMWB guarantee. Your Savings will grow over your life Tax Free , and when you choose to retire, you will know exactly how much you will receive Tax Free which is guaranteed, and you will know that it will last for your entire life, whether you live to 70, 80, 90 or even 100 years of age. All Guaranteed!

If you have not heard of this strategy for Saving for your Retirement, you need to give our office a call so we can show you exactly how this would work for you in retirement. Don’t keep throwing your money into an RRSP which will become a Tax Burden to you in the future. Without a True Income Plan,  you will be dramatically surprised come retirement about the uncertainty of your savings…

When you ask why your Bank Advisor has not come up with this idea, do not be mad at them, they are not allowed to offer you this type of strategy, as it is exclusive only to the clients of an Investment and Insurance Advisor… Call us today to see how we can integrate this into your current retirement and savings plan.

 Steffen deGraaf

If I told you there was a way to cover your Life Insurance needs with literally no cost to you, would you believe me? Most people would think there is some sort of a catch or there was something shady going on. It sounds too good to be true. How can an Insurance Company do this, and where can I get mine?

The Life Insurance product I am talking about, is a good 20 Pay Life Insurance product.

Here is how it works, you choose the coverage amount you are interested in, say $100,000. But in this case, you are not going to be using cheap Term Insurance, you are going to be selecting Permanent Insurance. Insurance that will be there for you, no matter how old you are when you pass away. Because it is true, that it is not if we die, but simply when we die.

When the Insurance is selected, we choose the 20 Pay option. This means that you will pay for the Permanent Insurance only for 20 years, and at the end of the 20 years, there are two options available to you.

1. You like the Insurance and choose to continue on with the coverage. In this case you are not responsible for paying any more premiums past the 20th year, and the Insurance is guaranteed to be there for the rest of your life, with no more payments due.

or

2. You are satisfied that the Insurance coverage is no longer needed and you can then cash in the policy. Here’s the “Free” part. Nearly all of the money you had invested over the last 20 years is returned back to you, as very tax efficient Accumulated Cash Value. The only part of the premium you paid every month that is not returned to you is the monthly policy fee, usually that equates to about $7 per month, so no big deal.

So here is a real world example to show you the value of this protection.

Suzie is a 35 year old mother who has just had a baby and she is interested in making sure there is Life Insurance coverage in place, in case anything happens to her for the next 20 years. Suzie does not smoke, and is in good health, so she looks at a 20 Pay Life Insurance product.

The cost: $70 per month

The Time: 20 years

Cash Value in 20 years: $17,000

This is a great option for Suzie for 3 reasons.

1. She gets the affordable Life Insurance coverage she needs, not only for today, but for the rest of her life if she chooses to keep it.

2. If she chooses to cash out the policy in its 20th year, she will have a large sum of money that she may even choose to use for her newborns Education Cost, what a great little nest egg.

3. If she chooses to keep the Insurance, and does not have to pay another dime for it, she has created a $100,000 asset for her family and it only cost $17,000. A pretty nice return on her investment.

So when we look at Life Insurance, it makes sense to look at all the options available to you. Even in the case of the 20 Pay Life Insurance, you can add additional Term Insurance on top of it to increase the Face Amount of Insurance greater than $100,000, but a “good” 20 Pay life if set up properly will create a great asset into your future.

Call us today, as not all 20 Pay Life policies are the same, and through our experience over the last 40 years, we have selected some of the best companies out there to Insure our clients needs.

As brokers, you know we always work in the best interest of our clients, and are able to search the marketplace for the best solutions available. Call us today to help you implement this valuable coverage into your Insurance Plans.

Steffen deGraaf

What would happen to your savings if you were diagnosed with a Critical Illness? Would you have sufficient funds to take 3-6 months off from work, would you have enough money to fund your retirement, or would you have to use your retirement savings while you were recovering?

This is a very common situation amongst Canadians, in the sense that if you became ill, or had a heart attack or were diagnosed and had to be treated for some form of Cancer, how would you fund your recovery?

It’s true that if money were no object, you would spend every last dollar you had to recover and get better.

This generally is how RRSP accounts can get wiped out, when a critical illness strikes.

It is a cycle that will not only affect your savings today, but well into retirement if not properly planned for. If you took $10,000 out of your RRSP today to fund your family’s income while you are recovering, it has a dramatic effect on your retirement income into the future. Not only are you using a fully taxable dollar when you withdraw it from your RRSP, you are also preventing that money to grow through compounding which is necessary to build your wealth for retirement.

So if you are in your 50′s when a critical illness strikes, with every $10,000 you withdraw from your RRSP, you will lose the ability of that money to compound over the 15 years before retirement. So the true value of the $10,000 in retirement is closer to $16,000, even at a modest interest rate of 5% compounded, come retirement time.

So how do you protect your savings from this devastating effect? Simple, protect your RRSP account with Critical Illness Insurance coverage, and here is how it works.

If you normally save $1.00 for your retirement, take out a policy that will cost 10 cents on that dollar, and also add a return of premium rider. This way the Insurance will always protect your income in the event of a Critical Illness, and if you reach retirement without having a critical illness, all the money you have invested in the protection will be returned to you in a Tax Free benefit, that you can then deposit back into your retirement account. That way all your future income can grow without being interrupted by a life threatening illness.

There are three ways to fund your recovery in the event of a Critical Illness.

1. Pay for your recovery with your own money (i.e your RRSP)

2. Borrow someone elses money to fund your recovery (i.e. Line of Credit)

3. Receive Tax Free money from your own CI policy to fund your recovery.

In the 1st option we know what the consequences will be, and in the 2nd option you have to ask yourself would your Bank be willing to lend you more or less money if you were currently off of work?

And in the 3rd option, when it is set up properly, will pay you out Tax Free in the event of a Critical Illness, or return your money back to you Tax Free if you live a happy healthy life up to retirement.

Medical advances are allowing more and more of us to be survivors of heart attacks and cancers, but the question remains. Will we be able to recover financially from those events?

The choice should be an easy one to make, call our office today, and we will show you how to use this coverage to protect your RRSP.

Steffen deGraaf