“Welcome to the PlanEasy blog! We make personal finance easy.
Thanks for visiting.”
– Owen
Do You Have An Emergency Budget?
You may have heard of an emergency fund, but have you ever heard of an emergency budget?
The fear of the unknown is very real. When it comes to personal finances, a little unexpected expense can cause a major issue. One small expense can lead to a snowball of high interest debt. An emergency fund can help avoid those issues. An emergency fund will help cover the cost of an unexpected expense. An emergency fund will help you worry less about the unknown and will provide a lot of peace of mind.
An emergency fund isn’t the only thing that can provide peace of mind though.
There are many things that you can do to help you worry less about the unknown and avoid financial problems that naturally come up from time to time.
On top of an emergency fund, one thing you can do is have a high savings rate. Having a high (+20%) savings rate will give you room breathe when something unexpected comes up. Another thing you can do is have more than one income stream. Having income from your job, plus investments, plus rentals/AirBnB, plus side gigs will help increase your financial flexibility.
Lastly, having an emergency budget will help you prepare for the unexpected and provide an enormous amount of peace of mind.
Six Retirement Risks To Plan For
Preparing for retirement can be exciting but also a bit stressful. Retirement is full of opportunity but also full of risk, and there are six key retirement risks to plan for.
Planning ahead to avoid or reduce these risks will make retirement more enjoyable. It will make a retirement plan more robust, more stable, and more secure.
These risks are very common in retirement, but everyone experiences these risks differently depending on their situation and goals. Depending on your situation, these risks may already be reduced, but if not, then you may need to take extra steps to reduce these risks in retirement.
5 Strategies To Help Increase Guaranteed Income Supplement (GIS) By Up To $100,000+
GIS (Guaranteed Income Supplement) is thought of as a government benefit that is exclusively for very low-income retirees, but the truth is that almost 1 in 3 retirees receive GIS benefits. This is a benefit that is widely available to retirees who are both low- and moderate-income.
GIS is a generous benefit. At a maximum it will provide over $10,000 per year per household. But this is quickly reduced by GIS clawbacks of 50% to 75%. For every dollar of taxable net income (line 23600 on your tax return), GIS is reduced by 50% to 75%.
For example, if you take $1,000 from an RRSP/RRIF then this would reduce next years GIS benefit by $500 to $750!
The challenge with the Guaranteed Income Supplement is that retirement planning with GIS benefits is very counter intuitive. Strategies that help reduce GIS clawbacks are often the opposite of strategies that help reduce income tax for higher income retirees. This can sometimes result in low- and moderate-income retirees getting advice that is not suited to their situation.
If not corrected in time, this bad advice can decrease future GIS benefits by $10,000’s or more.
For example, a client we worked with recently was advised to put $150/month into their RRSP despite being on disability benefits. This advice would have caused extra GIS clawbacks of at least $4,500 in retirement. From $9,000 in RRSP contributions, only half would end up in their pocket after considering GIS clawbacks.
Thankfully there are a handful of strategies to help reduce the GIS clawbacks… but these strategies require foresight. It’s best to create this type of plan in your 50’s, well before GIS benefits begin. The second-best time is in your early 60’s, right before GIS benefits begin. And the third-best time is between 65 and 70, when GIS benefits have begun but there is still time to make changes and maximize benefits. After age 72 there is less that can be done to reduce GIS clawbacks so planning ahead will pay off.
This type of planning can easily add $10,000’s in GIS benefits over the course of a plan and help make retirement significantly easier.
One of the reasons I love these GIS strategies is because they are specifically designed for low- and moderate-income households. We often hear about high-net-worth families employing teams of lawyers, accountants, and wealth managers to help them maximize their personal wealth. These strategies help low- and moderate-income households maximize their retirement income and could quickly backfire if used by anyone else.
Owen Winkelmolen
Advice-only financial planner, CFP, and founder of PlanEasy.ca
“Welcome to the PlanEasy blog! We make personal finance easy.
Thanks for visiting.”
– Owen
New blog posts weekly!
Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...
Do You Have An Emergency Budget?
You may have heard of an emergency fund, but have you ever heard of an emergency budget?
The fear of the unknown is very real. When it comes to personal finances, a little unexpected expense can cause a major issue. One small expense can lead to a snowball of high interest debt. An emergency fund can help avoid those issues. An emergency fund will help cover the cost of an unexpected expense. An emergency fund will help you worry less about the unknown and will provide a lot of peace of mind.
An emergency fund isn’t the only thing that can provide peace of mind though.
There are many things that you can do to help you worry less about the unknown and avoid financial problems that naturally come up from time to time.
On top of an emergency fund, one thing you can do is have a high savings rate. Having a high (+20%) savings rate will give you room breathe when something unexpected comes up. Another thing you can do is have more than one income stream. Having income from your job, plus investments, plus rentals/AirBnB, plus side gigs will help increase your financial flexibility.
Lastly, having an emergency budget will help you prepare for the unexpected and provide an enormous amount of peace of mind.
Six Retirement Risks To Plan For
Preparing for retirement can be exciting but also a bit stressful. Retirement is full of opportunity but also full of risk, and there are six key retirement risks to plan for.
Planning ahead to avoid or reduce these risks will make retirement more enjoyable. It will make a retirement plan more robust, more stable, and more secure.
These risks are very common in retirement, but everyone experiences these risks differently depending on their situation and goals. Depending on your situation, these risks may already be reduced, but if not, then you may need to take extra steps to reduce these risks in retirement.
5 Strategies To Help Increase Guaranteed Income Supplement (GIS) By Up To $100,000+
GIS (Guaranteed Income Supplement) is thought of as a government benefit that is exclusively for very low-income retirees, but the truth is that almost 1 in 3 retirees receive GIS benefits. This is a benefit that is widely available to retirees who are both low- and moderate-income.
GIS is a generous benefit. At a maximum it will provide over $10,000 per year per household. But this is quickly reduced by GIS clawbacks of 50% to 75%. For every dollar of taxable net income (line 23600 on your tax return), GIS is reduced by 50% to 75%.
For example, if you take $1,000 from an RRSP/RRIF then this would reduce next years GIS benefit by $500 to $750!
The challenge with the Guaranteed Income Supplement is that retirement planning with GIS benefits is very counter intuitive. Strategies that help reduce GIS clawbacks are often the opposite of strategies that help reduce income tax for higher income retirees. This can sometimes result in low- and moderate-income retirees getting advice that is not suited to their situation.
If not corrected in time, this bad advice can decrease future GIS benefits by $10,000’s or more.
For example, a client we worked with recently was advised to put $150/month into their RRSP despite being on disability benefits. This advice would have caused extra GIS clawbacks of at least $4,500 in retirement. From $9,000 in RRSP contributions, only half would end up in their pocket after considering GIS clawbacks.
Thankfully there are a handful of strategies to help reduce the GIS clawbacks… but these strategies require foresight. It’s best to create this type of plan in your 50’s, well before GIS benefits begin. The second-best time is in your early 60’s, right before GIS benefits begin. And the third-best time is between 65 and 70, when GIS benefits have begun but there is still time to make changes and maximize benefits. After age 72 there is less that can be done to reduce GIS clawbacks so planning ahead will pay off.
This type of planning can easily add $10,000’s in GIS benefits over the course of a plan and help make retirement significantly easier.
One of the reasons I love these GIS strategies is because they are specifically designed for low- and moderate-income households. We often hear about high-net-worth families employing teams of lawyers, accountants, and wealth managers to help them maximize their personal wealth. These strategies help low- and moderate-income households maximize their retirement income and could quickly backfire if used by anyone else.
Join over 250,000 people reading PlanEasy.ca each year. New blog posts weekly!
Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...
Join over 250,000 people reading PlanEasy.ca each year. New blog posts weekly!
Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...