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Investia Financial Services Inc.

 

 

Avoiding the Summer-Time Blues - How to Afford a Summer Vacation When Money is Tight

 

Getting away during the summer months for a much needed vacation is an expense many Canadians struggle with. When money is tight, here are 6 things you can do to help avoid the summer-time blues and still catch a break.

1. Set a savings goal

How much money do you need to go on a vacation? An expensive holiday might not be possible this year, so think about how much you do need to still enjoy some time away. Once you determine how much you need, break down how much to save per pay cheque to help you reach your goal.

If you're thinking that this is easier said than done, keep reading...we're getting there.

A family heading off onto a summer vacation. 

2. Create a spending plan

If you don’t have a personal or household budget, this is the first step to finding money for your vacation. It'll be hard to set a little extra aside if you don't know what you need for the rest of your expenses. Once most people take the time to track their spending and create a budget, they usually find it easy to identify expenses that they can cut back on.

3. Look for expenses to trim

One of the easiest ways to find a little extra money is to trim back somewhere else. As part of your budgeting process, track what your spending your money on.   Look at all of your expenses and decide where you can cut back. It could be as simple as putting your cable bill on hold for the spring and summer months when the weather is nicer. It might mean planning your meals and shopping better so that you've got leftovers that you can take for lunch. 

4. Look for places to save money

When trying to find either a little extra income, or a way to trim expenses, taking a step back can help. What advice would you give a friend who is in your situation? Extra savings can potentially come from using smarter shopping strategies your job, the government or your expenses.   Sometimes it's so easy to overlook the most obvious. 

5. Setup automatic transfers

We can be our money's worst enemy, so we need strategies to keep it safe from ourselves. Your bank or credit union can help you set up automatic transfers from your chequing account into another account that is hard to take money out of. This could be a high interest savings account that is not linked to your bank card. If, for example, you were to automatically transfer $25 per week into a separate savings account, you would have $1,300 saved within a year. Many people wouldn't really miss $25 a week, so a simple arrangement like this can help you save for your vacation almost “automatically.”

6. Go on a “staycation”

If money is really tight, or you prefer the comfort of your own bed, you don’t have to travel anywhere to get away and relax. “Staycations” have become really popular .   If you're not sure what you could do for a "staycation," we've created a list of staycations.

Use these tips to get started sooner rather than later. Your ticket to a summer get-away can be as easy as planning ahead! 

 

Funding a healthy retirement with  
tax-efficient income

 

One of the chief concerns for those in or nearing retirement is whether your income will be 
sufficient to meet your retirement spending needs.  As investment portfolios gyrate along with the 
markets, it has become increasingly important to ensure that your retirement portfolio is designed to provide the cash flows necessary to help you meet 
your retirement goals. Tax-efficient cash flows can provide you with peace of mind knowing that your income stream will be steady and consistent during your retirement years.
A well-designed retirement portfolio will make use of both registered and 
non-registered assets to supplement income provided by government and/or company pension plans.  Assets held in registered accounts benefit from tax-sheltered growth during 
their lifetime. Apart from a few credits and deductions which serve to reduce the tax payable, withdrawals from registered accounts are fully taxed as income at the owner’s marginal tax rate.
While there is little flexibility in terms of the tax treatment of withdrawals from registered plans, there are several options to consider in order to help maximize the after-tax income that can be provided by non-registered assets.  Let’s review the various types of income and the tax rates that apply:
          ›  Interest – taxed at the investor’s marginal rate
          ›  Dividends – eligible dividends receive a tax credit, which may make them 
             an attractive source of income for many investors in high tax brackets
         ›  Capital gains – 50% of the gain is taxed at the investor’s marginal rate
         ›  Return of Capital (ROC) – while not taxable in the year it is received, ROC 
       reduces the adjusted cost base (ACB) of your investment, which generally 
       results in a capital gain and the ensuing tax when the investment is sold.

 

 Clearly, income in the form of ROC with its tax-deferral characteristics is 
     worth considering.

Canadians’ retirement confidence drops as life expectancy rises

 

 

Almost half (45 per cent) of Canadians are confident they’ll be able to maintain their standard of living in retirement to a life expectancy of 85, according to a new study by market research firm Mathew Greenwald & Associates Inc. and Cannex Financial Exchanges Ltd. 

The survey, which questioned more than 1,000 Canadians aged 55 to 75 with more than $100,000 in investable assets, found that as expected longevity increased, confidence decreased. For example, 58 per cent of respondents said they’re not confident they can maintain their standard of living to age 90.

Read: Canada facing $13.4-trillion retirement savings deficit by 2050

Reflecting those concerns, 80 per cent of respondents to the survey rated guaranteed income products, such as annuities, as a highly valuable supplement to government-sponsored retirement plans. That compares with 60 per cent who said so in 2015.

“Concerns about being able to afford retirement appear to be universal, whether we are talking about Canadians or their American counterparts,” said Doug Kincaid, senior research director at Greenwald & Associates, in a news release.

A similar survey has tracked the issues in the United States since 2014. “Although they have a more robust safety net in retirement, Canadians are similarly worried about meeting their financial needs and see greater value in guaranteed lifetime income.”

The Canadian survey also found the majority of people approaching retirement anticipate a substantial cut in income when they retire and believe what they receive will decline over time. Some 42 per cent of respondents expect their highest expenses to occur early in retirement. In addition, more than a third (35 per cent) of women expressed significant concern about outliving their retirement savings. That compares to 20 per cent of men.

The survey found the top retirement concerns among Canadian respondents include retirement savings not keeping up with inflation (48 per cent), low interest rates (47 per cent), not earning as much as possible on investments (46 per cent), losing money during downturns in the stock market (46 per cent), not being able to afford long-term care expenses (45 per cent), outliving savings (43 per cent) and not having money for an emergency (43 per cent).

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