September 28, 2004

Investment Corner

Living the Canadian dream

By John Niekraszewicz,

B. Math, FCSI, CFP

The Canadian dream—retire at age 55, enjoy more leisure time.

The fortunate few are and will be living this Canadian dream, but what about Mary (not her real name).

Mary is my client—here is an excerpt from a recent conversation.

“Mary, did you enjoy your summer holidays?”

“John, as you know, my industry is very competitive. I’m under constant deadline pressures but I managed two weeks off with my family.

“When I returned to work, the paperwork, e-mails, 12-hour days, working weekends. I’m so stressed out— holidays—FORGET IT!”

Continuing with this unhealthy lifestyle could force Mary to either take early retirement because of a critical illness or take a less stressful, lower-paying job and work past age 65. Neither are desirable outcomes, but both are real possibilities.

A comprehensive financial plan needed to be put in place. Without increasing Mary’s monthly expenditures, since this might be too stressful, the big picture needed to be looked at.

Since Mary had been preoccupied with her work for the last 30 years, (she is now 55), she had neglected her financial affairs.

Here were some eye-openers:

• Term Life Insurance—premiums just doubled.

• Disability Insurance—too restricted, chances of collecting from a claim are slim.

• RRSP’s—at too many banks, misallocated.

• Savings Account—too much money getting too little interest.

• Stocks—mishmash of “hot stocks.”

Here’s one example of how we started to build Mary’s master plan.

We had Mary apply for Critical Illness insurance, which would pay her a lump sum of $250,000 in case of cancer, heart attack, stroke, etc.

This would reduce financial strain and allow for either a smooth transition into early retirement or out-of-country care.

Another exciting twist we implemented is that Mary cancelled her disability insurance policy and used the premiums to pay for the Critical Illness insurance policy.

If she doesn’t make a claim on this policy after 10 years, Mary will get back all of the premiums she paid during those 10 years.

Talk about having your cake and eating it too.

I’ll be meeting with Mary again soon to start saving taxes by reallocating some of her investments so she will be closer to “living the Canadian dream.”

John Niekraszewicz, B.Math, FCSI, CFP, (Nick-rashev- itch) is a Certified Financial Planner and president of JVK Life & Wealth Advisory Group.

For a reprint of this article in Newsletter format, call 1-800-767-5933 or info@jvkgroup.com

Print | Comment